Insights, Marketing, Web
You know all those uber-successful SaaS start-ups who make a million in their first five years? You can bet they spent a heap of time on SaaS budget planning to get everything just right – rather than counting on pure dumb luck to get them to a profitable year.
Budget planning is crucial for SaaS start-ups, as it will help you extract the maximum return on investment for every expense you make, figure out what to cut and keep each month, and make more accurate profit projections.
So, how can you effectively budget plan for your SaaS start-up to set you up for long-term, profitable growth? We’re so glad you asked! Keep reading to learn what to include in your SaaS budget plan.
You’re in the SaaS business – so you’ve already invested massively in your product. Now, all that’s left to do is market it! And for this, you’ll need a sizeable upfront budget.
According to Hubspot, SaaS start-ups spend 40-100% more on their marketing budgets. And it’s not difficult to understand why.
Growing a customer base from ground zero is tricky and can take a long time to start affecting your SaaS sales. On top of that, you’re creating all your material from scratch. Designing banners, websites, brochures, videos, and more takes time (and money.)
Need help getting the word out about your SaaS start-up? Read our previous blog, “5 proven SaaS marketing tactics to make your business stand out”.
Your SaaS budget planning process will help you understand where your investment is going every month, helping you evaluate results, make improvements, and plan your budget more effectively for the next month. But what elements should you include in your SaaS budget plans?
Get the calculator out and estimate how much profit you think your SaaS company will make monthly/quarterly/annual. Then after each month/quarter/year, you can compare your actual revenue with the estimated revenue to help you predict future profits.
Your fixed expenses are anything your SaaS company spends every month or year that you’re “locked into.” Fixed costs include things like the money you pay employees, your office rent and electricity bills, and your website hosting platform. Calculate your fixed monthly and yearly costs and add them to your budget.
Variable expenses include anything that can change monthly or annually, depending on how much of your SaaS product you sell. Let’s say you use a third-party vendor who charge a higher fee when you sell a higher volume of your SaaS product, this will bring profits down – so you must take note of what variables are at play.
List any expenses you only pay for once and include them in your budget. Once-off fees can consist of anything from employee WFH equipment to desks for your office. Make a note of these expenses during every budget plan, so you can keep track of your spending and account for them when you’re assessing your earnings.
Keeping an eye on your cash flow is essential, as this will determine your SaaS budget planning month on month. In your budget plans, measure what money trickles in and out of your business and estimate whether you’re getting enough money in to make a profit. If not, you have some rethinking to do.
To get your predicted profits, subtract your overall expenses from your predicted revenue. Calculating your estimated profits is essential to ensure you’re on the right track and spending your budget in all the right places. If you see profit figures rising every few months or every year, you must be doing something right! If not, it’s time to take a long hard look at your spending and reconfigure to get a better return.
SaaS budget planning is the best way to ensure your start-up is growing year-on-year, you have enough money flowing in to cover your expenses, and you’re only spending budget in areas (like ads or email marketing) that maximise ROI.
At Rocket SaaS, we help SaaS start-ups budget their marketing spends effectively, targeting the right channels with the right messaging to get your SaaS brand out there and generate healthy ROI.
With rolling monthly price plans starting from just £3,000 per month, we join or become your dedicated SaaS marketing and web design partner, taking your online presence to sky-high success with proven content strategies, comprehensive digital marketing, and high-converting websites.
Get in touch with us today to get started.