I started a SaaS company with a friend about a year and half ago. I'm technical, he is not. His role is more on the networking/business relationships side, and then helping wherever he can, but unfortunately I've found that 95% of the work falls on me (coding, design, and some marketing).
We hit a breakeven point recently, which is really awesome to an extent, and we have a decent number of active subscribers at this point (few thousand). But our marketing spend is eating up 85-95% of our income. After other spending, we are at breakeven, if not slightly in the red.
I'm EXHAUSTED. I have one developer helping me now part time, but it's only relieving the slightest bit of pressure. Not to mention, our platform is in a bit of a niche area so I haven't yet found a developer who can actually cover the whole range of features we're exploring.
I'm also getting to the point where I need to make money, very soon. My cofounder doesn't feel that because he's in a much better general financial position than I am.
I'm feeling heavy stress and anxiety, and I'm also feeling resentment towards my cofounder as I'm having to handle the most hours and the most complex work. Also, my work is always pressing whereas his is more relaxed and exploratory in my opinion – thinking about possible new features, etc.
We're supposed to be raising money, but that hasn't happened yet. It seems it's harder now than it was last year. I'm getting nervous anyway – I worry about my ability to keep at this work/stress level long term, even if we have investment.
I'm starting to doubt that I'm built for this type of life honestly. I'm having a hard time separating if that's actually true, or if it's just because so much falls on me.
Has anyone felt this? What ended up happening? What do I need to ask myself before I can make a decision on whether or not I should continue grinding away at this? How long do people usually work on a startup idea that isn't making profit before they decide to kill the idea?
We're at breakeven, but I'm drowning. Advice?
byu/missmaggg inEntrepreneur
Posted by missmaggg
4 Comments
Raising money at break even will be tough. It’s not 2021 anymore, VC’s want to see profitability before throwing money at a project. And even then it’s still a “maybe”.
You mentioned all of your profit is going towards marketing – are you simply leveraging paid ads? It’s an expensive and unscalable motion, plus it’s getting less efficient by the day if you don’t have a truly solid brand, position, value prop and overall strategy.
How niche is your market exactly and what online platforms do your buyers spend time on? An organic marketing motion could be the play here.
If you have a decent growth rate, are cashflow positive, decent retention, and a team that looks decent – you CAN raise. Especially if you’ve got something in the AI space.
You’re in the stage where you need to just stop thinking about the trek up the mountain, and just get to climbing. Just do it. Not getting enough customers? Look at things objectively, and try everything. Pretend you aren’t attached to your company, would you buy what you’re selling? Would you realistically follow through to conversion with the marketing you’ve set up? Be ruthlessly objective with yourself and do what needs to be done to get to the next milestone. Whether that’s a raise, or more customers.
Think about it, if you built it and someone is paying, odds are you have something that has value. Now, how do you realistically position your company. If you fail to do that in a reasonable amount of time, you run out of money. So be ruthless with yourself, and your co-founder.
If you truly believe you have a dud of an idea, and there’s no reasonable path for you (whether it’s due to reality or your own exhaustion), then yeah, maybe throw in the towel. But if you got to breakeven, I feel the exhaustion is the bigger problem. Start gradually paying yourself more until you get to a healthy salary. It doesn’t have to be equal to your co-founder.
My story:
I’m tired too. My company has been cash-poor, in debt, constant fires since Q3 2022. 2 years of pain. Finally, though, I’m seeing the light at the end of the tunnel, we’ll reach profitability in a few months time. I also want to make good money. My company is doing really well in terms of revenue, we’re at nearly $30M ARR: but we’re so huge, we’re spending so much. I pay myself a tiny amount. I didn’t even have health insurance until having to go to the hospital without insurance last week scared me straight, lol. We had 1.5 years where things were going well, we raised money, we spent it all on sales & marketing in pursuit of a Series A, but then the goal posts moved in 2022. Before that 1.5 years though, we had another 2 years of suck.
In any case, yeah, this stuff is hard. Getting to become a millionaire or billionaire or whatever it is, is hard. Being the only person willing to move the ocean liner that is your company away from the iceberg of death sucks, and is tiring, but if you don’t do it: you’ll crash. I am in the same position as you. I also find it unfair, tiring, taxing, etc. but I know if I don’t do it, my company will probably die, and I’m going to waste “my shot” at being a CEO, financial and ideological freedom, control and autonomy, and having enough money to do whatever I want. I see what numbers will look like 2 years from now, and so I personally think the torture is worth it.
I guess, it’s for you to decide if it’s worth it for you! I biasedly lean towards **yes**: for most people, you only realistically get one shot to do something like this unburdened from responsibility. Take yours!
I’m seeing lots of rounds getting done for unprofitable companies and things are much better now than they were 12 months ago. How are the user retention and growth metrics?
Openly communicating has always been the biggest help for me. I was in business with my brother for a couple of years. I had a lot of frustrations with the way work was going, and we didn’t see any growth in those couple of years. I felt like I couldn’t communicate my feelings or thoughts because I wasn’t the majority shareholder.
Finally, I had a breaking point and I told him everything I was struggling with over lunch. I thought it was going to hurt our relationship as brothers, but instead, it was probably the best conversation we could’ve had. It was uncomfortable in the moment, but we were able to work a lot out and re-establish our priorities. It ended up with me walking away from the company and pursuing my own opportunities. Not saying that’s what should happen in your situation, but talking it out without beating around the bush might help you get to a better place with your situation.
After my conversation with my brother, it was a very stressful time, but I felt so much more rejuvenated and excited to push through it because I felt that I got my spark back.
Good luck!