Never Take Your Foot off the Gas

I have been working with a software startup in Tampa, Florida for
the past several years. I was with them from the idea phase and have
helped them develop a strategy, fine-tune their product offering, and
have even designed several marketing pieces for them, including a new
logo and a website.
They are a bootstrapped company and have no outside investors other
than the original founders. The first year of their operations they did
an amazing job and were able to turn a profit off of booking roughly
$1.5 million in revenue. They tripled the number of employees adding a
dozen or so developers and were keeping each of them busy with well
paying projects.
Around November of last year they became a little concerned that
they were growing too fast. They had over a half dozen projects that
looked like they were all going to go through. The combined revenue for
those projects was double the revenue of their entire previous year and
they would all need to be completed within the first 4-5 months of the
new year. The rapid growth presented a serious problem as they felt
they would not be able to maintain the company`s integrity and fulfill
all of the projects even by hiring as fast as possible.
Then they committed the unpardonable sin. They took their foot off the gas.
Realizing that they couldn`t possibly fulfill all the promises they
had made and recognizing the strong possibility that all of the
outstanding contracts were likely to be signed and executed within the
next 30 days, they stopped pushing marketing efforts and told their
sales team to hold up and wait to see what would happen with the
current contracts before pursuing additional opportunities.
In the end, none of the contracts were signed. Each potential client
offered a unique excuse and by the end of the year, they had no signed
contracts, no work for their employees, and nothing in the pipeline to
produce new leads. Even worse, they had to begin filling the pipeline
in one of the slowest times of the year.
As a result, they lost a few key employees, had to lay off a few
more, gave away some profits by lowering new bids and were eventually
able to sign a few smaller contracts to keep them busy while they were
looking for larger opportunities. Their company is back down to the
size it was 18 months ago and they look like they might be able to
repeat the revenues from their first full year of operations.
In any bootstrapped startup venture you must remember that Cash is
King! You must run every facet of your business with that thought in
mind. Billing, sales, and contracts are important, of course, but none
of them replace cash and you need to make sure you have enough cash on
hand to make it to the next payroll cycle. Promises of cash and a log
jam of potential contracts are not enough.