Entrepreneur Support:
Building a new company can be one of the most rewarding activities you may accomplish in your life. Those rewards often come not in the form of large sums of money, but in the forms of new and interesting challenges.
The Channel
Most software is sold through the channel. Manufacturers sell to Distributors; Distributors sell to Resellers; Resellers sell to Customers.
This model is focused around creating efficient operations for large software companies. As a startup, you will need to utilize the parts of this model that you can while working around the model as much as possible.
As a startup, you will not be able to work directly with Distributors. Distributors are simply too large to be interested in your new product, no matter how good it is.
You will be able to market your product through a limited number of resellers. Each of these resellers will need to be approached individually and sold on the value your product will bring to their customers. The payoff comes when you sell a reseller and that reseller then sells multiple customers. You will also have to support your resellers throughout the sales process. Resellers can be of great benefit to you, if you manage them wisely. If you do not, they can be an enormous time sink that distracts you from the tasks you need to accomplish to be successful. Resellers buy software from software manufacturers at a discount and then mark it up for sale to end users. Discounts to resellers are normally within the 25-35% range. You should be careful not to compete with your resellers, or they will rightfully abandon you and your product. End-user Customers are the key sales target of successful startup software companies.
Continue reading: Starter Customers
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