Earlier this year, an opportunity arose to form a partnership between my service business (McMillian & Associates) and a national payroll company. They wanted to know if we had a software solution that could help them expedite the new-hire tax-credit process for their clients. Typical of a CEO, I said, “Not a problem,” which ultimately lead to the launch of VORTAX, an automated Federal Tax Credit software.
My team is very talented, but with no software development experience, we had a lot to learn. But, we did it! In only nine months, we launched a cloud-based tax-credit software. Not only that, the product became a success, and we have grown rapidly.
We learned 10 valuable lessons about launching a software product. I would like to share them with you:
Lesson One—Double that budget
Be aware, development takes twice as long and costs twice as much than you think. Beyond development costs are the security and privacy abilities of the product itself. If a customer does not feel your product is safe, or if you handle their data irresponsibly, they’ll leave forever. Prepare your best budget and best timeline. Then, double it.
Knowing lesson one, take the time to intentionally map out the mission-critical core features that provide clients the most value. Identify the items that solve the market problem. Develop those first. Be humble enough to put some of your likes aside for the needs that matter most to the end user.
Lesson Three—Launch early
Guy Kawasaki said “if you’re not embarrassed by the first version of your software, you’ve launched too late.” While I would not say I’m embarrassed by our first version, I know it’s not perfect visually and not developed enough. That’s okay; I know it will happen in time.
Lesson Four—Break the system
The only thing that can help temper your fear of launching your product is to test, retest, and test some more. There will be bugs, so try to break the system before it gets launched. Do everything wrong. What can go wrong, will go wrong. Your clients will do things wrong, they will enter data incorrectly, and do things they shouldn’t. Be prepared.
Lesson Five—Be flexible and pivot
One of things I think we’ve gotten right in this venture is that we were flexible and moved as needed with development. You must be willing to re-evaluate what’s in development, what’s next, and what’s the best item / feature at any given moment for the customer. Not only should you be establishing what has the most impact, but you should also be measuring the development effort involved, moving items up and down the list. For example, two weeks ago we had a client agree to move forward if we had a particular feature in our system. This client represented over a 150% growth, but the development feature was at the bottom of the priority list. That changed within a hour of that client meeting.
Lesson Six—Engagement is priority number one
The biggest failure we’ve had as a startup is focusing too much on just signing new clients. I can tell you with authority: this is a direction that comes from any leadership. If we had focused on nailing client engagement from the start, our numbers would be 50%-100% bigger. Don’t overlook how clients are using, or not using, your system.
Lesson Seven—Select a great partner
If you aren’t developing your software internally, you need to choose the right partner. We found a great partner, Codesmith, and it made all the difference. Make no mistake, the wrong partner can sink your project. Choose a partner that is committed to you, honest, and has the capabilities to take your product where you ultimately want to go.
When selecting a partner, make sure you:
- Like them as people. This is long-term relationship and you’ll be working with them a great deal.
- Accurately assess their capabilities.
- Select a vendor that is honest and will advocate for your success. Are they saying they are experts at everything? That’s a red flag. Are they willing to turn down your business if you aren’t a good fit? If no, another red flag.
Lesson Eight—Create Wins
This is a long process with many challenges. Celebrate often. When you and your team overcome the challenges, pause and enjoy the milestone. Relationships matter and they need to be nurtured. Don’t undermine your foundation, which is your people. This includes your vendors! Stay on their good side and reap the long-term benefits.
Lesson Nine—The first shall be last
At the beginning of this journey, I built up in my mind that software integrations with national partners was the achievement I wanted to claim. It was sexy and fun to talk about. The numbers were game-changing and I was excited about innovating.
But the deals weren’t closing.
I had to make a decision. Is this about my aspirations or serving customers and setting my team up for success?
So, instead of going from the top down, we went from the bottom up. We focused on people that can sell our tool without a legal department or corporate bureaucracy in the way. Then, we reallocated time to focus on customer service, on-boarding, and engagement.
Go figure, it worked. In the last 30 days, we’ve added 500% more customers.
Lesson Ten—Choose the right market
Launching a startup is already difficult, so don’t enter a crowded market. We are very blessed to operate in a market with virtually no innovation occurring. Nearly a year after our launch, we are still the only player offering software. By entering the right market, we gained two advantages:
We gained a first mover advantage. As we continue to iterate and improve, it will be very difficult for the competition to catch up.
It gave us the time we needed to make mistakes that were inevitable given our lack of software experience.
Software is powerful. It is already transforming our business. With a few integrations, the software segment of our business can be 2-10X our service business revenue in only 12-24 months! Think about that. It is allowing us to scale in ways we would have never imagined while maintaining the excellent service we pride ourselves on.
What risks should you be taking? What idea should you try to execute that can have significant impact.