If you’re interested in starting a software as a service (SaaS) business, you’ll want to start by outlining your needs. If you’re unsure of what you’ll need to launch and want an idea of what entrepreneurs in this industry do, then you’re in the right place.
I interviewed SaaS entrepreneurs from all over the world, including our own COO Noah Parsons, who has been a key figure in the making of LivePlan, our own SaaS product. With these insights we’ll dive into 10 steps you’ll need to take to plan, launch, and grow a successful SaaS company.
What is a software as a service company?
Let’s start by defining what exactly a SaaS company is. SaaS (software as a service) means that users access the software through their internet browser or a web-based app. The software maker hosts their product on their own servers, which is why SaaS products are sometimes referred to as a “hosted solution” or “web-based solution.”
It’s also common to hear SaaS products talked about as “cloud-based” solutions. In contrast, a desktop-based model is where an individual or company would install software on their computers and run it on their own servers. For your own business, you’ll need to be able to quickly explain this general benefit and elevate it with the value proposition of your specific solution.
Can you start a SaaS company without technical expertise?
If you have an idea for a software as a service business, but you don’t have the technical expertise to build your app yourself, it’s still possible to run a successful business. In his book “Lost and Founder,” Rand Fishkin talks about his journey as a non-technical CEO of Moz, a service company he founded and transformed into a SaaS company.
He emphasizes how important it was for him to learn (and keep learning) enough about the technical aspects of his business so that he was able to make good hires and understand technical roadblocks when they surfaced. And it’s not completely impossible to learn to code yourself — but it does take time.
Be mindful of your intellectual property — the code — whether you bring on an employee or outsource the technical work. A good contract can go a long way.
10 steps to start a software as a service company
1. Develop a solution for a problem
Before diving into pricing, branding, or building a team, it’s important to make sure you have a clear problem to address and a solution that alleviates it. After all, if you’re not solving a problem, you don’t have a business.
There are different ways to go about finding a problem worth solving. Here’s what others have to say:
Fix a problem better than anyone else
“If you can fix a problem for someone and do it better, quicker, and/or cheaper than your competitor, you’re off to a good start.” — Gabriel Kuperman, founder, and CEO of CuePin.
Solve a problem you can relate to
“The number one rule for any SaaS business should be to solve your own, real problems and not someone else’s problems. Only by solving a problem, you have struggled with yourself will you fully appreciate how to solve the problem in the best possible way.” — Uwe Dreissigacker, founder and CEO of InvoiceBerry.
Use your knowledge of an industry to solve a problem
“I had industry experience and knew that there was a big void to be filled for small and medium-sized businesses that could not afford to pay for local servers and an IT team. We created UpKeep to fill this void—a cloud-based solution that was affordable for any size business.” — Ryan Chan, founder of UpKeep.
2. Write up a lean plan
There’s no way to get around it, you’ll need a business plan. But instead of sitting down to write a 40-page plan, start with a one-page pitch.
It’s the fastest way to get your idea onto paper, and it’s the very first step in the lean planning process, which is much easier and more iterative than traditional planning methods. It’s also more suitable for SaaS businesses that are constantly testing new ideas.
Your pitch is going to roughly cover your strategy (what you’re going to do), your tactics (how you’re going to do it), your business model (how you will make money), and your schedule (who is doing what and when).
If you’d prefer to work through the lean plan on your own, you can either use our free business pitch template or read our guide on how to build your pitch. Regardless of the method you choose, here’s what you’ll want to cover:
In the strategy section you will want to include:
- A one or two-line description of your business— your unique value proposition.
- A description of the problem you’re solving for your customers, and your solution to the problem, which is usually your product or service.
- A description of your target market or the different market segments you’re targeting.
- Your competition, and a brief description of how you differ from them.
In the tactics section, list your sales channels and describe how you will be selling your products. You’ll also want to list out marketing activities that will drive customers to your door. List key partners and resources you will need, and then list your core team as well as their roles. If you don’t yet have a team yet, list the roles you need to hire for.
The business model
While it’s useful to be able to have a sales forecast and expense budget early on, it’s not something you need until you’ve validated your idea. At this stage, simply list what you think your primary revenue streams and your key expenses are. Later you will want to come back and create a proper sales forecast, cash flow forecast, and expense budget. In this section, you really just want to document how your business will make money.
In this section, you’re going to outline your action plan for moving forward with building your business. Your action plan will include a schedule of tasks or milestones. These will be mapped onto dates, responsibilities, and budgets so that you hold yourself accountable. Given the iterative nature of planning a business, you will likely come back to your action plan and add more steps as you go.
Once you’ve got your ideas in one place and a clearly defined problem and solution, you’re ready to move on to phase three—validating your idea.
3. Validate your SaaS idea
Now you’ve spent some time creating your lean plan, which is essentially a list of assumptions. In this step, you’re going to find out whether those assumptions are true or false. And then adjust your plan so that it addresses what you’ve learned.
You’ll do this by attempting to answer the following question — Can my idea make money?
Instead of rushing headlong into your first and favorite idea, this step acts as a check. It will help you determine whether or not you have a good idea that can be turned into a viable business.
Talk to your customers
The best way to do this is to get out and talk to your potential customers.
One of the biggest mistakes companies make is doing mostly secondary market research, instead of primary research (getting out of the building to talk to people face-to-face). But here’s the thing, you can also do this digitally and get similar feedback. It can be as easy as launching a coming soon website, running search ads or even launching a kickstarter to see if you gain any traction.
The important thing is that you are getting real-world feedback and setting parameters for success to determine if your idea has merit.
Gene Caballero, co-founder of GreenPal, validated his idea by getting out and speaking with random people. “We went door to door and even rented a kiosk in the mall to get feedback to see if people would use a product like ours. It’s a very humbling process.”
Through talking to people in real life, you want to learn:
- Have I identified a problem they actually have?
- Do I have a solution that solves their problem, whatever it is?
- What is the best way to sell to them, and what’s the worst way to sell to them?
- What would they pay for my product or service? Have I priced it too low or too high?
- What products do they currently use to solve their problem?
Based on what you learn, you may find you need to go back to your lean plan and revise it or refine it. You may even need to consider another idea if you find there’s no real market for your initial idea.
Conduct a competitive analysis
Beyond knowing your customers really well, it’s also important to know your competitors. The presence of competitors in your market is actually a good thing. It means a problem has in fact been identified. The trick then is figuring out what part of your competitors’ solution is inadequate. What do customers want that they don’t currently get?
Noah Parsons, COO of Palo Alto Software, says, “LivePlan’s competition is often Word and Excel. We know that Word and Excel are time-consuming, error-prone, and offer no help and resources. Our solution, an automated business planning tool, helps eliminate those pains for customers.”
Keep in mind that your competitors may not be immediately obvious. The industry your entering may simply have very disparate companies currently providing services. Be sure that you take the time to explore and understand how customers and competitors solve the problem you’re addressing and look for a way in from there.
Create your minimum viable product
Another great, and somewhat necessary testing method in the SaaS space, is creating a minimum viable product or MVP. This is the simplest version of your product.
It’s a particularly popular strategy in the world of product development and is used to quickly and quantitatively test a product or a product feature. Eric Ries, a Silicon Valley entrepreneur and author of The Lean Startup, popularized this strategy for web applications.
Eric says, “The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
If you can get an early prototype built, all the better. If you don’t yet have the resources to do so, you can still create an MVP.
Noah Parsons says, “Start with cheap mockups, wireframes, or even sketches on paper to make sure that your customers are going to want what you build.”
Besides software prototypes, MVPs come in many flavors, including:
- Explainer videos
- Landing pages
An MVP is a great way to save time and money before you go ahead and build anything, so take the time to make one and run it by your potential customers.
4. Explore pricing models and initial customer acquisition
SaaS products often use a subscription-based pricing model. So instead of paying once for a lifetime of use, your customer pays on an ongoing basis — usually monthly or annually. You can think of it as a software license.
It’s a popular model because of the increased potential lifetime value of each customer. Instead of a flat lifetime value — like $120 for the single sale opportunity you have with each customer or user, you might charge $10 a month per user for as long as your customer uses your service. The longer they stick around, the higher their lifetime value.
You likely spent some time modeling different subscription-based sales forecast scenarios during the creation of your lean plan. It hopefully gave you a rough idea of how reducing churn (the number of canceled subscribers) and other variables can affect your path to profitability. But now it’s time to officially establish a pricing model.
Test to find the right price
Growing SaaS companies are always testing their pricing models. You need to be willing to shift your pricing to fit what your customers are willing to pay. And in a crowded industry, you’ll likely need to be ok with offering your services, even if they’re better, for far less when starting out.
If you’re not sure where to start with your pricing, start with your competition. For Uwe Dreissigacker, founder and CEO of InvoiceBerry, looking into the competition was a good way to figure out how to price the company’s services. “Once you identified your competitors you can determine the lowest, highest, and average price your competitors charge for their services in order to determine a good starting point for your pricing.”
Your pricing model should be something you’re considering and testing during the validation phase, but you may need to treat that element of testing separately. A separate strategy, separate customer acquisition funnel, and separate goals you’re hoping to accomplish. Now there are a lot of different ways to get customers in the door to kick the tires, from offering free trials, to freemium services with upgrade options. You can check out the Bplans guide to SaaS pricing models for more on how to get started.
5. Establish your brand
If you’re looking to stand out in an already-crowded marketplace or simply be a memorable company, figuring out how to brand and differentiate yourself is key. You may want to pull from the competitor research you did above to help position yourself.
This isn’t a process you have to outsource to a brand agency — it’s one that can begin in-house. In fact, we’ve got a hands-on guide to building a brand right here on Bplans. You can also leverage tools like Canva to workshop designs, brand colors, and logos with little to no design knowledge. But before you start putting together mockups, here are a few branding elements you’ll need to consider.
Brand to stand out
For UpKeep founder Ryan Chan, spending some time on the branding process helped set his company apart from the competition. “There are a lot of competitors in this space, many with much more money than us. However, we have been able to differentiate [ourselves] and also excel by making enterprise software fun and enjoyable. Our biggest differentiator has really been our design, from the ease of use to our playful tone.”
If you want to learn more about how to develop your own unique tone of voice, check out this article by branding expert Elicia Putnam.
Brand to clarify your vision
Branding isn’t only a design-oriented initiative. In fact, it can be used to get everyone on board and ensure messaging is consistent. GreenPal co-founder Gene Caballero says it’s a great way to get buy-in from partners, “In our case, we had to make sure that our vendors knew our vision and that we had a plan to execute.”
If you’re working closely with partners who are helping you distribute your product, it’s especially important to make sure they understand who you are, how you speak, and who you serve. If you don’t have a brand guide, it may be worth putting one together. This will make mixed messaging much less likely, and make it that much easier for your partners to help you spread your message.
The importance of a domain name
For Gabriel Kuperman, founder and CEO of CuePin, finding a good domain name was a key part of his branding strategy. Gabriel says, “With an online SaaS business, it starts with a powerful domain. I recommend sticking with a short .com domain that’s easy to spell and [that is] memorable.”
If you find the domain name you want is taken, Gabriel suggests turning to a domain marketplace that sells premium domains. He says, “Spending a few thousand on a domain could make a big difference long term, and give you the credibility and advantage over the competition, especially in the very beginning and early stages of the business.”
6. Make it legal
While you don’t need any qualifications to build software, you may need to comply with the industry you’re looking to serve. Be sure to look into that industry’s specific rules and regulations, as well as legally set up your company including the following elements.
Choose your business structure
One of the only things you’ll need to do in order to be legally in business is to choose and register your business structure.
In terms of the best business structure, it really depends on your needs. For GreenPal, Gene Caballero says, “We knew that if we ever wanted to be looked at seriously by venture capitalists, we would need to be a C-Corp in Delaware.”
In fact, GreenPal wasn’t the only one that figured it was best to go for a Delaware-based C-Corp. Ryan Chan, founder at UpKeep said, “We created an LLC at first, but after realizing that we wanted to take on venture capital, we decided to move to a Delaware C corp.”
You can read more about setting up a C-Corp in Delaware here; it’s a particular favorite for technology startups, and there are plenty of reasons why:
- The ability to incorporate without needing to reside in the U.S., or even be a U.S. resident. Establishing a U.S. presence via a Delaware-based C-Corp also gives non-U.S. residents access to U.S. resources such as U.S. venture capital.
- Delaware’s corporation law is known to be favorable to owners and is considered more flexible and certain than in most other states.
- Delaware permits a single-member board of directors.
- Delaware does not require the Secretary of State to review and approve filings before they are effective.
- Delaware law gives preferred stock investors of a corporation certain voting rights and control over the corporation.
Pick a name for your business
You can’t register your business until you’ve given it a name. This is a part of the startup process you may actually enjoy. Ideally, you would have run your ideas by your potential target market first, but if not, there’s still time to figure out what will resonate with them.
Noah Parsons and the team at Palo Alto Software chose “LivePlan” as the name for their business planning product because they wanted the name to reinforce the nature of the product. Noah says, “We wanted a name that would resonate with our customers, help explain what we do, and reinforce the nature of ongoing use.”
If you’re no good at coming up with names on your own, try a business name brainstorming tool. There are plenty to choose from!
Also, be sure to read our guide on how to register your business name. You need to be sure it’s not already taken, close to another company name, or even just confirm that the website and social channel handles are still available.
7. Financing and funding
How do you get the funds to start your business? There are multiple solutions to this problem. You could bootstrap your startup and do most of the tough legwork on your own. You could also go for a larger sum of capital right from the start by pitching an angel investor or a venture capitalist for funding. And, if all else fails, what about asking friends and family to help out?
On the one hand, bootstrapping your business gives you much more control over it. You get to call all the shots, including how you want to operate the business and who you want to be involved with. On the other hand, it’s a slow process.
On the flip side, getting the right investors on board from the beginning can expedite both your learning and your go-to-market strategy. You might also get immediate access to channels that might have otherwise taken years to break into. But, you’ll give up some control of your company the moment you bring on outside investors.
Circle back and create a more detailed forecast
Before deciding on which funding and investment routes you’ll pursue, the best thing you can do is develop a more detailed financial forecast. The reason we advised holding off on creating a detailed forecast until now was that you hadn’t yet validated your pricing or your market and hadn’t fully explored startup costs.
What if you’d found out your customers wouldn’t be open to paying your initial price? Or, what if you’d learned you were charging much less than people were willing to pay? Your forecast would have been for nothing.
But if you’re planning on seeking out a loan, pitching your company to investors, or even self-fund, a detailed forecast is necessary. For investors and funding organizations, having a thorough and well-thought-out forecast can improve your chances of actually getting funded. For your own use, it acts as a management tool that can help you better understand the health of your business, set milestones, and guide decision making.
A few resources you may want to check out include:
- How to Forecast Your Sales
- A Complete Guide to Forecasting Sales for Your Monthly Subscription Business
- The Recommended Sales Forecasting Method
- Free Subscription Sales Forecast Template [DOWNLOAD]
According to Noah Parsons, “Without a real sales forecast and budget, you have no idea how much money you’re going to need to get your business off the ground. After all, with a subscription business, you’re only going to get a small payment every month from each customer, and you don’t know how long customers are going to subscribe, so you have to constantly update your forecast as you learn more about your customers. This forecast will help you predict how much cash you’re going to need to fund your growth.”
Sales forecasting isn’t impossible, or even all that difficult. Anyone can do it so long as they know their customers and their market. The great thing about the sales forecast is that it will really help you, and investors, answer that central question — Can my business really be a business?
Once you’ve done your forecast, don’t forget to go back and update your lean plan. You will do this throughout the life of your business, so get used to it and enjoy it.
Do it yourself
If you have the ability and the passion to do the work yourself, you can save yourself a lot of money. Joe Kindness, co-founder at Agency Analytics, says,
“Since Blake and I were both developers (and still are), we were able to create this company without any funding or additional resources. We set a goal to be profitable within one year and if that did not happen, we would move on. After about a six-month development cycle, we launched a beta version in July 2010, and three months later, started earning revenue that grew each month. The real motivation in all this was passion. Sure it was great (and essential) to be validated with revenue, but ultimately we enjoyed what we were creating so much that it resulted in a very nice product.”
If you can use your own savings or get a small bank loan, or even fund yourself via a third-party platform, you can avoid taking on too much risk. Gabriel Kuperman, CEO of CuePin, says, “Try testing an idea with a small budget that you can obtain through your own savings, a small bank loan, or even a Kickstarter campaign. Bringing in investors too early, before proof of concept is hard and may be unnecessary. You might also be giving investors too much equity early on, as the risk is extremely high for them in the beginning stages of growing a SaaS company.”
Taking the slow and careful approach can also save you from making some costly mistakes, says David Batchelor, President, and co-founder of DialMyCalls. “[Doing this] helps you really learn and get a feel for your industry, and lets you make mistakes on a smaller scale. It’s not as sexy as getting a big VC investment upfront and takes a bit longer, but at the end of the day, it has been much more rewarding for us to build it with our own capital.”
Seek out venture capital funding
In the event that you’re seriously thinking about pitching for VC funding (scary statistics aside), it’s useful to know a bit more about what venture capitalists are looking for. You can start by reading a few (or all) of these 17 venture capital blogs, reading Tim Berry’s thoughts on what venture capital firms want, and his advice on finding venture funding.
Even though Konstantinos Bratanis, co-founder and CTO of Goodvidio, and his partner started the business with their own hard-earned money, they were able to eventually raise VC funding. The great thing about raising money after they’d already started was that they’d had time to validate their idea and start building a team of good employees.
Konstantinos says, “As we were validating the value of our solution and recruiting early adopters, we started talking to a few VC firms. At the time, we didn’t have a sales pipeline yet or revenues coming into the firm. What encouraged us, was learning that at such an early stage VCs are more interested in the people behind the new company and their potential to build a viable business. They have modest expectations when it comes to cold hard sales and revenue numbers, so they want to see that there is a healthy team spirit behind the wheel that has the potential to reach growth. They want to see commitment, drive, vision, and hard work. Thanks to a combination of these traits we were able to secure a first-round of six-figure VC funding, which gave us a jump-start to start developing our sales and marketing channels.”
Just be sure that when you approach investors that you have your updated business plan, financial documents, and a refined pitch deck ready to go. These will help you prepare and give investors more holistic documentation to reference as you pitch your business.
8. Build your product
In this section, we’re briefly going to cover some of the things that are worth keeping in mind as you build your product.
Start as soon as possible
Noah Parsons says, “Start collecting contact information for interested, prospective customers. Develop a landing page, do some lightweight advertising, and generally reach out to as many potential customers as you can.”
In fact, you can even set up the landing page before you’ve finished building the product. Gleam.io has some great growth hacking strategies on their site; use these to give you that early boost.
Gabriel Kuperman, CEO of CuePin, also stresses the importance of starting small.
“When starting our SaaS company, we set out to create and develop the most important features for our launch. As we went through development, we began to accumulate many other ideas for features—both internally and through users who were testing our app. When you’re working with a shoestring budget, you want to release your app, get some real feedback from your targeted audience, and have some funds left over for marketing.”
Use a development methodology
Noah says, “Agile is what most software companies use. Estimate what it’s going to take to get to a working alpha or MVP.” You can learn more about the agile development methodology on Version One’s site.
Keep core development in-house
According to Dharmesh Shah, outsourcing core product development is something most startups shouldn’t try doing as there are many risks involved. And Buffer’s CEO Joel Gascoigne believes much the same thing; according to him, a freelancer’s goals are entirely different to your own. They’re not invested in the product like you are, or perhaps like someone with a stake in the business might be. Plus, they’ll be more likely to think about limiting the scope of the project to the allotted time or budget. I highly recommending checking out Joel’s article as he also gives some actionable tips on what to do instead of outsourcing the development process.
However, if you have the option of working and hiring remotely (not necessarily freelancing or outsourcing), do it. Noah Parsons says, “Skip the expense of an office if you can, but invest in great collaboration tools. For example, Buffer, a successful social media company, just closed their only office. There are benefits to in-person collaboration, but unless you can get space very inexpensively, focus on developing your product first. Offices can be very expensive and add little value.”
At Palo Alto Software, we rely on tools like Slack, Trello, Basecamp, and Jira to keep us all abreast of what is going on in the company.
9. Develop your go-to-market strategy
There are many ways to market a SaaS produc t— from paid advertising and affiliate partnerships, through active outreach to media outlets, and content marketing. Experimenting with a combination of these methods is a good idea. Pay attention to what works and be aware that it may change over time.
Do your own PR
Whether or not you’ve got the budget, doing your own PR to start with is a good idea. After all, who knows your business better than you?
“The media is always looking for new content to write about,” says Gene Caballero. “Just ask. We sent press releases to all of the cities that we launched in and easily got press in all of them.” Start building up a list of writers and journalists interested in news you may have to share, that you can reach out to. Use Twitter’s advanced search feature, and sites like Contently to find people who may be a good fit.
Participate in online communities
You can also spend some time participating in relevant online communities. Noah Parsons says, “Become an expert. Start participating in relevant discussion groups, comment on relevant blog posts, and start your own blog. You can get a little initial lift through sites like ProductHunt. Otherwise, it really depends on your industry. Figure out where your prospective customers hang out online and work to get coverage in those locations.”
Konstantinos Bratanis, co-founder of Goodvidio, offers much the same advice. He says, “When you start your SaaS business, you’re hit with a cold hard truth that you’re just a spec of dust in the universe of fast-paced tech and innovative ideas. Nobody knows your company’s name or what you do, especially if you’re providing a solution that is very new for your market. So, your first task is to get your name out there.”
For Goodvidio, this meant starting with a local community. Konstantinos says, “Since our market is online retailers, we approached our local eCommerce association and started interacting with the community. We asked for feedback about our software and our growth ideas and took part in the conversation. Taking part in the daily life of the community and learning how the ecosystem worked paid off because we started getting referrals, word-of-mouth, and endorsement from community leaders. That’s a good approach to meet early adopters and people who will be willing to work with you. This helped us get traction in the first year of business.”
Go the content route
Today, it’s particularly important for SaaS companies to do content marketing, and it’s even relatively affordable. Content marketing, as defined by the Content Marketing Institute, is “the marketing and business process for creating and distributing relevant and valuable content to attract, acquire, and engage a clearly defined and understood target audience — with the objective of driving profitable customer action.” It’s a marketing strategy that has seen immense growth over the past decade.
Noah says, “Find your prospects and work to help solve their problems. Use content marketing to share your knowledge on a topic and attract prospects that way.”
It’s relatively easy to get started doing content marketing by simply maintaining a company blog your target audience will find useful and interesting.
CEO Uwe Dreissigacker says, “SaaS companies should definitely operate their own blog. We blog at https://blog.invoiceberry.com, in case you want to pop by and read about small business and freelancing. It is also useful to get listed on all the big SaaS directories early on in order to get websites linking to your product and to receive initial product feedback. Producthunt.com is a great resource for viral marketing for the product launch as well as community feedback.”
That’s two votes for Product Hunt from two separate entrepreneurs. It’s not hard to see why, especially as it surfaces cool new products on a daily basis. Be sure to check it out.
Do a bit of everything
How will you know what works for you, unless you try it? Online, there are so many different ways to do your marketing and it’s simply not feasible, especially when you’re just getting started, to do them all. You have to try them, see how they go, and then pick the best performing of the lot.
“In terms of marketing, you should try to stretch your budget to a few different advertising channels. Putting all your eggs in one basket is not ideal,” says Gabriel Kuperman, CEO at CuePin. “This way, you can see which marketing channel gives you the most value. Make sure you’re tracking ‘conversions’ so you can see which marketing channel has the best conversion rate. A good online campaign should include paid search engine advertising, social media advertising, email marketing, and a PR campaign.”
Don’t forget real-life products
Don’t forget the value of using real-life products to market your business. Yes, even for a SaaS company. Many SaaS companies send stickers, or small “thank you” present to their best or most loyal customers, and many if not most founders and key team members have business cards.
Start with beta testing
Yet another great way to get started doing marketing is to launch a beta product. It’s also a good way to learn before the real thing is out there. Gabriel says, “Create a beta version of your app or software and get it released when it’s fully-functioning and bug-free. I’ve seen too many SaaS companies delay their launch because they continuously add features that they ‘want’ before they can release the first version. My advice is to get it to market when it’s in a usable and respectable form and let your beta users give you feedback and help shape the future of the software.”
10. Establish metrics for success
Whether or not you consider yourself a fan of numbers, if you run a business, you’re going to have to get used to looking at them.
For many people, tracking metrics can seem scary, boring, or time-consuming. But the truth is, these numbers are going to become your best friends. They’re going to help you make informed decisions, which will in turn take a lot of the weight of guesswork off your shoulders. Tracking your key metrics will also help you figure out how to grow, and whether or not it’s a good time to do so.
We use LivePlan’s Dashboard feature to keep track of our own metrics.
The benefits of tracking key metrics
In order to monitor your business’s health, it’s essential to understand what these metrics can tell you about your business. It’s also imperative that you monitor how these metrics are performing on a regular basis so that you can make better decisions and plan proactively for the future.
A few of the benefits of tracking your metrics include:
- Improving your current performance
- Improving future performance
- Catching things before they become problems
- Getting real feedback related to your goals and milestones
- Making decisions with more confidence
For those business owners who don’t keep an eye on the numbers, the statistics are not pretty. According to the SBA, 28 percent of businesses fail due to problems with the financial structure of their company, including keeping poor accounting records. If you don’t keep these records, or have a system in place that allows you to monitor them, you could run into problems.
The benefits of regular plan review meetings
At Palo Alto Software, we review our metrics in monthly plan review meetings. These meetings don’t take more than an hour, but they do provide insight into what is going on in the company. We use these meetings to ensure that we’re on track and in line to meet our goals. If we’re not, or something else has come up, we adjust our plan.
You can read more about how to run a monthly plan review meeting on the LivePlan blog, but here’s a brief summary:
1. We take some time to review the overarching numbers. How did we do compared to our forecast? How did we do compared to last month? Last year?
2. Review major milestones. Did you meet them? If not, how should they be adjusted?
3. Review long-range goals and strategy. Are you still on track to meet these goals? You may need to revise your long-term strategy based on the trends you notice in your numbers.
In order for your monthly plan review meeting to be successful, make sure to put it on your calendar, follow a repeatable agenda (so that everyone knows what is up for discussion), and be prepared to change your plan. These meetings aren’t about sticking to the plan if it no longer works, but rather about adjust the plan based on what the numbers reveal.
Starting a SaaS business takes time
While the startup process for a SaaS business can be condensed down to these 10 steps, each component will take time, testing, and refinement. You may even find consistent overlap between steps that have you complete specific elements in a completely different order. Funding, for example, may be something your startup doesn’t seek out until years after you’ve launched, and developing your business plan will be a constant process you revisit throughout the life of your business.
If you take away anything from this guide, just know that the most important thing for a SaaS startup is to get your product out there. As long as you have a working plan, metrics to track success, and a willingness to iterate, the more likely your business will survive and stand a chance against the competition.
Editors’ note: This article was originally published in 2016 and updated for 2020.