Five reasons why startups need to focus on sales
Monday, August 11, 2014/
Startups are hard. But life is better when you have sales. Here is why I encourage people to spend a ratio of 50:1 on sales versus capital.
Startups are far too ‘popular’ right now and, unfortunately, reading too much TechCrunch will have you believing that you start, raise capital and exit.
The goal is to build a business, not start a startup. Good business is the creation of value and the realisation of that is profit, which is when your revenues are more than your costs. Sounds dumb, but it’s easy to lose sight of that amongst the ‘thrill’ of entrepreneurship. You want to keep your costs down, but none of that matters without revenue.
1. Sales shows value
Product market fit is the goal of all startups and nothing says that those two things fit together in a real, business-like way more than sales. A customer saw so much value in the product that they gave you hard earned money for it.
2. Sales pays for things
Cash in the bank lets you pay for servers, two minute noodles, bandwidth. For team members, it’s a great day when your equity is worth more than cash, so you would rather pay for things than give away equity.
3. Sales pays for growth
Having a scalable growth model means when you spend a dollar on sales and marketing, more than a dollar comes back. Without revenue, the only way to keep growing is diluting through capital raising or crossing your fingers for ‘going viral’.
4. Sales attracts investors
Of all the numbers we think about, sales is the hardest for someone to reject. Visits, users, engagement and retention are all nice but nothing says ‘there is something here’ to an investor like sales.
5. Sales avoids investors
On the flip side, having enough sales can mean that you don’t need an investor. Who wants to raise money if they can fund costs and growth with sales?
So stop going to capital raising events and start going to sales events. Read sales books. Hire sales people. Be a salesperson.
This post originally appeared on the Pollenizer blog.