The real cost is your time. Projects always take longer than you expect, especially if you haven’t done it before (the business part). Product is the easiest and has limited risks if you have decent dev skills.
Enterprise is also one of the hardest markets, not only technically, but also getting clients (3-12 months from first contact to money in the bank is normal). Enterprise is also a game where they don’t buy the best software, a lot of factors play a role in getting enterprise clients. It’s doable but definitely playing a new game on hard/insane level.
Focus on the problem that you solve for the business, without a very strong case for that and be able to gain a champion within the company you are selling to, it’s near impossible. As you can see its more about sales, and connections, and less about product.
I’ve been in your situation before serving enterprise SaaS as a two-person company for 5 years. It was very hard and I would not do it again. Then again, once we got clients they were easily paying $30k/yr with long term contracts in place. High risk, high reward.
If you are starting out you have different levels of risk you can take. Since your real prime-time years are at stake, are you going to play this game on hard right at the beginning? I’d suggest to start on easy, get more experience, and as you grow, level up. Once you have a couple $$$ in the bank, do bigger projects with higher risk/higher reward ratio.
That’s what I wished someone told me 10 years ago.
If I were you in this situation now, I’d first warm up those connections, as they will play a crucial role in your company. Is it something they want or need? Is the pain they are experiencing so hard they are willing to prefund the project? If you think so, try convincing them to get either dev money beforehand (hard) or have them sign a binding (hard) or non-binding (doable) agreement to pay xx amount when the software is ready. Include what features/problems you will solve in the agreement.
Your ideas about profit sharing are too complicated in my opinion.
If you are not able to convince them to prefund or either sign an agreement, for me personally this would be already too high risk. Unless those connections are decision makers and you play golf every month with them ;)
That’s what I would do in your situation and my 2 cents.
Wish you all the best of luck, not want to discourage you, but sharing my own experiences in a somewhat similar situation. If you need advice, help, or just wanna bounce some ideas, always willing to help out fellow entrepreneurs.
we've been doing this for the past 4 years, but as i really started to enjoy sales, things are going quite well, so i'm just adding my 2 cents:
From my experience the sales process is the only thing that matters. No client cares about the software (at least initially).
Although this is/was tough to hear as a softwareenigneer (i didn't believe it either), if you're in B2B and trying to solve a serious enterprise problem, most of the readily available info on "how to start up" on the web is not applicable.
All the talk about "build a fancy landing page", "build an MVP", "test your market first" did not help us. This is because we found that our target audience is not really active on the internet and the amount of potential DECISION MAKERS/BUYERS (not users!) is in the thousands to tenthousands not in the millions. Therefore we needed direct sales, whether we liked it or not. And initially that's a founders job.
See this as a hint for my claim: B2B companies that are turning over many millions of dollars per year often have "a website" (which looks like it's 1999) but that's basically it.
Why? The clients are in B2B as well, so the level of doing business is mostly person to person, establishing a relationship. You don't need a fancy website for that.
The reason is actually pretty simple: If you are solving a relevant business problem in B2B the duration of the anticipated business relationship is 5-10++ years. Depending on WHAT problem you solve the dependency on the clients new supplier (=you) is very high. Therefore a client cares much more about WHO that supplier is. Building that trust takes time and interactions, and that is why B2B is so fundamentally different from B2C where you have everything from one-off interactions to product-lifecycles of 1-3 years (max).
It was therefore always clear to us that building a viable B2B business takes 10 years.
So what did we do? Initially none of our clients cared about the software but about the business problem we solve and the people/the company who they are doing business with. We funded our product development by doing a mixture of pre-financed dev work & "contract software dev/consulting" with the IP remaining with us. This allowed us to build a product and use the references to get to work with the next clients. Over time this lead us to our (now SaaS) product.
B2B is tough, but as soon as you're in, you're in.
Enterprise is also one of the hardest markets, not only technically, but also getting clients (3-12 months from first contact to money in the bank is normal). Enterprise is also a game where they don’t buy the best software, a lot of factors play a role in getting enterprise clients. It’s doable but definitely playing a new game on hard/insane level.
Focus on the problem that you solve for the business, without a very strong case for that and be able to gain a champion within the company you are selling to, it’s near impossible. As you can see its more about sales, and connections, and less about product.
I’ve been in your situation before serving enterprise SaaS as a two-person company for 5 years. It was very hard and I would not do it again. Then again, once we got clients they were easily paying $30k/yr with long term contracts in place. High risk, high reward.
If you are starting out you have different levels of risk you can take. Since your real prime-time years are at stake, are you going to play this game on hard right at the beginning? I’d suggest to start on easy, get more experience, and as you grow, level up. Once you have a couple $$$ in the bank, do bigger projects with higher risk/higher reward ratio.
That’s what I wished someone told me 10 years ago.
If I were you in this situation now, I’d first warm up those connections, as they will play a crucial role in your company. Is it something they want or need? Is the pain they are experiencing so hard they are willing to prefund the project? If you think so, try convincing them to get either dev money beforehand (hard) or have them sign a binding (hard) or non-binding (doable) agreement to pay xx amount when the software is ready. Include what features/problems you will solve in the agreement.
Your ideas about profit sharing are too complicated in my opinion.
If you are not able to convince them to prefund or either sign an agreement, for me personally this would be already too high risk. Unless those connections are decision makers and you play golf every month with them ;)
That’s what I would do in your situation and my 2 cents.
Wish you all the best of luck, not want to discourage you, but sharing my own experiences in a somewhat similar situation. If you need advice, help, or just wanna bounce some ideas, always willing to help out fellow entrepreneurs.