Three Reasons Why "Revenue FOMO" is Dangerous for Post-Series A Funded Startups

After your start-up receives Series A funding, you might feel intense pressure to prove that you have a profitable concept. Far too many people let that pressure encourage them to make questionable choices that create short-term bumps in revenue but sacrifice long-term growth. Borrowing a popular acronym from social media, you can think of this as “Revenue FOMO” (Fear of Missing Out).

Fear of missing out on revenue can make business leaders feel anxious about growing their companies, attracting more investors, and developing a plan for ongoing profits. Unfortunately, plans that come from fear and anxiety rarely focus on long-term goals. They're all about satisfying short-term needs that undermine strategic planning focused on meeting the needs of niche clients.

If you feel tempted by revenue FOMO, spend some time thinking about these three (3) unexpected challenges.

1 - Targeting Multiple Audience Gets Expensive Quickly

At this point in your business's growth, you probably have a million dollars to spend. It's exciting to finally get series A funding that makes your plans possible. At the same time, the investment doesn't go as far as some people think.

In the grips of revenue FOMO, you might reach out to as many potential clients as possible. Each of those campaigns drains additional money from your coffers.

You can usually accomplish more with your funding by targeting a specific audience and dedicating your effort and money to attracting the best clients. From a revenue FOMO perspective, you might convince yourself that it makes more sense to "cast a wide net" in hopes that you will capture a big fish, but that's probably false optimism. Business success in today's competitive industries usually comes from strategic plans that target specific leads.

It won't take long to discover the high costs of casting a wide net. Everything from hiring sales teams to planning an online marketing campaign adds more burdens to your budget. Instead, reserve money by targeting leads that will become long-term clients.

If you haven't yet defined your target market, you can find instructions in our earlier post, "Marketing for Start-ups: Define Your Target Audience in 3 Steps."

2 - Trying to Serve too Many Clients Can Damage Your Reputation

You've heard the old expression often attributed to poet John Lydgate:

You can satisfy some of the people all of the time, and all of the people some of the time, but you cannot satisfy all of the people all the time.

There are several versions of this saying, but they all have the same meaning; don't waste your time trying to satisfy people you can never satisfy. Instead, focus on the people you can satisfy and nurture those relationships.

John Lydgate was a poet and monk; he wasn't thinking about 21st-century businesses. Still, his words ring true.

Think about what happens when you waste your time, money, and energy trying to satisfy clients who do not fit your target audience. You cannot satisfy those clients, so they will feel disappointed by the products and services they receive. You cannot risk choosing clients that could damage your reputation at this point in the life of your business. Until you have years of experience and a long list of happy clients, every review shapes how others view your business.

By attracting too many clients simply to increase your revenues, you might unintentionally sabotage opportunities to connect with clients who will love the core services and products you provide.

3 - Building Relationships Becomes Easier When You Focus on High-Value, Niche Clients

Once you target an audience that will appreciate what your business offers, you can start building stronger relationships that lead to steady growth. Over time, you can even build an ecosystem of businesses and influencers that help you secure more high-value, niche clients.

When reaching out to influencers about marketing opportunities, you don't always get the best ROI by choosing someone with a large following. Micro-influences, individuals with 10,000 to 50,000 social media followers, have become increasingly helpful for start-ups that want to establish themselves as trustworthy businesses.

Since micro-influencers have smaller audiences, they can engage more with the people who follow them online. A celebrity doesn't have time to respond to questions from random people. A micro-influencer with a YouTube channel that has 25,000 subscribers, however, benefits from responding to comments. When they engage with their audience, they also make your start-up look more trustworthy.

Establishing trust is critical to attracting high-value, niche clients that want to partner with you for years or decades. Yes, it will probably take a little more time to capture these clients and turn them into significant sources of revenue. However, playing the long game makes it possible for you to slowly improve your products and services, scale your business to meet the needs of more clients, and continue offering excellent client services that keep people satisfied.

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Arch Collective handles marketing strategies for tech start-ups. Post-series-A funded B2B start-ups need to prove their viability without making mistakes that jeopardize long-term business health. Our work with diverse start-ups has given us essential insights into how companies can reach their goals.

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