They say all you need is a great idea and the will to develop it. This, unfortunately, is the farthest thing from the truth. A great idea will get you nowhere and, most often, a professional team and months of work invested also don’t do the trick.
Breaking into this highly competitive market is even more difficult for business-to-business startups. As individual consumers, we don’t typically pay too much attention to things like business continuity and guarantees when we’re paying for services that cost $5 per month, like web hosting and various apps. But businesses, whether small or large, are always skeptical and wary of any software they purchase for their operations. Not only is there a higher cost involved, there’s also a much greater risk involved in investing in business-to-business software and apps that could fail.
Consider everyone’s needs
Whether your startup is small or large, backed or bootstrapped, local or international, your customers will be concerned about security and continuity. These do come at an additional cost for the development of a new business, but those costs are an absolutely necessary investment for customer acquisition. If you build it, they won’t come – unless you can offer some sort of guarantee of what they’re buying into.
Considering potential customer needs is a wholesome attitude that every startup should have. But a startup needs to consider its own needs and costs as well. Is the startup – and its main servers and support team – located in a region that is prone to natural disasters? Does the startup’s product deal in software that is prone to security breaches or hacking attempts?
These and more are things that can seriously put the continuity of the software or service at risk and that are beyond any human control. So, where there is lack of control, we turn to insurance and a worst case scenario recovery plan.
Developing business continuity
Business continuity planning simply means developing an actionable plan for how a business prepares for and continues to operate after an incident, disaster or crisis. In the world of business-to-business software, this sort of plan is a must. Proving to potential customers who have enough to worry about regarding their own business that your startup will be willing and able to provide your services uninterrupted, whatever might come, is key in entering this competitive market and getting customers to trust your startup and rely on your products.
Preparing for such a worst case scenario comes with certain costs attached and plenty of time necessary to go through all of the steps. First, every startup needs a good lawyer who specializes in this sort of thing. Knowledgeable legal representation is paramount to any software startup. This lawyer and the rest of the startup team then need to identify possible risks, which are usually unique to every startup, and think of ways to prevent them.
What could possibly go wrong?
The next step is preparing for potential risks that are beyond your control. This also involves looking into a solid insurance plan, data recovery options, and source code escrow. Depending more on the type of software than the size of the startup, these can all be very different for each individual startup and there are no ready-to-go recipes for most. Usually, these all come at entirely acceptable prices that can seamlessly be added to product costs that customers will barely notice.
In 2012, many small businesses along the East Coast were devastated to find out that their insurance did not cover their business losses for having been shut down during hurricane Sandy. For many startups in the software industry, this meant permanent loss of customers that no one would cover and they had no way of recovering. Looking into insurance details and knowing the local risks of the area where your servers and backup servers are settled is simply necessary.
Then there’s the always present potential of a startup simply failing. Even long-standing, established businesses have gone out of business overnight – as the still fresh global economic crisis taught us. Business customers are fully aware of these risks and the fact that 9 out of 10 startups fail, regardless of their great ideas and the solid solutions they bring to business processes.
This is the number one reason that businesses choose often more expensive and perhaps even outdated software platforms to use for their operations. It’s not so much that they’re afraid of innovation – it’s the fear of the risk that tends to go with that innovation. As the old corporate world saying goes – no one ever got fired for choosing Microsoft. One thing that these major companies always have, aside from great insurance and thousands of backup servers, are almost infallible source code escrow services that ensure that their software and services will keep working even if the company goes up in smoke.
But if a startup has carefully assessed its potential risks and prepared for even the risks beyond their control, guaranteeing their customers a stable product and continuous delivery, then there’s no reason for business customers to choose that large multinational software developer over a small, local startup with a great, innovative product.