Your SaaS company needs a budget

Having a budget helps you prevent surprises running your SaaS company. Because if you stop counting money, you will start loosing money.

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Startup Costs Team 20/08/2019

When you run a SaaS company, you are likely excited about running it: working with your team on new features, talking to (prospect) customers and working on marketing and sales. But there’s one important aspect of running a company—especially early stage—and that’s budgeting. Having a budget helps you grow and greatly increases the chances of success, aka running a profitable business. Keeping track of your money early on helps prevent surprises later on.

Have one person per team in charge of the budget

If you keep the rule to have one person per team in charge of the budget, it will help them stay close to source, goals and needs. This is opposed to have one person in charge of the whole company. A team in this case can also be project-based (which are often temporarily). Early on, when the company only has one team, it is likely to be the founder’s role. But once your company grows, adding more teams like marketing and engineering, split up the previous sole role to multiple “budget owners”—one per team.

This way budgeting goals are easier to understand and more purposeful. Less chance for unnecessary expenses being made and investment mades, for marketing or ad spend, will prove more valuable.

Team leads in charge of the budget allocated to them will improve upon their leadership abilities. It also helps them work more autonomous as they can make bigger decisions knowing what kind of impact this will have on their budget.

Organise your budget early on

Early on in your SaaS journey your biggest expense will most likely be your time. Building the product, talking to customers, etc. But even in this stage there will be multiple software expenses. A month later, you will add some other service. Then another SaaS subscription. And before you know it, you lost track of the many subscriptions (paid and free) you use. Having these all in one central place, helps you get the overview: how much do we pay for what. Categorise and add clear purposes for every subscriptions: “engineering”, “infrastructure” and “marketing”. So later on, for your team members ánd for future-you, there will be no confusion about its purpose.

“Once you stop counting money, you will start loosing money”

Include your revenue forecast

Having a budget where you only manage your expenses is only one-half of the equation. Budgets help you with increasing the money you make. Including your revenue forecast helps you to make sure you make more than you spend. It’s what we know as “profit”. Having a revenue forecasts included in your budget will help you with your business’ growth.

Have a clear and logical budget

Having a logical budget for your business prevent confusion. It should always give you a clear overview of where your company is heading to. It should answer the simple question: what do expect to make and what do we need to get there. This also means you don’t have insert any expense to the decimal-point precise, but just enough to complete and clear.

The right budget will help grow your SaaS business

When you budget with care, you and your team will get a better understanding of the path forward, what issues to resolve and to prevent certain challenges. A budget should not be set in stone. If new opportunities arise, it’s totally okay to adjust your budget accordingly. Be conservative with your budget—rather underpromise and over-deliver. Being in a tight financial position is tough for private persons, it’s way worse for companies where people rely on their pay check.

Start with the budget for your SaaS company early on. As a company founder it gives your peace of mind. Knowing and seeing you have multiple options is liberating and helps making entrepreneurship a bit less scary.

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