Sports Start Ups face all sorts of challenges. From hiring the right people, to getting through a beta, to staying focused; the list of obstacles can be daunting. I recently read an article that identified 68 challenges startups face. Ouch!
We take a slightly less complicated view, asking three basic questions:
- What’s a reasonable way to categorize where in the growth cycle a startup lives?
- What are the business’ specific challenges based on where they are in the cycle?
- What needs to happen to push through to the next level? (Spoiler Alert – we agree with Mark Cuban “sales cures all”).
We find it helpful to think in terms of what we call SGP’s Four Sports Tech Categories for Start Ups:
SGP Sports Tech Category I
Start Ups Early Phase / little or no revenue. In Early Stage companies you’ll find owners that are excited about their product, have a working model either in beta or a small group of first or second degree clients, and a core founders’ team. Often discussions about raising money are in the air which is hopeful but often too early, with owners that are struggling to move from their “day job”. This is a critical time.
Challenge: The initial engagements, usually in some sort of beta, are focused on vetting the product against competitive products already in play. Up to this point all focus has been on product, its fit in the market (probably still not fully understood), and gaining real world feedback. Generally present engagements were found via reference and are technical in nature.
Strategies to Accelerate Revenue: Early Phase start-ups should heavily leverage their beta relationships and early buyers. Publishing solid case studies surrounded by early and direct outbound campaigns is a must at this time. Working inexpensively within social is a good start looking to engage directly persona based prospects and influencers. Inexpensive media such as recorded webinars or explainer videos with a small price tag will help. Since more than likely the beta clients came from reference selling a concerted effort to build a solid sales model, outbound first, and then inbound needs to happen. Finally, setting a clear client goal, say X clients in six months, should be established. It will force the vetting of your product, marketing and sales processes, delivery, and customer service.
SGP Sports Tech Category II
Start Ups Growth Phase / <$500,000 / year. The Growth Phase is an exciting time. Revenue is coming in the door, there is an initial marketing strategy with a heavy focus on social (inexpensive), initial sales processes are developing usually led by one of the founders or a sales leader brought in with the promise of equity.
Challenge: Revenue solves a lot of problems but it can also create an inertia that can stall growth. Reasons can be complex but generally there are four challenges. First, clients that buy at this stage are much different than those that are waiting to see (for those familiar with Geoffrey Moore – businesses here are selling to early adopters and are looking to approach the Chasm) and the next round of opportunities require a different value proposition. Second, since the initial selling was managed by one of the founders or an early hire, there is a deep understanding of the product by the lead team that must now be transferred to a new breed of employees. Third, dollars are available for expanded marketing but spending misapplied can quickly drain resources. Fourth, strategic partnering is a key to continuing exponential growth but often advanced partnering skills are lacking.
Strategies to Accelerate Revenue: Continued focus on the current target market must be maintained and doggedly defended as the value of cash flow cannot be overstated, but to grow, a commitment of effort and resources to the next market needs to be made. Leadership must clearly set the direction codifying the present marketing and sales process while looking to extend the companies reach. Strategies like product niche expansion, often based on product improvement, and vertical penetration are fairly standard. For these and other ideas to work though you must first be able to replicate the skill sets within the company. Client facing sales associates have to be performing at a high level and then immersed into the thinking surrounding the new targets. Marketing too must transition by establishing a go to marker test effort that would include a full package of landing sites, outbound / inbound contact mapping strategy, new content, A/B type thinking and a hard commitment to metrics. Establishing a process tightly based on metrics will allow you to pivot quickly as you search for the next set of wins.
SGP Sports Tech Category III
Start Ups Later Phase / Flat. Probably <$1,000,000 / year. Having revenue, a technical infrastructure to support clients and a market presence that seems to be working, Later Phase Start Ups that have Flat revenues are in a precarious position. Marketing is generating limited qualified leads and sales, though ringing the bell, is slowly moving from deal to deal while hoping to find the correct formula.
Challenge: Inertia and resources that are being squeezed makes Later Phase Start Ups that are have Flat revenues difficult to move. Often the product revenue is still coming from techie or early adopter markets; marketing messages become unclear as it is difficult to leave (grow beyond) a space that still bears some fruit. While attempting to enter a new market often boiling the ocean activities take over where any deal is a good deal (not true). Sales too is looking to make deals to keep afloat, hoping to crack that one big one that will solve all the company’s problems.
Strategies to Accelerate Revenue: Already stretched, the company has limited resources and is unable to bring in upgraded talent and any serious attempt at pivoting is a dangerous make or break proposition. A smaller aggressive effort led by an executive team member is the solution here. First though, you must make sure that selling skills are not the issue – and this could include a serious look at the founders themselves. Close rates and deal mapping are a good start and must happen quickly. Weighing in on marketing’s performance is also a must; metrics here are readily found and understood. Assuming all is reasonably well (experience says probably not) then it becomes incumbent on the identified leader to attack, as new, prioritized markets. This can be accomplished by quickly starting with a simple call to a prospect in the new space. One way to think about this is to recall your first handful of clients, how you acquired them and what was the value you offered? This is not a total reload and should zero in on succeeding or failing quickly.
SGP Sports Tech Category IV
Start Ups Later Phase / Growth >$1,000,000 / year. Start Ups in Growth mode seem to have it all. Revenue is up and to the right, marketing has solid persona qualification criteria and is driving leads, and the sales team has developed clean processes along with metrics. Discussions around organic growth vs. strategic partnerships vs. investor funding are taking place.
Challenge: As the company grows it will begin to attract attention from competitors and more than likely elicit a response in the form of price challenges, competitive marketing practices, and reframing (repackaging) of the competitors’ products. Speed is required to maintain accelerated growth and a concerted effort to penetrate and capture market is paramount.
Strategies to Accelerate Revenue: Given that cash flow provides the needed resources, acceleration opportunities seem to be everywhere. Prioritization is assumed and any strategy must have three components: 1. Quickly vetted. 2. Metric based. 3. Efforts cannot denigrate the brands value or the company’s reputation. A senior product manager should be identified, preferably from the leadership team, who is given the responsibility of managing the next effort. Leveraging clients who have bought, in an upsell effort or prospects that have stayed on the side lines can be vetted quickly. Larger opportunities though will come via the more complex strategic partnering; mapping these potential relationships is a good start. Regardless of direction the offering should grow from the present value base, on-ramping to the new vertical that later, if successful, can be integrated back into the business. You may want to consider a standalone P&L, an adjusted value proposition and of course revised marketing materials and metrics. Most importantly you must deliver a sales integration that clearly identifies the entire sales process including engagement flow, sales skills (may be different based on where you are in the technology adoption cycle), contact content, supporting materials and role playing.
Final thought – No matter where your business falls within the Four Categories, focusing resources quickly and effectively on new revenue opportunities will give your team the best chance for success. Sales do solve a lot of problems.
Are we close? Let us know. Thank You, Rich Scorza 612-730-4260