5) Product companies must avoid the consulting trap.
If you produce a software product and (or any product for that matter), you will always be inundated for specialty, one-off, requests from customers. These requests are well intentioned, but you can’t let your time and direction of a single customer drive your feature set. The exception to this rule is obviously if you are getting similar requests from multiple customers. If you start building special features for single customers, ultimately you will barely break even, and may go broke trying to please them. At some point (now), you have to say this is our product, and this is our price, and these are the features, and if a customer needs specialty features, you will need to politely decline. If your competition takes up your account on promises of customization, you can be sure they are spreading their resources thin.
6) Validate your product see if you can sell to strangers.
Early on, you need to sell what you have to somebody that is not a friend. Friends are great for testing a product, or making you feel good, or talking up your company, but for real honest feedback on whether your product will be a commercial success you need to find somebody that buys your product. I don’t really care if it is a $10 sale or a $10,000 sale, it is important to establish that somebody is willing to purchase your product. From there, you can work on pricing models. Perfection is great but don’t stay in development for years making things better and perfecting your support channel, or whatever. The reality is you have to sell something to build momentum and delay to market is your enemy. If you do not find customers willing to commit their hard earned money for your product at some early stage you do not have a product.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private company transactions, valuations and financials in India. Click Here to learn about Venture Intelligence products that help entrepreneurs Reach Out to Investors, Research Competition, Learn from Experienced Entrepreneurs and Interact with Peers.