Agile technology start-ups with innovative online business models may be well placed to weather a downturn, according to eight UK start-ups who spoke at a Sun Microsystems partner roundtable held recently in London.

Jake Stride, founder and chief executive officer at online sales and contact management provider Tactile CRM, said start-ups can be best placed to make it through today’s economic climate.

“There are positives and negatives. It is a fantastic time for people, but you have to be clever about what you do. We would be a bit leaner in the way that we work,” he said.

Economic pressures in themselves help companies lift their game. On top of that, small start-up companies are often more nimble than larger, well-established ones.

Looking for value
“Large companies are already starting to lay people off. But we can retool and repurpose people a bit more quickly and move things forward that way. It is very difficult for them,” said Stride.

Tactile CRM is doing well, with more customers signing up in recent months. Organisations are increasingly looking for better ways to manage their salesforces and contacts, according to Stride.

“This sort of CRM thing is quite a good area to be in, one that people are really starting to think about,” he said.

Ricky Doyle, director and co-founder of on-demand online training platform developer Practice-IT, said his experience is that most companies are looking for better value for money from services they adopt.

“The difficulty from our side is being known as the alternative,” he said.

Practice-IT has the technology that is wanted and the platform available, but selling it into companies that are reluctant to spend is tricky.

However, the company has a good sales proposition and still expects good results, he said.

Targeted transformation
“Budgets are being cut, but you cannot stop training. For us, the downturn is bittersweet,” said Doyle.

Stride said potential customers are contacting them, but they want to talk about particular topics of concern.
“They want to talk about what works and what does not, what works for business-to-consumer (B2C) and does not work for business-to-business (B2B) and vice versa.”

Whether a customer is B2C or B2B can affect the suitability and appeal of services or solutions offered.
“When we started up, getting user requests for our beta was difficult because we were asking people to load up their data on the web. B2C is easier to do,” he said.

Nick Halstead, founder and chief executive officer of RSS reader maker Favorit, said most start-ups do not have to pull themselves up by their own bootstraps.

Simon Grice, representative for BeLocal, a search venture slated for launch in early 2009, agreed. He said that start-ups have a better chance than most to surf the highs and lows of any boom-to-bust cycle.

“Start-ups have a unique opportunity because mature companies are cutting marketing spend in a downturn,” he said.
Emerging companies can and should seize the opportunity to expand. And because they are starting up, they will be marketing themselves regardless of the economic circumstance.

“Mature companies often cut marketing first because it is easy. When the back-end is in fact where inefficiencies should be cut,” said Grice. “You need to focus on the business, but not stop bringing in customers and revenues.”
Stride said that some companies do too much marketing and others already have very efficient back-ends and processes.

Also, it contradicted the old adage that you should up-sell to existing customers rather than try to attract new ones.
“I am saying that if you have a choice, do not cut the marketing,” Grice answered.

Ben Summers, technical director at online collaboration, document management and CRM developer OneIS, noted that companies with an online product can target the online community as customers more easily online than through newspapers and the like. Tech-savvy customers are likely to spread your message virally to more traditional customers.

“You are often targeting the online early adopters. And people talk to them and ask them, ‘What do you use? What should I use?’,” added Summers.