Pre-Seed Sales and Operational Bottlenecks
Key Processes for Pre-seed Startups:
The bottom line is making money as soon as possible. Putting that sales process in place is really, really important. Having a profitable product, having the ‘when’ to deliver it, having some marketing that gets you some calls, and then closing those calls through a sales process is what you absolutely need.
When should you raise money versus when should you build product?
My belief is always: go out and MVP your product - get people to start using it as soon as possible and then based on that you can build whatever mechanisms you need to actually get investment into your business.
What process should startups follow to determine the key metrics they need to monitor for growth?
They’re pretty much all the same for most B2B and B2C companies. B2B is going to be: what’s your list size? How many leads do you have? How many calls or demos do you book per month? How many sales do you get? How is customer delivery? Are your customers referring people? Are they upselling into higher-ticket products?
For B2C it’s going to be: How much website traffic do you have? How many of them are signing up or adding to cart? How many of them are purchasing? How is product delivery? Then re-sell, upsell, referrals.
You want to measure those 5 metrics. Each business will have its own individual KPIs that they need to monitor. As you start monitoring things, you can assign them to your employees, and then they have to be held accountable for them. That’s how you’re going to build up a team internally for those metrics.
The key is to measure less not more, especially in the beginning because just getting the numbers together at that stage can be a nightmare.
What sales software/ tools should you use?
None. I hate them. Use a google sheet.
Everything’s getting in your way. As a founder, you have too much to do, too many things to track, too many tools to get into. Just take a google sheet, put names in there, and follow up with those names. You can do some magic in there - you can have pipeline numbers and all of these things, but the simpler you make it the better.
Eventually, as you scale up, you can get a CRM, but I’ve scaled businesses up to a million with just google sheets. If you’re below a million - you can do it that way as long as you can keep it really clean.
Really, any CRM is fine - but If you don’t have the discipline to just keep staring at the sheet, not having anxiety about the sales, to keep looking at the names, to keep following up with the names - then you’re not going to use the CRM either. It’s not going to solve your problems- you have to solve the problems.
What if leads to sales generation is okay, but operational matters become a bottleneck to fulfilling sales and sales are slowing down?
That’s a common thing that I see, founders that grow too fast can’t deliver fast enough. Mental models are really good, hiring way way way better is super important, simplifying your business and abstracting your process is really important at that stage. Having a process-driven approach to fulfilling sales is important.
Most of the time, products or companies are just doing too much to get a customer to a desired outcome and that’s what causes the operational overhead - what’s cool is when you start analyzing your profitability and really looking at your business and how to make it profitable long-term you have to simplify it and make it cheaper- so you’ll naturally start cutting out a lot of that waste that goes into delivery.
Most of the time operational matters are a problem in your head versus what’s actually happening. You can actually 2-3x your output if you really wanted to, but you have this mental block on what you can actually get done in a day, what your team can get done in a day, how you can make them more productive, etc...