Pitfall #5 — Losing focus in the first year by chasing revenue not product
I’ve covered a bit of this in the last post, but this series really comes down to how not to fail. It isn’t about how to succeed, because success is all relative. There is some people that say if you never quit, then you can never fail. Tell that to someone with a zero balance in their account and wondering how they are going to eat. There are definitely times to call it quits, and it is best to do so before you have lost everything. However, there are sometimes when losing everything helps you focus on what really matters. That is what this is about.
What really matters when you are releasing a product is knowing WHY you are building your product.
You started this company to solve a problem. You personally hated something and thought there is a better way. You created an amazing product and even got your first PAYING client. Now your client asks for a minor change, you agree since they are paying. Then they ask for a new feature, then a new side product (as they phrase it) that they say will help them. You keep building for that first client because they keep paying you to do it. Your product has now become a customized version of something your first client wanted and no one else wants. Your first client finds a cheaper version of your product and cancels. You have no more clients and a product you didn’t intend to create.
STOP DOING THAT!
You need to keep focus on the WHY you are building your product. You need to remember who your audience is and not JUST your first paying client. Let’s do some basic math, let’s say your product cost 10k (annually) for anyone. Then your first client says they’ll pay you another 10k for this new feature. You build it. Then they pay you another 10k for this other product they wanted to add on to your product. It seems like your first client is now worth 3 clients. It is NOT the case. That additional 20k is lost in year 2, because it is a one-off. If you didn’t change anything and acquired two additional customers that same year, you would have made the same year 1, and 60% more in year 2. Integrity and honesty is important. Explain to your client why you are building something and why you are NOT building something. Don’t chase the quick buck at the sacrifice of the long term revenue. You will be amazed on the clients you attract and you will lose clients you probably shouldn’t have.
Be true to your original vision. You will make changes along the way, and pivot on priorities. However, realize WHY you are pivoting and is it for the right reason or simply to hold on to that one client that you probably should let go.
