An entrepreneur emailed me recently asking for advice about his Software-as-a-Service (SaaS) business. After several years of working on it, and signing up hundreds of customers paying a small amount of money, it became clear that it wasn’t a viable business. That is, by all accounts, product-market fit was reached but no matter how hard he tried, there wasn’t a repeatable customer acquisition process that could scale it to a multi-million dollar revenue business and make it worthwhile. This is one of the most challenging cases: years have been invested, customers clearly want it, and there’s no sustainable business in its current form.
Here are a few questions to ask when a product works but a business doesn’t:
- Are there any adjacent markets or opportunities that can use the expertise developed with the first product?
- How excited is the team about the opportunity? Has any fatigue set in from the current product?
- Is the product a must-have or a nice-to-have? What would it take to make it a must-have?
- Can you sunset the product or wind it down such that customers have time to switch to a different product?
- How much effort does it require to keep it running while moving to a different product? Can focus truly be put on something else without worrying about the first product?
Products that work with business models that don’t actually happen more often than expected. Inevitably, some ideas aren’t economically viable even though they look great from the outside looking in. Even though it’s hard, sometimes the best approach is to stop throwing good money after bad and pivot or iterate into a better opportunity.
What else? What are some other questions to ask when a product works but a business doesn’t?