An IT start-up that developed a product to conduct online exams for schools & college students, landed up in a mess soon after the product was launched!
Guess what went wrong – Customers wanted a product with inbuilt question banks that can be used readily. But he has developed a product where customers can upload their own questions.
He soon realized that it costs a bomb to build question bank for all courses & all curriculum and is something beyond his reach.
Soon he ran short of funds to market & sell.
As an IT product start-up, nearly 80% and above of your initial time might go into product development. It is likely that innovative ideas take longer to conceptualize, code, test and deliver to client.
Mostly by then there is someone already out there in the market with a more or less similar product. So your sales pitch starts with a defensive note, drawing comparisons rather than command a premium for your idea!
Worst, when your product isn’t tested in user environment – Defects, poor usability and complaints will keep you busy.
Even worst, you don’t find enough customers!
The real key for start-ups is to keep their initial operational overheads low and ensure that there are sustained cash-flows within few months of formation, rather than wait for years to develop and roll the product.
So offer your idea as a SERVICE to your customers rather than a PRODUCT… another way to consider Software As A Service!
As an entrepreneur, you may not really like the idea of going to customers with simpler and smaller versions of your ‘dream’ product and that too subsidizing it as a service. Sure, you have a point.
But the real value for you to run with this model, is to develop your dream product side-by-side as you deliver modules to your clients and instantly get them tested. In the example of online exams, the module for users to upload their own questions is something for which customers were not willing to pay and could have been built much later when there was demand.
Cash on hand allows to hire good resources and not shave corners where not needed. In other words, your customers funds for your product development.
So in a nutshell, don’t start any development activity before you find a client who is interested in at least some piece of your idea and wants it immediately!
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