So you’ve got a brilliant idea for a SaaS product that will revolutionize the industry, you’ve prepared some connections and initial leads to sell to, and you know who you’ll hire to make your dream a reality. It’s time to get stuck in, right?
Well, it’s actually crucial that you take a step back and create a business plan for your SaaS startup. Without one, your strategy will be unclear, your financial future will be uncertain, and you’ll be unable to acquire and retain customers confidently.
So it’s time to put your fast-paced entrepreneurial instincts aside and create a SaaS business plan – read on to find out everything you need to include.
What to include in your SaaS business plan
Running a startup isn’t straightforward. You’ve got to manage your employees, source investment, and complete a seemingly never-ending list of tasks, such as finding a VoIP phone number.
That’s why we’ve compiled a checklist of everything you need to include in your SaaS business plan. Following this will make the process of creating a business plan much easier.
What problem does your SaaS solve?
Think of the executive summary like the introduction to this article – it should include enough information to get your readers interested without giving them all the details. Keep it nice and brief so that you don’t bore your readers.
First up, you’ll have to justify the existence of your SaaS. With so many SaaS startups out there, you should begin by outlining the problem that you’re aiming to solve. According to Ascendix, there are approximately 30,000 SaaS companies worldwide in 2023. You might want to include a personal anecdote before introducing your solution – a domain name search tool to solve the problem of finding available URLs, for instance.
Who is the target customer?
Your executive summary also needs to include a description of your target customer. Use data segmentation to sort your target audience into different demographics – any investors will want to see a clear understanding of the sort of person that your SaaS product will target.
What are the pain points of the target customer?
To show off this understanding of your audience, demonstrate the problems that they often encounter and what your SaaS tool can do to help.
What are the features and benefits of your SaaS product?
Of course, if you want to grow your startup your SaaS product needs to be useful. Highlight the main features of your software, making sure to really emphasize its benefits in the context of the problems that you discussed earlier in your executive summary.
Why is your SaaS better than the competition?
The final thing to include in the executive summary is a quick recognition of your competitors. This will show that you’ve done your research and that you believe that your SaaS offers something new to the industry.
How big is your market?
The next section of any good SaaS business plan is an explanation of the market in which you’ll be operating. You’ll want to provide data on the size of your market – don’t worry if you’re aiming for a relatively small market, as you should still be able to estimate the accurate size of a niche market.
How fast does your market grow?
Markets aren’t static, so a single number won’t be a good reflection of the context that you’re aiming to work in. Instead, you should show how quickly your market has grown over the last decade and use predictions for its development in the near future.
Who are your competitors?
A key part of your market research should be identifying your competitors. An online phone software would be expected to include every other significant PBX solution in its business plan, for instance.
Without discussing your competitors, your market opportunity will be incomplete – after all, it’s pointless spotting a gap in the market without knowing who else might be competing for that gap.
How will you price your SaaS?
Laying out your business model should be the core part of your SaaS business plan. Most business models start with the pricing – compare this to your competitors and link your pricing levels to your expected costs.
SaaS products and services will often have different pricing models, so you should also specify whether you’ll be using a per-usage or per-user model, for example.
How will you distribute your products?
Having a competitive pricing strategy won’t mean anything without a way of actually getting your products to your customers so you should also include information about distribution: consider shipping costs, delivery companies, and warehouse options.
How will you market and sell your products?
Similarly, you’ll want to be able to effectively attract customers to your product. Your business model should include a marketing strategy that incorporates all of your social media channels, advertising campaigns, and marketing metrics.
How will you provide customer support?
Accenture reported in 2022 that companies viewing customer service as a value center vs. a cost center achieve 3.5x more revenue growth.
So, your business model shouldn’t come to an end when your customers have made a purchase. To develop a clear understanding of how your SaaS startup will operate, you should think about customer support. Will you focus on customer self-service or will you hire a dedicated team of customer support specialists?
What’s your revenue forecast?
It’s important to remember that most readers of your business plan will be prospective investors – and nothing is more important to investors than the financial details!
A key part of your financial projections will be your revenue forecast. If your startup has already started to operate, you can build these from your monthly turnover but you might have to rely on predictions. Either way, your numbers should be clearly evidenced – look at an audit trail definition if you’re unsure about this.
How do you calculate the cost of goods sold?
Part of evidencing your numbers is by highlighting how you calculate your sales, so show prospective investors how you know how many goods you sell.
What are your main expenses?
If you’re choosing to invest in a company, you’ll want to know where your money is going. That’s why it’s important that you document your biggest regular expenses in your business plan.
Can you share your P&L statement?
As well as this, you should include a profit and loss (P&L) statement if possible to be as open as possible about your finances.
How is your cash flow managed?
Similarly, being able to clearly show how you manage your cash flow is vital if you want to secure funding for your SaaS startup.
Who are the key members of the team?
Any organization is only as good as the people in it, so you should include a section about your team in your business plan. Write introductions to the key figures on your payroll so that your readers can put names and faces to your team.
What are their skills and experience?
Let’s say that an investor is reading a business guide only to find that it’s being run by someone with no experience who’s living in his parents’ basement – do you think the investor will put their money in?
That’s why you need to sell your team just as much as your product: emphasize each member’s individual skills and include any relevant experience so prospective investors know that you’re a serious company.
Your marketing leader, for instance, might have specific proficiency in Vonage phone call tracking – if so, shout about it!
What are their roles and responsibilities?
The team section of your business guide is the perfect place to set out your business’s organizational structure. This doesn’t have to be as dull as it sounds – simply include the roles and responsibilities when you’re introducing the main members of your team. With this, everyone will soon know who has responsibility for each aspect of your startup.
How do you plan to exit the business?
Investors aren’t just interested in the short term; if they’re reading your business guide and considering investing in your SaaS startup, they’ll want to know your strategy for the future – including potentially exiting the company.
It’s very rare that a startup founder continues to work for that company for the rest of their career. In fact 44% of founders anticipate an exit within one or two years of starting the business. Therefore, some SaaS business plans will be designed to secure funding for a complete takeover. This means that you should show who will succeed you if you leave the organization, as well as any other considerations related to your potential exit.
What are your exit goals?
Closely linked to this are your exit goals. This is just what you hope to achieve before leaving your company – this can be as short-term or as long-term as you like, as its main aim is to give potential investors certainty about the future.
Using a business plan for your SaaS startup
Let’s be honest – creating a business plan isn’t the most exciting part of creating a SaaS startup. However, using a business guide can be invaluable to plot the future of your company and attract investors.
If you don’t know where to start with a business plan, our checklist will make sure that your business plan is perfect. Start writing a SaaS business plan today!