What problems do your potential customers face? Finding out is the best route to success, a New Zealand accounting software company has found.
What do you get when you put a lawyer, accountant, marketer and IT programmer in a room together? In the case of Common Ledger, an online platform that lets accountants access clients’ financial data regardless of the software format they use.
Co-founder Drew Broadley was inspired to launch the company after creating software to help his accountant father-in-law deal with customers’ various accounting programs.
“After Drew made it, his father-in-law said: ‘This is fantastic, I’d pay for this’,” Common Ledger co-founder Carlos Chambers says.
There followed six months of market research and product validation, which involved talking to accountants in New Zealand, Australia, the UK and Canada.
"I guess on the whole feedback was really positive, and what we learned was that there was this really deep problem that accountants around the world were facing," Chambers says.
Common Ledger went through Wellington's 12-week Lightning Lab business accelerator programme and expanded its team. Joining Broadley were commercial lawyer Chambers, Vince Warnock, who had a sales and marketing background, and accountant Brendan Wu.
"One big output of Lightning Lab is that it enabled us to build a really strong core team," Chambers says. The business then started to mature.
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Next came software trials with accountancy firms like Deloitte to make sure there were no issues. Testing also showed the team how different accountants wanted to use Common Ledger.
"We weren't ready to go to market and, indeed, we didn't go to market until four-and-a-half months later because we wanted to make sure the product was A-class," Chambers says.
To go from an idea to commercial launch, the company has gone through three stages of capital raising. The first was borrowing money from friends and family. The next two rounds required more traditional means — networking and cold calling.
It took four to six months to do a decent capital raise. "We had our feet on the ground and spoke to whoever we could,” Chambers says. "I probably did about 100 phone calls to 50 people."
"We also really tried to build an audience so every person we met, or advisor...we added to our investor update list. We'd send them information about our company and what was happening. This was a precursor to stakeholder relations."
There were three important points to make when it came to selling their story to investors, Chambers says.
The hard work paid off. In 2015 the company announced it had raised $1 million to establish an Australian customer base, with an eye on the UK next. In New Zealand, Common Ledger is in talks with the stock exchange and boasts well-recognised accounting firms like Grant Thornton as customers.
Chambers says they can’t overstate the importance of customer research.
"Really understanding your customer is important. We see them as a genuine stakeholder in this,” he says.
"We solve accountants' problems and we've had them in the tent from the outset, feeding into the process… What better person than your customer to be an integral part of your business?"
