Why Tech Founders Must Always Focus on the Core Business…
Scaling a business with exponential growth is not about constantly creating new things but by doing the same thing repeatedly, making it a little bit better each time. In this way, the compound effect becomes so compelling that you cannot help but succeed. For many, I fear that may sound a bit boring, especially considering the neurodiverse nature of many entrepreneurs, but it has been proven to be true in the B2B tech startup world time and time again. Some founders may struggle with the mundanity of this reality, as they are risk takers for a reason, which means being psychologically wired to have new ideas and create new things. However, being a serial problem solver can still be applied to a single product, market or niche. The alternative to this is distraction, and the distraction of too many shiny new things can be a problem. If an early-stage founder allows themselves to get carried away beyond the idea stage, when the core business needs their absolute focus, this is a problem, one that could turn into an existential threat.
Losing Sight of the Customer
The threat of such distractions can lead startups to lose sight of their customers’ needs and expose them to a host of other issues. The initial success of a startup is often due to a deep understanding of and commitment to solving a specific problem for a specific group of companies and doing this very well, if not better than anyone else. When founders relentlessly chase new ideas, they will inevitably neglect their core market and stop listening to existing customers; instead they may be busy adapting their solution or creating a new one to meet a new audience. Ignoring the need to address the evolving demands of the existing market is a dangerous game to play. This disconnect can result in poor sales performance, a loss of customer loyalty and even a decline in repeat business, further stalling growth.
Not a Lead-Gen Problem – Yet
A common misconception among startup founders is the belief that acquiring more leads will automatically resolve their sales issues. While leads are crucial, the real problem often lies in the lack of focus on the core business due to the distraction of a new venture. Founders can become preoccupied with generating new leads by exploring fresh markets, thinking that diversification will lead to exponential growth. However, without a concentrated effort on nurturing and converting the existing pipeline for the core business, these off-script endeavours are likely to fall flat. Worse still, it risks causing the entire business to fail.
Avoid the Inevitable Sales Crash
The key to sustained growth isn’t necessarily in multiplying the overall number of leads, but in maximising the potential of the leads your business can put into the sales pipeline. This is your ability to convert as many of those leads as possible, or the conversion rate. Founders must focus on and invest in refining their marketing and sales processes, improving customer relationships and ensuring that their core solution continues to meet and exceed customer expectations. By concentrating on these areas, startups can achieve deeper market penetration and customer loyalty. This commitment to the original business plan is the focus every small business requires, and is far more valuable than getting distracted by something new and spreading resources too thinly across different objectives. Yes, it may take time to grow a business, and there is always the pressure to perform, but there are no shortcuts and allowing distractions to dilute your focus is a sure way to elongate the process, not shorten it.
More Leads Won’t Save You
When startups chase after more leads without a solid sales plan, the result is inevitably a failing sales conversion. This can risk diluting the brand message and having ineffective marketing when chasing adjacent markets prematurely, leading to inefficient sales efforts, where neither the existing nor the new leads receive the proper attention. Instead, tech startups must prioritise their resources in creating relevant pipeline opportunities, ensuring that every lead is followed up with personalised attention and a clear value proposition. This not only increases the chance of conversion but also builds a stronger foundation for long-term customer relationships. Focus means sticking to the core business plan, having a relevant message, targeting the relevant prospects and converting as many of them as efficiently as possible.
Decide What Type of Business You Want to Be
Another critical aspect to avoiding a growth downturn is deciding what type of company you are and who you are for. This involves determining whether your startup is predominantly a product-led business, a sales-led business or a market-led business. Each model requires a slightly different focus and strategy.
- Product-Led Business: In a product-led business, the product or technology itself is the main driver of growth. Companies like Dropbox and Slack are examples where the product’s value and user experience naturally lead to customer acquisition and retention. For these startups, the key is continuous product innovation and ensuring the product remains superior to competitors. However, those companies succeeded because they had a clear vision of who the technology was for and a deep understanding of the target user.
- Sales-Led Business: A sales-led business relies heavily on its sales force to drive growth. This model is common in B2B tech startups where complex products require a strong sales team to educate potential customers and close deals. Here, investing in a skilled sales team and robust sales processes is crucial. Again, this only works if you have a clear focus on the target audience with a relevant and compelling message.
- Market-Led Business: Market-led businesses focus on understanding and responding to market demands. They are driven by market research and customer feedback, tailoring their offerings to meet the needs of their target market. This model requires deep market insights and a flexible approach to product development. In reality, every tech startup must have at least an element of being market-led, because if you don’t understand who you are for and why they should care, then you are irrelevant.
To determine which type of business you are, consider where your strengths lie and what has driven your growth so far. Are customers coming to you because of an exceptional product or service? Is your sales team your strongest asset? Or do you excel at understanding and meeting market needs? Staying true to the reality of what type of business you have created ensures that your growth strategies align with your core competencies and market positioning.
How to Maintain Focus and Drive Sales
To avoid the situation where sales start to fail and growth declines, startups must maintain a laser sharp focus on their core business. This involves several key strategies:
- Fully Commit to the Core Mission: Founders must regularly revisit and reaffirm the startup’s core mission. This helps to keep the team aligned and focused on what matters most.
- Strengthen the Sales Pipeline: Continuous and dynamic sales efforts are crucial. This means investing in the marketing and sales teams, refining their processes and constantly targeting prospects within the existing market.
- Listen to Customers: Engaging with existing customers and understanding their changing needs can provide invaluable insights for product improvements and innovations that align with the core business and can help expand the business quickly.
- Measure What Matters: Establish key performance indicators (KPIs) that are directly tied to the core business objectives. Regularly tracking these metrics can help ensure that efforts remain focused on driving core growth. Avoid the distraction of vanity metrics.
- Prioritise Resource Allocation: Resources must be allocated primarily to activities that support and enhance increasing revenue in the core business. This includes building marketing, sales and pre-sales teams supported by dynamic product development, onboarding, as well as customer service and success efforts. Anything that diverts attention and resources away from these activities needs to be discarded.
- Avoid Shiny New Toy Syndrome: While it’s important to stay aware of market trends and potential opportunities, founders must be cautious about pursuing new ideas that divert attention from the core business too early. A rigorous evaluation process can help determine if new initiatives truly align with the company’s strategic goals. In time, and once a startup has scaled and become a stable business, it may be appealing or even necessary to explore adjacent markets, as new resources will make this possible and there is reduced risk of failure.
The Message – Lose Focus and Risk Failure
Tech startups stop selling and hit growth problems when founders lose focus before building a sustainable company. The allure of new ideas and markets can be strong, but it often leads to fragmented efforts and neglected core products. By deciding what type of business you want to be, who you are for and committing to your mission with complete focus, you can market effectively, strengthen your sales pipeline, listen to customers, measure key metrics, prioritise resources and avoid unhelpful distractions. This is what’s necessary for your startup to sustain its early growth, continue to survive and then begin to thrive. Maintaining focus is not just about staying the course; it’s about relentlessly driving forward with the core vision that sparked the startup’s initial success.
You may want to read: “How to Define Your Target Market.”
