April 11, 2023
Last year, I was sitting in a relaxing theater, watching Top Gun Maverick. At the end of the film, Rooster & Maverick taxi a plane onto a dangerously short runway. Rooster yells from the back seat, “Mav this is a taxiway, not a runway! This is a very…short...taxi-way!”
How does Mav react? He takes the steps necessary to get the plane into the air, regardless of the length of the runway.
If you’re a SaaS founder trying to take flight on a cratered runway, I imagine this scene may sound painfully familiar.
Investors, creditors, and other stakeholders want to know that you have a plan.
Boards are talking about “paths to profitability” instead of “growth at all costs”. So how do you get there?
Panic is your enemy. Stakeholders, including employees, need a clear vision of the future. And, giving in to this panic can lead to poor decision-making and a loss of focus on your company's vision. If thinking about the future inspires fear, not hope, then your team has already accepted failure. If you want to manage expectations then you need to provide crystal clear transparency and financial clarity.
It needs to be well thought-out, plan for multiple scenarios and outcomes, and have targets and off-ramps. Make sure you know what the next stage of funding is for your business, and that you no what KPIs that will put you in the best position to access future capital.
Finding new customers right now is much harder than maintaining existing ones. Make sure you understand your retention metrics and can actively measure customer and dollar retention. Know when renewals are coming up, and how you plan to respond to renewal concerns and pricing push-back. Focusing efforts to combat customer churn is one of the best ways to prevent a negative hit to your startup runway.
Simplify and examine everything. This often involves very difficult decisions including headcount cuts. Focus on the people and processes that will be most critical to your success moving forward under the new plan.
Growth is still possible. You might need to tweak your message, get more creative with your offerings, etc. but if you are a painkiller and not a vitamin, there is still opportunity.
Even in this market, deals are still happening. Bridge rounds and even debt financing have grown in popularity, as they provide a way for companies to access funding without diluting their equity. Bridge rounds allow companies to raise money quickly, while debt financing provides can provide a more certain and reassuring form of funding. Accessing this capital is definitely harder now, but having a good financial plan around your business will make this much easier.
Facta is a team of SaaS-specialized finance professionals that creates clarity for SaaS companies & their investors. We bridge the gap between disparate SaaS financial systems & the financial data you need. Request a demo to learn more.