Why SaaS Founders Need to Watch Outgoings as Much as Income

As an early-stage SaaS entrepreneur, you'll be familiar with the constant hustle of growing your business and securing new clients. You probably have a thorough understanding of your revenue stream and diligently track your income, but, are you paying the same attention to your outgoings?

Many SaaS founders focus solely on increasing their income and overlook the impact of their expenses on cashflow. However, keeping a very close eye on your outgoings is crucial for the financial stability and long-term success of your business.

"Managing your cashflow effectively is essential!"

It's the lifeblood of your business, and without it, your operations can quickly grind to a halt. Expenses such as marketing, software development, and employee salaries can quickly add up and impact your bank balance. Therefore, it's vital to monitor your outgoings regularly and make strategic decisions to ensure your business's financial health.

Here are some practical tips to help you keep your cashflow in check and manage your outgoings effectively:

- Create a Spreadsheet: While your accounting package may provide an overview of your finances, having a separate spreadsheet to monitor your income and outgoings daily can give you a more detailed and organised perspective. This will allow you to see where your money is going and identify areas where you can reduce costs.-

- Put Money Aside: On days when your sales are high, it's tempting to celebrate and splurge on unnecessary expenses. However, it's essential to put some money aside on these high-income days to cover your outgoings on the low-income ones. This will prevent any cashflow shortages and keep your business running smoothly.

- Review Your Subscriptions: As a SaaS business, you may have various subscriptions for software, tools, or services. While these may seem like small expenses, they can add up and quickly impact your cashflow. Take a critical look at your subscriptions and cancel any that are not essential to your product or service. Consider cheaper alternatives or negotiate better deals with your current providers.

- Change Suppliers: It's always a good idea to regularly review your suppliers and see if there are more cost-effective options available. For example, if you're using a specific cloud hosting service, research other providers and compare prices. By switching to a lower-cost supplier, you can significantly reduce your outgoings and improve your cashflow.

- Balance Your Direct Debits: If you have multiple direct debits and standing orders going out at different times of the month, it can be challenging to ensure they go out when you have enough in your bank to cover them. Consider rearranging these payments to balance them out throughout the month, so you're not hit with a large amount going out all at once. This will help you avoid any unexpected financial strains.

- Cut back on 'Nice to Have' Expenses: As a SaaS entrepreneur, you may feel the pressure to invest in the latest tools and gadgets to stay ahead of the competition. However, it's crucial to evaluate whether these expenses are necessary or just 'nice to have.' If they don't directly contribute to your product or service, consider cutting back on them. Do you really need that shiny new monitor this month?.

I have a spreadsheet that tells me what days payments are due out and I match them against the YourPCM dashboard which tells me what days what subscription payments are coming in. I update it every day to ensure all my bills get paid on time and that nothing bounces.

"Manage your expenses effectively, and ensure the financial stability of your business"

With my practical tips, you can take control of your outgoings, reduce costs, and improve your cashflow. Don't overlook the impact of your expenses on your business's financial health and make it a priority to monitor and manage them regularly.

By doing so, you'll set your SaaS business up for long-term success.

If anything I've mentioned here resonates with you, do call me on 07490 373980 and let's talk.