The top secret to thriving in tough economic times with software products or services
During tough economic times, it is a normal phenomenon that everyone tends to cut their spending and only continue spending on revenue-generating activities or things that are basic amenities to survive.
We feel that difficult times always put a temporary stop to future endeavors, whether it is at the personal or organizational level.
In tough economic times, entrepreneurs are also left with only one option: ‘holding project work’ whether it is future assignments like MVPs, full-software project development, product testing, expansions, new marketing strategies, or any other business activity.
But putting a hold on work somewhere leads to delays in project market entry timing.
A study on Uber, Airbnb, LinkedIn, Instagram, and YouTube revealed that timing to market was the single biggest reason that contributed to the 42% success of all startups.
Then, there is no doubt that if these startups had been delayed by 2–5 years, the same space would have definitely been occupied by new players.
No one wants to stop working on their software product or service-based startup even in adverse situations, but the big question is, what are the ways one can follow and be unstoppable in tough economic times?
We will discuss here how an entrepreneur can be unstoppable in tough economic times, just by changing a little in course of actions.
1) Reducing the cost-
There are some ways that can be adapted by startups to reduce operation costs, because it is always advisable by experts to first understand the situation and time and then try to adapt or make changes accordingly
If you are working on your software-based startup, then you can definitely continue working on your project even in tough economic times by using the following steps.
Mix Hiring: 30% in-house and 70% remote hiring:
This is a very effective strategy that can save your project development cost by 40-50% while getting developed at the same speed. Hiring resources in countries like US, Europe, Australia, and Canada can be 3 times more expensive than the countries like India.
An experienced project manager will play an important role in managing and executing of project while dividing the main project into small sub-micro architecture modules so it can easily be assigned to remote and in-house teams. In the end, it is only required to join all modules in one project.
Reduce unwanted overheads
In troubled economic times, bad luck comes with a bonus. When you are selling less, you have to drop your pricing as well because, at the same time, you need to attract new customers.
A drop in pricing will result in a drop in margins, and the only way to survive in smaller margins is to reduce overhead.
Is your office space too big? Then share it with someone else. Are you over-staffed for the amount of work you have to do? Then find out how you can get more work.
What subscription and license of software are you are not fully utilizing and soon they can be a debt to you? If required, unsubscribe them or find an alternative to them.
100% Outsourcing
Think about it- the work you are doing in-house possible to outsource? If yes, then this is the biggest cost-saving formula without compromising the quality of work.
You can think about it, hiring In-house experienced back-end software developers at $150k/year or an outsourced back-end developer at $50k/year.
You can think about hiring an In-house UI/UX designer at $110k/year or an outsourced UI/UX designer at $40k/year.
You can also think about hiring an in-house front-end developer at $140k/year or an outsourced front-end developer at $45k/year.
Outsourcing is a business strategy where you can lower your software development cost by 1/3rd without compromising the quality of work by hiring an experienced team of developers and project managers.
2) Funding and Financing
If you want to be unstoppable then whether you are in the early product development phase or early positioning your product in the market, in both phases you will require funding to sustain your business operation at the same pace. Because yet your business is not generating profits yet, and you can consider funding sources-
- Series funding
- Crowdfunding
- Small business loans
- Friends and family financing
- Venture Capital
- Angel investors
Above all, this type of funding is business-stage specific, when you fail to hit your revenue projection targets or when troubled economic situations last longer than expected, then these funding tools work very well in favor of business.
And, it is a good idea to maintain your cash reserves for the next 6 -12 months of operations, so budget carefully for every activity.
3) Right Approach
Use marketing smartly
In tough economic times with established businesses, you and your team have to be enough to cope with the situation. Marketing is a tool that can get you ahead in the game and from your competitors when it is used wisely.
Although marketing is a continuous process to educate customers about your product features and benefits, in tough economic times, it is often stopped by companies.
The better way to target a niche market is by narrowing down your customer segment.
For example, if your product targets adults, then it is better to target a particular age group of customers. i.e. Expensive watch companies target 25-35 years age group customers.
Alternatively, think about your service offerings, sometimes a little change in product and service features opens a new segment. For example, a restaurant owner was running a business traditionally and now provides an online food ordering service.
Keeps an eye on customers & competition they always give signals that help to make new decisions for business growth.
Start with small with a plan to expand
It’s okay if this is a tough time to survive in the industry but we have seen many startups that started with a small business idea and now become the industry leaders.
So it is always advisable to start with an MVP stage with a vision to expand it globally.
It’s better to get develop your MVP in adverse times rather than waiting for the good time to come.
It’s better to come up with an MVP in the market and test the end user’s experience and market feasibility.
In adverse conditions, It’s better to collect market information and to find market gaps rather than merely waiting for good time to come.
If you can do this despite all adversity, there will be someone who will join you and can fund your MVP stage project because the market is always ready to invest.
And when good times come, you will be 100% ready with your products and services to serve the market and ready to grab market share. While others might be still waiting to take the first step.
Conclusion:
Only one thing is constant in the world, and that is “change”. Never ever hold or stop working on your dream software project, even in the toughest times. Entrepreneurs turn adversities into opportunities, and it happens sometimes through little changes in the course of actions. If you are working on your software startup idea, use the above-mentioned strategies in tough economic times and thrive without waiting for a good time.