SaaS business plan for starting your own company
Are you thinking about starting a business that will have an enormous scope in the near future? Well, you must opt for a SaaS business then. SaaS stands for software as a service and includes providing software such as CAD or content management with their key or license on a subscription basis to many customers, even at the same time, and hosting and upgrading them while sitting on your location.
These days several startups and businesses require different software to make their tasks easier. But not all of them want to buy them. So, they prefer to contact SaaS businesses and pay on a monthly or weekly basis to use their software services instead of spending a heavy amount in making a purchase.
If you have made up your mind to start this business but have no idea about how to start or how to write a business plan SaaS, you can take help from here. This sample SaaS business plan provides all the crucial details while relating them to a SaaS business startup, Techware, based in Houston.
Executive Summary
2.1 The Business
Techware will be a registered and licensed SaaS business responsible for hosting software services throughout Houston and nearby cities. Techware will be offering management, accounting, and engineering software on affordable subscription fee. Moreover, it’ll be responsible for updating and monitoring the provided software from time to time.
2.2 Management
Tom Will, the owner, has decided to manage his business by himself. Knowing the importance of good management structure in business, he decided to include that in his business plan for SaaS startup. Tom will hire experienced software engineers, IT experts, computer experts, account managers, sales executive, and other personnel to run his business.
Later in this sample SaaS business plan package, we will be listing company’s employees along with their job description and average salaries.
2.3 Customers
Before making a business plan for SaaS company, it’s essential to know your customers. Having a clear idea about your target groups helps you in devising SaaS business continuity plan template, which can help in specifying ways to deal with possible losses/threats by approaching another group of customers if one fails to satisfy your sales.
After analyzing the market, Techware identified that every group which will be associated with any small or large business, company or institute will be its target customers.
2.4 Business Target
Our main business targets are to add two new software services every 3 months, expanding our business network and increasing our sales by 20% every 6 months.
Company Summary
3.1 Company Owner
Tom Will, owner of Techware is a software engineer who did an MBA from London Business School after his graduation. Tom has worked in Symantec for two years as a product manager. But he resigned as he wanted to start his own business. No doubt, he possesses all the qualities that enable one of starting their own business such as talent, knowledge, management skills, experience and wealth.
3.2 Why the SaaS Business is being started
In this age, no business and company can survive without the usage of the latest software. But not every startup can afford to buy them. So here comes the scope of SaaS companies who buy expensive software and host their services on any location specified by the customers on a subscription basis.
So, Tom who always wanted to start his own business couldn’t have come up with a better idea than initiating a SaaS business. As it offers him the platform to blend his software knowledge with his management skills to generate huge gains.
3.3 How the SaaS Business will be started
The only way to avoid confusion at every decision making stage is to formulate a proper saas business plan. Your business plan for saas company must cover the details of your investments, advertisement costs, strategy to reach your customers, management structure and financial plan.
Recognizing the importance, Tom created a thorough software as a service business plan. According to which, the company’s office will be based in Houston, but its services will be offered in nearby cities too.
The office will be decked by first-class equipment and the latest networking system. Initially, the company will be providing services for some major software such as office software, payroll processing, customer relationship management, and collaboration, etc. Moreover, it will hire highly experienced personnel to ensure the perfect running of the business and skilled web developers to ensure a strong web presence.
The detailed startup requirements are given below:
| Start-up Expenses | ||
| Legal | $135 000 | |
| Consultants | $0 | |
| Insurance | $75 000 | |
| Rent | $70 000 | |
| Research and Development | $65 500 | |
| Expensed Equipment | $80 500 | |
| Signs | $3 500 | |
| TOTAL START-UP EXPENSES | $429 500 | |
| Start-up Assets | $453 000 | |
| Cash Required | $546 000 | |
| Start-up Inventory | $45 000 | |
| Other Current Assets | $643 000 | |
| Long-term Assets | $520 000 | |
| TOTAL ASSETS | $2 207 000 | |
| Total Requirements | $2 636 500 | |
| START-UP FUNDING | ||
| Start-up Expenses to Fund | $429 500 | |
| Start-up Assets to Fund | $2 207 000 | |
| TOTAL FUNDING REQUIRED | $2 636 500 | |
| Assets | ||
| Non-cash Assets from Start-up | $973 000 | |
| Cash Requirements from Start-up | $546 000 | |
| Additional Cash Raised | $40 000 | |
| Cash Balance on Starting Date | $44 250 | |
| TOTAL ASSETS | $1 603 250 | |
| Liabilities and Capital | ||
| Liabilities | $36 000 | |
| Current Borrowing | $0 | |
| Long-term Liabilities | $0 | |
| Accounts Payable (Outstanding Bills) | $48 500 | |
| Other Current Liabilities (interest-free) | $0 | |
| TOTAL LIABILITIES | $84 500 | |
| Capital | ||
| Planned Investment | $2 636 500 | |
| Investor 1 | $0 | |
| Investor 2 | $0 | |
| Other | $0 | |
| Additional Investment Requirement | $0 | |
| TOTAL PLANNED INVESTMENT | $2 636 500 | |
| Loss at Start-up (Start-up Expenses) | ($1 117 750) | |
| TOTAL CAPITAL | $1 518 750 | |
| TOTAL CAPITAL AND LIABILITIES | $1 603 250 | |
| Total Funding | $2 636 500 | |
Services for Customers
Deciding your services is a step that must be taken before crafting a marketing plan for your saas business. Your investments, purchases, hired staff and many more things will just be dependent on your services, so you must state them clearly in your saas startup business plan.
Note
Choosing your services at the initial stage will also help you in devising saas lean business plan and finding ways to minimize wastage of resources.
- Providing Management Software: We’ll be offering software services for management software like accounting, invoicing, enterprise resource planning, content management, office software, human resource management, payroll processing, customer relationship management, and collaboration.
- Providing Engineering Software: Software that are used in engineering institutes and companies will also be offered by us such as Adobe Font Folio, AutoCAD, Visual Studio Ultimate with MSDN, VxWorks, etc.
- Providing Construction Software: We’ll provide services for following expensive software used by construction companies such as Oracle Primavera P6, Esticom, Buildertrend, FINALCAD, etc.
- Graphic Designing Software: We’ll offer services in graphic designing software such as Adobe Illustrator CC, Adobe InDesign CC, CorelDraw Graphics Suite, Corel PaintShop Pro, etc
- Training Sessions: Our software engineers will also give training sessions on the latest software at our customer’s location.
Marketing Analysis of SaaS Business
If you want to opt for a SaaS startup, you must first search out whether the market you’re choosing has the potential to bear your startup or not. It’s better to research to know if there are already-established such businesses because it’ll be difficult for you to strive then.
Operational/Strategic Planning Services
5.1 Market Trends
In this current age, usage of software in various sectors has increased which has helped in increasing productivity and keeping pace with the fast-going world. Almost all companies and businesses require some sort of software. But usually, enterprises don’t prefer to purchase them for a lifetime and opt for seeking the services of SaaS companies instead.
So you don’t have to bother at all about the scope or trend of SaaS business, you’ll just need to have a look at your budget. If it is not too large then you can start with just one type of software such as business software.
5.2 Marketing Segmentation
Before you think about how to find clients, you must be clear upon who will be your clients. To understand their demands and meet their expectations, it’s essential to do a thorough marketing segmentation in your saas business plan template.
The detailed marketing segmentation done for Techware is given in this part of startup saas actual business plan.
5.2.1 Companies: Our first target will be the companies that will be needing our services to have the latest payroll, coordination, and management systems. Besides the general software, they are also expected to use our services for software which will be specific to their works.
5.2.2 Startups: Our second target will be the startups who just can’t afford to make huge investments on the software especially when they have a better option to get them hosted by SaaS companies.
5.2.3 Institutes: Our last category will be institutions such as those who carry out research work on some engineering-related projects. They will surely be needing diverse software, some for a smaller span of time and some for a larger, thus, will obviously prefer to use our services.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Companies | 46% | 44 500 | 46 250 | 48 000 | 49 750 | 51 500 | 10% |
| Startups | 26% | 15 350 | 17 400 | 19 450 | 21 500 | 24 000 | 10% |
| Institutes | 28% | 17 430 | 18 250 | 19 070 | 19 890 | 20 300 | 10% |
| Total | 100% | 77 280 | 81 900 | 86 520 | 91 140 | 95 800 | 10% |
5.3 Business Target
Setting SMART: specific, measurable, attainable, realistic and time-bound goals for your startup is necessary to keep up the spirit of working hard and harder.
Our business targets are as follows:
- To achieve a net profit margin of $15k per month by the end of the first year
- To increase our services by adding new software in our package after every 3 months
- To increase our overall sales by 20% every 6 months
- To attain an average rating of 4.5/5 by the end of the first year
5.4 Product Pricing
To maintain the quality of our services Techware found it essential to not compromise on the money. So, our prices will be in the same range as that of our competitors.
SaaS Marketing Strategy
Before writing a saas business plan, you must research what your competitors are doing. This will help you in coming up with diverse and better services.
If you are looking for saas business plan example to get an idea about what strategy can make you more preferable than your customers, you can take help from this saas business plan template free of cost.
6.1 Competitive Analysis
Our biggest competitive advantage lies in our wide range of services and the skills of our employees. Secondly, we are highly customer service oriented. Besides providing them with just our software services, we’ll offer training sessions by our software engineers, so that they can learn about working on it. We’ll be providing our services in various regions so we expect to attract more customers to our site. Lastly, we’ll be extremely careful about protecting our customer’s data.
6.2 Sales Strategy
We’ll advertise us by the following methods:
- By ensuring a strong web presence
- By providing a 5% discount on our services for the first two months
- By personally sending our representative to our target customers
- By providing a 2-day free training session to help those persons who don’t have hands-on on the latest software
6.3 Sales Monthly
Our monthly sales are forecasted as follows:
6.4 Sales Yearly
Our yearly sales are forecasted as follows:
6.5 Sales Forecast
Our forecasted sales are given below.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Providing Management Software | 1 200 | 1 600 | 1 900 |
| Providing Engineering Software | 760 | 890 | 1 200 |
| Providing Construction & Designing Software | 1 350 | 1 650 | 1 870 |
| Training Sessions | 230 | 300 | 450 |
| TOTAL UNIT SALES | 3 540 | 4 440 | 5 420 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Providing Management Software | $160,00 | $180,00 | $200,00 |
| Providing Engineering Software | $200,00 | $210,00 | $220,00 |
| Providing Construction & Designing Software | $350,00 | $420,00 | $540,00 |
| Training Sessions | $140,00 | $220,00 | $260,00 |
| Sales | |||
| Providing Management Software | $192 000 | $288 000 | $380 000 |
| Providing Engineering Software | $152 000 | $186 900 | $264 000 |
| Providing Construction & Designing Software | $472 500 | $693 000 | $1 009 800 |
| Training Sessions | $32 200 | $66 000 | $117 000 |
| TOTAL SALES | $848 700 | $1 233 900 | $1 770 800 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Providing Management Software | $67,00 | $81,00 | $94,00 |
| Providing Engineering Software | $72,00 | $76,00 | $100,00 |
| Providing Construction & Designing Software | $69,00 | $89,00 | $99,00 |
| Training Sessions | $105,00 | $165,00 | $195,00 |
| Direct Cost of Sales | |||
| Providing Management Software | $80 400 | $129 600 | $178 600 |
| Providing Engineering Software | $54 720 | $67 640 | $120 000 |
| Providing Construction & Designing Software | $93 150 | $146 850 | $185 130 |
| Training Sessions | $24 150 | $49 500 | $87 750 |
| Subtotal Direct Cost of Sales | $252 420 | $393 590 | $571 480 |
Personnel plan
It’s not just the role of management which must be played efficiently. No business can survive until devoted and talented employees invest their tireless efforts in it. So, it is necessary to hire suitable persons for your business. In this saas business plan sample we’re listing personnel plan of Techware to help those who have no idea about how to writing a saas business plan.
7.1 Company Staff
Tom will be the manager himself and will hire the following persons:
- 2 Network and Information Security Managers to ensure network security
- 1 HR Manager to coordinate staff
- 2 Software Engineers to maintain and upgrade software
- 4 IT experts to host software services
- 2 Technical Assistants to maintain equipment
- 2 Accountants to maintain financial and other records
- 4 Sales Executives to market and reach target groups
- 1 Web Developer to manage company’s sites
- 2 Customer Representatives to interact with customers off/online
- 1 Cleaner to ensure a healthy environment
- 2 General Assistants to carry out day-to-day tasks
7.2 Average Salary of Employees
The following table shows the forecasted data about the salaries of the employees for the next three years.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Network & Info. Security Manager | $60 000 | $66 000 | $72 600 |
| HR Manager | $35 000 | $38 500 | $42 350 |
| Software Engineers | $35 000 | $38 500 | $42 350 |
| IT Experts | $70 000 | $77 000 | $84 700 |
| Technical Assistants | $18 000 | $19 800 | $21 780 |
| Accountants | $15 000 | $16 500 | $18 150 |
| Sales Executives | $48 000 | $52 800 | $58 080 |
| Web Developer | $12 000 | $13 200 | $14 520 |
| Customer Representatives | $28 000 | $30 800 | $33 880 |
| Cleaner | $10 000 | $11 000 | $12 100 |
| General Assistants | $28 000 | $30 800 | $33 880 |
| Total Salaries | $359 000 | $394 900 | $434 390 |
Financial Plan
Since a SaaS business requires a large investment for purchasing licenses of costly software thus it’s necessary to get its business plan written by a financial expert. The financial expert must be adept at playing with figures and stats and finding ways to cater possible capital losses.
As for Tom, he wanted a business plan saas that could enable him of making a heavy investment every 3 months to increase his services as well as generating profits after spending money on all possible expenses like salaries and system maintenance. So he sought help from a financial consultant. Thus the financial plan which is provided below is the result of combined efforts of Tom and his hired financial consultant.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 9,60% | 10,10% | 10,60% |
| Long-term Interest Rate | 9,80% | 10,20% | 11,10% |
| Tax Rate | 27,10% | 28,20% | 29,60% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | ||
| Monthly Units Break-even | 6370 | |
| Monthly Revenue Break-even | $144 542 | |
| Assumptions: | ||
| Average Per-Unit Revenue | $222,87 | |
| Average Per-Unit Variable Cost | $0,76 | |
| Estimated Monthly Fixed Cost | $200 146 | |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $848 700 | $1 233 900 | $1 770 800 |
| Direct Cost of Sales | $252 420 | $393 590 | $571 480 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $252 420 | $393 590 | $571 480 |
| Gross Proft | $596 280 | $840 310 | $1 199 320 |
| Gross Margin % | 70,26% | 68,10% | 67,73% |
| Expenses | |||
| Payroll | $359 000 | $394 900 | $434 390 |
| Sales and Marketing and Other Expenses | $1 730 | $1 850 | $1 990 |
| Depreciation | $2 190 | $2 190 | $2 190 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $3 600 | $3 950 | $4 200 |
| Insurance | $2 200 | $2 200 | $2 200 |
| Rent | $6 750 | $6 900 | $7 100 |
| Payroll Taxes | $36 540 | $42 350 | $43 252 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $412 010 | $454 340 | $495 322 |
| Profit Before Interest and Taxes | $184 270 | $385 970 | $703 998 |
| EBITDA | $184 270 | $385 970 | $703 998 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $36 854 | $77 194 | $140 800 |
| Net Profit | $147 416 | $308 776 | $563 198 |
| Net Profit/Sales | 17,37% | 25,02% | 31,80% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $38 000 | $40 000 | $42 000 |
| Cash from Receivables | $8 090 | $8 650 | $9 210 |
| SUBTOTAL CASH FROM OPERATIONS | $45 900 | $51 000 | $56 100 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $43 500 | $44 000 | $44 500 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $19 500 | $20 900 | $22 300 |
| Bill Payments | $15 900 | $16 400 | $16 900 |
| SUBTOTAL SPENT ON OPERATIONS | $34 000 | $36 700 | $39 400 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $42 000 | $46 500 | $51 000 |
| Net Cash Flow | $10 800 | $11 800 | $12 800 |
| Cash Balance | $19 000 | $20 700 | $22 400 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $182 100 | $198 200 | $214 300 |
| Accounts Receivable | $11 980 | $13 970 | $15 960 |
| Inventory | $2 460 | $3 100 | $3 740 |
| Other Current Assets | $900 | $950 | $1 000 |
| TOTAL CURRENT ASSETS | $199 450 | $247 120 | $294 790 |
| Long-term Assets | |||
| Long-term Assets | $9 800 | $12 000 | $14 200 |
| Accumulated Depreciation | $13 100 | $14 230 | $15 360 |
| TOTAL LONG-TERM ASSETS | $975 | $990 | $1 005 |
| TOTAL ASSETS | $200 000 | $234 000 | $268 000 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9 230 | $10 120 | $11 010 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9 230 | $10 120 | $11 010 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9 230 | $10 120 | $11 010 |
| Paid-in Capital | $27 000 | $27 000 | $27 000 |
| Retained Earnings | $46 000 | $65 000 | $84 000 |
| Earnings | $99 000 | $120 000 | $141 000 |
| TOTAL CAPITAL | $201 000 | $218 000 | $235 000 |
| TOTAL LIABILITIES AND CAPITAL | $197 600 | $218 000 | $238 400 |
| Net Worth | $209 000 | $210 000 | $211 000 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 4,24% | 5,22% | 5,09% | 4,00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5,47% | 6,73% | 6,56% | 9,50% |
| Inventory | 1,80% | 2,22% | 2,16% | 9,50% |
| Other Current Assets | 1,71% | 2,10% | 2,05% | 25,40% |
| Total Current Assets | 135,07% | 166,13% | 161,98% | 50,50% |
| Long-term Assets | -9,23% | -11,36% | -11,07% | 50,20% |
| TOTAL ASSETS | 97,50% | 119,93% | 116,93% | 100,00% |
| Current Liabilities | 4,56% | 5,61% | 5,47% | 25,30% |
| Long-term Liabilities | 0,00% | 0,00% | 0,00% | 24,30% |
| Total Liabilities | 4,56% | 5,61% | 5,47% | 51,00% |
| NET WORTH | 96,84% | 119,11% | 116,13% | 49,60% |
| Percent of Sales | ||||
| Sales | 97,50% | 119,93% | 116,93% | 100,00% |
| Gross Margin | 91,83% | 112,95% | 110,12% | 0,00% |
| Selling, General & Administrative Expenses | 72,43% | 89,09% | 86,86% | 85,40% |
| Advertising Expenses | 2,01% | 2,47% | 2,41% | 1,50% |
| Profit Before Interest and Taxes | 25,81% | 31,74% | 30,95% | 2,54% |
| Main Ratios | ||||
| Current | 25,2135 | 31,01 | 30,24 | 1,88 |
| Quick | 24,765 | 30,46 | 29,70 | 0,87 |
| Total Debt to Total Assets | 2,61% | 3,21% | 3,13% | 87,50% |
| Pre-tax Return on Net Worth | 65,16% | 80,15% | 78,14% | 3,60% |
| Pre-tax Return on Assets | 63,26% | 77,81% | 75,86% | 9,70% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 18,72% | 23,03% | 22,45% | N.A. |
| Return on Equity | 46,60% | 57,31% | 55,88% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4,45 | 5,47 | 5,33 | N.A. |
| Collection Days | 89,70 | 110,33 | 107,57 | N.A. |
| Inventory Turnover | 19,21 | 23,63 | 23,03 | N.A. |
| Accounts Payable Turnover | 13,82 | 16,99 | 16,57 | N.A. |
| Payment Days | 26,33 | 32,38 | 31,57 | N.A. |
| Total Asset Turnover | 1,79 | 2,21 | 2,15 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | 0 | 0 | N.A. |
| Current Liab. to Liab. | 0,98 | 1,20 | 1,17 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $117 919 | $145 041 | $141 415 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0,44 | 0,54 | 0,53 | N.A. |
| Current Debt/Total Assets | 4% | 5% | 5% | N.A. |
| Acid Test | 23,07 | 28,37 | 27,66 | N.A. |
| Sales/Net Worth | 1,64 | 2,01 | 1,96 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
Download SaaS Business Plan Sample in pdf
OGS capital professional writers specialized also in themes such as the business plan for the cyber security, business plan for a graphic designing, internet business plan, mobile apps business plan, video game business plan, gaming business plan and many other business plans.