Shit shit shit shit shit!
Shit shit shit shit shit! That’s a lot of shit. Much like Four Weddings and a Funeral, my October started with a lot of good old middle-class, English, swearing.
In September I had increased the price of BugMuncher’s Corporate plan from $99 per Month to $399 per Month, an undeniably sizeable increase. However, while the price had gone up by 300%, what came with the plan went up by over 900%. And as I said in part 2, I was grandfathering my existing subscribers, so they got the huge increase in features, while still paying $99 / month.
I had all my bases covered, nothing could go wrong, or so I thought.
There was one angle I hadn’t considered: What if someone signed up for the free trial when the price was $99, and then went to buy a Corporate subscription, only to discover the price had gone up to $399? It’s very unlikely they’ll remember what the corporate plan used to come with, so it will just look like a big price hike. I know I’d be pretty pissed off if that happened to me.
But what are the chances of that happening? Well, pretty high as it happens.
Not a great way to start the month. Having lost a Corporate plan subscriber last month, this was the last thing I wanted to see. Shit shit shit. Once I’d managed to stop saying ‘shit’, I composed myself, and my response:
At the time I just typed out what I was thinking, but looking back, I’m pretty happy with my response. It starts with an apology, goes on to explain why the Corporate plan is now worth $399, and then offers a discount to make things right. They must have been happy with it as well, as they signed up for the discounted Corporate plan at $199 / month.
I know a 50% lifetime discount is a big hit to my ongoing revenue, essentially losing me $2,400 in potential income each year, but I already had 2 people paying $99 / month for the Corporate plan, and this customer just missed out that price by a few days, so I stand by it.
My Purple Cow
Having finished September feeling pretty good about everything, my mood and optimism were starting to slump. I wasn’t even sure why. I’d gained two new paying subscribers within the first week of October, bringing in an extra $218 each month. I knew that one of my Start Up ($49 / month) subscribers had cancelled, and their subscription would expire this month, but I was still up overall.
I just had that general sinking feeling that this whole gamble wasn’t going to pay off. I didn’t want to go back to freelancing, I didn’t want BugMuncher to be a side project again, and I really didn’t want to have to get a real job. Especially as getting a real job would most likely require moving away from North Devon - it’s a beautiful part of the Country, but Ruby Developer jobs are rare at best. I spoke to my girlfriend about my fears, and she was awesome as always. She’s been amazingly encouraging from the start, putting up with me working longer hours, and always believing in me. I think that’s one of the most valuable things any Founder can have.
I decided that if it did start to look like my savings would run out, I’d look into getting a small investment or loan. I felt a bit better knowing that.
I was determined to really focus on marketing this month, my bedtime reading consisted of books on marketing, including Purple Cow by Seth Godin. It was this book that triggered this series of blog posts, and some other changes throughout BugMuncher. I’d been living in fear of my solo-founder status, but Purple Cow inspired me to embrace it, after all, it’s the one thing that sets BugMuncher apart from my competitors.
The first thing I did in my efforts to embrace being a solo-founder was to change the account welcome screen:
Updated Welcome Screen
So far around 30% of new users have chosen to fill in at least some of the fields, which is pretty cool. I particularly love when users fill in the how are you field.
But if you look closely, that screen never actually says I’m BugMuncher’s only employee, so I chickened out a little bit (which reminds me, I should fix that). The real change came the next day when I wrote and published Part 1 of this blog series. Like all my blog posts, I submitted it to Hacker News, a few choice sub-reddits, Bootstrappers.io, and Twitter. The only difference was people loved this post.
I received so many encouraging comments, it was even retweeted a fair few times. Even more amazing, people were subscribing to receive updates by email. By the end of the first day 20 people had subscribed, I couldn’t believe it. Traffic received a huge spike due to that post:
The surge in traffic didn’t really bring many more sign ups, but I honestly wasn’t bothered. Unlike pretty much every other post on the BugMuncher blog, I didn’t write this one to try and bring more potential customers to the site.
This wasn’t content marketing, this was therapy. Going over the numbers while writing it, as well as the response it got, really alleviated a lot of the fear I had been feeling. I couldn’t wait to write Part 2.
Cold Emailing
One particular comment on Hacker News blew my mind hole:
Their maths was spot on, 6 people signing up to the Corporate plan would bring my total monthly recurring revenue up to $3,114 - surpassing my goal of $3,000. Although their maximum of 40 new customers wasn’t quite right, it would take 120 new $19 subscriptions to reach my goal.
I’d always planned to do some cold selling, but put it off as, quite frankly, it’s scary. That comment was like a sword with which I would slay the big scary cold selling monster.
And so I hatched a plan to start phoning companies. While researching what I should say on the phone, I kept seeing people saying emails are more effective. This made me realise that I personally am much more likely to check out a company that emails me instead of phoning.
Thus, I hatched a new plan to start a cold email outreach campaign, which conveniently was less daunting and would be less time consuming than phoning. Score! I started researching cold email campaigns, and read through any cold emails I’d been sent from start ups. I also researched spam laws, and found that contacting companies is generally fair game. I had no intention of spamming anyway - I was going to be manually finding prospects, not buying lists. And of I’d course respect any requests not to be contacted again.
I decided on a personal approach: plain emails without images, I’d address the recipient by their first name, keep it short, and send it from my personal BugMuncher email address. Now all I needed was software to manage the campaign - I couldn’t use my Mailchimp account, as they require a double opt in. All the services I found seemed to come with a bunch of features I didn’t need, and charged a lot more than I wanted to pay. All I wanted was to send a simple email, and track opens and clicks.
In the end I spent an afternoon knocking up a really simple solution myself, in which I could enter a prospects email address, name, company, website and category. A neat feature was that it would take a best guess at their name, company and website based on the email address. I could then write a simple email with a single click-tracked link to BugMuncher, and an open tracking pixel would automatically be added.
Throughout the next week I emailed to 90 prospects. 49 (54%) of whom opened the email, and 15 (17%) clicked the link. I only had one person opt out, and that was because they didn’t work at the company any more, not because they didn’t want to be contacted.
So far no one has signed up from one of my emails, but it’s still early days, and I’m pretty happy with the open and click rates for my first attempt.
Savings
At the end of October I was finally able to figure out how much money I had saved. Up until then it had been largely guesswork due to me not keeping up to date with my accounts, and freelance invoices still being sent out. The full breakdown is:
- £15,727 In my business bank account
- £6,000 Saved in a separate business account to pay corporation tax
- £462 Owed in freelance invoices
- £2,000 In personal savings
It occurred to me that for the first time in my company’s history, the financial year for 2015/2016 would most likely incur a loss. I spoke to my accountant about this, and learned it should be possible to offset some of that loss against the profit made in the previous year, allowing me to claim some of the £6,000 corporation tax back.
So all together there is £24,189, but really I shouldn’t spend any of the £6k I’ve set aside for tax until I know how much I’ll be able to claim back, so I’m going to calculate my savings as £18,189.
Using Trevor Blackwell’s Startup Growth Calculator, working from my current recurring income of around £400 / month, and expenses of £1,700 / month, I only need 7% month on month growth to achieve profitability before the savings run out. Considering I’d originally been aiming for 10%, and I averaged 5.3% MoM growth when BugMuncher was a side project, 7% seems very achievable.
The Figures
| This Month (Oct 2015) | Last Month | Change | |
|---|---|---|---|
| Savings (end of month) | £18,189 | - | - |
| Monthly Recurring Revenue | $720 | $551 | 30.7% |
| Average Month on Month Growth | 7.8% | -11.1% | 47% |
| Paying customers | 17 | 16 | 6.3% |
| - Personal Plan | 9 | 8 | 12.5% |
| - Start Up Plan | 5 | 6 | 16.7% |
| - Corporate Plan | 3 | 2 | 50% |
| Unique users on landing page | 3,404 | 2,662 | 27.9% |
| New Free Trial sign ups | 47 | 34 | 38.2% |
| Free Trial sign up rate | 1.38% | 1.28% | 7.8% |
| New Paying customers | 2 | 2 | - |
| Lost Paying Customers | 1 | 3 | 66.7% |
| Free Trial to Paying conversion | 6.38% | 5.59% | 14.1% |
Look at all that green, things are definitely looking good right now, maybe “Shit” x 5 was the wrong title for this entry :)
Growth
Now that I’ve got two months under my belt I can start to analyse my month on month growth. As I mentioned earlier, I need at least 7% average MoM growth to reach profitability before my savings run out. So far I’ve averaged 7.8% revenue growth each month, so I’m slightly ahead of my target, but really I’d like to be hitting 10% MoM.
Last month was my second best month ever in terms of users viewing the website, second only to July 2011 when I launched BugMuncher and got some good press. Well October was even better, 3,404 unique users viewed the website, making it the best month BugMuncher has ever had!
It’s really cool to be able to look at that graph and see the effect my working full time on BugMuncher has had. Admittedly my sign ups haven’t quite increased by the same factor, but there are noticeably more people signing up for the free trial each month.
Closing Statement
Considering I’m supposed to be 100% transparent in this series, I feel I owe you, the reader, an apology. I’ve repeatedly said I was giving up freelancing, and that from this month (October 2015) I would be all BugMuncher, all the time.
That was a lie. I’d actually been planning to keep one freelance client on. I’ve been working with this client for 7 years, since I first started freelancing, and he’d been awesome to work for. He even paid all invoices the day they were sent, that’s the kind of client you hold on to. I’d usually only work one or two days a month for this client, so I had planned to keep doing that, the extra income would definitely be useful.
However it didn’t work out that way. I found myself putting off working for this client so that I could work on BugMuncher. It would sometimes take me days just to reply to an email, which was very unlike me. And when I did finally do some work for them, it wasn’t up to my usual standards, as BugMuncher would always be on my mind, and I’d rush jobs so that I could get back to working on BugMuncher.
At the end of October I realised it had to be all or nothing, so I told this client I would no longer be able to work for him. Of all the clients I’ve fired, this was by far the most difficult for me to do. Having worked for him so long, it was more like ending a friendship than a working relationship.
But, I can now say, with complete honesty, that I am no longer freelancing. 100% of time will be focussed on BugMuncher.
It’s both liberating and terrifying.
- Matt Bearman