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Writing a business plan?

Planning to launch your innovative software solution?

Great! Starting a Software as a Service (SaaS) business promises endless opportunities for growth and impact in today’s tech-driven world.

But in the process of creating a new software solution, it’s very crucial to manage your finances carefully and understand the importance of financial success and sustainability of your SaaS venture.

So,  you’ll need to build a solid financial plan!

Well, if you’ve never done financial planning before, the process might seem daunting and intimidating in the first place. But not to worry; we’ve got you covered.

This sample SaaS financial plan will help you get started.

SaaS Business Financial Outlook

Before diving right into financial planning, let’s take a look at the Software as a Service (SaaS) industry highlights:

  • The worldwide SaaS market revenue is expected to reach a whopping value of $282.20 billion in 2024 and is expected to reach $374.50 billion by 2028, with a yearly growth rate of 7.33%.
  • In global comparison, the United States is projected to generate the highest revenue in the SaaS market, reaching $150.70bn in 2024.
  • The SaaS market revenue is estimated to maintain a yearly growth rate (CAGR) of 5.40%, achieving a market size of $186.00 billion by 2028.
  • It’s projected that each employee in the SaaS market will spend an average of $890 in 2024.

Overall, the SaaS market is experiencing rapid growth with the increasing demand for cloud-based solutions to streamline operations and enhance efficiency. So, there is enough scope for new SaaS businesses to soar in this marketplace.

Now, without further ado; let’s get started on how to create a successful financial plan.

1. Calculate Business Startup Costs

Once you’ve decided to start your own SaaS company, it’s very crucial to have a clear understanding of your finances, right? So, you’ll need to calculate the SaaS startup costs very first!

You may start by identifying all the initial expenses associated with your SaaS venture. It includes software development, infrastructure setup, marketing, legal fees, licenses & permits, and personnel expenses.

You can also research local market conditions and industry benchmarks to evaluate the typical costs of starting a SaaS business. This will help you get accurate estimates.

Try to be clear and comprise every potential cost, no matter how small it is. You can make a specific list of all the expenses, as shown in the below table:

Expense Category Average costs
Software development costs $50,000 to $150,000
API purchase $5,000 to $25,000
Marketing costs $5,000 to $15,000
Infrastructure costs $3,000 to $5,000
Legal expenses $3,000 to $10,000
Business licenses and permits $1,500 to $3,000

So, having a good idea of startup costs will help you create a proper budget and determine the necessary capital to launch your business successfully.

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2. Determine Financing Requirements & Strategy

Sometimes, people don’t have enough money to start their own business. So, they might need to ask for help from others to get the initial investment.

For your SaaS services, you’ll need to evaluate the current monetary position and determine how much startup capital you’ll require to fund your business. Also, assess various financing options and develop a clear strategy to secure funding.

Here are a few funding options you may consider:

  • Traditional bank loans
  • Angel investors or partnerships
  • Crowdfunding
  • Venture Capital (VC) firms

For each option, you have to evaluate the terms, interest rates, and repayment methods. This will let you devise a financing strategy that aligns with your investment goals and risk tolerance.

Then, you can decide which funding option is the most appropriate for your SaaS business.

Furthermore, while seeking credit from banks or investors, you’ll need a professional document that projects how your SaaS financial modeling works. It will assist potential lenders to have a better idea of your business.

3. Understand Your Business Model

Developing a scalable business model is a crucial aspect of a financial plan. This is something you have to decide before you start running your business.

It is a strategic framework that defines how you generate income, manage expenses, and reach your financial objectives.

Here is a list of different types of SaaS business models you may consider:

  • Subscription-based model
  • Freemium model
  • Value-based pricing model
  • Platform as a Service (PaaS) model

While deciding on any of the above models, you have to understand their financial considerations, including revenue potential, cost structure, profit margins, customer lifetime value, and risk mitigation strategies.

This will help you make well-informed decisions and achieve your financial goals in the long run.

4. Identify Revenue Streams

Identifying your business revenue streams is an essential part of maximizing profitability. So, try to diversify your income sources within the SaaS market and create a sustainable portfolio.

It will help potential investors or lenders determine how much revenue your business intends to generate over the next few years.

For instance, you may include the following revenue streams in your SaaS financial projections:

  • Subscription fees
  • Add-on features
  • Usage-based pricing
  • White labeling or reseller programs
  • Professional services (like consulting, implementation, training, or customization)

By doing so, your SaaS businesses can explore various revenue streams, serve broader customer needs, and reduce reliance on a single source.

5. Market Analysis and Pre-Assumptions

A successful business requires a comprehensive market analysis to gain valuable insights into the local business landscape.

While shaping a SaaS business plan, you’ve already conducted thorough market research and gained a better knowledge of the target audience, their needs, preferences, pain points, and competitor offerings.

So, it’s time to use that knowledge to prepare a financial forecast and make realistic assumptions about subscription rates, customer acquisition costs, churn rates, and operating costs.

Here are a few key components that you should include in your plan:

Pricing Strategy

When it comes to devising a pricing strategy, there’s no bound law. Yet, you’ll need to analyze a few factors, such as your product USPs, target customers, their willingness to pay, and local competition, to develop optimal pricing.

You may conduct a competitive market analysis to comprehend the prevailing market prices and set competitive yet profitable prices for your solution.

Remember, your prices should reflect the value of your SaaS products and still help you generate sufficient returns on your investment.

Sales Forecast

A sales forecast is a primary element of any business, serving as the cornerstone for its profitability and growth.

It helps you estimate the future subscription sales of your SaaS company based on market demand, pricing strategy, conversion rates, and customer acquisition costs.

Additionally, you can analyze historical sales data and industry trends to predict future demand and patterns that can inform your sales projections.

Business Expenses

Generally, business expenses are operating costs or day-to-day expenses that will keep your business running smoothly.

For your SaaS company, you may conduct a detailed analysis of your anticipated expenses, including fixed and variable costs. It includes software development prices, marketing fees, personnel expenses, overhead costs, and other operating outlay.

In addition to that, you may consider a few factors, like market trends, technological advancements, and industry standards, while estimating your SaaS business expenses.

Here, you should note one thing—you must account for probable cost overruns or unexpected expenses during business operations. So, be conservative in your financial projections.

6. Make Financial Projections

If you want to attract investors, let the numbers do the talking. This is so because potential investors or stakeholders will look at the financial reports once and decide whether or not to invest in your business.

So, ensure that the key financial reports give a clear picture of your SaaS firm’s financial health and viability.

Here’s a list of several financial statements and analyzes you should incorporate into your projections:

Cash flow statement

A cash flow statement gives a detailed view of how much cash your business brings in, pays out, and ends with the cash balance. Typically, it’s an illustration of how well your business is generating cash.

It helps you track the cash flow in and out of your SaaS business over a specific timeframe, generally monthly, quarterly, or annually.

You may take into account the cash flows related to software development, subscription renewals, research and development,  customer acquisition costs, marketing and sales efforts, loan repayments (if applicable), technical investments, and equity financing.

Be realistic about your financial assumptions and measure your business’s liquidity, capability to meet financial obligations, and sufficiency of cash flow to fund future investments and expense outlays.

Balance sheet

A balance sheet provides a quick overview of your business’s financial position at a specific time.

It clearly demonstrates what you own, what you owe to vendors or other debtors, and what’s left over for you. After all, it has three main elements:

  • Assets: Cash, software licenses, intellectual property rights, and accounts receivable
  • Liabilities: Debts, loan repayments, and accounts payable
  • Equity: Owners’ equity & other investments, stock proceeds, and retained earnings

Ideally, it is formulated as, assets = liabilities + equity

By looking at your balance sheet, anyone can get the exact idea of how financially stable your business is, how much cash you hold, and where your money is tied up.

Income statement

The income statement is also known as a profit and loss statement(P&L), explaining how your business made a profit or incurred a loss over a specific period, typically monthly, quarterly, or annually.

Depending on the structure and type of your business, consider adding these factors—revenue or sales, operating expenses, and gross margin to your profit and loss statement.

You may calculate the gross margin by subtracting the cost of sales or COGS from revenue. It enables you to determine your business’s efficiency in utilizing resources.

Further, the P&L statement should also include operating income, which is equivalent to EBITDA. And the net income is the ultimate goal of any business, found at the end by deducting the operational expenses from EBITDA.

Overall, the income statement helps you gauge your business’s profitability, financial performance, and feasibility in the long run.

Break-even Analysis

The break-even analysis allows you to determine the point at which your SaaS business’s total revenue matches its total expenses, causing no profit or loss.

It helps you evaluate the minimum level of sales or revenue needed to cover your business’s fixed & variable costs and gain profitability.

This analysis provides valuable insights into your financial sustainability and helps you set sales targets, pricing strategies, and cost-control criteria.

7. Test Assumptions and Scenario Analysis

As your entire plan is prepared based on assumptions, you’ll need to regularly review and stress-test your financial projections to check their relevance with market realities and business performance.

In this stage, you may consider various “what-if” situations and think about scenarios where things go well or don’t.

For instance, you’ll need to consider the changes in customer acquisition growth, churn rates, technological advancements, infrastructure investments, and market trends to measure the stability of your SaaS financial plan.

By performing test assumptions and sensitivity analysis, you can adjust your strategies accordingly to mitigate risks, optimize returns, and make well-informed business decisions.

8. Monitor and Update Your Plan

Once your plan is ready, continuously evaluate and monitor your SaaS company’s financial performance closely against the financial projections and key performance indicators(KPIs).

You can compare the actual financial results with the projected income streams, expenses, and ROI to take note of any variances or deviations from the plan.

If some factors are remarkably different from projections, recognize the causes behind them. This will help you understand which areas need improvement and which works as anticipated.

Also, review and update your strategies accordingly to optimize financial results and achieve long-term success.

Now that you know how to create a solid SaaS financial plan, it’s time to explore an example for easy understanding.

SaaS Financial Plan Example

Building a SaaS financial plan from scratch can be overwhelming, right? But not to worry; we’re here to help you with a realistic financial plan example prepared using Upmetrics.

It includes all the key elements of the SaaS platform’s financial projection, including the income statement, balance sheet, cash flow statement, and break-even point. This will simplify the entire planning process and help you get started.

Start Preparing Your SaaS Financial Plan

And that’s a wrap—we’ve discussed all the fundamental aspects of financial planning. So, it’s time to start drafting a financial plan for your small business.

But if you still feel like a tough job, don’t worry; we have an easy way out for you!

Upmetrics’ robust AI-powered financial forecasting feature will help you build investment-ready financial plans quickly and efficiently.

You’ll just have to input your key assumptions and let it figure out the rest!

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

Frequently Asked Questions

About the Author


Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more


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