They may now trade on the stock markets as public companies, but it took years for Facebook, Twitter and other former startups to figure out a business model that would generate revenue. Startups in Canada, on the other hand, are wasting no time getting on solid financial footing, according to a recent research report.
In A Nation of Innovators: 2015 Canadian Emerging Technology Companies’ Survey, consulting firm PricewaterhouseCoopers reports that 56 per cent of startups here are expecting between $500,000 and $1M in estimated revenue, and 11 per cent are forecasting between $5M and $25M this year. In other words, they’re off to a great start.
Alongside the statistics in the report, though, PwC also conducted a series of video interviews with Canadian startup executives that offer some important advice on how to keep the revenue momentum going. Here are some of the highlights.
Revenue Comes From Listening To Customers
According to Scott Miller, CEO of Vision Critical, one step in selling that startups may sometimes overlook is establishing communities of customers and prospects you can use to vet ideas and ensure products and services will meet the right needs. Actively listening to customers can also inspire startups with opportunities to cross-sell or target new markets they might not have considered on their own.
“No matter how big your company is, you don’t know all the ways that customers are using your product, or want to use your product,” he said.
Miller added it’s important to make sure communities understand how you use what you’ve learned so they’ll feel receptive the next time a startup reaches out.
Prove That Revenue Is Part Of A Long-Term Strategy
Although the PwC report says 63 per cent of startups expect to be acquired and less than a quarter see themselves staying in the market for the long-term, they should always act as though they playing to win. Angela Tran Kingyens, an associate at Version One Ventures, said startups could actually get more funding if they demonstrated they are creating something that customers will simply be unable to do without.
“Build a product that is not just a nice-to-have but a need-to-have,” she said. “The second important thing is to become a category leader. So, not just improving upon something that already exists but sets a new bar in a new area that hasn’t been touched before.”
There’s no way for startups to show that without having a lot of good data behind them, whether it’s CRM data that tracks customer retention and growth within accounts or analytics data that helps forecast demand for a startup’s products and services.
Follow The Revenue Beyond Your Borders
Although Canada has a strong and supportive startup community, the country may not always be large enough to supply the number of customers an emerging firm needs to survive. Expanding globally, however, comes with a lot of risks, and timing can be critical.
For Michael Hyatt, CEO with BlueCat Networks, the sure-fire approach is moving into a new country when you start getting requests for your product or service. That doesn’t mean opening a huge network of branch locations necessarily. It could just mean using prospecting tools to pinpoint a city or state to begin building a base.
“It’s about going to where your customers are and making small investments,” he said. “Make sure the money is there.”
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