Is SaaS heaven on earth for B2B Software startups? Startup development & the platform dilemma
The following guest post is contributed by Thomas Oriol, who is the co-founder and CEO of online sales analysis and forecasting application Salesclic. You can follow him at @ThomasOriol as well as his company at @Salesclic. SaaS has considerably reduced B2B startup development costs. Think of the products and services you had to buy when starting a B2B software company 10 years ago, and that you can now rent. These include servers, productivity suites, telecom networks, software development tools and project management and CRM software. Of course the lifecycle cost of these services may be higher than their perpetual license equivalent (SaaS wouldn’t exist as an industry otherwise), but given the cashflow profile of a startup, renting vs. buying makes a big difference. Sales and marketing boost Furthermore, reduced costs are only the supply-side advantage of SaaS. One obvious drawback of SaaS is its difficult economics during the first phases of a company’s lifecycle. Platform orphans
Financial models are always wrong. Build one anyway. - Foresight
The financial model doesn't matter; the thought process does. To start, financial models are always wrong. But it’s important to create one anyway. I have created, modified, and delivered hundreds of custom financial models in Excel for a range of clients over the past decade, and learned a lot about how to create and use financial models in decision-making. Creating a financial model forces an entrepreneur to outline very specifically how a business “works”: how a company creates their products, how users and customers find and use their products and how those processes create revenues and costs. The result, a set of operational metrics, financial statements and the “equation of the business”, is one view of a potential reality of the business. Instead of focusing on the bottom line profit and net income, focus on the assumptions and key drivers of the business. Sounds hard? Resources for Business and Financial Modeling Financial Model Excel Templates Best Practices and Guidelines
Financial planning for SaaS Startups: Q&A with Christoph Janz
I quit my day job with my friend Igor I started a new company called elastic.io, a solution that helps people connect cloud API’s without programming. One of the major hurdles we faced when starting our company was how to do the financial planning for our SaaS startup. Since we thought this might be useful for other entrepreneurs, I wanted to share with you what we learned. Financial planning for Saas resources There are multiple resources that you simply HAVE to read before doing any financial planning for SaaS. After that I would recommend Christoph Janz‘ blog. In March 2012, Christoph published a couple of blog posts about financial planning for SaaS, which we studied intensely. This sample financial plan is pretty detailed and you can read it on Christoph’s blog, so I won’t go into it again, but after we studied it, we still had a few unanswered questions about it. Is a cheaper SaaS product always easier to sell? Unfortunately, according to Christoph, this is just not true.
B2B Startup Marketing | Blog Your Way to Leads | B2B Marketing Strategy
B2B startup marketing is tough. It used to be that you could polish off a high level message and a slide deck and let the salesperson handle it from there. Today, online marketing is the primary driver of revenue at the typical B2B startup. The new breed of B2B buyer expects your online content to be engaging, valuable and deep, and is unlikely to engage your salesperson if you don’t deliver. The B2B Startup Marketing Blog Imperative Every B2B startup marketing professional knows that they need a blog, but not everyone recognizes it’s central importance in getting the B2B startup marketing effort off the ground. The Shortest Path to Deep Content Creativity is a process, not a plan. Your B2B startup marketing blog should be a crucible of creativity. Get Instant Results Through SEO and Social Media On the Web, the medium is quite literally the message. Integrate Blog Content Into the Buying Experience Don’t let your blog hang off the side of your website. Capture Your Prospects
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Cloudonomics 101 - Creating a Financial Plan for your SaaS or Cloud C…
SaaS Economics - Part 1: The SaaS Cash Flow Trough
This post provides SaaS entrepreneurs with an Excel spreadsheet model and graphs that show the cash flow trough that happens to SaaS, or other subscription/recurring revenue businesses that use a sales organization. These kinds of SaaS businesses face a cash flow problem in the early days, because they have to invest up front in sales and marketing expenses to acquire customers, and only get payments from those customers over a delayed period of time. I refer to this phenomenon as the the SaaS Cash Flow Trough. The model also compares the cash flows of businesses that charge monthly to those that are able to charge their customers for a year’s payment in advance. The greatest value from this post will come from downloading the model and inputting your own variables. Part 2 of this series can be found here: SaaS Economics – Part 2: Scaling the Business. Where is this applicable What are the different analyses? Part 1: Looking at a single new sales hire The Cash Flow Trough Conclusions
The Truth About Start-up Marketing
I am a Full-Stack Marketer. For years I’ve struggled with how to describe what I do professionally. The default answer is “Online Marketing” but these days every marketer is an online marketer. Nevermind the age-old stereotypes of a marketer being a 29 yr old female blonde who doesn’t have the technical or analytical skills to do anything else. People generalize. I didn’t come up with this term, but rather found it recently through fellow full-stack marketer, Mark Evans, and the great post he discovered on GeekWire. Rather, his point was that startups need a different kind of marketer. It clicked – this is what I do. Lavalife (2006): As a company that was in its maturity stage, understanding the ROI on each dollar invested in marketing was crucial for all marketing tactics at Lavalife: Paid Search: the easiest and often most effective way to spend your direct response budget. In 2009 I joined Kobo as the first online marketer. There is no such thing as a start-up marketing playbook.
Startups and financial models for SAAS companies
The other day I met with an entrepreneur I was advising as he prepared to raise his next round of funding. In the meeting, he wanted me to narrow in and focus on his financial model. Financial models for startups are important from a big picture perspective, but I never like to get mired in the full details as things always change in the early stages. So first and foremost, I let him know that while it was nice to have a well thought out spreadsheet, that the most important thing was getting the product developed and the right team in place. I don't invest based on detailed spreadsheet models - getting comfortable with the team, the problem being solved, and the market opportunity are more important in the early days. Secondly, what is most important for me to understand is the expenses and what milestones will be achieved with this first round of funding and whether or not it would be suitable enough to raise the next round of financing.
