I’ve been running a relatively unknown SAAS startup that launched publicly about 13months ago. The software itself took about 2 years to develop before launch. I have a co-founder and 1 intern that helps out occasionally. The business is bootstrapped – we haven’t taken external funding. My partner and I financed the business with money from side gigs.
We are currently doing ~$400 USD monthly and we’ve grown at >75% quarterly since launch. Our biggest expenses are phone calls and internet, as we collaborate remotely. Monthly expense sums up to about ~$250 USD monthly.
On prospects of the business, my personal assessment is that there is a market for the service and interest is high, but certain issues are slowing down adoption. We get an average of 3 leads daily and a lot of these leads verbally agree to adopt our solution but never quite get to it and their reason is always that they’re busy running their business. Which is funny because the issues keeping them busy is what our product solves, but the problem is they need to invest some time and effort in adopting our solution before they experience the productivity gain. So it’s more work before less work. And since we are relatively unknown, with no reputation, they might be worried about investing the effort only to find out it doesn’t work well enough for their business.
I believe if we had more money to support these businesses through the onboarding process we could significantly boost our conversion rates, but I can’t be too sure as it is always very easy to assume the solution is more money.
I fear I may be slowly growing depressed because even though >75% quarterly growth might seem good, at this rate we will likely still not be making significant money in the next 5 years. Especially considering it is easy to get high percentage growth when your business is very small.
I am beginning to question if I should just quit, forget the 3+years invested and go start afresh doing something else.
I worry those around me are not experienced enough about these things, and only tell me we’re doing OK to keep me from going depressed. Which is why I decided to ask here. I need honest brutal assessment/advice on this business, and I am prepared to answer questions about the business as long as I can remain anonymous while doing so. Should I quit? Try to raise money? Continuing bootstrapping? Or just kill myself? LOL
How much turnover does your typical customer profile make?
How much can you save (or make) realistically for your customers within 3 months?
Ballpark figures only. The reason for the questions is that it in Nigeria, it often takes the same amount of time to close a higher value deal so it makes sense to choose richer customers. Secondly, if your product competes with Excel or pen and paper, you will find that customer inertia is your biggest risk. In such cases, it helps to create some urgency around your product and the best urgency is a clear indication of how much they are leaving on the table by not using your product.
So it’s more work before less work.
Does this “work” involve human capital development i.e training?
How much of this work can you offload off your customers e.g data entry / digitisation work?
As you know, the more vested your customer is in your product (financially or data wise), the better. One big problem that you didn’t acknowledge is the potential of your existing revenues evaporating away leaving you in the cashflow spiral of death. As long as you have steady cashflow to keep you alive, you will still have options so it makes sense to try to help your customers cross the chasm, so to speak. To use the common mantra - “at the early stage, do things that don’t scale”.
On your final questions
Should I quit? Not yet
Try to raise more money? Not until you are confident in your sales and onboarding process. I know it is a chicken an egg situation, but if you focus on retention and engagement of existing customers, as opposed to growth, it may become clearer.
Continue bootstrapping? Yes but spend a few hours a week building relationship with potential investors and advisors. Those relationships will hopefully germinate when you are ready to raise.
Or just kill myself? Sure why not. Reroute the $400 per month to me first
I would say continue bootstrapping and talk to a mentor working in similar space, perhaps, maybe you need to change something (e.g. the way you approach potential customers?). Is there any other cheap solution to your onboarding process (e.g. set it up for them on their behalf)?
I don’t want to quit. I just don’t want to invest more time into the business if our current growth rate is indicative that the business isn’t viable. Better to quit and try something else now that I still have a few years of youth left, than spend my youth toiling only to end up a bum.
I have searched and I can’t find data on enterprise SAAS startup growth in emerging markets, if I could I would have used that as a benchmark to assess how we are doing. The Enterprise SAAS growth numbers I could find are from US companies and all I could find that succeeded had over 500 paying accounts, not seats, in their first year. The truly impressive ones got tens of thousands.
As for what I would do if I quit this, I haven’t figured it out. The news I hear about most Nigerian/African startups isn’t encouraging. So starting another business doesn’t appeal to me ATM, especially if this fails cuz I totally believed it was guaranteed to succeed when I started. The only thing that comes to mind when I think of alternatives is travelling abroad to further my education and never returning till I gain citizenship.
We charge $5 monthly per seat, average customer has 3-4 employees that need access. So our monthly charge per customer is about $20.
A typical customer makes a few millions monthly.
Difficult to estimate that. We basically automate their processes so the savings is in manhours, fraud prevention, money spent on purchasing and storing paper records, etc.
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Yes, the employees need to be taught to use the system. We have chat support built into the app and that is how we’ve been training users. The system is simple/intuitive so anyone can figure it out without being taught how to, but we find that a lot of employees just assume that it has to be difficult if it is software. So a lot of them don’t bother to try it out unless the business owner forces them to. In a lot of cases the business owner is not involved in the day to day running of the business, so their employees just “park it one side”. Sometimes when the business owner finds out they’ve not been using it some of them will even lie that it doesn’t work well even though they never used it.
The good thing is those that get into using it never stop. We’ve only lost 2 customers since we started. We lost our first customer we used to test during development cuz they insisted on having it offline and we couldn’t fix issues fast enough because we had to physically visit them to resolve issues. We also recently had to disable a customer that backpedalled on our agreed price after the 45 days trial. We could have renegotiated but we decided to use the customer to test how important the software is to them. We wanted to see if they’ll go back to pen and paper after using our software. It’s been 5 weeks since we disabled their account, no word yet from them.
As for how much work can be offloaded from customers, I think the major task is initial data entry of medical records and training of users. I don’t think we need to necessarily help them enter records, I just think we need to be on-site to supervise and support them for a few days while they get used to the new system, after that we can continue with online support. But the one investor I have spoken to did not like that idea and lost interest when I suggested that. The investor said it is unscalable and if we need to be on-site it indicates we have a poor product. BTW, the primary reason I approached this investor was not for the money, but I wanted an experienced third party to assess the business.
In Africa, the money for enterprise software is in the Oracle model of custom desktop software with recurring fees for on-site maintenance. Online SAAS has not yet picked up in these parts. Unfortunately following the Oracle model in Africa needs connections with the high and mighty in big companies, and/or money to bribe for the tenders. If you have those connections, then try to develop a desktop app with similar functionality and sell it locally. If that’s a challenge, another route you can try is to market it globally. If it’s as sticky as you say it is, in this bad African market, maybe more mature markets would appreciate it even more.
it seems you are in the EHR(electronic medical record business).if i am correct
I am not an expert but i will will give you some tips
Please dont give up, building a business is hard everywhere but it takes time,patience, persistent and determination to succeed.
Have you compile list of hospitals in your location,try doing it your self, go to hospitals around you and tell them about your service,explain to them about your services,the benefits, you can offer to help them put all records into your system for free,offer the free service for 3- 6 months then when they see the usefulness of your service and cant live without it ,you convert them to paying clients.
you need a physical person on ground to train one person or two staff of the hospital,explain to him or her,how the system works,make sure there is an open communication between the two of you.every staff wont have the patients to learn the process or use the chat system,train one or two persons to do the job,he will be the point of reference for every staff.
imagine if you call and visit 2 hospitals per day explaining to them about ur startup
1 person = 2 hospitals per day * 5 working days=10 hospitals in a week*4 weeks=40 hospitals per month
there is power in numbers if you and your intern go out and visit hospitals, in a month you might have visited 80 hospitals and maybe 40 will be interested,you need to bring them in for free that way they see the usefulness of your system,depend on it and start paying.i hope you not charging in dollars ? charge in naira ooh ,it helps alot.
This is spot on. You seem to have done this before.
This is currently my biggest worry and the reason I am in distress. Wasn’t something I initially anticipated. It befuddled me that customers we have convinced about the benefit of our services, who seemed very eager to start, and whom we have set up everything for will keep postponing usage for months. Our problem at the moment isn’t finding customers, but customer inertia.
We actually charge in Naira, I converted to USD. Also finding customers is not a problem, we have gotten well over 250 customers to say yes to us, but we currently have only 23 paying customers. The bulk of them sit idle without commencing usage.
Thank you for sharing this. I’m always happy to see people in the B2B SaaS space. When we started Prowork about 5 years ago, there was hardly anyone interested in the space, and so like you pointed out there’s little local information to reference in this kind of scenarios.
I don’t have the specifics of your business and Prowork’s clients are most probably from industries different from yours. However in these few years we’ve come to learn some things along the way that you might find helpful.
SaaS and process improvement tech is not yet mainstream in Nigeria.
Reduce your CAC or increase your price per seat (unit economics) if you want to keep cash flow positive.
Your better customers are (medium) businesss already paying for tech licenses that want a better option, not the easier sells that you have to train.
Consider a licensing option of your software that goes for >1000x the cost of your monthly subscription and find a partner that can manage the sales process end to end.
People buy from pople they trust, if you find someone they trust to sell to them for you, you’ll be happier.
If applicable, focus your SaaS efforts in other economies not Nigeria.
Your Nigerian SaaS revenue effort should focus on annual billing and utilize automated recurrent billing for clients billed monthly, the effort/cost to call clients monthly is not worth it.
In a B2B startup it is important that you dont see investment as a lifeline, raise money intentionally for specific needs that can provide 10x value for the same effort you’re putting now.
Your better local B2B investors will invest in ~ 3 months, and they have access to opportunities and network to distribute your product. B2B SaaS investors are not plenty in Nigeria. Don’t let investors keep you waiting for more than 3 months. Move on. You need to put that time in your business. We wasted almost 2 years on that front.
While you remain bootstrapped and unprofitable, the team will have to decide togetherwhich cereal they’ll sell (ref AirBnB) in order to keep body and soul going.
Make sure the team always agrees on side gigs together and be clear why you are embracing this distraction and when to cut it, if you want to remain together.
Side gigs that offer your product as a part of a service are the best, and can provide you with valuable learning points on how people use your product and what features could be must haves.
I don’t know if any of these helps but I’d like to encourage you to take this as far as you can and ask for help strategically and frequently.
A lot of local B2B SaaS startups are ahead of the market curve and even face competition from established global players and so end up dying from the drought or suffocating from the competition but who knows your day in the sun could be just around the corner.
Good luck! You need it.
NB: It would be good if we had a small offline forum for B2B startups to share their adventures and network.
[quote=“unemployed, post:1, topic:14908”]
I need honest brutal assessment/advice on this business
[/quote]
The thing is, most of the people you’re getting advice from have little or no insight into the Nigerian Healthcare Market. The only way you understand this market is from long-term experience. Even if you like have an MBA from Harvard…
2.[quote=“unemployed, post:1, topic:14908”]
Should I quit?
[/quote]
‘Quit’ is not the right word. At 13 months, you just started and you should be having your welcome ceremony. First get advice from the right people on product development, and if afterwards you still don’t have enough revenue to sustain the business, then ‘pivot’. That’s the right term. Sorry you spent 2 years developing the product but don’t be too romantic with it. If you’re a true entrepreneur, you must have a thousand ways to solve the same problem with or without the same product.
3. [quote=“unemployed, post:1, topic:14908”]
Try to raise money?
[/quote]
I hope you’re talking about debt finance (like a bank loan) because no investor will fund your business. Like you’ve already been told, it’s not ‘scalable’. What that means in investors’ lingo is not that you can’t grow or expand but that you can’t ‘exit’ with enough ROI for them.
4.
Yes, this is your best option but based on what I mentioned in the last point above - redevelop the product with market insights. You don’t have a problem/solution fit yet talk less of product/market fit - reason you’re having low conversion. And you’ll keep getting customers who are interested but they’ll never convert - it’s pretty common even in B2C healthcare in Nigeria. But the moment you have a product/market fit, everything changes dramatically.
5.
No. You’re probably isolating yourself by trying to be anonymous (which I’m surprised you’ve not realized that’s not really possible in this age). Get support from entrepreneurs who are in the same market with you. They don’t only feel the same pain, they also understand the market and will give you the right info/data you need.
This is true tho…Considering there are not a lot of successful SAAS startups in these parts. The few we do have are not very open about their challenges.
I would have agreed with this if we have had people abandon it after trying it out. Which hasn’t happened.
I was joking about the kill myself part tho.
I am not so much concerned about anonymity as I am about deniability. As for networking with SAAS founders, there is not a lot of them walking about. A lot of them are here anyway, but few will admit to having problems much less share their experience dealing with these issues.
One thing I have learnt working in Nigerian Tech is that our major problem isn’t internet or power. It is Education. There is still a lot of subtle misconceptions the average Nigerian/African has about the accessibility and usefulness of tech solutions. There needs to be a fundamental paradigm shift in the way we view technology. That can happen one of two ways. We can wait till the current generation of leaders, not just political leaders, die off, and millennials take over. Or the tech/startup community/businesses can invest more in education. Education is more important to the bigger picture than fancy offices and news about acquisitions.
If things aren’t moving fast as you would have hoped for, if you’ve exhaust all possible options to go boom with the product and its still not, if you’ve tried raising a round and its not looking good, if you’re running out of cash
Start looking for another company to acqui-hire your team and some assets
Quit and start something new that you’re passionate about in parallel while
working with another company to get you financially stable
Keep pushing but be warned (You will be depressed! and might become homeless)
Speaking from experience
And when work is all that defines you, you will feel like you’re dying when it starts to disappoint.
