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Published on Software CEO:
http://www.softwareceo.com/forums/showthread.php?t=2009&page=3&pp=10

Hi Frank,

First let me say, I’m speaking as the director of an international software company in New Zealand, who has been where you are, thought what your thinking, then wised up a bit after talking to those that’d been there before me. We are sweat equity funded (no self-capital), and also used to have no marketing budget, sales budget, etc etc. This is the exciting time of the business where you get to be creative – I say enjoy it!

Whilst you have not a lot of money to spread around, advice is free (mistakes cost), take as much as you can get – as you are doing…

I agree with the ‘Walk before you run’ approach that’s been mentioned, but want to explain why. People who get money, funding etc too early on can tend to blow it. It takes time and experimentation to know where to wisely spend a dollar so you can guarantee that two dollars will be returned.
in the first few years, it’s very easy to spend $10,000 on expenses (sales, marketing etc), and when all is tallied, not to make it back. Thus, leverage is an issue and a risk at this point. Wait until you know for certain, that you can turn $1,000 into $2,000 (sales to revenue), or for that matter, $10,000 into $30,000, or $100,000 (Sales salary/marketing) into $400,000.

The principles are the same, and when you have sales/marketing (and associated sales material) sussed at a small level, you can easilly ramp up, but if it’s not sussed at a smaller level, you could be ramping up unfocussed effort – and that is a biiiig risk. When you are a small software co, you only get 1 or two 50,100k mistakes. You blow them and you go under, but you can do a lot of smaller sales/marketing experimentation.

As an Example.. We have played a lot over the past year with dedicated mailings, and newsletter sponsorships to large lists (20-100k emails each) and have tried different lists, markets, etc. Some of them are duds, and don’t return, and some age great and we make good sales, but they all cost money… However, now we know all the good lists, we can focus our money on those and increase the frequency of mailings. Each mailout costs about $1-2k. If I had done a couple of $50k mailouts and one was a dud… Man, that’d hurt, and be very hard to recover from. Which leads me to….

Reactive vs Proactive Selling/Marketing/Lead generation

I believe that you should not have the entire company’s sales future hanging off a sales reps ability. Don’t hire a sales rep until you have enough monthly sales revenue to cover at least 1/2 their pay (not their commission).

The http://www.proworkflow.com website is an example of a reactive sales website. You should try to get this under control before you hire sales staff. As mentioned earlier – YOU are the best salesman at this stage. If you setup a reactive website, you don’t need to actively sell, rather just talk about your product reactively as companies come to you.

Simply put – We fire leads, traffic, SEO, advertising etc at the website. 2-5% of site visitors try the public demo (qualification 1), 30% of these people then sign up for a 14 day private trial account (qualification 2), and these people are handled through their demo period via autoresponders on day 1, 6, 14. The really interested companies either purchase (yay!, no effort) or contact us with direct sales questions (qualification 3) as their trivial/general questions have all been answered on the website already.

So we only end up spending focused time talking to people who a 3x qualified leads, ready to buy. Now that’s reactive selling! – you just have to answer questions and fill an order!

I know your business is a little different, but proactive selling and lead generation is high inertia business (and hard) and to strike at the core of all in this thread, isn’t the reason we all got into this to make low inertia / high growth profitable software businesses? ProActive selling works, for sure, but isn’t the point of the internet (and software) to create leverage of all our time, money and effort? So if you hate proactive selling, try reactive marketing! Heaps easier! All you have to do is buy marketing, and systemize the website, adding more product info, demos etc… Take a look at ours…

it’s not the prettiest, but it is a machine that just keeps ticking!

As a side note, you must make the first 5-10 sales by yourself and see them through. Otherwise your commission rep is gleaning all the vital sales info/constraints/barriers etc that you need to have in order to position your company from the top down.

We are software company based in the country in New Zealand and are now running a profitable international software co, with code options, hosted accounts and customization, and users well in the thousands, and very slick internal automated systems. We are only able to achieve this due to having no initial money or funding – it made us think smart, we had to… Anyone is welcome to email me through the site to find out more.

That’s my two cents anyway… and Hi from New Zealand (Home of the AB’s)

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About the author:
Julian Stone, CEO – Project, Task & Time Management specialist for: ProActiveSoftware.com, ProWorkflow.com & Julian101.com

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About The Author:
Julian Stone begin_of_the_skype_highlighting     end_of_the_skype_highlighting is the CEO of ProActive Software, developers and creators of the leading web based project management software http://www.proworkflow.com.