** Update **
The newest version of the financial model is published here: http://tiny.cc/senovo_finplan_medium
Back in July, we shared our B2B SaaS financial model with the public (for the model v1.0 and an explanation of the layout and basic mechanics please see Markus’ post) and have since then been overwhelmed by the positive reactions and interesting discussions that emerged out of that. Over the past months, we continued improving the template, incorporating much of the feedback we’ve received.
Furthermore, we added a new layer to our template with a simple marketplace that runs on top of the SaaS business. We have seen this model work out quite well at many companies (e.g. our portfolio company Veact) and believe there is great potential in it. The basic idea is that once your customers start using your SaaS product in their daily business, there might be substantial upselling potential through related value-added services. However, a SaaS company should not try to build these transactional services on their own but — if it makes sense — rather open its platform to partners, which can then offer their services to its customers. In return, the SaaS business gets a commission on every purchase made through the platform, thereby adding a new revenue stream to its business.
If you have any comments or suggestions, I would love to hear from you either in the comments below, or via email: andreas(at)senovo(dot)vc!
Below, I outline the major changes and additions we made to the template:
- We added two new account metrics which we find very useful when evaluating whether a business plan is healthy. The first is “new MRR per sales rep” which describes how much new MRR is added by each sales representative per month. The second metric is the implied “target sales quota per sales rep” which is directly related to the new MRR added per month. It describes the target sales quota (in ACV/month) you should set for your sales reps considering that the average quota attainment lies at roughly 70%. For some very useful benchmarks regarding sales quotas and other sales metrics, please consider these two very comprehensive sources: Bridge Group 2017 SaaS AE Metrics Report, Bridge Group 2015 SaaS Inside Sales Survey Report
- Furthermore, we added a marketing team in the headcount section and marketing spend in the costs section to account for the importance/necessity of marketing in the enterprise sales process. However, we still decided to not directly link the lead generation process to marketing spend as it is very hard to draw linear correlations between these two in the enterprise segment.
- In the costs section, we now list the costs of goods sold (COGS) separately which are costs directly related to the delivery of the product/service and therefore have an impact on gross margin. The CAC payback period calculation is adjusted accordingly.
- Last but not least, we extended the cashflow section so that up to three different payment terms can be entered (e.g. depending on package or customer size).
- The model assumes that only users of the SaaS software can become marketplace customers. The acquisition logic is modeled in a way that a share of X% of the SaaS customers also start using the marketplace after an average lead time of Y days. After becoming a marketplace customer, they are either retained or must be activated again if they’ve not used the marketplace two periods in a row.
- Revenue is calculated based on the total transaction volume and the commissions from partners. Furthermore, there might be a one-time activation fee for new customers.
- We assume that there is a separate sales&marketing, customer success and development teams for the marketplace while the top management and the admin team are shared between SaaS business and marketplace business.
- The cash flow approximation is modeled in a very simple way for the marketplace component as complex payment terms typically do not apply to those kind of businesses.
Tab “Combined Financials”
- This tab gives a summarized overview of the most important KPIs and financials from both the SaaS and the Marketplace sheet.
- There is a filter in column A, which allows to switch between a pure SaaS/Marketplace or a combined view.