Table of Content

    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.

    SaaS Business Plan - 3 Years Profit Forecast

    Bank/SBA Business Plan
    Document for raising debt funding from financial institutions to meet the expectations of the banks, SBA, and government agencies.

    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.

    SaaS Business Plan - Startup Cost

    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

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    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.

    Services which will be provided by Techware are given in this standard business plan saas company.

    • 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.

    Strategic/Operational Business Plan

    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.

    SaaS Business Plan - Marketing Sermentation

    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.

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    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.

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    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:

    SaaS Business Plan - Sales Monthly

    6.4 Sales Yearly

    Our yearly sales are forecasted as follows:

    SaaS Business Plan - Sales Yearly

    6.5 Sales Forecast

    Our forecasted sales are given below.

    SaaS Business Plan - Unit Sales

    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

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    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

    SaaS Business Plan - Break-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

    SaaS Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    SaaS Business Plan - Profit Yearly
    8.3.3 Gross Margin Monthly

    SaaS Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    SaaS Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    SaaS Business Plan - Project 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.

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