3 Mistakes New SaaS Companies Make that Impede Growth
Many new SaaS companies start out with a product and a dream of growing their business around that product. Then, they hit the market and realize they aren’t growing at the rate they expected. It can be discouraging, but having an expert in your corner like SaaS Gurus founder, Anthony Nitsos, can help you understand the mistakes new SaaS companies make and how to avoid them. Here are 3 common mistakes that new SaaS companies make that impede growth.
Mistake 1: No Clear Marketing Strategy
Many new SaaS companies have a field of dreams mentality. Like the movie, they think, “If you build it, they will come.” Companies have an idea for a great app and think everyone is going to want it. That could be, but there’s so much noise in the market. We’re all consumers of something. How many times do you click on an ad at the bottom of your phone? We make a point of avoiding ads because we have been trained to avoid being sold to. We want to go out and buy something, not be be sold something. When I’m ready and need something, I want to go out and buy it. And it’s a rare occasion where somebody finds something that I didn’t know I needed.
The reason that companies fail is that they have the field of dreams marketing mindset.
Instead, you need to have an obvious go-to-market strategy. I don’t mean just numbers on a spreadsheet with a bunch of conversion numbers. You need to know:
- Who is your ideal customer?
- Where do they consume information?
- How are you going to get your product in front of them in a way that they’ll react to?
They’re simple questions, but an integral part of setting up a clear marketing strategy.
Mistake 2: Not Understanding the Consumer Pain Hierarchy
When it comes to hierarchies of why people buy things, I go by what I call the pain hierarchy. If my water heater goes out today, do you think I will be shopping around for a water heater replacement? No, the first person who can fix my water heater will get my business. That’s immediate pain.
There’s also imminent pain that compels consumers to buy things. “I know something bad is going to happen if I don’t take action.” For example, if your breaks are squealing or grinding, you may still be able to drive your vehicle. But with each grinding noise, you feel that imminent pain. Most likely, you’re thinking, “I better get my breaks fixed soon, or there’s going to be a problem. That’s imminent pain.
You need to be able to find the people who are in immediate pain, and ideally the ones that are in imminent pain, for what it is that you offer. If you don’t have a clear marketing strategy that targets consumers’ needs, you’re probably not going to succeed.
Mistake 3: Failing to Set Up an F&S Ecosystem Early
One of the biggest mistakes new SaaS companies make is not setting up an F&S ecosystem early. F&S ecosystems are integral for setting your company on a growth trajectory. Setting this up correctly will avoid several accounting, budgeting, and metrics mistakes that SaaS startups typically make. Start by laying the foundation correctly from the beginning.
Once you have that foundation set for your F&S ecosystem, you can start building on things like:
- Financial statements and forecasts
- Project revenue and assets
- Scales annual recurring revenue
SaaS Fractional CFO Lists Benefits of F&S Ecosystem
SaaS Accounting for Startups
A fractional CFO can help you put the tools and technology in place to build your F&S ecosystem early and avoid making the most common mistakes that impede growth.
Fractional CFO, Anthony Nitsos, Helps Prevent Mistakes New SaaS Companies Make
With a background in medicine, total quality management process re-engineering, IT, and finance, Anthony’s unique professional experience has shaped his professional approach into a disciplined, rigorous, and scientific approach focused on maximum efficiency, minimum cost, and strategic outcomes. He believes treating the symptoms and not root causes is just as big a miss in commerce as it is in medicine. Anthony Founded SaaS Gurus from his years of experience building B2B SaaS finance and admin ecosystems for many companies including Duo Security (exit to Cisco $2.35Bn), LLamasoft (exit to Coupa $1.5Bn), and dozens of other start-ups.