Skedsheet Blog

Where we talk about the product, calendars, organization, and business

Will your vendor be around in 5 years?

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Going Out of BusinessA common question prospects ask software companies is: “How do I know you’ll still be in business in a few years?” It’s important in determining what to buy because you don’t want to hitch your wagon to a sinking ship.

One answer I heard (and said) a lot in the Bay Area was “We are backed by a respected venture capital firm.” All that means is the VC is probably going to stay in business, and the investors in the VC will be around because they’re billionaires and pension funds. But for the startup, it simply means they’re going to spend lots of money trying to be a big success, and if that doesn’t work, they’ll go out of business.

I think the best answer you’re likely to hear is:
1) We’ve been around a long time
2) We have lots of customers
3) We’re profitable

That’s the answer I would give if someone asked about Moraware.

After seeing the carnage of two bubbles bursting over the past 10 years, I think there’s a fourth aspect that is important:
4) We have the flexibility to adapt to a changing market

Unfortunately you probably won’t find out about that one until it’s too late.

A common problem we’ve recently seen in the countertop fabrication business is companies who borrowed heavily to expand their production capacity. The new buildings and machinery costs millions, but when demand dropped, their high fixed costs put them out of business. We saw other companies outsource their extra capacity needs, and when demand dropped, they could adjust and survive.

Another area of flexibility we have seen is having a diverse set of customers. For the construction industry, companies serving residential and commercial, for new construction and remodeling have certainly fared better than those exclusively doing new residential construction.

As a company that survived this downturn, I’ve heard prospects at trade shows say this gives us more credibility in their eyes. I’m sure we would have done better in the past few years if our customers were less concentrated in the construction industry. So hopefully Skedsheet will allow us to diversify our customers a bit more, providing us even more flexibility as the market changes.

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Written by Ted Pitts

June 5, 2009 at 7:34 am

Posted in Uncategorized

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