How to scale a tech start-up during an economic downturn
In a challenging market where investors may be dialing back the size of their rounds, there are ways for tech founders to reliably scale while preserving – and ideally extending – runway.
In this article, we’ll be revisiting how to scale companies that are bootstrapped or that do not have access to funding, by relying on pillars such as product-market fit, agility, and storytelling. Crucially, we would advocate taking incremental steps that focus on structured value creation for your existing customers and target audience.
Focus on refining your product-market fit
Successful bootstrapped tech start-ups are often forced to focus on excellent product-market fit (among other things) to grow, especially when their customer acquisition strategy relies on stealing existing market share from competitors. If you are preparing for your next fundraising round, then sales traction will help to differentiate you in a floundering market.
Hone in on your market needs and think critically about how you can refine your product offering and go-to-market strategy. A helpful first step is to identify whether room for improvement is a matter of tweaking your product or revising your target audience (or both!).
An ideal approach is to work with sales, marketing, and product teams to ensure a 360-degree view of your customer lifecycle and experience. Simple and quick polls can help tech teams prioritise rapid product improvements (and avoid costly customer frustration) while a Customer Advisory Board could help develop a longer-term strategy to reinforce your value proposition and lay some groundwork for future conversion.
Take feedback from existing customers, but don’t be tempted to cater to their every whim. Product development should cater to wider market needs – not just the loudest voice in your client portfolio.
Don’t underestimate the power of incremental changes for scaling during a downturn
There are lessons to be learned from Chinese tech start-ups when it comes to rapid rollout of product improvements. Often, these companies tend to adopt rapid roll-out of product features long before this functionality is perfected. With such intense competition, it often comes down to who gets there first, honing the agility needed to keep up with rapidly changing market conditions. Product revisions tend to be smaller but more frequent, allowing crucial feedback loops from clients to fuel future developments from tech teams.
Pivotal changes can be great for tech start-ups, but don’t underestimate the power of minor improvements in radically overhauling the customer experience. Whatever you do, make sure you leave guesswork out of it. It’s likely you’re also slowing down hiring plans during the economic downturn and you don’t want to frustrate the limited resources you do have with futile – or even harmful – changes.
Now more than ever, storytelling is crucial in building brands that your market and your investors can’t ignore
It’s not enough to create a fantastic product and expect investors or clients to buy into the value you are creating. Now more than ever, your go-to market plan and customer acquisition strategy should focus on communicating the uniqueness of your product, ideally to those that will benefit from it most. Targeting those with the most to gain from what you offer will help you to convert a core pool of customers from which you can generate success stories and case studies.
Economic downturns present challenges, but there are also opportunities for tech start-ups to be noticed by investors hunting for good deals. If you’re a tech start-up looking for support in navigating tougher market conditions, get in touch to find out how we can help you scale.