Ask HN: Profitable startup's small revenue. What next? | Hacker News Reader

Ask HN: Profitable startup's small revenue. What next?

4 pointsBinaryBird7 comments

Hi guys,

Two years ago, we launched our startup (all previous attempts didn't even last an year). It started out slow, but picked up gradually. Today, its one of the top 3 web services in its 'genre', in terms of traffic and market share.

We started as a free service, but moved to a 'freemium' business model last year. Our revenue comes from paid plans and advertising. Our monthly revenue ranges between $500-$1000. We are working on a few other avenues for marketing and promotion, which can increase our revenue.

We have no immidiate plans for IPO, or selling our startup, or finding an investor. We want to continue growing our startup organically.

But, I've been thinking about expansion a lot lately. I was wondering, how can one grow a startup once it reaches a profitable stage yet small-scale (like us at the moment)? We have revenue around a few hundred dollars coming in, but how can we take it to the 'next level' and increase our sales volume as well as profit margin?

Any advice, suggestions, or views are most welcome. Thanks!

A few things:

Marketing to existing customers. Is there a new product your existing customers also wish you made? Is there anything else they would pay good money for you to add on? Look for competitors that do what you do and see what else they offer. See if they've given any clues on their website to what else their customer's like. Heck, find their customers and market to them. Do a bit of competitive intelligence, see what else customers want, and confirm it with your customers. Its never too early to get a whole new product line in the works.

Market through existing customers: Call up all your biggest customers and check in and see how they're doing. It works especially good if you have a new feature you've added on to their subscription that you're announcing to them. Encourage them to use it, then say "We're looking to expand and grow our business, do you know any other companies that might be interested in our products?" Don't pressure, just ask, and if you get a name, follow up with them. Don't use the existing customer's name without permission, but ask if you can i.e. "Bob from Wigit-MakersPlus suggested we call you..."

I would do basic advertising research. Even if you don't decide to advertise. Think, where would you go to advertise? Who are your potential customers, and where can you find them? Who do you contact at the company to get a sale? I wouldn't discount online advertising, such as feed sponsorships or niche websites. If there's a blog or site many of your customers go to, find it. If it doesn't do advertising, contact them and ask to be a sponsor, you might get a great deal.

If every single customer is profitable, expanding your business involves getting more customers, but like someone else mentioned, increasing the profit margin on each sale is important as well.

Automate as much as possible. Reduce the time you need per customer, so if you record how much time you need for current customers -- then multiply that out. If you had 2x the customers would you be able to support them properly? How about 10-50x?

Is there anything you can do to make the existing customers happy? If you keep concentrating on them, more will follow.

Just take it slowly... don't do massive advertising/marketing spends all at once. Control the rate of new customers you get.

Each time you grow you'll probably find issues, so best to do it slowly... otherwise everything could fuck up.

It's tempting to go 'oh things are working now, let's throw $20-80k at advertising tomorrow and see what happens!'

Nothing worse than having 20,000 angry customers.

True. Thanks for your viewpoint.

Althought our service is completely automated, still internal process automation has been our core initiative. While we haven't been able to achieve as much as we wanted, but we did streamline a lot of our processes.

Marketing, marketing, marketing. Become a 'sponsor' of other companies, and look for a target audience. Just do anything you can to make people aware of your product.

Start sending emails, get on the phone. When you find people, give them a reason to use the product you're trying to sell.

Start sending emails, get on the phone.

We were thinking on similar lines, for an offline marketing strategy, which by the way, we haven't utilized at all.

Thanks.

Congrats!

You made it further than most startups ever do. Can you share with us what you do?

I'd echo imawesty's advice: expand and profit by acquiring new users.

Best of luck -

Thanks!

While I can't share specifics of our operations due to privacy concerns, I can share some general thoughts ...

I've had a series of 'startup setbacks', but this time, I guess the one main thing we did differently was: to build something that people are not only willing to use, but also willing to pay for. We saw plenty of examples where people loved to use stuff for free, but didn't find much 'value' when it came to paying for it. If someday Gmail went paid, a vast majority of users will not pay and move to other free email services. So our challenge was to mould our idea into a 'product', not just a fancy application.

I guess the other reason we saw some success was because, although our product has atleast 10 competing services, but we focus on simplicity of use, which I think attracts a lot of Web users these days.

And yes, we didn't give up, even when things weren't going well. I kept saying to myself: whatever happens I'll not pull the plug.

We still have a long way to go.

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