What are some things to consider in business planning for SAAS companies?
Software as a service is a business concept with multiple business offerings. Each business offer will have various use cases. Clearly defining the offerings and related use cases should be the first task. Thinking these basic concepts through is a job that the Founders best do, for they are in the best position to understand the intricacies of the SAAS concept they are bringing to the market.
This done, ask yourself what objective of the planning exercise you seek to undertake. Is it to convince an investor that your company will be a great investment destination? If that is the objective, the entire subsequent exercise will be aimed at presenting facts and arguments that support this goal. A business plan in such cases will not be very different from a lawyer’s statement in support of your company.
Most business units of established companies conduct an annual business planning exercise routinely. The task for a SAAS company will be no different. The annual business plan has to be an operational plan in which you look at what you have achieved in the past, what objectives and milestones you plan for the year, and how you would achieve these objectives. Annual business plans are taken very seriously in mature companies. It is a demanding exercise for leaders. Facts are gathered, resources are required to implement the program, and revenues, prospects, deals, wins, and losses are tabulated. An annual business plan should be done with a lot of care, and the projections should be conservative. Often, you and your team use business plans for target allocation, goal setting, and performance appraisal. I have goofed up once by preparing an ambitious business plan for your business unit. My boss hugely appreciated the project. The quarterly reviews were a nightmare that I wanted to avoid but couldn’t. In SAAS companies, it will be no different.
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