SaaS Startups: 3 Tips for Creating Financial Plans



Q&A with our Co-Founder Susan Richards, FCPA, FCMA


Q: Susan, what are 3 tips you would give to SaaS startup businesses when it comes to creating a strong financial plan?


A: If you are running your SaaS business without a financial plan you are not alone.  In my experience business owners are often without this valuable tool and yet I swear it is #1 thing you can do to make your business much more successful.  


Financial plans do not need to be very complex, and in fact simplicity is the theme of my 3 tips for creating financial plans.


Tip #1: You'll want your time unit to be months (vs years or quarters).  Picture an excel worksheet that has months across the columns.  It is much easier to set monthly goals and to review plans monthly.  Measuring progress to an annual number does little to help you determine if you are really on pace or not.

Tip #2:  Make sure your plan reflects your business model. Include the following simple assumptions about your sales forecasts by answering these questions: a) How many new customers will I add in each of these months? b) What will be the average price these new customers will pay for my products/services?  c) What will the payment terms be? 


This last one is where you'll be confirming whether they are paying a monthly subscription, or a one time annual license paid in advance.  


Tip #3:  Group your expenses into the following categories: 


a) R&D

b) Sales & Marketing

c) Customer Success

d) General and Admin. 


These categories will make it much easier for you to measure Metrics and Key Performance Indicators.  


Once you have quantified your plans into the above format you'll be able to measure variances to plan each month to stay on track.  No time to do that?  We're here to help.

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