Our latest article, “SaaS Business Plan Tips,” on Software Marketing Advisor is about SaaS business planning… how critically important having a solid business plan is for software-as-a-service providers.
You may ask: why should I write down a lengthy business plan? Sure, there are too many things to do already when you’re trying to start or grow a business, and often business planning does not seem as critical as the other urgent calls on your time.
SaaS companies should not make that mistake… Here’s a quick summary of the top 5 reasons why you need to write that SaaS business plan now:
- SaaS involves selling and delivering a standardized solution that solves a customer need broadly without too much expensive customization. Getting that right requires up-front planning: there’s little opportunity to customize during the sales cycle or during installation and still make money.
- SaaS usually requires more up-front capital than a more traditional software startup. That means investors are going to be looking more closely at that SaaS business plan and financial projections.
- Because it is newer, the SaaS business model is less proven, requiring more ongoing analysis and adjustment as the industry matures. It’s hard to determine which assumptions worked and which didn’t if you don’t write it down.
- One of the most important SaaS metrics is low customer acquisition costs. Without a SaaS business plan, it is too easy to over-invest in lead generation or focus on the wrong leads, leading to unsustainable marketing and sales costs.
- There is additional complexity to SaaS business metrics that necessitates an ongoing plan to forecast and track them reliably. It is not sufficient to simply forecast and track quarterly bookings, as with licensed software.
So stop procrastinating… and start writing your business plan! This SaaS business plan template can be a useful place to start.