Whether you created your SaaS product to help solve a problem you had or because you wanted some extra income, the truth is that your SaaS business is a valuable asset.Whether you’re an early-stage founder or you’ve built up an established B2B SaaS business, it's crucial to understand how valuations work and how you can prepare for an exit when the time is right for you.

It’s a Valuable Asset

There are three ways to look at SaaS valuations:<ol><li>Seller discretionary earnings (SDE)</li><li>Earnings before interest, taxes, depreciation, and amortization (EBITDA)</li><li>Monthly recurring revenue (MRR)</li></ol>No matter which formula you use, they boil down to how much money your SaaS business generates and set that number against a multiple that reflects the quality of your business.For SDE and EBITDA, you would set annual profit against an annual multiple; typically, this multiple ranges from 2-10X.MRR is set against a monthly multiple that usually ranges from 25X to 100X.

Valuing SaaS Companies Based on SDE, EBITDA, and MRR

SDE reflects how much money your business makes after all expenses are paid and any salaries are added back into the business. The figure is one way to indicate a business’s earning potential and is often confused with EBITDA. Businesses valued with SDE tend to earn less than $2 million in annual recurring revenue (ARR) and tend to be run by solopreneurs. Year-on-year revenue growth is usually less than 50%.

SDE for Businesses Valued at Less Than $5 Million

Businesses that make over $5 million in ARR will likely use EBITDA, as the business will have a high growth velocity and a more fleshed-out infrastructure. The owners tend to be thought leaders in their industry and operations are developed with department heads and teams working under them. There are usually more stakeholders than the owner. EBITDA takes many factors into consideration, which is why this metric is more suitable for mature and complex businesses.

EBITDA for Businesses Valued Above $5 Million

MRR is a popular way to value SaaS businesses because it’s a key indicator of revenue growth.Investors prefer looking at MRR rather than ARR because annual recurring revenue doesn’t provide proof of churn.Big SaaS brands generating high MRR can raise a lot of money during seed funding rounds, despite not generating profit. For less mature brands that haven’t built up a name, people prefer monthly plans; with a recognizable brand, they can charge a discounted annual plan.A newer startup could be valued using MRR if it’s experiencing rapid growth and ARR is more than $2 million.

MRR for Fast-Growing SaaS Companies

No matter which valuation formula is used, investors look for proof of these three characteristics in a business: <ol><li>Transferability </li><li>Sustainability </li><li>Scalability </li> </ol>

The Three Key Elements of Attractive Assets

Investors look for businesses that can be easily transferred. To prepare your business for a sale, focus on making the transition as seamless as possible. Payment processing can cause huge headaches for buyers if the account can’t be transferred. Payment processing aside, you’ll need to document your business operations as much as possible to make your business plug and play. Creating well-documented code that can be understood by another developer ensures continuity if the new owner wants to develop the product or fix any issues. Standard operating procedures (SOPs) help buyers to learn how to run the business as you did; SOPs are great for training new staff or to refer back to during the transitional period when the business changes hands. While buyers are doing their due diligence, they’ll need to see clean financials. This will include tax returns from the past three years, a balance sheet, income statements, and cash flow.

1. Transferability

Scaling your revenue (MRR) is great, but it needs to be done efficiently.A business with high MRR won’t be worth as much if the churn rate is through the roof and your retention rate is poor. Buyers pay attention to your LTV, churn rate, and conversion rate optimization.Investors will also look at how efficient your operations are at acquiring new leads. Organic lead generation is highly attractive because there are no expenses involved; if you have other customer acquisition channels (CACs), the conversion rates will indicate whether these marketing channels are worth maintaining.

2. Sustainability

The most exciting prospect of SaaS businesses is their room for growth.Buyers will be looking at how scalable your business is based on a number of factors, such as the LTV/CAC ratio.A low LTV/CAC ratio may indicate that more capital is needed than expected to scale a business; on the other hand, a high ratio could mean your growth is slower than your competitors because you aren’t spending enough on marketing.

3. Scalability

<ul><li>Competition  - is there enough differentiation from existing software companies? </li><li>Product lifecycle - does your product need any major updates to stay relevant? </li><li>Technical knowledge - does the new owner require deep technical programming knowledge to be able to run the business, or can that knowledge be easily transferred? </li><li>CAC per channel - how effective is your marketing strategy at generating new customers in a cost-effective way? </li><li>Diversification - how many single points of failure are there in your business? </li><li>Saturation - is there room for growth in the current market? </li> </ul>

Other Factors That Affect the Sales Multiple

If you're thinking an exit strategy from your SaaS startup, you have to be prepared for it.

Whether you created your SaaS product to help solve a problem you had or because you wanted some extra income, the truth is that your SaaS business is a Here is an article on what investors look for in SaaS businesses and the factors that affect multiple sales.

strategy

Strategy

entrepreneurship

Entrepreneurship

business

Business

startup

Startups

product

Product & Design

Here's What Buyers Look for in SaaS Businesses

<ul><li>Change in business (and life) is essential for growth. Everything changes </li><li>Without understanding the importance of change you won't be able to alter the things in your business that aren't working and require change to flourish</li><li>Change in any business is vital as without it no business can succeed. Don't get too stuck in your old ways/ habits</li><li>BE OPEN TO CHANGE</li></ul>

Lesson 1: Change

"Frightened of change? But what can exist without it? What's closer to nature's heart? Can you take a hot bath and leave the firewood as it was? Eat food without transforming it? Can any vital process take place without something being changed?"

<ul><li>Most small businesses fail because they believe that if they understand the technical work of a business then they understand a business that does technical work (e.g. just because you are a good carpenter, doesn't mean you understand how to start a carpentry business)</li><li>The key here is to ensure that you understand the inner workings of business before attempting to start one. If you have already started a business, you still have a chance to learn but that will require change!</li></ul>

Lesson 2: THINK DIFFERENTLY

"If your business depends on you, you don't own a business-you have a job. And it's the worst job in the world because you're working for a lunatic!

Every person who goes into business is made up of three different people These are<ol><li> The Technician, </li><li>The Manager, and </li><li>The Entrepreneur. </li></ol><ul><li>Each of us has different aspects of these personalities inside of us which we need to understand so we can make better decisions. </li><li>Balancing all three of these personality types is ideal and would allow us to be incredibly competent.</li></ul> These personalities are as follows:

Lesson 3: The three personalities

<ul><li>The Entrepreneur is always thinking forward and about the future. </li><li>This personality is the part of us that is constantly making strategies, innovating, thinking creatively, looking for opportunities (and occasionally wrecking havoc).</li><li> This also comes with the need for control of the things around them</li><li>CREATES THE VISION</li></ul>

The Entrepreneur

<ul><li>The Manager is the planner/ organiser. Always creating order and living in the past. Where the Entrepreneur sees opportunity and possibilities, the Manager sees the problems that will invariably occur.</li><li>Constantly chasing the Entrepreneur and cleaning up the mess left behind, the Manager is tactical and focuses on achieving results through others.</li><li>TURNS THE VISION INTO ACTION</li></ul>

The Manager

<ul><li>The Technician is the doer. Loving the hands-on work within the business</li><li>Not caring about thinking or ideas or multitasking, the Technician just wants to tinker and work, always living in the present</li><li>The Technician believes that all things need to be reduced to a method if they are to be of value</li><li>Ruminating is common of this personality type</li><li>DELIVERS ON THE VISION THROUGH VARIOUS SYSTEMS</li></ul>

The Technician

SYSTEMS?<ul><li>Systems are one of the most important aspects of your business.</li><li>Systems are a series of specific and explained processes showing how to carry out a task in detail</li></ul>WHY ?Systems are important for:<ul><li>Creating consistency</li><li>Increasing your business's value</li><li>Improving quality of work</li><li>Increasing efficiency</li></ul>RULES<ol><li>Always give consistent value to your customers and partners</li><li>The system should be able to be operated by low skilled workers</li><li>Order is required in all aspects</li><li>Document using an Operations manual</li><li>Provide predicable service to customers</li><li>Use colour schemes specific to your business</li></ol>

Lesson 4: SYSTEMS and Strategy

Important for anyone in business already or wanting to start one

An instant classic, this revised and updated edition of the phenomenal bestseller dispels the myths about starting your own business. Small business consultant and author Michael E. Gerber, with sharp insight gained from years of experience, points out how common assumptions, expectations, and even technical expertise can get in the way of running a successful business. Gerber walks you through the steps in the life of a business—from entrepreneurial infancy through adolescent growing pains to the mature entrepreneurial perspective: the guiding light of all businesses that succeed—and shows how to apply the lessons of franchising to any business, whether or not it is a franchise. Most importantly, Gerber draws the vital, often overlooked distinction between working on your business and working in your business. The E-Myth Revisited will help you grow your business in a productive, assured way.

personaldevelopment

Personal Development

moneyandinvestments

Money & Investments

An instant classic, this revised and updated edition of the phenomenal bestseller dispels the myths about starting your own business. Small business consultant and author Michael E. Gerber, with sharp insight gained from years of experience, points out how common assumptions, expectations, and even technical expertise can get in the way of running a successful business. Gerber walks you through the steps in the life of a business—from entrepreneurial infancy through adolescent growing pains to the mature entrepreneurial perspective: the guiding light of all businesses that succeed—and shows how to apply the lessons of franchising to any business, whether or not it is a franchise. Most importantly, Gerber draws the vital, often overlooked distinction between working on your business and working in your business.The E-Myth Revisited will help you grow your business in a productive, assured way.

Michael E. Gerber is a true legend of entrepreneurship. Inc. Magazine called him "the World's #1 Small Business Guru." He started over 40-plus years ago addressing a significant need in the small business market: businesses owned primarily by people with technical skills but few business skills, and no place to go to get meaningful help.

Michael E. Gerber

The E-Myth Revisited

These are a few snippets from ego is the enemy which got me thinking and writing. These were useful and actionable for me so will also likely be useful to others who share similar interests. I will first write out the quote in plain unedited format for those who don't care about what I have to say, but will add my own understanding in an idea below for those who would like to hear my view. enjoy

Quotes from 'Ego Is the Enemy' By Ryan Holiday

"What is rare is not raw talent, skill, or even confidence, but humility, diligence, and self-awareness."

Idea #1 - Learn to Learn

What I took from this was the realisation that my priorities were not straight because I was focussing too much on improving my so called "skills". This is not necessarily a bad thing, but while doing so I was not thinking at all about improving the traits that lead to being a person who actually can improve and grow. Having traits like Ryan mentioned (Humility, self awareness, etc...) are more important then just trying to improve in one specific area because these are traits that actually allow you to be a good learner and have the ability to grow and improve

Idea #1 - My Understanding

"Talk depletes us. Talking and doing fight for the same resources. Research shows that while goal visualization is important, after a certain point our mind begins to confuse it with actual progress. The same goes for verbalization"

Idea #2 - Talk less, Do more

This has been (and still sometimes is) a problem of mine. I would always talk about the new cool thing that Im starting to whoever would listen. This created real problems for me because this verbalisation of what I was doing (or planned to do) felt like actual progress to my brain. This meant that I felt less motivated to work and to take action towards the goal because In my mind I had already done so by speaking about it. In contrast, now I only ever talk about what I'm working on to 1-2 people who are closest to me. Unless I'm far enough into the project where I feel it is safe to share

Idea #2 - My Understanding

"The mixed martial arts pioneer and multi-title champion Frank Shamrock has a system he trains fighters in that he calls plus, minus, and equal. Each fighter, to become great, he said, needs to have someone better that they can learn from, someone lesser who they can teach, and someone equal that they can challenge themselves against"

 Idea #3 - Learn, Teach, Challenge

I agree with this fully. The biggest takeaway for me from this was an idea that has been drilled into me by various people and mentors. This is the idea of teaching - to learn. There was a study which proved this point where students who were asked to learn a topic with the intention to teach it to others did better on a test then those who just studied the topic normally. This is because when our intention is to teach, we aim to understand the subject fully instead of just memorising terms and ideas. This alone has allowed me to learn and actually understand, more then I could have ever hoped

Idea #3 - My Understanding

Some of my main takeaways from Ego Is the Enemy

The instant Wall Street Journal, USA Today, and international bestseller “While the history books are filled with tales of obsessive visionary geniuses who remade the world in their image with sheer, almost irrational force, I’ve found that history is also made by individuals who fought their egos at every turn, who eschewed the spotlight, and who put their higher goals above their desire for recognition.” —from the prologue Many of us insist the main impediment to a full, successful life is the outside world. In fact, the most common enemy lies within: our ego. Early in our careers, it impedes learning and the cultivation of talent. With success, it can blind us to our faults and sow future problems. In failure, it magnifies each blow and makes recovery more difficult. At every stage, ego holds us back. Ego Is the Enemy draws on a vast array of stories and examples, from literature to philosophy to his­tory. We meet fascinating figures such as George Marshall, Jackie Robinson, Katharine Graham, Bill Belichick, and Eleanor Roosevelt, who all reached the highest levels of power and success by con­quering their own egos. Their strategies and tactics can be ours as well. In an era that glorifies social media, reality TV, and other forms of shameless self-promotion, the battle against ego must be fought on many fronts. Armed with the lessons in this book, as Holiday writes, “you will be less invested in the story you tell about your own specialness, and as a result, you will be liberated to accomplish the world-changing work you’ve set out to achieve.”

books

Books

The instant Wall Street Journal, USA Today, and international bestseller “While the history books are filled with tales of obsessive visionary geniuses who remade the world in their image with sheer, almost irrational force, I’ve found that history is also made by individuals who fought their egos at every turn, who eschewed the spotlight, and who put their higher goals above their desire for recognition.” —from the prologue   Many of us insist the main impediment to a full, successful life is the outside world. In fact, the most common enemy lies within: our ego. Early in our careers, it impedes learning and the cultivation of talent. With success, it can blind us to our faults and sow future problems. In failure, it magnifies each blow and makes recovery more difficult. At every stage, ego holds us back.   Ego Is the Enemy draws on a vast array of stories and examples, from literature to philosophy to his­tory. We meet fascinating figures such as George Marshall, Jackie Robinson, Katharine Graham, Bill Belichick, and Eleanor Roosevelt, who all reached the highest levels of power and success by con­quering their own egos. Their strategies and tactics can be ours as well.   In an era that glorifies social media, reality TV, and other forms of shameless self-promotion, the battle against ego must be fought on many fronts. Armed with the lessons in this book, as Holiday writes, “you will be less invested in the story you tell about your own specialness, and as a result, you will be liberated to accomplish the world-changing work you’ve set out to achieve.”

Ryan Holiday is media strategist for notorious clients like Tucker Max and Dov Charney. After dropping out of college at 19 to apprentice under the strategist Robert Greene, he went on to advise many bestselling authors and multi-platinum musicians. He is the Director of Marketing at American Apparel, where his work in advertising was internationally known. His strategies are used as case studies by Twitter, YouTube, and Google, and have been written about in AdAge, the New York Times, Gawker, and Fast Company. He is the author is *Trust Me, I'm Lying: Confessions of a Media Manipulator*, which is due out in July. He currently lives in New Orleans, with his rebellious puppy, Hanno.

Ryan Holiday

Ego Is the Enemy

Create a start date that’s three to nine months in the future with clearly <a href="https://www.lifehack.org/articles/lifestyle/goal-setting-the-why-behind-the-what.html">defined goals</a> and actions for every month.Ask yourself:<ul><li>How much money will you need to bring in every month to cover your existing bills?</li><li>How many customers would that equate to?</li><li>Are you going to be content to match your current salary or can you take a decrease in salary to get you going?</li><li>Do you need a level of savings in place to take the pressure off?</li><li>Do you thrive on pressure, or does it make you shut down?</li></ul>

How (And When) to Quit Your Job And Start a Business

Ask the following:<ul><li>How will you pick up the phone and ask for the contract/business/feedback/reviews?</li><li>How will you have faith that people will come to you instead of the competition?</li><li>How will you have the guts to put yourself out there to win awards? Get in the media? Or attend networking events?</li><li>How will you stop hiding and go live on social media so you can create an interested audience ready to buy your product?</li></ul>Don’t scrimp on this action. You need to understand and monitor your confidence

Get Your Confidence in Check

Just because your Mum/Brother/Best mate said it’s a great idea, it doesn’t make it a business. Find out what’s available. Do your research now to help you determine your products and services, price points, customers, opportunities and threats, and even your brand and marketing.

Do Research Before Deciding on Your Products

How you will make yourself available to build a business? Because that ensures its sustainability, too. On average, you want about 25% of your time available to start your own business. However you manage your time, you must communicate your decision and ensure those around you adhere to those boundaries. It’s one of the biggest sources of stress in business owners—not making enough time to create the business they want.

Dedicate Enough Time

People won’t tell you that, at times, you’ll work ridiculously hard and have nothing to show for it. That can be soul-destroying.To combat this, know why you want to quit your job and go it alone. It’s not enough to say it’s because you want to make money and work when you want. You have to understand what motivates you.Ideally, create a thorough list of things that will make you motivated no matter what the task—on a dreary Monday when you’ve got a stinky cold and just want to crawl back into bed. This list is crucial.

Understand What Motivates You

What values matter to you most? Often, business owners who aren’t satisfied despite making fairly good profits and enjoying most aspects of business because they aren’t running a business aligned to their values.

Identify Your Values

If you had the perfect business, what would it look like?When answering this, if you don’t want to work Thursdays because you want to go to an art class, then write it. The big picture needs to address all areas of your life.There are too many business owners who have cracked excelling at business but failed to grasp how to win at life, too, so they still aren’t happy!

Look at the Big Picture

Before you go out looking for your first sale if you were at capacity, would your prices give you the profit you want?Don’t start with low prices and think you can put them up later. You risk having to find a whole new set of customers if you do this, so get the pricing right at the start. Can you see why confidence is so important?

Mind Your Pricing

Goals – What will your business look like in one, five, and ten years?Action – What actions have you planned to achieve your goals?“Now” goals – These refer to the short-term things you need and long-term achievements you want.Strategy – What is the strategy to achieve these goals?Vision – What’s the vision that your business will fulfill? What you want it to do for you and what you want it to do for your customers. Timing – When will you be able to quit that job? How many customers/sales will give you the profit margin you need?

Business Plan: Aspects To Check

Of all the things to keep an eye on, few know their numbers as well as they should: What are your basic profit requirements (i.e., what can you survive on?), good level of profit (business is sustainably profitable), and exceptional profit (money is available for investment in the business, rainy days—they do happen—or tax bills)?

The Profit You Plan To Make

It’s a well-trusted strategy to consider your Strengths, Weakness, Opportunities, and Threats(SWOT).  In addition, you must review and reflect regularly. It’s the first question I ask clients when we meet in the next session: What have you noticed? What has changed?

Have A SWOT Analysis

Did you know anyone can set up a business that says it can help you grow your business?They need no qualifications, they can just read some books, google some info, and set up programs and training for business.Things like Canva and Lumen 5 can make you look sleek and professional online (for free), but it also means you’ve easily duped into believing a pretty sales page or social media account.To avoid this, ask to speak to customers, not look at reviews. Anyone can write those, and the unscrupulous write them for themselves!

Shiny Does Not Make Brilliant

Communication is one of the defining issues for your new business.<ul><li>How will you communicate when you are unavailable so you can get on with working on your business?</li><li>What boundaries will you set? If you were with a customer, you wouldn’t answer the phone. People will easily drain your time if you let them, so set boundaries and communicate their existence.  </li></ul>

Find the Best Way to Communicate

You need a strong powerful marketing message. Once you know what you are selling, to whom, at what price, and with what desired outcome, then you need to hone your understanding of your perfect customers.Running a business you want to get to know, like, and trust people can make it awkward to have difficult conversations where you need to tell someone they aren’t delivering as promised or you need to increase your prices. Learning how to be comfortable with difficult conversations will help.

Your Message

Ensure you’re not reliant on your mates to spread the word. Define your market—your customers.  The more you define your customer, the more you know them.Then, ask what language they use and ensure that features in your marketing strategy. This is essential for the next key strategy.

Understand Your Perfect Customers

Social media can be a marketing strategy, but for the person looking to quit their full-time job, it rarely sits alone. Ideally, you will have eight to ten routes to market:<ul><li>Hold events.</li><li>Encourage online connection through social media, email campaigns, newsletters, and blogs.</li><li>Networking – definitely network!</li><li>Get in the local newspaper—for free, not paid!</li><li>Get on the local radio or a relevant podcast.</li><li>Google My business – ask every customer to post a review to GMB because it’s great for logistical businesses.</li><li>Publish your articles on relevant sites like Medium or industry-relevant sites</li></ul>

Social Media Is Not a Marketing Strategy

Question your thoughts, actions, and beliefs at all times. It’s often where you may find missed opportunities with clients.<ul><li>Are you following up as effectively as you could?</li><li>Are you assuming it’s too early to enter an award? It’s not!</li><li>Are you assuming that person has your best intentions at heart?</li><li>Are you assuming yes is the right answer? Go back to these key strategies and your business plan—does it really fit?</li></ul>

Always Make Assumptions

Reading these strategies to quitting your job, it can be all too easy to shut down to the idea—please don’t.Get the right support around you (not friends and family), get the right business model and marketing strategy, and ask for help.It’s scary to say “I don’t know the answer to this.” That’s why business (even self-employment) is better together—there are over 400 million small businesses globally, so please do join us.

The Bottom Line

Are you fed up with working long hours but not earning more no matter how hard you work? Here's how to quit your job to start a business.

career

Career

How to Quit Your Job to Start a Business: 13 Untold Tips

Motivation is something that comes and goes as it pleases. This means that waiting for motivation to strike to start working on something will result in very unreliable and inconsistent work habits.

Don't wait for motivation to find you

The way around this barrier is to utilise the motivation loop. This is a infinite loop which consists of -ACTION-INSPIRATION-MOTIVATION- in a continuous circle. To take advantage of this loop you need to take action (even when the motivation to do so isn't there) which, as per the loop, will then lead to inspiration then motivation and so on.

Find motivation yourself

Do the hard work... especially when you don't feel like it

Acting in this way will drastically improve feelings of motivation in your life and in doing so will allow you to work not only longer and at a better standard but you will also feel more satisfied about yourself and your work

Benefits of Acting Prior to Motivation

Using this method I am able to reach my goals/ things I want in life much faster due to one less thing holding me back

Understand yourself and those around you.

psychology

Psychology

motivationandinspiration

Motivation & Inspiration

habits

Habits

Finding Motivation

"I can understand wanting to have millions of dollars, there's a certain freedom, meaningful freedom that comes with that. But once you get much beyond that, I have to tell you, it's the same hamburger."

"I thought back on my running career at Oregon. I'd competed with, and against, men far better, faster, more physically gifted. Many were future Olympians. And yet I'd trained myself to forget this unhappy fact. People reflexively assume that competition is always a good thing, that it always brings out the best in people, but that's only true of people who can forget the competition. The art of competing, I'd learned from track, was the art of forgetting, and I now reminded myself of that fact. You must forget your limits. You must forget your doubts, your pain, your past."

"We don't build services to make money; we make money to build better services."

"Failure is an option here. If things are not failing, you are not innovating enough."

"What I love doing is creating things I can be proud of, and if you create things that you can be proud of, the byproduct of that can be that you become a millionaire or you become a billionaire, because people like what you've created."

"I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out."

What better way to get a glimpse inside successful people's heads than to study the wisdom they've already imparted?

6 quotes from self-made billionaires that will change how you think about money and success

There's no single right way to get started or build a business. Timing, luck, and grit often play an outsize role. However, we can learn from how the best entrepreneurs went about building their companies.

How to know when an idea is promising

<ol><li>Market first: Start with a market or space that you find interesting, then look for a specific problem.</li><li>Experience ripe for improvement: Look for areas where you believe there should be a better consumer experience and iterate from there.</li><li>Problem first: Start with a problem you’ve experienced firsthand, then find out if enough other people have the same problem. </li></ol>

How to come up with an idea

If you have a market in mind, talk to people in that space to better understand their experiences and challenges. Look for a pain that is so bad that customers will try almost anything to solve it. For example, Christina Cacioppo, CEO of Vanta, discovered that SOC2 - the way a company needs to prove its security competency, was a major pain point. While security consultants can offer help, people wanted an easier solution.

Start with a market/space first and look for a problem

When you're at the idea stage, it's easy to throw ideas around and poke holes in them. Don't do this. All ideas are flawed, you're limited by what you know, and it's hard to get honest feedback when you're talking through hypotheticals. Instead, get out into the market, have conversations, and test early models.

Finding an idea

First build a MVP (minimum viable product) to test with potential customers and validate that people want the product. For Christina at Vantra, she knew they were onto something when people proactively reached out to ask about what she was building.

Validating the idea

<ul><li>Don’t rush into just starting a company—wait for the right thing to hit you personally, emotionally, and logically.</li><li>If it feels like you’re pulling teeth to find the pain point, you haven’t found a problem worth solving.</li><li>Be sure to validate the pain points for each persona you’re targeting.</li><li>Build prototypes and test your early ideas on real customers.</li><li>Don’t build a complete product until you’re feeling a real pull from the market. </li><li>Figure out who you can sell to most easily, and start there.</li><li>Develop a product that unlocks revenue for your customers.</li></ul>

Quick startup tips

<ul><li>Asking the wrong questions. Ask people about their past and current actions and problems, not to predict their future behaviour.</li><li>Settling for a "nice to have" reaction from early customer discovery. Instead, search for a big problem and solution.</li><li>Not having enough conversations. You need to start new conversations until clear patterns and themes emerge.</li><li>Selling a vitamin, not a painkiller. Painkillers are a “need to have”. while vitamins are a “nice to have”. Classic painkiller products include Google search and Mailchimp. Vitamins include Google Glass and CNN+.</li></ul>

Common traps to look out for

<ul><li>Take time to appreciate the small and large wins.</li><li>Document your metrics and share them with your investors and advisors.</li><li>Keep updating your roadmap and goals, so your team knows where to focus their efforts.</li><li>Carefully expand your team. Ensure to build to company culture you want while keeping an eye on your burn rate and cash reserves.</li></ul>

What to do once you have validation

Lessons learned from Flexport, Vanta, Rec Room, LaunchDarkly, Pinwheel, Snackpass, Good Dog, and Cocoon—a guest post by Todd Jackson

How to validate your startup idea

Nurturing relationships with your customers is a crucial part of growing a successful business.In this age of automation,caring for your customers has never been more important.At any moment,an unhappy customer can share their opinion with the masses through social media and the web and negatively affect your business.That's why it's even more important than ever to create an excellent experience for your customers to help develop your companys relationship with them into loveCreating love between your company and your customers can help scale positive word of mouth that's absolutely priceless

Intro...

"Do what you do so well that they will want to see it again and bring their friends."

Happy customers who get their issue resolved tell 4 to 6 people about their experience. So that's a way to significantly influence the word of mouth about your business. Don't act as a nameless or faceless business; genuinely talk with your customers as a person representing the business. Address your customers by name, and tell them your name at the very beginning of your interaction.Talk to your customers as you would in person, not like you would in a press release.

1. Treat your Customers Right - Genuinely Interact

A third of consumers say they experience rude customer service at least once a month, and 58 percent of them tell their friends. This is exactly how word of mouth can work against your company's reputation for the long term. It's very important to be respectful of a customer's mood when trying to resolve an issue they have with your company.Keeping your patience is key to giving your customer the time to air out their issue. And, in turn, it creates the opportunity for you to help resolve the issue and make them comfortable.

2. Don't Come on Too Strong - Respect Your Customers 

At a time when it's easy to have a two-way dialogue with your customers, it's important to truly listen. When listening to your customers, take into account what changes your organization should make from this feedback, and then follow through. Your customers are the lifeblood of your organization, and not dealing with the reasonable requests could cause backlash.Use the following methods to gather feedback from your customers:<ul><li>Surveys</li><li>Focus Groups</li><li>Observation</li><li>Point of Sale</li><li>Customer Service</li><li>Social Media</li><li>Communities and Groups</li><li>Email and Web Forms</li></ul>

3. Always Listen - Hear What Your Customers are Saying

It takes 12 positive service experiences to make up for 1 negative experience. This is how sensitive trust is between a business and its customers. No matter your size, keep your customers in the know when it comes to positive and negatives changes to your products and services that affect them. It's crucial to tread lightly when making changes to your products and services because your customers have become accustomed to what you've already got.

4. Build Trust - Alert Customers to Large Scale Changes,Good/Bad

Here's what to do to gain trust:<ul><li>Heavily research whether changes to your company could alter public perception.</li><li>Be methodical in how you communicate the changes to your product and services.</li><li>Tell your customers when you've made a change, you've screwed up, or you've done something right. A healthy mix will give your customers a transparent look into your company that can't be forged.</li><li>Find value in the feedback about your company changes.</li></ul>

Gain Trust

Being transparent in the digital age is a must. Much like the principles discussed above, transparency is a critical factor in building trust, satisfaction, and love from your customers. What does it mean to be transparent?<ul><li>Transparency means that you are not afraid of feedback.</li><li>Transparency means that you have nothing to hide.</li><li>Transparency means your employees' personal and work persona blur.</li><li>Transparency means you like to have conversations with your customers.</li></ul>

5. Be Transparent - Honesty is Crucial When it comes to Mistakes

Making a business is not that tough, but standing out from the competition becomes difficult when customers does not fall into your business. This all idea is about how can customer fall in love with your business...

At any moment, an unhappy customer can share their opinion with the masses through social media and the web, negatively affecting your business. That's why it's important to create an excellent experience for your customers to help develop your company's relationship with them.

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Marketing & Sales

5 Ways to Make Customers Fall in Love with Your Business

Why do some products, companies, and social programs thrive as they grow while others peter out? There are five causes: 1) False positives, or inaccurately interpreting a piece of evidence or data; 2) Biased representativeness of population, or not making sure your samples reflect the larger population at scale; 3) Non-negotiables that can’t grow or be replicated; 4) Negative spillovers, or unintended outcomes; and 5) Cost traps.

The Challenge Of Scale

When a seemingly promising idea loses efficacy or profitability as it expands, we call it a “voltage drop.” These failures to scale never happen because of one single reason.False positives occur when you interpret a piece of evidence or data as proof that something is true, when in fact it isn’t — the inaccurate Covid test results. For scaling, a false positive is an erroneous sign that an idea has voltage when it really doesn’t.When possible, the solution for rooting out false positives is to have at least three independent replications of the idea that show early promise.

False Positives 

All ventures must understand their potential audience. The first way to do this is by making sure your test samples in the small scale reflect the larger population at scale.  To weed out biases, make sure your early adopters are a random sample. You should also make sure that your survey respondents have appropriate incentives to tell you the truth. A focus group participant who says they would purchase a product if it was introduced could simply be saying, “I would love the option to consider that product in the future,” as opposed to “I will be purchasing the product in the future.”

Biased Representativeness of Population

For an idea or enterprise to hold strong at scale, you need to know whether your “non-negotiables” — the drivers of your success — can be replicated at scale. You can’t afford all the talent you need as you grow, so you hire fewer high-performers and quality suffers at scale — a cruel voltage drop.As you scale, regulatory constraints, resource constraints, fidelity concerns, and a host of other issues might arise. We must bring these scaling constraints back to the petri dish and make sure the idea works with them in place.

Non-Negotiables That Can’t Grow or Be Replicated

A spillover effect is the unintended impact one event or outcome can have on another event or outcome. A classic example is when a city opens a new factory, and the air pollution it produces impacts the health of nearby residents.As you scale, the likelihood of spillovers increases dramatically. General equilibrium effects, or natural readjustments of the market, are one chief cause.When designing your idea early on, you must anticipate negative spillovers and look for opportunities to engineer and benefit from positive ones.

Negative Spillovers

To scale successfully, you need to determine not only how many people like your idea, but also what they’re willing to pay for it and, crucially, how much it will cost to provide.<ul><li>One strategy to escape the cost trap of scaling is to make sure you benefit from economies of scale, a skill Elon Musk excels at in all his ventures.</li><li>Another strategy is to create models that don’t rely on top-tier talent. As you scale, finding and paying high-performers will become prohibitive. The solution is to create products that can give their full value to customers even with average performers delivering it.</li></ul>

The Cost Trap

Happy families are all alike; every unhappy family is unhappy in its own way.

Just like Leo Tolstoy's quote, scalable ideas are all alike; every unscalable idea is unscalable in its own way. The difference with scaling is there are only five main obstacles you face. And once you anticipate and avoid them, you can scale your idea for the highest voltage possible.

Why do some products, companies, and social programs thrive as they grow while others peter out? According to the author, there are five causes: 1) False positives, or inaccurately interpreting a piece of evidence or data; 2) Biased representativeness of population, or not making sure your samples reflect the larger population at scale; 3) Non-negotiables that can’t grow or be replicated; 4) Negative spillovers, or unintended outcomes; and 5) Cost traps. Here, he explains and offers examples of each cause, as well as how to anticipate or avoid them.

Why It’s So Hard to Scale a Great Idea

University friends Kadar and Jendruszak began developing what would become Seon while working on a crypto exchange venture in 2015 that was targeted by a slew of fake accounts. To stop these attacks, they built their own solution to detect false accounts and quash fraudulent transactions. That became Seon, which they launched in 2017.  “For the past couple of years we’ve tripled our revenue year-on-year, and have been onboarding new clients and expanding like crazy into new markets,” says Jendruszak. In the next 12 months, Seon plans to increase its headcount by 150 people in total, doubling its teams in London and Jakarta, adding another 80 to 90 people in its founding location Budapest, and doubling its team in the US.

‘Crazy’ growth

Hungarian-founded Seon just picked up $94m from Hopin-backer IVP to fight fintech’s biggest problem: fraud.

Meet the fraud-buster that Revolut, Wise and Sorare trust

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