How To Create A Business Plan For SaaS Startup
Growing a SaaS startup can be one of the most lucrative and rewarding endeavors, but it can also be one of the riskiest.
The SaaS industry is now worth around $242.57 billion, and it’s growing at a rate of 22.2% each year.
But with such high growth comes high competition. And fledgling SaaS businesses have to be very strategic in order to succeed.
Now, one of the most important things for any SaaS company is to have a solid business plan.
It will be your roadmap to success. And it will help you raise funding, attract partners, and scale your business.
In this article, we’re going to show you how to create a business plan for a SaaS startup. But first, we’ll give you an overview of what a business plan is and why it’s so important.
What Is A SaaS Business Plan?
A business plan is a document that outlines your business goals, strategies, and how you plan on achieving them. It’s also a valuable tool for attracting investors and partners.
Your business plan should be clear, concise, and easy to understand. It should also be realistic and achievable.
Why Is A SaaS Business Plan Important?
A business plan is important because it will help you do three crucial things for your SaaS startup:
- Raise funding from investors
- Attract partners
- Scale your business
Without a business plan, it can be a challenge to raise funding or attract partners. And without funding or partnerships, it would be very difficult to scale your SaaS company.
How To Create A Business Plan For Your SaaS Startup
A solid SaaS business plan should have the following parts:
1) Executive Summary
The executive summary is the most important part of your business plan. It should be clear, concise, and easy to understand.
It’s sort of the elevator pitch about the SaaS company you want to build. The goal of the executive summary is to get the reader excited about your business and convince them to keep reading.
It should include the following:
- An overview of your business
- Your target market
- Your unique selling proposition (USP)
- Your revenue streams
- Your expenses
- Your profitability
- Your exit strategy
Make sure to keep your executive summary short and sweet. You want to give investors and partners a general idea of your business, but you don’t want to bore them with too much detail.
2) Company Description
The company description should give investors and partners a brief overview of your business. It should include the following:
- Your company history
- Your mission statement
- Your organizational structure
- Your location
- Your legal structure
3) The Problem
Every SaaS product seeks to solve a pressing problem in its target market. That’s why they are called SaaS solutions.
In this section of your business plan, you need to clearly define the problem that your product is solving.
But more importantly, you also need to make your reader relate to that problem or at least evoke some empathy for the people experiencing this problem.
One good way to do this is through storytelling. You can tell the story of a person or business that is currently going through the problem that your product solves.
4) The Solution
After you’ve clearly defined the problem, it’s time to talk about your solution. You need to touch on four things about your SaaS solution:
How it solves the problem: In this section of your business plan, you need to describe your product in detail and how it solves the problem that you’ve described.
Competitor analysis: You might also want to highlight a competitor analysis and how your product is different from the competition.
Pricing: You need to have a pricing strategy and pricing model for your product. Will you charge per usage? Per feature? Will you have a tiered pricing structure?
5) The Target Market
In this section of your business plan, you need to describe your target customer. You need to talk about different factors that can help you set your target market apart from other people.
If you’re offering a B2C SaaS solution, you might want to state the following factors:
Demographics: Age, gender, location, income, etc.
Psychographics: Lifestyle, values, interests, personality, etc.
If you’re offering a B2B SaaS product, you might want to add factors that pertain to the businesses or companies within your target market.
Firmographics: Business size, industry, location, etc.
6) Customer Acquisition Strategy
In this section, you need to talk about how you plan on acquiring customers for your SaaS solution. That means marketing and sales.
You need to have a solid go-to-market strategy for acquiring customers that is sustainable and scalable.
Some common customer acquisition models for SaaS products are:
Inbound marketing: For most SaaS businesses, inbound marketing is the only primary acquisition channel that can get them high-quality leads and long-term customers.
This is because inbound marketing focuses on attracting potential customers and building trust with them before turning them into paying customers.
It involves various marketing channels and strategies, including the following:
Inbound marketing is all about generating leads through the channels we mentioned above.
Once you’ve generated a lead, you then need to nurture that lead through the sales process until they’re ready to buy.
Outbound marketing: This is a more traditional form of marketing that involves reaching out to potential customers through different channels.
Some common outbound SaaS marketing channels are:
- Paid advertising
- Cold emails
- Cold calling
- PR and media outreach
- Events and trade shows
- Some aspects of account-based marketing
In general, SaaS businesses tend to avoid some outbound marketing methods, such as cold calling and cold emailing. This is because these methods can be quite disruptive and tend to have a low return on investment (ROI).
However, an outbound marketing strategy can still be useful, especially if it’s a part of an account-based marketing campaign.
Sales: As we mentioned earlier, you can nurture your leads through a solid sales process.
This is where having a great sales team comes into play. They can help you turn a potential customer into a full-fledged paying customer.
There are different types of sales strategies, but the general idea is to have a process in place that allows you to qualify and close deals efficiently.
Product-led growth model: If you’re launching a B2C SaaS product or a B2B solution targeting small businesses, this might be one of the best customer acquisition strategies for you.
Product-led growth is all about using your product itself as a marketing and sales tool, without relying too much on sales.
In other words, your SaaS product would sell itself.
You can do this by offering a freemium version of your product or by providing a free trial.
The idea is that people will use your product and fall in love with it. They will then be more likely to upgrade to the paid version or recommend it to their friends or colleagues.
7) The Team
In this section, you need to talk about the people who are going to make your business a success.
That means talking about the founding team, as well as any key employees or advisors.
You should include information about each person’s experience, skills, and achievements.
This is important because investors want to know that your team has the right mix of experience and expertise to make your business a success. If they are confident in your team’s abilities, they will be more likely to invest.
8) Financial Plan
Your financial plan is one of the most important parts of your business plan.
This is because it will show investors whether or not your business is viable from a financial perspective.
And that’s their ultimate consideration on deciding whether or not a SaaS company is worth investing in.
Your financial plan should include the following:
Sales forecast: This is a projection of how much revenue your business will generate over a period of time.
There are many different ways you can forecast your sales. But the important thing is to be realistic.
If your projections are too optimistic, investors will see right through it and it will damage your credibility.
Cash flow statement: This is a projection of how much cash will flow in and out of your business over a period of time.
It’s important to have a good handle on your business’s cash flow because it will show investors whether or not you will be able to fund your operations and grow your business.
Profit and loss statement: This is a projection of your business’s profitability over a period of time
This is an important metric because it shows investors whether or not your business is viable in the long run. If your business is not profitable, it will eventually go out of business.
Balance sheet: This is a snapshot of your business’s assets and liabilities at a given point in time.
This is an important metric because it shows investors whether or not your business is financially healthy. A business with more assets than liabilities is in good financial health, while a business with more liabilities than assets is in bad financial health.
Final Thoughts About Creating A Business Plan For SaaS Startup
Creating a business plan is an important exercise for any SaaS startup.
It will not only help you raise money from investors, but it will also force you to think about your business in a structured and logical way.
The process of creating a business plan will also help you to better understand your business and what it takes to be successful.
If you’re not sure where to start, there are plenty of business plan templates and examples out there that you can use as a starting point. But ultimately, it’s up to you to make your business plan unique and tailored to your business.
Looking for more guides to help you take your SaaS startup to the next level? Check out our blog here.