- If you're having trouble getting buy-in for a brand new idea, start with an existing model and build on that
- Everything takes longer than you expect. There's no need to rush if you're not ready
- Minimise costs by learning new skills and taking on some of the work you might have considered outsourcing
We started talking to maxmyrate.com.au about their online startup over six months ago. Their focus during that time has been on gathering customer data and making sure they had a viable product.
This instalment, we're speaking to partner David Nelson.
'It would be nice to think you could launch a business in a couple of weeks and then learn as you go, but the business course that started it all taught us to base every decision on data.
'That's taken longer because we're doing something new.'
David now has capacity to work full time on the business, which they hope will speed things up. 'We all have young families and we were all working full time so progress was slow.'
A new model to attract suppliers also attracts customers
maxmyrate.com.au is a service that helps suppliers (e.g. banks and other financial institutions) find customers and they help customers get the best possible rate for their term deposits.
'We have taken some time to develop a model of working with suppliers. What we were doing was a new idea for them. Now we're taking on a more intermediary role – more like a broker.'
The broker model turns out to be good for their customers too.
'Now we can help customers maximise the amount of interest they are getting by facilitating the movement of their funds from one term deposit to another at maturity.'
Licensing and reporting changes
'Our change in approach has meant that we definitely need a financial services licence (AFSL).'
The licence carries an expense and reporting obligations. In previous instalments, we heard that the maxmyrate partners had decided not to apply until they were sure their business needed it.
Because they've changed their product, they also now need to confirm the identity of customers to comply with strict customer identification obligations under anti-money laundering legislation.
'We take customer details and confirm their ID once so they don't have to go through that every time they try to move their money, as long as they are moving it through us. Removing that barrier means our model is much more flexible and attractive to customers and suppliers.'
'We're trying to minimise costs wherever we can.'
David already had technical skills and since he recently started working full time in the business, he's upgraded his development and design skills.
'I'm able to work on the new interface myself. I've been doing most of the website coding.'
'We estimate that by using free tools like Bootstrap we have saved at least $10,000 in design and development costs alone.'
The new website is currently being tested, and has been redesigned based on customer feedback and the new business model.
'We've also incorporated functionality that we can see is working very well for others in this space. We've been able to do that fast and without much cost, because we can do it ourselves.'
Scale up from small beginnings
The partners have been using open source and 'freemium' applications to ensure they keep their costs low during this development phase.
Freemium models provide a free or low-cost option for smaller customers, with a fee payable for higher value services.
'If there's a widget or some functionality that we want to incorporate, it costs us next to nothing to get the basic version. Then as we get more customers, we're able to seamlessly upgrade to a premium – higher cost – version that has more functionality.'
They have opted for cloud-based hosting, using Amazon. 'We liked their scalable cost and usage model,' says David. 'As our business grows we are able to easily deploy more storage and processing power.
'It's new technology but at least one of the big banks is moving in that direction, so that's good enough for us.'
This scalable approach is also saving the business thousands of dollars during this startup phase as they refine their product.
Still 'coming soon'
'It's taken longer than we expected, and that's partly because of our change of direction. Now we have suppliers on board so we're getting ready to launch this next model.'
The project hasn't had a high cost for the partners yet, but it also hasn’t been profitable while they confirmed the model.
'Without both sides of the market on board we could never know if we were going to make money out of it or not.
'You can take a best guess, and at some point we need to make a leap of faith; we just need to get it going.'
We are talking to the partners at maxmyrate.com.au every three months as they start their business journey. This is the third instalment. Read the first instalment 'How to build a small business' to find out how the partners at maxmyrate.com.au improved on their original product idea and went to market with a much better chance of success. The second instalment 'Improve your online user experience' to read more about the insights they received from user feedback and how those insights were incorporated into the website.
To see how maxmyrate is going in three months, sign up for the Small Business Victoria Update.
The partners at maxmyrate.com.au are still refining their idea but they're much closer to a viable product than they were six months ago. They have sought customer feedback and have managed to find a model that suppliers want to be involved in and have also added value to what they were offering customers. They've also saved $10,000 by using freemium and cloud-based solutions.