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Every week we get dozens of enquiries from aspiring telco founders. All fascinated by the idea of selling their own VoIP, mobile or broadband products.
Having worked with hundreds of service providers, big and small, Telcoinabox has a unique perspective on what it takes to start – and succeed – as a communication provider.
Drawing on this experience, we have explored three of the most common mistakes that plague telecom founders. By knowing which mistakes to avoid, you can side-step these pitfalls and give yourself the best change of business success.
Telco can be used by anyone – so your market is everyone, right? Wrong.
Successful telecom companies start by finding a niche. A group of customers that are underserved by the current providers.
Finding a niche means being specific and ruling out large potential markets. For example: targeting ‘law firms’ means ruling out other kinds of small and medium business.
Narrowing your market can feel scary to first-time telco founders.
You naturally want to have a large addressable market. Who are we kidding, you’d anyone’s money. So why rule anyone out?
Focusing on a niche group lets you focus on their needs, and tailor pricing and products accordingly. Niching down makes your value proposition clearer, and stronger.
As you build scale you can expand your market. But that’s at least 500 customers away.
Too many first-time telcos struggle because they don’t niche down early enough.
You can’t stand out without the clear and compelling value proposition. That clarity and focus comes only with knowing your niche.
Without a niche, you end up blending in – leaving price as your only selling point.
Which brings me to my second point…
When asked ‘how are you different to Telstra’ most first-time telco founders will spout out variations of ‘price’ and ‘service’.
These differentiators are a great start, but they’re not enough.
Competitive rates should be part of your strategy, but they cannot be your entire strategy. Leave that arms race for the big telcos, who have much larger margins to burn.
Local, expert service is always a strong selling point too. But I’d argue that this pitch is table stakes for any service-led challenger telco.
If price and service are generic differentiators, what else can you offer?
The answer is to go back think about your niche. What do they value? What shortcomings do they experience when dealing with other telcos? Let this insight guide you.
The goal is to know your niche and, thereby, serve them better than anyone else.
Are you serving international arrivals? Virtual SIM cards and multi-lingual service make sense.
Serving seniors? Make your services jargon-free and easy to understand. Offering seniors’ discounts might help too.
Modest, thoughtful telecom innovation goes a long way. You don’t need to reinvent the wheel – just focus on tailoring your offer to fit your niche
Customers are the fuel that keeps your business running.
Take it from us: Starting your telco, MVNO or ISP with zero customers is a fast-track to heartbreak and financial ruin.
Many first-time telco founders take for granted the time and cost of winning new clients, especially when their business is new and unknown. And keep in mind – you’re up against some big brands with deep pockets and vast sales and marketing resources.
Our advice to aspiring founders is to hold off starting their business until they know where their first 200-500 customers will come from.
So how and where do you find these customers?
The natural starting point is your friends, colleagues, and connections. Hopefully, if you’ve done the hard work to define a customer niche, you already have some relationships in that market.
For example, if you chose ‘mid-sized law firms’ – presumably you have contacts and insights into that market – precisely because you’ve already had conversations about their needs and challenges when it comes to communications.
If you don’t have any relationships – it’s time to start building them. Join industry meetups (or host your own), go to your local business chamber meetings, run online surveys among your niche, or engage with niche experts on LinkedIn to raise your profile. The options are endless.
Many telcos start as adjacent technology businesses. Such as IT specialists, data and cabling installers, Managed Service Providers (MSPs) or systems integrators. Large retail brands have also found success in telecom, including energy companies and grocery chains.
With this approach, you are building a new product line on top of an existing business. The focus is cross-selling white label voice, data, and mobile to your database.
Cross-selling is an efficient way to establish your telco because there is no added marketing cost to acquire customers.
Another common approach is to build up your business as a telecom channel partner, and once you have 200+ customers, graduate to become a white label telecom.
The channel partner model means finding and referring customers to a telco provider (Aussie Broadband for example). The customers are contracted by the telco (rather than you).
In exchange for this referral, you can receive upfront and trailing commissions. It is also a simpler, leaner business model – as customer support and billing are done by the telco. They will also be responsible for compliance with telecom regulations.
By starting out as a channel partner, you build a business foundation without immediately taking on the risk, cost, and pressure of being a fully-fledged telecom provider.
But this is just a stepping-stone to greater things.
Once you feel confident that you have a good customer base, you can transition from partner to white label telco and migrate customers to your business instead.
You’ve got a great idea for a telecom business. We’ve got the expertise.
So don’t waste your time dreaming. Start a conversation with our expert team. We have worked with hundreds of telcos – from startups to major brands – and can help you understand what you need to succeed.
If you have a well-considered business plan, and a base of existing customers, we can provide you with wholesale pricing, carrier-grade software, and white label products. Everything you need to power your communications business.
