During the last 20 years since Salesforce first launched their CRM, they have grown to be one of the largest software-as-a-service (SaaS) companies in the world. The SaaS model has become omnipresent. Even with incredible market growth, many SaaS and subscription startups fail for operational and financial reasons or due to market fit. Others are unable to secure the proper funding while they find their way to sustainable growth. Keep reading to find out how an automated SaaS dashboard that visualizes and calculates the leading indicators of business health has helped startups, Series A and even Series B companies succeed.
The global SaaS market size is projected to reach $307.3 billion by 2026, according to market research firm Valuates. The SaaS market continues to grow despite the pandemic, or perhaps because of it, kick-started by the global shift to a more geographically dispersed workforce. A McKinsey Global Survey of around 900 C-level executives indicated that the pandemic has expedited the adoption of digitized products and services by six years.
Even with these advancements, SaaS and subscription startups face disheartening odds. According to Deloitte, a vast majority of startups fail and even fewer “scale up” – only .05%, or about one in 200 businesses grow to more than $10 million in revenue by their fifth year. Culture, leadership and organizational structure may play a role. There are also financial and operational reasons SaaS and subscription businesses fail: undercapitalization, unprofitable unit economics, poor product-market fit, lack of cash runway visibility, leaky-bucket of recurring revenue, inability to pivot or lack of awareness that they should pivot – issues that the right operational and financial insights could help them overcome.
Plenty of challenges faced by SaaS and subscription businesses can be addressed with automated, real-time access to the right metrics. Using these tools, businesses can identify issues, course correct, take advantage of more opportunities and compete for investors’ dollars.
SaaS and subscription businesses need real-time, reliable intelligence about their operational and financial health in order to succeed and grow. Unfortunately, this can be hard to achieve; critical information lives in different systems and is difficult to gather. Businesses must identify what SaaS KPIs are important to them, pull the relevant data then compile, calculate and analyze it. This time-consuming process often results in delayed and error-prone information.
The rapid growth trajectory and dynamic nature of SaaS subscription businesses complicates the matter even further: metrics that are important to an early-stage startup may differ from their priorities in later stages.
By using the right automated tools that can integrate their financial software with other third-party systems, SaaS and subscription businesses can get real-time access to a broad range of key SaaS metrics and granular insights specifically tailored to their needs without manual effort. These metrics illuminate performance trends and the drivers behind them, indicate financial and operational health and inform more proactive decision making. On top of that, these metrics are essential to attracting the investors needed to help scale and report out to existing investors.