SaaS Business Plan Template
If you want to start a SaaS business or expand your current SaaS business, you need a business plan. Our team has helped develop over 100,000 business plans over the past 20 years, including thousands of SaaS business plans.
The following SaaS business plan template and example gives you the key elements you must include in your plan. In our experience speaking with lenders and investors, the template is organized in the precise format they want.
SaaS Business Plan Example
I. Executive Summary
Business Overview
[Company Name] is a SaaS business that provides hosting software services throughout [location]. [Company Name] offers customer management, accounting, and project management software at an affordable subscription fee. Moreover, it’ll be responsible for updating and monitoring the provided software. The Company will operate in the heart of the city, conveniently located in the center of the business district.
Products and Services
[Company Name] will provide management, accounting, and project management software. The Company’s custom software is available across various industries including construction, financial services, manufacturing, retail and restaurants.
Customer Focus
[Company Name] will primarily serve small to medium-sized businesses, from new ventures to well-established businesses and individual clients. The clients are further categorized into the following categories:
- Financial service providers
- Construction companies
- Manufacturing businesses
- Restaurants
- Retail Establishments
- Other businesses that may need SaaS technology
Management Team
[Founder Name] has a bachelor’s degree in Technology. He is a certified SOC 2 – Trust (SOC 2 is designed specifically for SaaS operations) and has over [x] years’ experience working as a senior software engineer prior to starting [Company Name].
[Company Name] will also employ an experienced assistant to work as a business analyst and help with various administrative duties around the office.
Success Factors
[Company Name] is qualified to succeed due to the following reasons:
- The Company has a competent, technically sound team with analytical and critical thinking skills that can help them find creative solutions for clients when they request customized software apps.
- The US has a robust business environment with a large number of businesses going the way of technology, and software as a service (SaaS) is indispensable in the value chain of the infotech industry.
Financial Highlights
[Company Name] is seeking a total funding of $200,000 of debt capital to open its office. Specifically, these funds will be used as follows:
- Office design/build: $40,000
- Software development: $90,000
- Working capital: $70,000 to pay for marketing, salaries, equipment and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name] is a SaaS business that provides hosting software services throughout [location]. [Company Name] offers customer management, accounting, and project management software at an affordable subscription fee. Moreover, it’ll be responsible for updating and monitoring the provided software. The Company will operate in the heart of the city, conveniently located in the center of the business district.
[Company Name]’s History
In the past few years, a number of IT businesses have opened in [location], and many startups have flourished. SaaS solutions are among the fastest-growing segments in the IT industry. In [year], [Founder’s Name] decided to meet this market need by investing in business providing SaaS solutions to various types of companies and startups.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo, and placeholder website located at [website]
- Determined the list of services to be offered
- Determined equipment and development requirements
[Company Name]’s Products/Services
The following are the services that [Company Name] will provide:
- Customer Management Software
- Accounting Software
- Project Management Software
- Software Training: Training sessions on how to use the software solutions and integrate them into their businesses
III. Industry Analysis
The SaaS industry is booming. Over the past five years, the SaaS industry has been one of the fastest growing industries in the U.S. In fact, end-user spending on public cloud services will reach $482 billion over the next five years.
Among cloud options, the outlook for SaaS is the brightest. The overall growth of the SaaS industry will remain consistent through these years as more companies adopt SaaS solutions for a variety of business functions, extending far beyond the initial SaaS territories of core engineering and sales applications.
The demand for subscription-based pricing models, however, is spurring legacy companies to rapidly migrate their software solutions to a SaaS consumption model.
IV. Customer Analysis
Customer Segmentation
[Company Name] will primarily serve small to medium-sized businesses, from new ventures to well-established businesses and individual clients. These businesses typically gross from $8 million to $80 million in annual revenues and can invest up to $100,000 to $150,000 in their IT infrastructure. Clients are segmented as follows:
- Financial service providers
- Construction companies
- Manufacturing businesses
- Restaurants
- Retail Establishments
- Other businesses that may need SaaS technology
V. Competitive Analysis
Direct & Indirect Competitors
Cloud Partners
Cloud Partners was founded in 1999. It has been a reliable SaaS company in [location] for more than fifteen years. The company is known for its wide range of services that serves many people. With its large number of experts focused on delivering customer satisfaction, the organization maintains its high standard of services. Cloud Partners provides business software on a subscription basis. It develops enterprise cloud computing solutions with a focus on customer relationship management.
Software Solutions
Software Solutions is a cloud computing and hosting platform. The company offers cloud infrastructure services, such as compute, storage and content delivery, database, and networking services, platform services that include analytics, enterprise applications, mobile services, and internet of things, and developer tools, management tools, security, and identity services, and application services. It has also introduced a pay-as-you-go cloud computing model that scales to provide users with computing, storage, etc.
SaaS Partners Inc.
SaaS Partners Inc. provides integrated cloud applications and platform services. Its products and services include applications and infrastructure offerings delivered through various IT deployment models, including on-premise deployments, cloud-based deployments, and hybrid deployments. The company serves automotive, financial services, healthcare, hospitality, retail, utilities, construction, etc. It provides solutions for enterprise resource planning, banking, human capital management, etc.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Management: [Founder’s Name] has been extremely successful working in the SaaS industry and will be able to use his previous experience to provide the best service experience. His unique qualifications will serve customers in a much more sophisticated manner than [Company Name’s] competitors.
- Relationships: [Founder’s Name] knows many of the local leaders, business managers, and other influencers within [location]. With his [x] years of experience and good relationships with business leaders in the area, he will be able to develop an initial client base.
- Innovative: The Company will add new data sources to expand on new valuable insights, launch new advanced features like benchmarking, predictive and prescriptive analytics, and self-guided data discovery. Adding embedded analytics creates a new way to innovate continually.
- Client-oriented service: [Company Name] will have full-time customer service and sales managers to keep in contact with clients and answer their everyday questions.
VI. Marketing Plan
The [Company Name] Brand
[Company name] seeks to position itself as a respectable, upper-middle-market competitor in the SaaS industry. Clients can expect to receive the best services at competitive prices.
The [Company Name] brand will focus on the Company’s unique value proposition:
- Client-focused SaaS services that are customized for every client
- Service built on long-term relationships
- Thorough knowledge of the clients and their varying needs
Promotions Strategy
The Company’s promotions strategy to reach the audience includes:
Advertisement
Advertisements in print are an excellent way for businesses to connect with their audience. The Company will advertise its company offerings in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.
Social Media Marketing
Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content in terms of various forms and technologies of SaaS industry and post customer reviews that will increase audience awareness and loyalty.
Direct Mail
[Company Name] will blanket businesses with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts, and/or provide other enticements for people to use SaaS services.
Pricing Strategy
[Company Name]’s pricing will be moderate, so customers feel they receive great value when availing of Software services. The customer can expect to receive quality software services at a more affordable price than what they pay at an ultra-premium SaaS company.
VII. Operations Plan
Functional Roles
[Company Name] will carry out its operations at its headquarters in [Location]. The business will require the following job functions:
Administrative and Service Functions
- General & administrative functions including marketing, bookkeeping, etc.
- Software development
- Software and customer support
Milestones
[Company Name] expects to achieve the following milestones in the following [] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Founder Name] has a Bachelor of Technology. He is a certified SOC 2 – Trust (SOC 2 is designed specifically for SaaS operations) and has over [x] years’ experience working in the SaaS industry as a senior software engineer before starting [Company Name]. [Company Name] will also employ an experienced assistant to work as a business analyst and help with various administrative duties around the office.
Hiring Plan
[Founder’s Name] will serve as the CEO. He will hire the following personnel to maintain an effective and profitable SaaS business:
- Programmers and Software Developers [Number]
- Account Executive
- Business Development
- Accountant
- Customer Care Executive
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come primarily from software development.
The staff will earn competitive salaries allowing [Company Name] to hire experienced workers. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market. Moreover, rent for the prime location is also one of the notable cost drivers for the [Company Name].
Capital Requirements and Use of Funds
[Company Name] is seeking a total funding of $200,000 of debt capital to open its office. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Office design/build: $40,000
- Software development: $90,000
- Working capital: $70,000 to pay for marketing, salaries, equipment and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of Clients | Average |
|---|---|
| FY 1 | 42 |
| FY 2 | 63 |
| FY 3 | 96 |
| FY 4 | 162 |
| FY 5 | 243 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
