Five Reasons Why a Strong SaaS Business Plan is so Critical to SaaS Startup Success

A strong SaaS business plan is one critical component of a successful SaaS startup. Any software business needs a strategy and a solid software business plan. ... but this is especially true for software as a service companies. Read this article to find out why, or check out our SaaS Business Plan Template Package here. Writing a business plan, and then tracking performance against it, is an important part of running any business effectively. Without a business plan, how will you know whether you achieved your goals, whether you are meeting customer needs as well as you possibly can, and whether you are taking full advantage of your unique value proposition?

A business plan may also be a requirement for investors and funding organizations.

However, there are a number of characteristics of SaaS startups that make it especially critical for them to have a solid SaaS business plan. In no particular order, those are:

Subscribe to our Free Newsletter

new Go-to-Market Toolkit

We have just launched our Go-to-Market Toolkit, with guides, templates and checklists to plan a successful software launch. 

Check out the Toolkit here, or you can get a free Go-to-Market Checklist one-pager if you sign up for our FREE monthly newsletter here.

If you prefer, you can also check out our other software marketing downloads.

1. SaaS involves standardized solution selling... successful standardization requires up-front planning

Selling SaaS = selling a service, or a solution to a customer's problem, while at the same time not being able to customize it to each customer individually since that would be cost-prohibitive.

Successfully selling a solution involves really understanding your customer in great detail, understanding their needs and problems, and crafting a compelling solution. Many traditional software companies rely on customization during the sales process to create that compelling solution. With SaaS, that research and understanding has to be done up-front (and then iterated) to be able to create a standard solution or set of solutions that will appeal to a wide enough customer base to support a successful business.

You also have a very short selling opportunity once the prospective customer lands on your site. If your messages are not crisp and targeted, they will move on.

2. SaaS often requires more up-front capital

SaaS business models tend to be front-loaded on costs, which means they often have a heavier reliance on up-front investment with delayed payout. A higher level of investment is going to mean increased due diligence on the part of investors, and increased scrutiny of the SaaS business plan.

3. The SaaS business model is newer and less proven

Companies have been selling software licenses, some more successfully than others, for decades. This is less true of the SaaS business model, especially if you sell to business customers. Since the business model is relatively new, your plan is likely to require some ongoing analysis and adjustment as the market matures.

4. Keeping customer acquisition costs low is key

One of the key SaaS metrics is low customer acquisition costs, as compared to customer lifetime value. With a SaaS business, over-investing in lead generation or focusing on the wrong leads can lead to unsustainable marketing and sales costs. Keeping those costs down requires planning and strategy to make sure the company is investing in the right places to drive sustainable customer revenue.

5. SaaS business plan metrics are more complex

With a SaaS business, it is not sufficient to simply forecast and track quarterly bookings, as is common with licensed software companies. There is additional complexity to the key SaaS metrics of business health, and an ongoing plan is needed to forecast and track them reliably.

So, if you are launching a SaaS startup, having a well-thought-out business plan is going to be crucial to the success of that business.

We provide a business plan template, together with tools to forecast and track the SaaS financial metrics, in our SaaS Business Plan Package which can be downloaded here.

  1. Home
  2.  ›
  3. SaaS & Software Market
  4.  ›
  5. SaaS Business Plan Tips

Recent Articles

  1. Software Business Plan and Marketing Strategy

    Apr 26, 19 03:33 PM

    Get tips on defining the best software business plan -- one-time software license, SaaS, subscription, or a hybrid model? Read more to learn how to write a strong business plan.

    Read More

  2. Hiring a Software Marketing Firm - What to Look For

    Apr 04, 19 10:05 AM

    Thinking of hiring a software marketing firm? Get some tips on what to look for, what to avoid, and how to manage the process of marketing outsourcing.

    Read More

  3. Software Marketing Consultant Services

    Apr 03, 19 02:18 PM

    Need the help of a software marketing consultant? We provide services to help with marketing strategy and business planning for your software company.

    Read More