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It’s not easy to grow from a beta or entry-level product to a mature business solution if you don’t have financing, but it’s doable and it’s all part of being an australiabusinessblog.com. Frankly, you may not have a choice.
Take my company for example. We grew early on through our ability to quickly add marketable features without outside funding. We didn’t have the extra revenue to build critical elements, but our CEO came up with some practical ways to get the job done without closing a VC round. As a result, we found that you don’t always need outside funds or a bank loan to grow your product suite. Instead, you can turn customers into investors.
Here are a few takeaways on how to do this.
Related: Think You Need Venture Capital to Start Your Business? Think again.
1. Never give an outright no about what your product or company can do
Instead of saying “no, we can’t,” respond with an optimistic “maybe.” When a customer asks about a feature, it means they have a problem that needs to be resolved. They may be willing to pay upfront subscription fees to offset the new feature build. Enter this negotiation. It can be a win-win.
2. Reply with the sales team, not the technical team
Technical staff usually have a long backlog of things to do, and they won’t mince words about what you currently offer or don’t offer. On our team, coders and even coder founders will typically give a flat yes or no.
These all-important builders of the actual product often work in a world of binaries and don’t always have a soft-skilled or entrepreneurial mindset. Let your sales force – living in the wild world of instincts and expediency – explore options to keep the conversation from hitting a wall.
3. Make your customer stick around
Turning customers into investors can be as simple as getting the assurance that they’ll stick around when you build a new feature for them.
If they’re not willing to commit – in writing or prepaid on use – don’t waste time building just for them. Their reluctance to commit can be a signal that they don’t need the solution as much. That doesn’t bode well for investing in that new feature until you gather more evidence of the demand.
Related: You Actually Don’t Need VC Funding to Succeed
4. Get proof that others want the feature
It’s not enough that just one customer wants the new feature. Your fundamental goal should be to prioritize quality builds that many people will use. Find out if the newly requested feature piques the interest of your other paying customers. Send surveys and call. The fact that one customer is willing to pay and commit does not guarantee that the investment is worth it.
Real-life examples to consider
Riot Games wanted to use our SaaS product in conjunction with a new version of Google Cloud Dialogflow, a conversational AI framework. After our CEO analyzed 1) the bandwidth of our team, 2) the demand from other customers and 3) the amount Riot Games was willing to pay up front, he decided to give the green light for the integration. The situation checked all the boxes and the amount prepaid for the build made the customer a sort of “investor”.
Here’s another one: The University of Birmingham needed a way to add our chat messenger to Canvas, a leading platform for online classroom environments. So we sprinted to create a Botcopy/Canvas integration. At the time, we had never heard of Canvas, but discovered that it is one of the world’s most popular online classrooms. As a result, we determined that our other education customers would be interested in this integration. Plus, the integration wasn’t challenging to build quickly, so we didn’t need much upfront to get it done.
Related: How to Drive Growth — With or Without VC Financing
However, I suggest providing such a service on a case-by-case basis. No founder wants to be associated as a service agency or generate disproportionate income from service work, which could be a red flag during VC due diligence. But in the beginning, providing occasional services is a smart way to fill the treasury of new features and ensure that your most important customers get the highest and best use of your product.
Plus, most customers love it when you go the extra mile for them to build new features or provide value-added services. They like to know that they’ve influenced your product – it makes them feel like part of the family and more likely to stick around and refer others. More importantly, this approach may be the only way to build income if you’re small and new. It’s a way of working your way into that $1 million that many VCs want to see.
The best part is that once you get that level of predictable income, depending on your overhead, you can reject VC terms you don’t like. Until that day comes, remember that you already have investors: your customers.