This guidebook help's SaaS founders know where it makes sense to go cheap, and where it makes sense to invest in doing it right the first time. We walk through the top software platforms every startup should be using, and what habits are essential to build from the get-go.
2. List of Topics
The sobering math
Costly mistakes
Top tools to get right the first time
Recommendations
CONTENTS
3. The Sobering
Math
Building a company is hard. Duh.
In 2020, growing a business requires a
new level of tenacity and resilience.
It's easier with funding, but VCs are
being more careful and selective than
ever. Covid-19 has tightened the
market's belt, so if you want capital,
you need to STAND OUT
4. RAISING CAPITAL
Seed/Preseed
You can raise money from angel or seed investors with a great idea, a product that
solves a big problem and/or a killer team, but it's a lot easier with a handful of
customers.
Series A
Most investors want to see a startup hit $1m ARR before raising a series A. The
quicker you get there, the higher your valuation.
5. GETTING TO SERIES A
LET'S ADD IT UP
With an average deal size (ADS) of $25,000, you'll need 40 paying customers in order to get to $1m
ARR
You need to account for customer churn. A good handful of your early customers will leave. Assume
20% logo churn to be safe. So plan on 50 wins in order to hit $1m.
Not every opportunity closes. In fact, most don't. A pretty good win rate is 25% for an early-stage
company. Plan on needing 200 legitimate opportunities in order to get those 50 wins.
You're a romantic if you think that most people you reach out to will be interested. Plan on 12-15% of
the people you reach out to being willing to talk. That's about 1,500 people that you need to
prospect into.
6. Yourfirst
salespeople
GETTING EVANGELISTS
Most sales gurus will tell you that you need "evangelists" in your
early days. These are the rainmakers that just find a way to bring
money through the door. They are passionate about the
problem and how you solve it.
THEY ONLY WORK FOR SO LONG
Evangelists are great and probably necessary for most startups.
But the same people telling you to hire them will be telling you
that you need scalability come Series A time. If you don't start
the process of setting up for scalability early, you'll sacrifice a
ton of time and effort getting a sales engine up and running
once it comes time to grow.
8. Why do I need to track
everything from the get go?
Think back to our baseline metrics.
You'll likely need to target around
1,500 people in order to get to $1m
ARR. THAT'S A LOT OF PEOPLE!!! By
tracking everything, you'll learn who
your buyers are, what types of
activities and calls-to-action resonate,
what communication channels are
effective, and how your buyers buy. Q1 Q2 Q3 Q4
40
30
20
10
0
9. WHY SHOULDN'T I USE
CHEAPER SOFTWARE?
They're cheap for a reason
Most sales tools that are less expensive
have limited functionality. You get what
you pay for.
Migrating is hard (and
pricey)
You'll save money early, but you'll
eventually need more robust software to
support your sales and marketing teams.
Migrating from one platform to another
is time consuming, and very expensive.Your salespeople won't
love it
Employees want to be invested in. Being
overly stringent sends them a message.
10. Optimism is
good, right?
Yes...but so is realism.
Look, you could nail everything
perfectly and your product could be
crazy viral. But probably not. Lots will
likely go wrong before everything goes
right. There are things you can't
control, and there are things you can.
Take the time to set up your sales
engine properly, so that you are
efficient and you can scale your
growth when the time is right.
11. WHERESHOULDN'TI
CUTCORNERS?
CRM
Honestly, it's probably Salesforce or bust. As you
grow and scale, other tools your team will need will
likely integrate with Salesforce and not much else.
Switching CRMs takes a ton of effort, costs a bunch
of money, and will likely result in a big loss of data.
MAP
Investing in the right Marketing Automation
Platform will not only help you build more pipeline
and brand recognition, but switching MAPs might
be as intense as switching CRMs. Marketo, Hubspot
or Pardot are the best players.
SALES ENGAGEMENT
The platform your team will live out of most can
be a huge source of data and efficiency. Don't
make your team use a poor one. Outreach and
SalesLoft own the lion's share. MixMax and Groove
are worthy up and comers.
12. UNDERSTAND THE MAGNITUDE
It takes a lot to found a startup. It will probably take a lot
more grit than you anticipate to get to the point where
you can raise serious captial.
EVANGELISTS W SYSTEMS
Use passionate rainmakers to sell your product in the early
days, but gather data around what they are doing so that
you can scale it.
DON'T GO CHEAP
Your primary SaaS tools (CRM, MAP and Sales
Engagement) are not the places to go lean. You'll sacrifice
too much and will pay (figurateively and literally) for it
later.
Summary
13. About the author
ZACH BARNEY
Founder/Principal
Zach Barney Ventures,
LLC
Hi, I'm Zach! I live for startups, and have
been helping companies build and scale
their sales, marketing and customer success
efforts for more than a decade. I've failed a
ton, and had a few successes to go along
with it. I'd love to chat about your startup
and how I can help your grow.
Find me on Linkedin or text me!
801.376.9909
