According to BLOOMBERG, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. On April 1st of this year, TRADITION SOFTWARE, INC. celebrated a critical business milestone with its 10th year anniversary.
Eric T. Wagner of FORBES MAGAZINE wrote in 2013 five (5) reasons that businesses fail. Here are my thoughts as to why TRADITION SOFTWARE and its great team of employees bucked the trend and succeeded for ten (10) years.
Reason #1: Not really in touch with customers through deep dialogue.
Within the first thirty (30) days of purchasing SIERRA PHOENIX, I traveled to Phoenix, AZ (no joke) to meet with customers. Subsequent customer trips occured in the Midwest, Texas, Florida, and much of both Southern and Northern California. I heard loud and clear the previous owner provided poor technical support, a buggy software product, and notices that rarely were legal. With the help of several current and past employees, huge strides were taken at a great expense to greatly improve all three of these areas.
Reason #2: No real differentiation in the market (read: lack of unique value propositions)
PreLien2Lien’s main competitor is Lien Writer, formerly of PASE SOFTWARE and now owned by GOLDENOMEGA.NET. Since Lien Writer and PreLien2Lien were part of the same company in late 90’s, their GUI (Graphical User Interface) looked remarkably similar. Miriam Liskin, Software Development Manager and I went about clearing a lot of clutter off the main data entry screen. We made the print menu state specific by document titles. We religiously made sure technical support at our 800 number was available first thing at 8AM PST when we opened, and was available until 4PM. I personally re-wrote sixteen hundred (1600) legal notices in the software. And we licensed German software technology that made it easy for notice customization. Finally, we decided the total cost of ownership for PreLien2Lien should be at least 50 percent less than our competitors.
Reason #3: Failure to communicate value propositions in clear, concise and compelling fashion.
The first day TRADITION SOFTWARE, INC., a California S-corporation was open for business was April 1, 2005 (no joke again). I wanted our verbal communication, website messages, and marketing collateral to communicate three (3) things:
1) PreLien2Lien is easy to use.
2) PreLien2Lien is legally compiant.
3) PreLien2Lien is reliable, with overall uptime across all customers at 99.99%.
Since we continue to acquire new customers nationally while keeping each year an overwhelming majority of our customers, we feel we have succeeded with our unique value propositions.
Reason #4: Leadership breakdown at the top (yes — founder dysfunction).
TRADITION SOFTWARE has been led by myself since our inception. The technical backbone of the company is headed up by a nine (9) year employee, Miriam Liskin. Together we have made several good hires. We priced our products and services correctly from the start, with only one (1) price increase in 10 years. The company has never been taken to court, never bounced a paycheck and navigated through both the difficult housing downturn in 2007 and my personal divorce in 2013.
Reason #5: Inability to nail a profitable business model with proven revenue streams.
Within two months of purchasing PreLien2Lien, we added a time-bomb lease feature to the software, requring an Annual Subscription to be current. This represents 60% of the company’s annual revenue, with new software sales representing 20% of the of the company revenue. In 2009, our TRADITION LIEN SERVICE division was started. Five years later three hundred and thirty (330) companies are under contract. This represents the remaining 20% of the revenue.
Along the way, not every decision has been perfect or easy. TRADITIONINK.COM was launched in 2005 as a national ink and toner online retailer division. Consolidation in buying behavior with behemoths like AMAZON.COM have severely impacted that business unit. Marketing initiative with trade show participation at NECA (National Electrical Contractors Association), World Of Concrete and CFMA (Construction Financial Management Association) and youth sports sponsorships produced poor marketing returns. And the software world is moving towards “Software as a Service” (SaaS). I shudder to think what my day will be like when a website for PreLien2Lien goes down on a business day.
As we go forward, our commitment to improving our easy to use software solution that is legally compliant and reliable will continue. As Andy Dufresne says in THE SHAWSHANK REDEMPTION “….hope is a good thing, maybe the best of things, and no good thing ever dies.” That quote, along with one I gave to my Batavia High School (Batavia, IL) 1982 graduating class as Farewell Address Speaker on June 3, 1982 “… “then give to the world the best that you have, and the best will come back to you” sums up my focus going forward. Hope, and giving my best will enable TRADITION SOFTWARE as a market leader to keep helping its highly valued customers with products, services and solutions for construction lien management.