Partnerships · Fundraising

Need to increase sales - fundraising, partnership, or cofounder?

Benjamin Caudill

March 16th, 2014

I'm the cofounder of Rhino Security Labs (an IT security services company) and still a bit new to the entrepreneurship scene.  I'm much more than technologist and IT security guru than the business expert, as is my partner.  Our technical expertise is top-notch, but with just the two of us running things, we're having a hard time with bringing business in the door.  We provide security testing and managed security services to businesses - being a B2B model, the sales funnel is long and it's difficult to break into the market (I find businesses tend to go with established names rather than roll the dice on a vendor's reputation).

If business development isn't enough of a challenge, we're also on a very tight budget, as we're entirely bootstrapped. 

This brings in a number of questions (as again, I'm new to the area): 
Even if we had a sales person (who worked entirely on commission), would they expect/need marketing leads to act on?  Does cold calling/emailing produce a worthwhile ROI? 

Assuming the sales person would need marketing (of which we can afford very little), how do we proceed?  Should we look into a seed round of fundraising (friends/family)?  Try to find a partnership?  Find a marketing/business development cofounder?  Any direction or assistance here would be very helpful.

Thank you!


Rob G

March 17th, 2014

Benjamin, this is a long conversation, not something you will solve overnight and there is no magic bullet. feel free to message me offline (robg@TuxedoTech.com). I'm a recovering techie who has built and run sales teams for small, medium and large software and tech services companies. I moved to the 'dark side' when i realized that if someone didn't sell the next project we were going to starve.  i feel your pain. 

1. You are your best salesman:  As Rick says, don't hire sales until you and your partner understand your market and customer needs better. It can be done if you find a high quality sales person, but on your budget that's unlikely.  The only way to understand who your ideal customer is and their needs is face-to-face. 

2. Identify your IDEAL customer.  Your company is small - you need a rifle not a shotgun.  narrow your focus.  Every company who has an online presence needs security so the pool is large. don't try to boil the ocean, boil the tea pot first. 

3. Differentiate:  if you do nothing else, do this. Differentiate, differentiate, differentiate...then do it again.  Security is a big issue right now and there are plenty of companies in that space with much greater resources.  You need a niche/specialty that you can use as a competitive differentiator.  The big services companies (Deloitte, Accenture, etc.) differentiate by saying they can cover everything from soup to nuts. You need to go to the opposite end - "we know ______ better than anyone". 
if this is the case then show that - show a list of customers that prospects can recognize. If you don't have them then don't try to look like a big firm - try to look like a small firm that has deep expertise in a small number of specialties.  

As i said, this is a long conversation, but this is a good start. 

Rob G

March 17th, 2014

Benjamin, it looks like FD filtered out the quote from your website that i copied/pasted:  "Rhino Security Labs is a leading provider of security assessment and subscription-based information security services to organizations throughout the world."  There are tale tale signs on your website that you are a small firm yet the statement above makes it look like you want people to think you are a large firm.  In your market, small is OK don't fight it - leverage it.  Besides, the last thing you want to do is mislead anyone - the fastest way to loose a prospect /customer /business partner/ employee. 

Rob G

March 17th, 2014

don't worry too much about marketing yet until you learn how to sell.  Marketing is a tool to support sales not a substitute - in the B2B world anyway. 

Rick Nguyen Cofounder @ Spot Trender

March 16th, 2014

Hi Ben,

It's beneficial for both you and your cofounder to be directly in touch with the potential clients since day one. You need to close the first deal to understand the process before hiring the sales rep. The deal doesn't need to be big, as long as you're getting paid something. This has several benefits:
-You know your clients' needs and pain intimately.
-You hear feedback about service/product directly from client and can prioritize product development.
-You build personal relationship with first key clients.
-You validate your product by getting the first sales.

Bela Tibor

March 17th, 2014

Hello Benjamin,

Great posts to your questions by all!

I'm learning about the entrepreneurship methodologies of Blank, Ries and Osterwalder.  All with the view of finding a sustainable and scalable business model.

Latest wisdom of the customer development process suggests that the customer problems/pain points and various parts of the business model  canvas (Osterwalder) must be tested.  Customer archetype(s) should be created - they put a rather large emphasis on this one.  Solutions to the problem then tested with a MVP.  Validation.  Objective:  product market fit.  Earlyvangelists. etc.  This is the theory.

I have just started Steve Blank's Lean Launchpad Udacity course and am looking for opportunities to put the customer development theory into practice as I go along. 

https://www.udacity.com/course/viewer?utm_campaign=welcome_ep245&utm_source=sendgrid&utm_medium=email#!/c-ep245/l-48743167/m-48750057

How would you feel about possibly re-visiting customer dev for your service in a rigorous fashion according to this method with me as a temporary addition to your team? This could be a win for all of us: gets me out of the building to try/practice my customer interview skills and this methodology; will provide a rigorous testing of various hypothesis; will facilitate changes in the business model - iteration, pivots if and when hypothesis tests fail; will lead to product market fit; and finally, will provide a much clearer and detailed picture of the customer with validated interest in the service.  With which, you can then devise specific strategies to reach and sell them.

Yes I'm in Toronto - but that's just a technicality :0






Tim Kilroy Analytics - LTV - Boosting Profits - Digital Marketing

March 24th, 2014

Hey - This is hard. This is the hardest part of business. In "investor" terms, you are searching for "product-market fit". I am a non-technical founder - I don't code. I sell. I am also the CEO. The CEO has 3 jobs:
  1. Make sure that there is enough money in the bank.
  2. Make sure that the team can do what they need to do.
  3. Make sure that the product works.
They all start with money in the bank. So, you need to figure out how to make yourself more efficient so that you have time to drive dollars in the door. That is your job - no one else's. Don't hire a sales guy - you aren't ready for that. Sales people drive scale. You need more depth on your tech team so that you can scale. Hire an hourly project programmer to take over 20% of your work and you go sell.

This is YOUR job. No one can sell your company better than you can, and no one knows how critical every dollar is more than you do. Fix the problem and you start selling. Hiring another body (even on commission) to sell will slow your company down.

Mike Brunzell Director Digital Platforms at Benjamin Moore & Co.

March 16th, 2014

It seems to me that you need a third cofounder that: 1.) Really believes in your product and company potential 2.) Knows how to sell B2B software solutions 3.) Can support him/herself for a period of time as first sales are made 4.) Will accept equity for payment for initial efforts At your stage I think the right person will do sales and marketing. I would not start paying for leads/marketing yet. Get someone not afraid to cold call that is willing to work hard. Good luck! Mike Michael Brunzell mbrunzell@me.com 508.566.5016

Rick Nguyen Cofounder @ Spot Trender

March 16th, 2014

Just on boarded several fortune 500 companies as paid clients for my video/radio ad testing startup; some key ideas worked well for me:

-Constantly talk with your potential customers. Ask as many questions as you can about their needs and their pain points. Go back, do your homework, and present to them a custom solution to their problems. I'd highly recommend you and your cofounder do this, get at least a paid pilot, before hiring a sales rep. Only then you know that your product is ready for the sales guy/gal.

-When you're getting your first sales badass: Closers generally are slow (or bad) at generating leads. Expect things to be slow if you want your closer to cold call AND closing deals. When you're ready to speed things up, use outsourced lead gen and pay per appointments only. Generally they cost $500-1000/ appointment. Qualified leads are usually defined as 1)have needs 2)have existing budget 3)looking for solution. I'd recommend only buy appointments if you know your closing rate and average deal size.

Hope this helps.

Benjamin Caudill

March 16th, 2014

Great, thank you both for the advice!

Rick - what do you mean by getting a paid pilot before hiring a sales rep?

Thanks

Shannon Code Chief Architect

March 17th, 2014

I'm a security consultant myself (just starting in sec), congratulations and good luck. Have you considered participation in any of the security bounty programs? Research is also a great way to get know. And for this industry offering a talk at a conference or 2 might help. Another thing that I do is approach companies and offer them a free 15 hour security audit. 

These are probably pretty obvious things and not the best answer, but at 3am it's what I've got. I mostly wanted to introduce myself to you and couldn't miss an opportunity to post on a security related thread.