Preparing your software product for an exit takes a lot of consideration and planning. It isn’t all about new features or the next phase. It’s the entire strategy that can really make your software sing to investors. It can a bit overwhelming, and it is better to start at least one year in advance of an exit if possible. Here are six things to keep in mind while you’re preparing.
Development Platform
If you’re using a legacy platform, revisit your priorities. How much time does your team spend on support issues? What kind of issues regularly resurface?
Speed is usually the most common complaint about outdated software. The prime advantage of software is supposed to be delivering information quickly. If users are waiting on a loading screen too often, they’ll be ready to move on to your competitor. Regular maintenance is always going to be part of any software project, new or old. Keep an eye out for red flags that indicate a need to rewrite or make improvements along the way. You should never stop innovating if software is a critical part of your business plan.
Growth/Market Saturation
Have you saturated your niche market? Have you considered reaching other industries or expanding your offering? Can you sell more to your current customers?
Winning your market is the biggest challenge and the biggest reward. Once you’ve decisively won a small niche, think about how you sell more to your current customers or expand outside of your niche. New customers are essential to growth, and if you can’t keep the pipeline flowing, some buyers will lose interest.
UX
Is your product simple to use? Is it as easy as it can be? Does it need a tutorial or demo? Do you get a lot of initial concerns from prospects? How is your active user retention?
Presenting your solution well is key. Give your customer what they’re looking for quickly and easily. Every industry is different when it comes to user onboarding and retention. Some industries by nature have drastically different standards for user retention. Tracking the details of how and when customers use your software will give you the information you need to help them succeed.
Customer Success
What automated and/or manual process do you have for ensuring customer success on your products? Are you monitoring reports to suggest better usage?
Customer success is an important part of the process, and it will help you monitor and report issues with retention more easily. Dedicating someone to reach out to your customers to assist can drastically change your retention. It is a simple process, but you need the right systems in place to document any concerns or compliments. Easily running reports on customer success can help point to issues and successes, and it’s very valuable to future buyers.
Talent Attraction
Does your software help you attract talent to your company? Are you considering talent availability as you make decision on your software stack?
The team and culture you build shapes the nature of your company and its growth. The software stack you chose shapes the engineers you hire and where you look for them. If you’re software is innovative, and you’re focusing on popular, open-sourced technology, hiring will be easier for you.
The team you build and the ability to grow that team, in addition to the tech, will matter to your acquirer. They want to feel confident your team understands the tech and can build on their future growth plans.
Defensibility
How are you protecting your product or service from current and future competitors?
The stronger your product is in defending against competitors and new market entrants, the more attractive it will be for potential acquirers. Make larger companies think twice about competing with you and they’ll be more likely to want to buy you.
Ways to be more defensible:
– Customer retention/loyalty
– Exclusive partnership/distribution channels
If you’re looking for a technology partner to help you prepare your software for an exit, we’d love to hear from you and understand how we can help.