When I am talking with SaaS founders the discussion frequently turns to the pros and cons of asking customers to prepay their subscription annually. Often the decision to do this is driven by a desire to improve conversion rates. I think this is mistaken.
We specialize in 3 sectors at SurePath: SaaS, E-Commerce and Marketplaces. The commonality across these segments is that they are all data-driven. Companies in these segments have lots of knobs and levers that they can twist and turn to optimize and grow.
In this post, I’d like to show you the first of three simple tests to ensure that your SaaS Pro Forma Model is solid. I’ll do the same thing for E-com and Marketplace businesses in future posts.
Test #1: Your Historical Funnel
It’s pretty easy to forecast expenses. The magic is forecasting revenue. If your SaaS business targets SMB, then you likely generate new revenue through a large marketing/ freemium funnel. If you run an enterprise SaaS business then you probably grow new revenue through an inside sales machine. Continue reading Is your Revenue Model accurate?
Earlier this week Endurance International announced an agreement to acquire Constant Contact, one of the largest SMB SaaS players. At $1B, this exit is probably the largest in the SMB space. So, I thought it would be worth looking at to see what other SMB SaaS companies can learn from it.
Background: (thanks to my colleague Shubham for pulling together some research here)
Constant Contact (NASDAQ: CTCT): Continue reading A look at the Constant Contact acquisition
Founders and non financial people in general usually hate building financial forecasts. But, every startup needs one. You need one in order to raise capital. You need one every year thereafter to present to your board.
For me, financial models are very powerful. The numbers in them are rarely right. It’s not like you need to hit the revenue target that you set for 36 months out. But, the thinking into how your business works, how you grow users, revenue and staff is invaluable.