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How To Create A SaaS Business Plan In 11 Steps: Full Guide
Software as a service (SaaS) is the fastest-growing market segment of the past 5 years: the overall spend per company on SaaS products was up +50% in 2021 compared to 2018!
Yet, SaaS do require significant upfront investment before they can turn out a profit. Whether you are raising capital or applying for a grant, you will need a solid business plan for your SaaS startup.
Whilst every business is unique, we strongly recommend to follow a clear structure vetted by dozens of high-profile VC firms globally. Having a powerful and clear business plan will maximise your chances of raising capital from potential investors.
In this article we walk you through the 14 sections you must have in your SaaS business plan.
Note: If you are looking for a pitch deck instead, read our guide here. Although business plans and pitch decks are similar, they are also very different in their format. If you aren’t sure what is best for you, we recommend to read our article on the key differences between business plans and pitch decks.
SaaS Business Plan: The Template
If you are creating a business plan for your SaaS startup, we recommend you follow the following structure:
- Executive Summary
- The Problem
- The Solution
- Market Opportunity
- Competitive Landscape
- Business Model
- Intellectual Property
- Marketing Strategy
- Financial Plan
1. Executive Summary
The executive summary is the introduction of your SaaS business plan. This is a section you should spend a lot of time on as it’s the first impression investors will have when looking at your business plan.
The executive summary should fit in 2 pages maximum. Make it to the point, concise, and make sure to answer the following questions:
- What is the problem you want to solve?
- What is your solution?
- Who are the co-founders behind the project?
- Do you have early traction?
- What are you asking for (capital from investors, government grant application, etc.)?
Need a Pitch Deck?
2. The Problem
This is the “why” of your business. Explain in this section what is the problem you are trying to solve.
The greatest businesses are solving big problems, yet they aren’t necessarily obvious. For instance, if your SaaS startup aims to solve the pain points of HR administrative tasks (human errors, low digitalisation, time-consuming, etc.) make it clear here. Not everyone is knowledgeable about companies’ support functions processes, let alone HR.
Ideally you would list the 2/3 friction points you aim to fix. For instance, digitalisation usually fixes multiple problems at once: it is fast, seamless and accessible (vs. slow, prone to errors and non-readily available / accessible solutions).
3. The Solution
Your startup builds and commercialises a product and/or a service which solves the problem explained earlier.
This section should not explain in detail your product nor how it works. Instead, it should focus on the benefits for your customers.
Ideally, you should compare the pain points explained on section 2 (the Problem) to the benefits your solution brings to your customers. That way, it is crystal clear to investors your solution really adds value to potential customers.
4. Market Opportunity
Here, you need to clearly identify 2 very important metrics:
- Market size: how big is your market?
- Market growth: how fast does your market grow?
If you are operating in a niche market, chances are that you will face some challenges: the information might not be publicly available. In any case, you should be able to make a high-level estimation of your market. Read our article on market sizing and how to estimate TAM, SAM and SOM for your startup.
When looking for these metrics, you have multiple sources of information: public reports, specialised press, etc. Even public companies publish press releases and annual reports including some of their proprietary market estimates so be sure to look there too.
5. Competitive Landscape
How fragmented is your market?
Are there 3 big players sharing 90% market share or thousands of small players? Here, refer to public market reports and your own understanding of the competitive landscape.
A few questions you could ask yourself, among others:
- Who are your competitors?
- Are they local, regional, national or global?
- Do they have mobile and/or desktop applications?
Where do you position yourself vs. competition?
Is your solution a game changer other competitors don’t have (yet)? Do you have competitors with similar products/services?
Ideally, you would create a small table with, for each type of competitors (e.g. global diversified companies, small pure players, etc.) the main characteristics they share or not. For instance, do they all a global presence? Do they have a on-premise or a SaaS solution? Do they offer both a desktop and mobile app, or just desktop? What is their relative price positioning (expensive vs. accessible)?
Need a Pitch Deck?
6. Business Model
This section is very important. Now that we have clearly identified the problem you are solving and the benefits of your solution, let’s have a closer look at your product.
This is where you clearly explain 2 key things:
How does your product work?
Explain what your product is and how it works. For instance, is it a desktop and/or a mobile SaaS application? Who is it for exactly (is this a FP&A application only for CFOs or a Slack-like collaboration tool for any type of user)?
SaaS businesses have different types of pricing models: per-user, per-usage, flat-tiered, etc. For a full list of the different pricing models, refer to this great article here.
7. Intellectual Property
This section is optional: only include it if you already have a MVP. If so, you have a strong argument for product-driven investors which will give a lot of credit to your tech.
Be careful not to go into too many specifics though: investors aren’t always engineer by training. Do not put things like the programming language you have chosen (e.g. React, Python) or the database provider (PostgreSQL, MongoDB).
Instead, include things such as:
- whether you have a white-labelled solution or a proprietary back-end / database
- how many full time front/back-end engineers you have
- how much you invested already in your tech
8. Marketing Strategy
This section explains how you acquire customers.
Are you selling a SaaS solution to B2B customers? Or is this a B2C product? This will determine whether you have an inbound or outbound acquisition strategy, or both:
- Inbound acquisition: fully digital acquisition. It can be either paid (paid ads e.g. Google Ads) or organic (content, SEO). Essentially, you convert customers from leads who land on your landing page. This strategy is most common for B2C SaaS businesses
- Outbound acquisition: you acquire customers thanks to your sales team who contact potential customers via phone, emailing or in-person sales efforts. This strategy is very common for B2B SaaS businesses
Once you have clearly explained your acquisition strategy and what tools you are using (e.g. Google Ads for paid search, Instagram and/or newsletter for content), ideally you can show, among others:
- Your average Customer Acquisition Cost (only if you have early traction)
- The number of sales people you have today
- How many customers your sales people close per month in average
- Your monthly paid ads budget
- The number of followers you have on social media
- Your newsletter count
The roadmap tells investors where you are going and how is product going to evolve in the future. You can either keep it high-level (e.g. your long-term strategy) or more detailed (e.g. the pipeline of the near-future product features).
Investors do not just invest in your product as it is today. For example, you might only have developed a MVP with limited features for early-adopters while your product could be tweaked and serve a much larger customer base in the future.
Note: if you choose to include your product pipeline, keep it very simple. Your SaaS business plan isn’t your product manager’s presentation to engineers. Instead of features, focus on the additional benefits and customer segments you might target as such. For instance, if you plan to launch a messaging feature, focus on the fact it will open new growth opportunities (e.g. network effects).
Need a Pitch Deck?
In this section you should focus on the people behind the company. Unlike in the executive summary, the team section of your SaaS business plan should not be limited to the cofounding or management team.
Instead, you should explain the current organisational structure of your company, the different teams, who they report to and their relative size.
For the people, keep it short. Keep biography to a minimum and only to key people (cofounders and management team). As rule of thumb, 5 lines per team member are enough, 10 a maximum.
When it comes to biographies, only include what is relevant: name, position, years of experience and/or previous companies is more than enough.
What about advisors?
Do you have angel investors with significant experience who advise you on strategy? Do you have a PhD who acts as advisor to your SaaS startup (on regulation and market access matters for instance)?
Any advisor should also be included here, with the same level of detail as for the management team.
Demonstrating in your SaaS business plan that not only team members but also experts are advising and/or sitting on your board is a strong selling point.
Note: add a clickable link to the respective Linkedin profiles so investors can refer to a more exhaustive resume for your team members (if relevant)
11. Financial Plan
Along with your product and the team, this section is highly important. Unfortunately, many startups overlook the importance of financial projections in their SaaS business plan.
Think about your audience: investors (venture capital firms or angel investors) are financially literate individuals. As such, they invest in your business to generate returns. Logically, they care a lot about your financials and more especially, the expected financial performance of your business.
Do not expect investors to make up their own plan for your startup if you haven’t. As CEO, founder or entrepreneur alike, you should have a clear idea of where you are going.
As rule of thumb, the more advanced your startup is, the more granularity you should include here. Pre-seed startups might keep it short (1 slide) yet we recommend seed and Series A+ startups to include 2 slides instead.
Common SaaS metrics you should include in your financial plan slide are:
- Monthly Recurring Revenue (MRR)
- Churn rate
- ARPU and ARPPU
- LTV and CAC
For a complete list of the 8 most important metrics for SaaS businesses, refer to our article here.