5 Lessons I Learned From Building a Profitable Software Services Business
I started my first business over twenty years ago to prove a point. I grew tired of MBA’s telling me what to do when they knew nothing about technology.
They simplified the engineering process, and it made me sick. So, I decided to take my own risks. If I was going to be a victim of bad decisions, they would be my own horrible decisions.
Back then, I survived on the people I knew. I’d called friends to let them know I had time, and I’d land projects. It’s a typical way to start a business, but early success can be deceiving.
My initial focus was maximizing revenue so that I could pay myself. I began to accept deals that weren’t an exact fit, but I could do the work. I reasoned that I needed to take whatever now and think about the business mechanics later.
One awkward deal at a time, I made money. Projects got larger, so I hired a team. Because I had moderate success, I repeated the process continuing to pile on new work.
My journey would prove to be lucky happenstance. Too much TV and quick fix videos convinced me to make money, rather than build a business.
I bet you can guess by now, that I made it harder because I didn’t build a business. I found a way to make money using a skill, but this was far from a Henry Ford story.
When you make a little money, it’s easy to look past business fundamentals. It can take years to find that your luck has run out. You need to go back to the drawing board and do the hard work of making a business.
I’ve built two successful businesses, and I’ve shared some of my personal pain. If you take the time to hone your idea into a real business, there’s no doubt it will work out for you.
Engineer The Sales Process
If I could pick one word that’s a must for a business, it's sales. You can consume oodles of internet stories about content marketing and digital transformations. But the bottom line is, someone has to buy your services or product.
If you want your business to soar, sales are the jet fuel. Build it and they will come, is a fallacy. There’s no point in receiving social media likes if you don’t have a viable business.
The truth is figuring out how and what to sell is challenging. It’s a process that can take months of banging your head against the wall. I’ve learned that failure is part of the process.
My mistake was trying haphazard processes and five-minute YouTube videos. I convinced myself that I could watch a video, then try some random technique the same day. I had a shotgun sales approach with little to no structure. My ad hoc process yielded some success, but it wasn’t sustainable.
You can get far by landing projects here and there, but creating a solid sales process is an uphill climb. It takes work. You must craft a mission and vision and marry that with a process.
To realize your dream you need a systematic, methodical approach. Your dream isn’t enough, and a dream without a plan is a nightmare.
It’s counterintuitive, but you can struggle because of the things you don’t do. Your list of friends and passion won’t be enough. You need much more.
Here’s a list of things I didn’t do the first time:
- Sales pipeline — Your sales pipeline tells you how many open deals you have. My first pipeline had all my friends’ names in it
- Profit and loss statement — Logging into the bank account each day is no way to manage company finances. You need to project revenue based on a repeatable process.
- Sales process — You need a systematic approach to turning prospects into customers. A good rule of thumb is to approach sales as if you are training someone that is not you to sell your services.
- Sales training — I learned to respect the craft of sales. It’s not easy, and YouTube isn’t enough. You need mentorship, patience, and a mindset to invest in acquiring skills.
- Lead generation — If you don’t have leads, there’s no one to sell to. Random searches on LinkedIn won’t cut it. You can waste lots of money and time reaching out to people who will never buy from you.
When you run your own company, it’s easy to drink your own Kool-Aid. You pour your heart and soul into your work, so it’s hard to see the forest for the trees. You can’t work out why the world doesn’t believe in your mission. It’s a frustrating cycle of doubt and failure. You work every waking minute only to get doors slammed in your face.
Once you get past the euphoria of your first successful deals, you hear crickets. There’s no sales activity, and your phone isn’t ringing. Refreshing your email doesn’t help because deals don’t land in your lap. You may have projects, but do you have a business? It’s dangerous to get a few things right, but never question your entire process. You are likely to repeat the same mistakes for months with little results.
You soon realize that selling to your friends is easy. But selling to people you don’t know is the real measure of a successful company. Your passion, blood, sweat, and tears will only be enough if you can engineer your sales process.
Customers Have an Appetite For Cheap Labor
My first non-friend sales calls were a disaster. I approached each call intending to sell elite services. To my surprise, companies wanted quick deliveries and cheap rates.
My spreadsheet of friends had run out, so it was time to take my show on the road and sell to strangers. I canvassed my proverbial Rolodex looking for potential partners.
With the help of search filters, I trolled LinkedIn to find the best prospects. At first, it seemed like the entire Internet was a customer. On good advice, I created personas and a targeted list. I built custom and detailed presentations packed full of research. All I needed was someone to share my nuggets of wisdom with.
If I could get anyone to listen, they’d understand and buy what I was selling — so I thought.
After all the hard pre-work, I booked my first non-friend call. I hopped on a scheduled call, and the guy didn’t even listen. He asked for a rate sheet before I could describe our value. Without understanding anything about my company, he disqualified our offering based on price.
I had failed hard in five minutes flat.
Over fifteen years later, I’ve learned a lot. If you don’t productize your services offering, customers will eat you alive. Each conversation will be about low rates and short cuts.
There’s tons of business advice about how to grow your company from X to Y. A master salesperson will teach you that if it boils down to price, you aren’t telling a good enough story. You’ve already lost, and your prospective customers don’t see your value.
It’s a brutal world. Customers think they should get high-quality services for the price of a latte.
A few things I paid someone to teach me:
- The best way to battle the cry for cheap labor is to strengthen what you offer.
- Part of working out a sales process is understanding what you have to sell and how to do so.
- Five-minute YouTube videos is not a process. There’s great content out there, but paid mentorship is superior.
- You have to study the market and your customers. Understanding them will help you understand yourself.
There’s no doubt that what you have to offer is unique. If you aren’t careful, the market will reduce your expertise and brilliance to pennies.
Figure out how to maximize your uniqueness, and you will win the battle of cheap labor.
Focus On Making Your Offer The Best, Not Money
It’s fantastic to see so many experts creating content to share their business wins. But I’ve observed too many business owners looking for a quick buck — like I did. The maniacal focus on fast revenue and profits often gets in the way, making your company the best it can be.
If you take the time to build a business, you’ll make money. If you follow solid principles based on sound business practices, success will follow. But, if you create a business based on sporadic internet advice, you will lose your business’s essence. You become a slave to the almighty dollar.
Instead, spend the time to make your offering something people want. Write down your offering as if you were buying it.
The first time I wrote down what I thought I was selling, it wasn’t what I was selling. Please sit down and think it through. What is it that you sell?
A few business hacks that worked for me:
- Create a business one-sheet for each service offering. As an example, we offer debugging services with clear expertise and SLA sold as a package.
- Study successful business models and mimic them. One of my favorites is Geek Squad. Best Buy provides real-estate and customers. They benefit by offering specialized services.
- Read trends. You will notice a successful business pivot. With a little research, you can find out why and see if it applies to your business.Invest in Your Team
Invest In Your Team
It’s an old cliche by now, but good people are hard to find. For any company, dedicated and well-trained people are a must.
There’s plenty of people looking for work, but you have to pick the ones that are right for you. Once you find those diamonds in the rough, invest in their future.
It’s easy to build a business based on you, and that’s a good thing. To grow, you will need to multiply and scale yourself. A good team will lead you because you serve them.
Often business operations can get in the way, and it’s easy to forget to grow your people. We all fall victim to the day to day grind.
However, growing people are essential. Remember this: do what you have to do, so you can do what you want to do. You have to invest in people because they are the soul of your business.
Temptation Is Evil
Sometimes the market seduces you into selling services outside your wheelhouse. When this happens, you become the sales person you hate. Every business owner faces this dilemma. At the end of the day, you do what’s necessary to stay afloat and thrive.
But spending time selling tertiary offerings takes away from your main business. You end up trying to support an oblong offering wasting precious business cycles.
To this day, it’s hard for me to turn away revenue because I never know when the market will turn. I’ve found that doubling down on our core services is the best way to grow the business.
When I started my first company, we offered every software development service possible. The truth is, we were only good at some of it. The tragic part is, you spend more time supporting the things you aren’t good at. Customers notice you provide terrible service. You build the company you once hated.
There’s no silver bullet. You need a business plan, a sales strategy, luck, and good people.
If I could go back to thirty-year-old me, I’d sit myself down and do the hard work of thinking the business through. I would write a business plan and think about who my customers would be. I would create a sales model, nothing fancy, but something.
My browser bookmarks would be business articles so that I can learn from those who have done it before. I would spend time understanding tax law, and accounting fundamentals.
And my most important takeaway would be to seek advice often and as much as possible. I would learn to sell.