An estimated 92% of SaaS companies fail within the first 3 years often despite having the initial growth and funding. Some of the key reasons for a SaaS startups failure can be broken down as follows:
- Product to Market Fit – is your product solving a problem worth paying for? Are you getting continuous validation from your customers and pivoting based on this vital information?
- Cashflow – Are you spending your valuable cash reserves in the right areas for stage you’re at ? Have you forecasted when your cash will run out and planned accordingly.
- More Churn than Growth – An average churn rate is between 5-7% per month (0.42 – 0.58% per month). If you are higher than this, you need to review your retention strategy. Listening to your customers and having a good feedback strategy can be the difference between success and failure.
- Poor Management – We are not all born good managers and often start-ups are thrown into the lion’s den and must learn the hard way from the beginning. Knowing who to hire and when to hire is critical to scale. Even when you have a team in place this doesn’t mean they’re performing to the high standards you’ve no doubt set. A weak sales team can slow down your performance while poor customer support can increase your churn. Building a good culture from the beginning and listening to your experienced advisors can help immensely but there is no one size fits all solution to this problem.
Talk to us today about how StartItNow can help increase your chance of success!
Starting up a Software as a Service (SaaS) business is hard work and requires founders to have multidisciplinary skill just to get your business going. The first few years are extremely difficult just to validate that you have a solution that people want to use.
Launching a Minimum Viable Product (MVP) by developing a great idea and testing it with potential customers is just the first step of the journey. After that, you must create a high-quality software application and effectively market it, all while ensuring you have the cashflow and runway in place to get the necessary funding for your next stage of growth.
At StartItNow we help SaaS businesses get your ideas to market faster while lowering the overall risk. We validate your chance of success along the way with honest feedback and real advice so that you can make the hard decisions necessary to increase your chance of success.