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SOFTWARE 'AND' A SERVICE

Pranav Dalal
CEO-Office Beacon
Monday, November 16, 2015
Pranav Dalal
Aspiring tech entrepreneurs keep looking for the Holy Grail - a software business that can grow exponentially and withstand the onslaught of competitors. This editorial is aimed at those entrepreneurs who want to create a growing and sustainable business for the long term. Specifically, we all understand the business model "Software as a Service"; however, I believe that the model "Software and a Service" will be a winning strategy for years to come, especially for those of you targeting small businesses.

So, why to opt for Software and a Service? Because unless you are likes of Uber or Snapchat, the reality is that most tech startups will be unsuccessful. A Wall Street Journal article highlighted that 75 percent of startups fail and this is despite having an innovative product, having a well thought out business plan or even having funding from venture capitalists. While I've participated in a number of high growth tech startups, I decided years ago to focus my energies on growing highly competitive and sustainable companies rather than focusing on exit strategies. My target market was the 25 million small US based businesses. The number one lesson I learned in working with many small business owners is that they do not have time to use most software marketed to them. They need help and they need the software, service and support to make them successful with your offerings.

So how was I able to combine both software and services to create winning business models? Simply put, I've followed certain principles that have proven to ensure long-term business success. These principles are:

Principle #1: Focus on a unique business model.

Being a "me too" tech startup is self-defeating. Many say they won't but end up doing just that. Pursuing a "me too" model ensures that you will only be competing on price. So if you start with a flawed business model from day one, you won't achieve the level of success for which you hope. Even worse, you will be stuck with a business that you will be unhappy with and you will eventually find yourself pivoting your business model to find any level of success. But how exactly do you assess your model? First, take time to understand and test how your offering is different from competitors. Yes, it's a SWOT analysis of sorts but mostly based on whether your strengths can sustain your business long term. Another crucial element is to understand if customers value your differentiation, and determining whether they will see you as the 'only' viable option. When they do, pricing and growth become easier, much easier. One way I like to look at things is to put my feet in the shoes of my competitor. If I offered a new product to my clients, how would my competitors react? Could they offer the same thing in response, could they match my delivery, could they offer something better? In all the business I started, the answer was 'no' each time... and I knew I was off to a good start. I have always combined my software with a supported service which none of my competitors could match. Software and a Service has been a winning combination for many businesses. Case in point, Uber. Are they a tech company or service company? They claim to be a tech company but I would argue that they are both. They have combined their app with the service drivers provide and now they have one of the most widely anticipated IPOs since Alibaba.


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