I'm building an aggregator for building permits and planning meeting notes. My business model is to sell alerts based on coordinates and/or search terms. Would love to hear from anyone bootstrapped selling a platform/SaaS to municipalities because we're considering also selling solutions to the public sector. I assume the sales process is long?
I did. I had a startup selling transportation software to small cities (<40k population).
Sale process was 6 months. The tender process is excruciating. You will need to meet them up to 5 times to get an informal yes (3 months), and up to 6 months to get a contract (only if they do not need to organize a public bidding).
If they need to do a public bidding because they did not planned to implement a service like yours soon, the whole process takes up to a year.
Cities all have a different tender process/rules. Most ask you to have an insurance of up to a 5 millions by event adding mostly 10/15k in expenses.
There was a lot of interest, but cities did not have the cash on hand to pay for my services. I was billing up to 100k/city/year.
Mostly, if you have a product that can be paid for by the federal government or the state, they will buy it in an heartbeat. Eg: if it helps handicapped people.
The good: the LTV is really long, 10+ years. Try to find a champion in the town hall, that person will help you setup your offer so that the different branches of the city are happy.
Also, overcharge. Cities love personnal support. You will spend a lot of time on the phone, talking to real people.
For more info, write me an email at bobberkarl(at)gmail.com
Do you think it's possible to sell a "low dollar" SaaS (e.g., price points below $200/month) to cities?
I've had a few discovery calls lately where people have said you can slip things by on a credit card if it's cheap enough, while others have said absolutely everything goes through a procurement process.
Very interested to hear your thoughts based on the experience you described...
For most cities, YES.
If they can pay for X with a credit card, and it`s cheaper than 1k$ a month, they will.
The only problem is, are you willing to take up to 3 meetings for ~8 hours with 4/5 different people in person in a small city hours away from where you live for 2k$ a year in revenue?
And if your answer is yes, please shoot me an email.
How did you find cities to bid for. I once did a very cursory look into government contracts and selling products / services to local governments by checking out the sites for some random small cities and a few states. Very few had open bids and the ones that did were typically not for a software related project.
You call every city that might need the thing you are proposing, you talk to the receptionist and ask her who you should talk to about $SUBJECT. She will give you multiple names, extension numbers, and email addresses.
Local consultants. Hire a local engineering firm or PR firm or attorney as a representative to do the handholding. You hire someone who knows all the right folks with a good rapport and a grasp of the technicals. Even paying someone who normally charges $400/hr for a few weeks of work who has the right contacts can reap rewards. You can structure those consultants with a lower base rate and a commission upon success.
The problem is, in smaller cities, the local consultants are your competition. They are the one providing the cities with decade old technologies and ugly U.I./U.X.
Truth is, and i can't stress it enough, you are a 100% right. If you can find someone to cooperate with after you already beat him at the public bidding process, you did 90% of the personal relation work.
Right.
On a bill, it will show a 80/20 ratio for the tech/support pricing, but in your internal cost structure, you put 30% for the tech and 60% in support.
Because they are small organizations, they are used to pick up a phone and talk to someone right away.
x0xo is perfectly right. I did not own a car, so it costed me 4k$ just in car/hotel/food/printing for my first client.
PRINT EVERYTHING. Buy a nice presentation template online, print it on glossy paper, and you will always have a meeting in person or at least, a phone call.
It's one of the tragedies of public services, that the value is not always apparent. Would citizens be willing to pay $x/year for so and so enhancement? There is probably more value there than adding one staffer.
No the citizens are not willing. Just look at the median income of small cities, then look at their budget. Some cities have a 5M$ budget, and police is half of it. No mayor will raise taxes for a SAAS.
I sold to cities, counties and regional agencies in the U.S. for 30 years. Random suggestions:
* Do not wait wait for them to decide they need a solution and then engage; your business will die. Success comes from educating prospects, helping them understand the benefits -- hell, even helping them write the RFP, if they'll let you -- and being the preferred solution before the bidding process formally begins.
* Related: All of your meaningful sales will come from formal proposals submitted as part of an RFP process. You need to get good at being the insider who helps them write the RFP or you need to get good at writing better, more compelling (not cheaper, not fancier -- more compelling) proposals. Even better? Get good at both.
* Bob correctly referenced the fact that you'll have high insurance requirements. Don't let them faze you too much -- commercial liability is cheap. Errors and Omissions, on the other hand, can be pricey and you want to avoid having to have that if possible.
* Get very good at finding local partners, even if you don't need them. Big projects that leave some of the money in the community are more compelling.
* If you are not a woman or a minority, get good at finding local partners who are certified as women-owned or minority-owned businesses. Some public agencies set up their RFPs with an automatic point deduction from your score if you can't tick this box.
If you are not a woman or a minority, get good at finding local partners who are certified as women-owned or minority-owned businesses. Some public agencies set up their RFPs with an automatic point deduction from your score if you can't tick this box.
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Happy to help and happier still if it helps you drive revenue. I love talking about this stuff so don't be afraid to reach out: gregb(at)west-third.com
Many years ago I was part of a SaaS startup for which local governments were one of our target markets. During our beta we quickly gained interest from the relevant department of the city and were then led on by them for the better part of a year before we went under. This behavior seems consistent with a lot of the comments that have already been posted.
One of the biggest hurdles for us besides the timeline, which I haven't seen mentioned yet, was compliance. The city had a very antiquated security checklist they wanted us to satisfy which was written exclusively for their existing on-prem software deployments in a MS ecosystem, and thus impossible to meet as a SaaS provider. I suspect many smaller municipalities will present you with the same nonsense. In our case, this was not what ultimately killed us, but based on this experience I would advise you to avoid putting all your eggs in one basket and perhaps avoid altogether working a government that is not ready for SaaS once you find out that is the case.
My brother in law’s brother is the founder of ClearGov which sells SAAS to municipalities for reporting budgets and such. If relevant shoot me an email, include some information so I can lay it up for him and I will make an email intro. Can’t promise other people’s time but never hurts to ask.
At https://apply4.com/ we have a SaaS helping local municipalities streamline how they manage particular types of permitting, including permits for filming and special events.
The sales process has typically involved multiple in-person meetings (until recently, at least) and been very long with larger contracts needing to go out to tender.
Not sure if it'll be the case for you, but we often need to persuade multiple people from the department that will be paying for the software as well as one or more people from the municipality's central IT team (who naturally have rather different concerns and priorities).
Worked on a startup doing something very similar--would recommend against it. As everyone else is saying, the sales process is incredibly long and most local governments just aren't used to buying SaaS. Local partners are important AND you'll need to be very good at sales: can't rely on marketing to bring in customers.
It's a hard business to bootstrap unless you have a large bank account to fall back upon for years while waiting for sales growth to kick in.
Anything over a threshold requires bidding (usually rfp process). There are only like 20 cities that have money, everyone else is scraping buy. If you can deliver value for $100 / month, you can make money, otherwise you're looking at the rfp process. There are rfp aggregators like rfpmart and others that capture about 50% of the rfps out there. You should also be warned that there probably is competition out there even if you were unaware of it.
Worked on some of this in the UK a few years ago. Main complexity from a tech pov is hooking into whatever CRM and line of business and workflow/workforce management solutions the local authority uses. And then in public sector it's not unusual to have a requirement for open bidding for a solution.
The first company in Switzerland I worked at in the mid 2000s as one of the first employees, did records and project managment platforms, intranets and CMS originally for civil engineering projects later for goverment agencies, cities, states, NGO, public schools and universities, etc.
Sales processes are long. 6 to 12 months if I rember correctly. But ones you sell, it might well be a 10-15 years subscription with a bunch of additional services like support contracts and customizations. Also it becomes easier ones you have the foot in the door somewhere and use word of mouth referals from there.
I don't know how well typical start ups do in this space, because of the stability requirements which might not be something you'd want to commit to. But it has been exellent for the fully bootstrapped companies I know.
I'm an investor in https://permits.com/ which is that exact space but potentially different business model.
Regardless, it's hard to make inroads into any government space if you don't already have experience in it. It's not nepotism or "backroom deals" but more just jargon, processes, understanding the buyer, etc, etc.. aka not unique to government at all.
When you're first trying to enter any space, coming into sell is the hardest approach. You're viewed with suspicion. It's 100x easier (still not easy) if you're already a participant in some way.
Municipalities are my biggest client base for https://covidcomply.org - I’ve been doing a spray and pray sales approach for this that has been going very well - governments like to make things complicated but what I’ve found is most of the time the person on the other side is sick of the long complex processes as well which makes relationship based sales work well - this in references to Australian culture though - this might not translate to wherever you are based
I was at a conference in Australia once (I'm an American). I met a company there that sold software to local governments.
I asked them if they ever considered expanding to the US. They answered something like this:
>No, because governments in America are constrained because Americans hate their government and get upset whenever it spends any money. Americans want their government to spend the least by buying the cheapest stuff, so dealing with them is more trouble than it's worth. No local government in America will ever invest in quality.
www.peoplegis.com's peopleforms and mapsonline, on which is built everything from building permits and payments, workorder management and snow ops, to elder services, dog permits, cemetery management and a lot more. Incredibly flexible SaaS used by a lot of small-medium cities and towns.
If they need to do a public bidding because they did not planned to implement a service like yours soon, the whole process takes up to a year.
Cities all have a different tender process/rules. Most ask you to have an insurance of up to a 5 millions by event adding mostly 10/15k in expenses.
There was a lot of interest, but cities did not have the cash on hand to pay for my services. I was billing up to 100k/city/year.
Mostly, if you have a product that can be paid for by the federal government or the state, they will buy it in an heartbeat. Eg: if it helps handicapped people.
The good: the LTV is really long, 10+ years. Try to find a champion in the town hall, that person will help you setup your offer so that the different branches of the city are happy.
Also, overcharge. Cities love personnal support. You will spend a lot of time on the phone, talking to real people.
For more info, write me an email at bobberkarl(at)gmail.com