** Update **
As B2B SaaS investor we are frequently asked for advice on financial planning and KPIs. There are some great resources out there such as Christoph Janz’s post http://christophjanz.blogspot.com/2016/03/saas-financial-plan-20.html. However, if you have a more “enterprisy” approach with higher ACVs and more complex sales cycles you’ll need a model which relies less on self-signups and marketing spend. The core sales process is often more focused on an outbound or inbound tele sales operation and sometimes even has a field sales component. As a result, there is usually a strong link between the ramp up of the sales team and the ability to create and maintain a pipeline of enterprise customers.
We felt that a good “enterprise sales” template is missing and hence, would like to share our own model which we use internally at Senovo. Besides sales being mostly driven by the internal sales team, the model also puts a strong emphasize on churn. One reason for that is that churn is one of the major valuation drivers of a SaaS startup. Furthermore, it is also important to get into the habit of working on a cohort basis early on because otherwise you can’t measure individual changes to the sales process and product with the same sensitivity. Churn on a cohort level allows you to get an early warning in case something is wrong with your customer base.
You can find the plan here as download for Excel: https://drive.google.com/open?id=0B_3ow_qxgccrY1hGZC1yeEVrQjg
…and here in Google Sheets: https://drive.google.com/open?id=1YN8yA0ZKCaf_RevLwm9dVWTiaPgC0cPrZX31q6qmTz0
If you find any bugs, have any comments or suggestions, I would love to hear from you (either in the comments below, or via email markus at senovo dot vc)!
Below are some notes on the layout and mechanics:
Tab SaaS P&L
· All cells which require manual input are marked yellow.
· The model starts with a sales funnel from leads to paying customers, followed by churn and contract down- and upgrades.
· Churn, downgrades and upgrades are only reported here on an aggregated level and are based on cohorts as described later and modeled on the respective tabs.
· We assume that there are 3 products / bundles (basic, pro, enterprise) that are sold.
· In the middle section, revenues are modeled and splitted into MRR, setup fees and the various product types.
· Here you can also set the average payment terms to upfront/post-payment and select how many months upfront/post payments you usually get.
· The lower section contains the headcount plan and costs.
· The funnel in the beginning is driven by the “Lead Quota” in line 7 as well as the “effectiveness” calculated in the “Sales Team” section. The reason why we create an “effective sales KPI” is that even if the sales team can be hired fast it usually takes 3–6 months until they are in full swing. The (conservative) standard assumption is that it takes 6 months for a sales employee to be fully ramped.
· If you already have some customers before the begin of the financial plan you can enter them under “Existing” in line 33 (Total Customers).
· Finally, the model ends with a very brief cashflow approximation which takes the standard payments into account since they can have a significant impact on your liquidity.
· This tab allows you to model churn in % of the customers for each cohort. Each row represents one monthly cohort of the plan and in the columns you can enter the expected churn behavior for every month after they are signed on. E.g. the row Feb 17, column marked 3, would be the churn of the 3rd month after the customers signed on in February.
· There are 3 tables for each product segment.
· The behavior can be very different: e.g. if you have annual contracts you would have 0% churn until month 12 and then maybe 7% for the customers which didn’t renew followed by 0% again.
· Also a new product release can have very different behavior if it introduces certain type of functionality which impacts churn.
Tabs Upselling and Downselling
· These tabs follow the same logic as the churn model but with regard to contract upgrades and downgrades.
Tabs Cohorts (MRR), Cohorts (Logos)
· Now that you modeled churn, upsell and downgrade behavior we can calculate the cohort data on an MRR basis and customer count / logo basis