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Lessons POS Software Startups Can Learn from Their Predecessors

Lessons POS ISVsWhen software startups are ready to bring their new ideas to market, the last thing they want to think about is failure. However, identifying potential points of failure – and avoiding them – are crucial to the success of a new company.

Startups fail for numerous reasons. In an industry that is already oversaturated, founders must consider how their new solution will disrupt the marketplace. Point of sale (POS) software startups face the real possibility of getting outcompeted or running into regulatory challenges related to PCI DSS compliance.

Understanding how other companies successfully navigated those challenges can help you find your own path to success. Established companies have learned these lessons, sometimes the hard way. Use them to make your journey a little easier.

1. Understand the Market

Market research is crucial for understanding whether your POS solution resonates with your target audience. Do merchants need your new offering? Often, the most successful companies have found “riches in the niches” because they understood a specific vertical and how their solutions can fill gaps in that market. Keep in mind that 42 percent of software startups failed because of poor product-market fit.

In today’s modern landscape, how payment processing integrates with your solution will impact its relevance in the marketplace. POS software startups should consider partnering with a provider of modular payment options for specific verticals or industries. This helps niche markets benefit from the security-centric, versatility modular payments bring to the table. Merchants have the flexibility to add the modules that best meet their needs, including omnichannel gift cards, e-commerce, and alternative payments.

2. Secure Funding

Securing funding can seem daunting–after all, failure to raise capital is the number one reason startups fail. However, the most successful companies find ways to engage investors. For example, you can consider contacting alumni networks, business groups, and colleagues with whom you’ve collaborated throughout your career. This will help you develop a short list of key prospects with whom you already have a past, positive relationship.

POS software startups also need to demonstrate the need for your product, the value it provides, and how it stands out in the marketplace. A minimum viable product (MVP), validated for your market, will help you gain buy-in you need to raise capital and expand your product.

3. Stay Nimble

Even though you’re at the beginning of your company’s history, you need to build the ability to adapt into your processes. For example, stay open to the idea of not locking in a single operating system that might limit your market reach. It’s also best not to tie “all your horses” to a single payment processor or one payment device OEM. Give your users the freedom to choose the processor and devices they prefer. Also, give them the flexibility to adapt to industry changes with processor-agnostic tokens that make it easy for them to accept payments on any channel. Agility in your operations and for your customers will put you in the best position to succeed.

4. Build the Right Team

A significant number, 14 percent of software startups fail due to not having the right team. Tech expertise will be critical for successfully building an MVP that not only works but also has relevance and demand in the marketplace. However, founders also need to consider that team members need other skills. Software startup leadership must be committed to building a strong culture that is service-oriented and prioritizes teamwork, respect, and integrity. The leadership team you create will set the course for your business.

5. Build Strong Reseller Partnerships

If you intend to sell through a channel, planning and establishing a partner program early is important. Recruit partners with the right skills and background to help you position and sell your solution. Also, decide how partnerships will work and the level of participation partners will have when providing your software, for example:

  • Affiliate Partners: Act as independent marketers, influencing prospects to become customers because of the weight their recommendation carries within the industry.

  • Referral Partners: Leverage their existing expansive audiences to help you build your customer network.

  • Reseller Partners: Act as an extension of your own sales team, helping your POS software solution expand into new marketplaces and territories.

Choose the model that will help expand your market reach and provide the best service to your customers. Remember, however, that partners will need your support for mutual success. Offer good margins for promoting your products as well as technical and marketing support.

6. Build Strong Industry Partnerships

Success in the POS and payments industry often involves collaboration rather than solo efforts. Even companies claiming to be “one-stop shops” likely used mergers and acquisitions to get there.

For POS software startups, a payments partner is essential for merchants to be able to process payments through your solution. Be open to changing pricing models as market needs shift and new functionality becomes available. The right partner will give you options for integrating, white labeling, or embedded payments/PayFac model to provide the best user experiences, elevate your brand, and grow revenues.

Stay on the Road to Success

Founders of POS software startups are innovators and, by nature, determined to forge a new path. However, researching successful companies and the lessons they’ve learned is a smarter strategy, helping you to avoid missteps that can slow your growth.

To discuss a partnership that can help you build your network and provide the payment solutions your customers need, contact us.

Choose the right payment partner for your Point of Sale!