Instigator Blog

A whackload of trouble. (See, I answered my own question!)

As 2008 comes to an end you should be well on your way to planning 2009. And what a year it will be! The economy is in shambles, it’s getting harder to raise capital (and it was already hard!) and customers are freezing budgets. 2009 won’t be the prettiest year ever.

And SaaS (Software as a Service) vendors have to be very careful in their planning and rigorous in their execution of what will most likely be some very difficult plans. Companies will have to cut somewhere, and take a hard look at each employee, business strategies, pricing, etc. Basically: Look at everything.

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Howard Lindzon recently spoke at the Startup Empire event about why it’s not a good time to start a company. Thankfully and importantly, his presentation was very practical in nature, answering specific questions that many startup entrepreneurs should be asking right now.

Howard touched on three things that are critical:

• startup valuations
• business models
• social leverage

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I’ve argued before that startups need mentorship more than anything - practical, hands-on help from more experienced entrepreneurs, investors, executives, etc. That’s even more true now, given the tough times many startups will face. First time startup entrepreneurs in particular, who might not have gone through the last crash, are not adequately prepared to handle things. “Cut, cut, cut!” is not practical, helpful advice. It’s tantamount to yelling, “The sky is falling!” Not useful.

“It’s going to be hard to raise capital.” = Not Helpful.

It was always hard to raise capital (contrary to what we might have seen coming out of Silicon Valley). It’s certainly harder, but not impossible, and stating the obvious doesn’t help.

Equally, presentations that talk at a high level about why it’s actually a good time to start a company don’t help either.

Startup entrepreneurs need mentors.

They’re hard to come by, but I believe in their necessity more and more each day.

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Deciding on pricing for a software product is never easy. There are a lot of variables and unknowns. There are certainly no guarantees. But there are some fundamental things to look at when deciding on how to price your software product.

1. Frequency. One of the first major decisions you have to make is on frequency. How often are you going to charge customers? What is the model? These days, most software is sold on a subscription basis - Software-as-a-Service - either monthly or yearly. But there’s still plenty of software that’s sold on a one-time basis, with the possibility of charging for future upgrades.

   If you decide to go with a subscription model, you then need to decide whether or not to offer yearly pricing. It’s great for cash flow, but often less appealing to customers. A lot of software companies offer monthly and yearly packages, with incentives to secure long-term relationships. There’s no right answer. Each has its pros and cons. The most important thing is to keep the pricing simple. Don’t overwhelm with options.

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November 11th, 2008
Comments

In this tough economic climate raising capital is going to be even harder. It was already hard (for most people), and venture capitalists or holding the purse strings tighter than ever. With that in mind, it’s the perfect time to improve your pitch. A bad pitch will kill you each and every time; and it’s even more important at this stage to keep the doors from closing in your face.

Startup Camp Montreal - organized by the good folks at Embrase - is an opportunity to get on stage, in a relatively friendly atmosphere amongst friends and peers, and do your pitch for raising capital. There are judges as well, venture capitalists, angel investors and others, that will critique your presentation, ask tough questions and generally … help you out.

They want more startups to apply - and I would encourage you to do so. All you have to do is list your company, and get in touch with them. It’s a good environment to test out your pitch, get honest feedback and improve.

Here are the Startup Camp details:

Date : November 27th, 2008
Time : 6pm to 10pm EST
Location : SAT - Société des arts technologiques
Address : 1195 Saint-Laurent boulevard, Montreal Google Map