By Scott Skinger an EO Chicago Elumni and president of Train Signal, Inc.
Last year, my information technology training company, TrainSignal, was raking in profits. Since I first bootstrapped the company 10 years ago, we had managed to grow our revenues every year, and have been profitable since 2003. That’s when I decided to transform TrainSignal from a DVD model to an online SaaS subscription model. Making the switch, I knew we stood to potentially lose hundreds of thousands of dollars for up to a year. But like many entrepreneurs out there, I first founded my company with a crystal clear idea of what I wanted to accomplish. After taking a step back to assess whether my business was continuing to fulfill our goals, I realized it was time to make some aggressive and yes, scary, decision to keep the business on track. Shaking up your business model shouldn’t be a blind leap of faith. Here are four points I thought through carefully before taking the plunge.
Know Your Industry
I’ll be direct about this: Businesses that don’t grow and change, die. For TrainSignal, we certainly could have chugged along with our current model for a few more years. But we saw that DVDs were going the way of the dinosaur— we’d only be putting off the inevitable transition to the cloud. To continue being a leader in our industry, we had to completely shift our business model in order to put the best training tools possible in the hands of our students.
Know Your Customer Base
Keeping your customers front of mind while planning for a revamp helps you ensure the stability of your existing customer base, while making moves to broaden your reach. We conducted a survey of more than 2,000 IT pros and found that almost 70 percent prefer online video training over traditional and expensive classroom or textbook training methods. Our users were already in the digital age and it was our job to meet them there. Furthermore, by making our services on-demand and cloud-based, we could make our training more easily available to IT pros for the times they need it most – on the job. 69 percent of respondents to our survey said that they refer back to training materials at least monthly, meaning that they want to be able to access our service from any device at any time. Knowing what our customers wanted made the transition to the online platform a no-brainer.
Know What You Stand To Lose
It’s essential to be aware of what you can, and likely will, lose in the process of making a major change in your business. Moving to the cloud made sense for us in the long run, but moving away from our legacy model meant that we were going to lose a lot of money while we were gaining traction with our new model. Building out conservative financial projections for the new model allowed us to prepare for these losses, and afforded us insight into how much cash we would need to survive. Because we’ve been profitable for many years, we were able to retain cash within the business, allowing us to lose money for a year and giving us plenty of time to create traction for our new offering.
Know What You Stand to Gain
Know what your end goal is, and have confidence that you will get there. Shifting to an online platform was a huge disruptive move for us. But it has given us access to a much larger audience than we ever had with the DVD version of our business. Now that our training is accessible online, we are getting interest from aspiring IT pros around the world.
Because I took the time to consider all these parts of the business before disrupting our working business model, I feel confident that my company will emerge healthier than ever before. I also feel fulfilled because I’ve stuck to the vision I founded the company upon: to create the best IT training products and to make them available to as many aspiring IT pros as possible.