Changing environment for Start-Ups
The Start-Up environment has changed a lot in the past few years - while many investors and VCs invested in good teams and products that showed a somewhat good market fit, now investors expect scale, growth, and an excellent understanding of your market that results in good to exceptional sales, on top of everything else. They hope this even from start-ups in seed or series A investment rounds to make sure their investment will scale.
We're seeing a changing environment different from what we were used to a few years ago. The reason is the over-competing market for entrepreneurs, freelancers, and start-ups - a phenomenon that usually takes place after significant crises (the 2007-2008 recession has seen the founding of many great companies like Airbnb, Uber, Mailchimp, and Square but also the founding of many failed companies). We now live the same, but quite different times - as investors with more experience expect much more from their investments.
Investors steer away from companies with just a good product and excellent teams. They need to understand more about their market fit and the problem it solves. They need to see sales, scale, customers, and growth.
Value-based Selling is the Key to scaling sales early.
In the early stage of start-up or growth companies, sales are usually slow, and the best deals occur between your 3rd and 6th years of business (known as your growth and scale-up years). Entrepreneurship activity shows striking patterns across space, time, and person. If you understand these patterns, you can quickly sell more - no matter what product type or what pain your start-up solves. These patterns are the Key to scaling and growing your business - understanding where, when, and to whom to sell (basically the 5W2Hs - what, why, where, when, who, how much, how).
With the continuously changing environment, founders need to find a way to replicate the 3rd to 6th years' growth and scale up to the first years. You can only do that through Value Based Selling, a strategy that puts you closer to your clients. You get to know them more, have more frequent contact, and have more time to learn and discover the 5W2Hs.
Conclusion
I've always said that Value & Market Fit are crucial to bringing your product to market. Value-Based Selling can accelerate sales in the first years for Start-Ups, but only if you know your market and your customers. It's not enough to see the value of your product; you need to understand who will buy it and why they will buy it. You need to know where they buy, not just how much they pay. You need to understand where your customers are and where you need to be to ensure the product you sell makes sense.
The 5W2Hs are the Key to "Value-Based Selling" and are a must-have part of your sales strategy. Every Start-Up founder should have "Scaling Sales" and 5W2Hs as major KPIs they follow and better understand how to achieve these.
To learn more - contact my colleagues or me at Traction Keys. We are more than happy to have a conversation on this!