Nov 3, 2022

Getting started with a SaaS business model

Why this newfound software makes it worth transforming your business today

Madison @CAKE
Madison @CAKE

Have you ever heard of SaaS? 

For those that don’t know what it is, SaaS is defined as a cloud-based software solution in which software providers deliver applications to users all over the Internet. The SaaS business model is one most companies are shifting to; considered a more modern way to earn, this software is likely to generate good revenue after it reaches the maturity stage of the business model. 

Working through the cloud-delivery model, SaaS key advantages are that this business model include accessibility, comparability and operational management. SaaS is more widely available due to lower upfront costs, which also makes it easier for smaller companies to disrupt existing markets (which we’ll get into later on). 

Most businesses that choose to partake in the SaaS business model have to undergo three stages of growth: the early stage, the growth stage and the mature stage. Each stage comes with unique business needs specific to the branding of your company. 

The Early Stage 

In the early stages, you’re likely to be working bare-bones, with anticipation for the growth of your company. As a new entrepreneur, it might still be challenging to navigate the ins and outs of the start of your new business. You might also still be seeking pre-seed funding, or figuring out how to navigate each new venture. 

At this stage, you should be asking yourself how you’re going to fund the business, as well as start to identify what makes you and your product unique to consumers and other competitions alike. 

The Growth Stage

When you discover your product and figure out that it works, you’ll be able to move on to the growth stage. Once you get to the growth stage, the SaaS business model leads to rapid scaling. Rapid scaling is defined as a strategy and set of techniques for activating and managing the company’s quick growth. Your job is to keep up, as the business needs to scale at an explosive rate in order for this part of the strategy to work. This means scaling your team and any key resources that may play a part in the company’s success. 

Although growth can be seen as a step in the right direction, there are many risks that follow in this stage. For example, insufficient cash to handle any costs associated with said growth, scaling prematurely or even hiring mistakes, to name a few. However, the success of this stage is key to determine when your business is able to move on to the final stage of development, otherwise known as the mature stage.

The Mature Stage 

This stage, considered the most successful of all stages, allows for businesses to continue growing, just not at the alarming rate that they were in the growth stage. Your goal in this stage is to maintain that steady growth and keep building connections with your loyal customers. At this point, you can focus on finding opportunities to allow you to grow globally. While the maturity stage means you’ve definitely found success with your business, it doesn’t mean you need to stop working towards your goals. Becoming too comfortable in its success will likely impact the business in a negative way, so it’s important to stay humble and continue to work hard. 

By understanding and implementing SaaS into your business, you’ll be able to create better strategies when it comes to both short and long term marketing. With an SaaS model, there are always opportunities to adapt and improve, in any stage of its cycle. An added benefit is that investors are more attracted to businesses that have a ‘deep understanding of their financial growth metrics’, which is exactly what comes with learning about SaaS. In order to properly profit off of your business ideas, enacting the use of an SaaS business model is the way to go. 

Now that you’re more familiar with the development of SaaS, you might be wondering how CAKE Capital plans to stay involved. Well, CAKE “allows SaaS companies to unlock recurring revenue on demand while maintaining flexible payment options for customers.” Because of this, SaaS companies are able to boost their revenue, while CAKE allows you to access all benefits of up-front capital without devaluing your product offering. 

Because CAKE is sector-agnostic, we’re quite confident in our ability to dominate the SaaS industry; With SaaS, you can flip the traditional business model upside down by basically renting access to a software. Offering lower overhead costs and a much simpler sales process, SaaS models are generally hard to beat. 

Like we touched on earlier, the market for SaaS companies is growing primarily due to the urgent demand for productive software within small-medium organizations. Even larger companies, like Salesforce, Microsoft and Slack have since profited on the upswing of SaaS business models. Due to multi-tenancy, the amount of capital needed for upfront growth is lower, which is one of the reasons why SaaS models are found to be so appealing. 

Back in 2021, the global SaaS market size was valued at a total of 165.9B (USD) and is anticipated to expand at a compound annual growth rate (CAGR) of 11.0% during the years of 2022 to 2028. To date, nearly 78% of small businesses have invested in SaaS options, which was a smart business decision considering the rate of success with SaaS. 

Where businesses go to grow.

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