What to do with a startup, that is not thriving, but is not complete failure either

I'm working on a startup that is providing web-based application. We have over 600 paying customers, which is 5% market share in that particular niche. It takes 2 persons to drive this business, but the revenue covers expenses of only 1 or 1.5. As we have been doing this for four years already the enthusiasm is starting to wear off. What to do in this situation?

• Take an investment. There are actually no obstacles to achieve bigger market share and there is no direct competition either. But we have been doing this for four years already, maybe the problem is us or the market? We have decent CTO and CFO, but we are missing natural sales person and an executive type. And the market is adopting our ideas slowly. Maybe it's time to let it go.
• Refresh the team. Hard to achieve. The revenue hardly pays our bills, hiring a new person seems too much risk. Its also hard to offer partnership, because we already have 4 co-owners of the company. Adding another person would require lots of negotiation between current owners and I'm not sure the resulting percentage would be motivating. Two of our partners are inactive, so buyout could be solution. But then I would need to justify this investment to myself, see previous point.
• Sell the company. We all know, that nobody is buying piece of code from you. They are buying access to users or market share. I'm not sure, that 600 customers or 5% market share is enough.
• Drop the idea That would be disappointing for our existing customers. Of course we could open-source the software and turn management of the service to non-profit organization.

If you are an active type like me, than you have several new business ideas every day. So you could guess, that I feel kind of stuck with current idea, which is not really bad, but is not flying either.

EDIT: Many people asked about the actual product, so here it is - it's a specialized accounting solution for condominiums (apartment houses) in Estonia. The website is http://www.korteriyhistu.net/, but it is entirely in Estonian, that's why I didn't publish it at first place. Similar softwares in US seem to be Condo Manager and The CondoKeeper. Also Strataware in Australia.

The business model is, that you can register on our website and start using the application right away. First three months are free, then it's $0.50 per apartment per month. User guides and training materials are freely available on our website to remove all obstacles from starting.

Most of our competitors are standard accounting software providers. We differentiate from them by being web-based and allowing apartment owners to access the system. We pride ourselves for transparency - apartment owners can see how their money is spent.

To me, the obvious starting point is your 600 customers. Do you even know why they are your customers? It seems to me you do not know what they really like about your product, and what they think could be added or improved. Do you know anything about those that did not choose your offering? It would be useful to know why they did not go with you.

I think the four options you present are premature right now. This is because what you do depends on what the root cause of the problem is, but it seems you do not know what that is.

It could be, perhaps, that your product is really targeting only a niche in that market. It could be that you are missing a critical feature in your product. It could even be something as backward-sounding as your pricing being too low. You do not say how you get revenue (ie, subscription or one-time payments, or whatever else), but 600 customers not supporting two full time employees sounds too low. You need to figure out how to get better revenue out of the deal. Sometimes people expect to pay a certain amount and discard options based on low price alone. I have certainly seen this many times: People look at the most expensive product first and then then compare based on highest-to-lowest sorting order in looking at products. They stop looking once a cheap enough product is found. The least expensive product does not even get looked at. Weird, but this could be the case, depending on what your product is, on the market, and how your product compares in features to the market leaders.

Focus on your competitors as well. What does the market leader have that you do not? How do prices and features compare? What about support, how does it compare? How difficult/expensive is it to switch to your product?

These are all very broad questions because your description of the problem is very vague (you don't even say if this is B2B or consumer product, nor what type of product it is).

Anyway, to me it appears you are not trying to diagnose the problem, it seems you are jumping to the "finding the answer" part.

EDIT: (In response to your edit :-) ) Actually I could make some sense of your page with Google Translate. The site looks great. The map that shows your customers is impressive.

About the pricing, this completely out of my field of knowledge, but you should really compare pricing.

What I would do at this point is do at least these three things:

• Understand your customers. You should really be able to tell why they are your customer. Get in touch with them, and find out what you are doing right and what you are doing wrong. Improve on your current offering. Are you targeting the right customers? In apartment buildings there are owners that have 5 units and there are owners that have 500 units. Are you segmenting the market accordingly? Maybe you should create a different edition of your offering for very large owners, raise your price by a factor of 10, and then make sure you have all the needs of the 500 unit and above clients met.
• Understand your competition. Is there something obvious you are missing? Also how much do they charge? What is the market share of the largest player?
• Think about going into other markets. Is there a reason why you are in Estonia only? You have great momentum (600 customers in a B2B application is very respectable), why don't you carry it over to different markets? Preferably markets where you can charge more :-) Is there a reason you have not tried the US market, or the rest of the European markets?

Now I don't know about Estonia very much, but is 5% a reasonable market share to expect? In other words, how do you know your market share is not 10% or 1%? If many of your users "have no clue", is it because they are not sophisticated enough to find your offering on their own, or maybe they do not feel they need your product? If that is the case (and this goes back to "know your customer") then you may have to try different methods of approaching and selling to your potential customers.

In summary, I think you are in a very good position. You have momentum, which is very hard to attain, and you have lots of options in how to solve this.

EDIT2: The more I think about it, the more ideas that come to mind as to what you can do to fix your situation. You have many outs, as they say in Poker. You definitely should not abandon your venture just yet.

GET A SALESPERSON. I can't believe you don't have one. Bring someone in who will sit there all week long and call up every single condo and try to get them to buy. Pick a wealthy neighborhood and work down the streets, one at a time, cold calling. Call every single happy customer and ask them to refer two others.

If the salesperson doesn't pay for himself/herself within a month or two, fire them and bring in someone else.

Pretty much the same thing happened to me (the technology guy in the company). We ended up closing the company and released the source code to the customers. I ended up continuing to do for the existing customers for changes / enhancements / support, but it only requires a fraction of the time than before than when my effort was on cranking out new features / releases. Also, I actually make money as a consultant, rather than costing me (in opportunity cost and actual dollars) as a founder.

Look for another company in the same segment (the remaining 95% of the market must go somewhere) that is willing to merge with you, or buy your 5% of the market. Or maybe you can just increase your prices to cover the costs?

Is it a consumer product ? 600 seems like a lot of customers for a business to business product. Perhaps you could create a premium version with a higher price tag or resegment the market for a specific niche ?

EDIT :

• Would it be an option to expand and target the English speaking market?
• Your price tag seems a little bit low. Maybe you should rework your pricing scheme? What about a base fee for access to your app. + 0.50$/apartment ?

I agree with some of the other answers.

• Can you get more revenue from existing customers? 600 paying customers seems pretty valuable. If you can solve some more problems for them, maybe they would be excited to pay more.

You are in a tough spot. The think I would do is sit down with your partners and figure out what you guys want to do with the business. Have a brainstorming session along the lines you just outlined. Once you have several ideas, make a 3 month, 6 month and 1 year plan. Then, either sign up to do it or sell the business.

It sounds like you really do need some fresh perspective. Maybe hire someone to facilitate this brainstorming session to help you through some of the sticky issues. At this point, you really do need to do something, anything, to move the business forward or just sell it off.

Would you customers benefit from exchanging knowledge about your product?

Does your staff spend a lot of time doing support?

Why not open a knowledge exchange site using stackexchange? Just like fogbugz or Litmus did. This can create a common place for all your customers and your staff to discuss bugs, possible improvements, tips, etc. This can open the door to many opportunities.
The amazing thing is that you can have customers helping each other using your product... (which reduces the workload for your staff).

How are you reaching your customers to make then sign up?

Do you do events, mailings, advertising on the web, a combination? Is there no need or are the users not aware that your system exists and what it can mean to them?
I noticed that you have a large contentration (1/3) of users in Tallin. Can you tell us why it worked better there, what did you do different? Something to be learned from that?

Anyhow, I'd not go abroad unless you've got things sorted out locally. Unless you see a real good reason why the situation is so different in another country.

And if I'd ever decide to sell, I'd look for a complementary buyer. Someone who justs continues the business pays the same as it's worth to you. But in a situation where 1+1 > 2, the value might be higher to them.

Not the answer to your question, but we have something similar but for small "self-managed" condo associations, and we launched this as a free service last year -- myCondoBooks. It allows them to track their units, condo fee collections, expenses, etc and helps them keep the transparency. I wish we knew you had a product in another language! Very exciting.

I am not sure what other features exist in your product, but perhaps, you can think about adding more features like managing documents, announcements, service requests, dashboard, etc. to get more associations. We have a sophisticated service provider directory that continues to grow.

EDIT: I had forgotten to add the link: myCondoBooks

Maybe Estonia is a tiny market and you can't grow quickly and as much. So maybe you need to go into your neighbors' markets.

I suggest you make the website/software customizable by the customer, not by you the programmer. Meaning the customer can create their own business rules and enter their country's laws, taxes and formulas. Let them do the work and maintain it and relieve yourself from that burden. You can't possibly learn each country's laws.

or license it to a VAR in each country and let them do the customization work and resell and you get royalties.