Want to Turn Huge Startup Profits? Here's Why You Need to Be Patient.
The last new product my company took on was a cloud-based Customer Relationship Management (CRM) application. The CRM application was developed by someone much smarter than me and we signed on as a partner to sell and implement the system. We added it to the mix of our existing CRM applications. I’ve done this before. And I’ve learned something: You don’t just add a new product. You invest in one.
For starters, the unlucky person in your company who you’ve volunteered to learn this new product will need to become an expert. This takes a long, long time. It requires sitting for certification exams, attending vendor classes, testing internally and then dipping your toes into the water with a new client, pretending you know what you’re doing, while you struggle to keep your own nausea under control. Because you don’t really know what you’re doing for a while. Becoming an expert in anything takes years, not months.
And becoming an expert requires money -- not just the fee you’re paying to the vendor for the privilege to sell their product (yes, if you can believe it, there is a fee). It’s the additional costs of the certification classes, the training, the seminars, the webinars and the partner conferences you’re required to attend. It’s the cost of time spent learning all this new stuff and the opportunity cost of that lost billable time. It’s the testing labs, the new server, the additional software that needs to be integrated that no one mentioned before.
And then there’s the cost of marketing materials, lists you’re buying, email campaigns, webinars and white papers you’re writing to establish yourself as an expert while you desperately search for new leads for the product . Maybe, just maybe, it all comes together in a thousand days.
You also need to develop a thick skin. Your key person -- who has spent so much of your money getting trained -- leaves. A great prospect gets lost because you went after him prematurely. A new client signs on and you wind up spending twice what was budgeted because your people, even with all the certifications and passed exams, are still just learning on the job. And of course you can’t bill the client for the extra hours.
Brace yourself: this will happen five or six times over the course of the first year. And then a few more times after that. You will have many unprofitable jobs where your people look like idiots and you’re singing and dancing to try and keep the client happy. He’s figured out by now that you didn’t know what you were doing in the first place. Can you take the abuse and save this job from disaster? Can you survive these jobs? It will take a thousand days. But if you do, all those bad experiences will materialize into good future projects one day.
A new product doesn’t take hold for a thousand days. That’s three years -- about how long it takes to get it to a level of profitability. If you think you’re going to launch a new product and bank profits anytime before then you’re kidding yourself.
Sure, it’s been done. And we read about those anomalies. But those cases are rare -- so rare that they get media attention. Most new companies require much more time than that. Be patient and you'll start to see success.