4 Stages of a SaaS Start-up. Which one are you?

Halzak is passionate about supporting the SaaS (Software-as-a-Service) start-up space, having worked within the staffing industry for many years, we have been fortunate to have worked with many founders and leaders on their start-up to scale-up journey. We understand how tough a challenge this can be.

Halzak breaks down the 4 stages a SaaS company will go through, identifying which stage you are at will help with what areas to focus on, the potential risks and knowing when the right time is to scale.

Source: How to start a start up by Anna Vital

Stage 1 – Idea Creation / Pre- Start-up

An exciting part of the journey for many SaaS founders the pre-startup or idea / problem solution stage for the company. While there are many activities happening at this stage a crucial question every SaaS founder needs to answer is: What is the problem we want to solve and how can we provide the solution?

Activities at this stage can include:

  • Talking to potential customers
  • If not using personal funds, seeking early investment typically this is from family or friends
  • Creation of MVP (Minimum Viable Product)
  • Networking with other founders or groups
  • Attract your first paying customers

Potential risks at this phase

  • Failure to create a business strategy or creation of a product that’s not needed (doesn’t solve a problem)
  • Relying on initial funding for too long
  • Lacking funds to cover increasing costs eg employment costs
  • Product roadmap distractions or early customers with needs outside of the core focus which can cause slowdown for the team and possibly reduce your attractiveness to early investors

The Team: Likely to be lean and consisting of Founders, or Co-Founders, possibly a handful of early employees.

Entrepreneur turned investor Mark Suster says

“The single biggest mistake founders make is waiting until they have too

little cash in the bank before fund raising”

Stage 2 –Start-up / PMF (Product Market Fit)

You have built a viable solution to the problem you identified. This stage of the journey can seem frantic. Founders are typically making all of the decisions – this is everything from closing customers, taking onboard feedback about the product, hiring, managing the operational aspects of the business (office leases, equipment for staff) and everything else needed to not only support the development of your solution but also to ensure the day-to-day of the business is running.

What’s key at this stage is to identify customers who are prepared to pay, stay and become your raving fans and refer other customers.

“The best way to acquire new customers it to make your

current customers excited and happy about your products”

 Said Mikkel Svane, Co-Founder at Zendesk

Activities at this stage can include:

  • Refining the product and its core features
  • Identifying your core business metrics
  • Understanding and optimising your business value proposition – Your Why
  • Making your 1st hires
  • Creating sales processes – consistent revenue flow

Potential risks at this phase

  • Not understanding and selling to your target audience
  • Focusing on the wins to much vs stability and route to profitability
  • Early hiring mistakes
  • Founders time spent on activities that distract them from the core focus of the business
  • Not having repeatable sales processes or customer onboarding plan

The Team: 4 – 20 employees working in positions but likely to be wearing many hats

Stage 3 – Growth / Scaling

The growth stage of a SaaS company you know the product works and you have established a customer base, created processes that drives traffic, creates leads and converts to paying customers. A key point at this stage of the journey is that the focus is not only on the product but you’re also focusing on building your organization. Challenges many founders face at this phase is the transition from sole decision maker to building out a team to run the core operating functions.

Eric Yuan, Founder of Zoom shared what 5 things matter when they hire new employees:

“So five things really matter: care about the community,

customer, company, teammates, as well as ourselves”

Activities at this stage can include:

  • Secure Series A funding
  • Focus on the metrics for improvements
    • Improving conversion rates
    • Reduction in logo churn and revenue churn
    • Focus on customer experience NPS
    • Users per account (Increasing)
    • Testimonials / customer success stories
  • Hiring of leadership team and departments
  • Customer acquisition – customers are acquired from multiple demand generation sources

Potential risks at this phase

  • Competitors with same / similar products
  • Lack of funds
  • Focusing on the wins to much vs stability and route to profitability
  • Scaling to quickly
  • Not hiring the right team – reliance on personal network or spending too much time on this activity neglecting the wider business

The Team: 50+ employees with key department heads onboard

Stage 4 – Scale-Up

By now your customers/potential customers know who you are and how this will help solve their problems. Growth remains a core focus however growth is likely to focus on global / international growth and putting new teams in place in these countries to focus on local demands. Within the scale-up phase it’s likely that not only are new territories but also new products with ideas being generated from customers and from across the team.

Founders will still have many areas of focus at this stage, recapping on that Why? from Stage 1 (this may have seen iterations) should be at the core of the business and long-term vision. A key focus at this stage alongside the vision must be your PEOPLE strategy. Developing your people and creating a culture that will help you hire and retain the best talent in a very competitive space.

Activities at this stage can include:

  • Expansion of the team – new countries / territories
  • Product road map – linked to 5 / 10-year plan
  • New products or services added to core offering
  • Focus on driving a profitable and sustainable business
  • Further funding / investment rounds to enable growth and expansion

Potential risks at this stage:

  • Losing focus from your WHY and losing competitive edge
  • Stop testing and development of the product and services you offer
  • Not listening to customers
  • Loose focus on service to focus on profit
  • Having the wrong team in place – leading to high churn

Halzak was founded to fill a gap within the SaaS community. With a solely to focus on supporting SaaS Founders, Co-founders and leaders grow and achieve their goals. Our Founder and CEO Kellie Kwarteng said “After working with the SaaS community for a number of years, one of the challenges I am told by founders over and over is how they struggle to source the right talent, with many spending weeks and months at a time on this and usually with little success and at the detriment to their business growth goals”

We understand that having the right team at the right point of the journey is vital to this success story for scaling your SaaS business, so how can you ensure this will be a success? Halzak has a wealth of experience helping start-up and scaling B2B SaaS founders grow their teams to enable them to achieve their goals and objectives. One of our core values is Customer success is our success” We have no hidden agendas;

Our goal is to build authentic relationships and be your trusted partner as we’re only successful if you are successful.

Where are you on your SaaS Start-up journey? Are you spending too much time focused on hiring with little results? Contact Kellie Kwarteng or Michael Kwarteng today to see how we can support you today.

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