How to Scale a SaaS Business for Exponential Growth
As CEOs and founders launch new businesses or look to improve the profitability of their current ventures, a topic that often comes up is scalability. When scaling a SaaS business, understanding the growth process and planning ahead will help scaling to come naturally.
Understanding Growth and Scalability
Scalability can be described as company’s ability to perform well under an expanding workload.
There’s plenty of examples with two people starting a business and then suddenly 20 people are needed. Then, they’re trying to hire 200 more people. Case in point: Hewlett and Packard. They started in a garage. But consider how big their business grew at one point.
As a rule, if a system works now, add a zero to the volume and consider if your system will still work. For example, if you’re at 5 million, scaling your business is going to 50 million. If you’re at 50,000, scaling is going to 500,000.
The key is to create systems and processes for this type of growth, right from the start.
SaaS Business Scaling Requires Planning
Failing to plan is planning to fail. In many cases, it can be just as easy to go out of business by growing too fast and not being optimized and ready, as it is by not selling enough to survive.
Have a Plan for People. A lot of times when businesses first start, you’re the solopreneur, the single person running it. You’re the chief, cook, and bottle washer and you have it all in your head.
Eventually, you have to hire that first employee and train them. You’re going to make assumptions about what they know, or don’t know. Then, you’re going to hire the next employee, and so on.
If you don’t have a clear plan on how you, as an owner, are going to dissociate the parts of you into the various parts of the organization, that’s going to start to cause you problems in scaling.
Utilize Technology from the Start. The second problem business owners run into is a reliance on manual systems. We have computers everywhere. We have software everywhere. You can buy a computer program to do just about anything. You should be looking at ways to find a software solution for particular problems instead of throwing a person at the problem.
Have an Income Plan. The other issue is scaling means rapid growth. If you’re going to grow rapidly, you need to consider if you have the capital to do so. Do you have the resources to grow in a way that you don’t stumble and fall on yourself?
There are multiple examples of where business scaling suddenly started to become stressful for everybody and it was because of a lack of real planning. To avoid those stressful situations, remember that scaling is achievable with planning, thinking ahead, and thinking in terms of, “Okay, if I’m at 50,000 in revenue right now, hey, I want to get to half a million.”
When considering how to scale a SaaS business, you should consider what scaling means as far as:
Then ask yourself if you have those elements clearly laid out in your plan.
Anthony Nitsos, Founder and Fractional CFO
Anthony Nitsos elevates your financial strategy to meet challenges and drive your company value. Working with pre-seed to Series B stage SaaS startups, he ensures that founders have reliable metrics and a solid understanding of the true economics of their business to maximize valuation. He optimizes financial operations, sales operations, human resources operations, and risk management systems. He’s worked with various startups, including two unicorn exits.