Early-Stage Tech Entrepreneurs:
Say NO to Opportunistic Deals and YES to the Strategic
5 Guidelines When to Just Say NO
Congratulations…you made it through your first year and perhaps beyond. You have an evolving product and are chasing aggressive growth goals. You have set expectations with your investors and you must now meet or exceed those expectations. Your spending-‘eyes’ always seem to bigger than your revenue-‘stomach.’ Your sales team is building a decent pipeline but the deal that is imminent is never exactly aligned with the product you are selling. You say to yourself, “But it is cash! But it is revenue! It will fund the next month or the next quarter!”
Sound familiar? If you are the CEO of an early or even-growth stage software company you know exactly what I mean. We have all been there. Unfortunately, that next opportunistic deal also means MORE product modifications or one-offs, MORE professional services and more opportunity cost keeping your company and your product from realizing its strategic vision.
How do you break the cycle of your product direction being dictated by the last paying customer?
How do you attain a repeatable, scalable model that will sling-shot your business to that ‘hockey stick’ growth you committed to?
Cash may be king, but living from deal to next deal is no way to live and no way to get a healthy, long-term return for your hard work and investment.
There comes a time, typically the sooner the better, when opportunities must be rejected or selected based on their high alignment with your company’s strategic direction. The longer you commit to the next paying deal, without regard to its ‘fit,’ the longer you will have to wait to scale your business and achieve the success you committed to and want.
There are 5 keys to know when to say NO to those opportunistic deals and YES to the strategic deals. Saying NO to a lucrative, but diversionary deal, may be painful but is ultimately liberating…liberating you and your business to get to the next level.
You know it is time to say NO to an opportunistic deal when:
You have attained not only your MVP, but your MLP:
It is critical to create a minimal viable product asap. To achieve this requires aggressive product iteration, listening to your early adopters and flagship customers to ensure you are addressing and solving a customer pain point. Your product vision will evolve during this process in conjunction with product usability. When you have attained a high degree of customer acceptance while addressing the business and strategic objectives you sought out to achieve, delivering a product loved by its users….then, from that point, you must say NO to the opportunistic deal that takes you off your course.
2. You have faith in your product roadmap:
You have listened to your customers, you have sized your market opportunity, you have delivered your MLP and you have spent countless hours developing an aggressive, strategic, market-focused product roadmap. Have faith in your plan and execute on your roadmap!
3. You are focused on closing 10 or 100 like-deals, not 1:
Every early-stage CEO is exhilarated by each new deal that closes. However, to be successful, it is not 1 or 2 deals that will get you to the next level but 10 or 100 depending on your transaction size. Time spent on opportunistic, diversionary deals takes precious time and resources away from the strategic deals. You must be focused on and built a predictable pipeline of strategic deals.
4. You have expenses chasing revenues…not the other way around:
You have a plan, a budget. That budget should reflect attainable revenues along with expenses that ramp in line with the intended revenue and capital burn. Ramping expenses in advance of the plan or not aligning the expense burn based on the revenue and capital spend plan will shackle your business to chase whatever deal comes in the door irrespective of its strategic fit.
5. You have conviction:
You have done your homework. You have researched the market, delivered proof-points, have delighted your early adopters and flagship accounts and now it is time to scale. Now you must take the leap. Say NO to the opportunistic transaction so you can be laser-focused on and say YES to the strategic opportunities that will let you achieve your vision and your plan.
Don’t be deterred!