The backbone of startup operations is more than just keeping paperwork organized: ‘operations’ encompass finance, legal, compliance, HR and general admin.
Having solid processes in place from an early stage for each of these can make all the difference when you’re ready to start scaling your business.
To run a profitable SaaS business, you must be able to recognize where your costs are coming from, or how much capital you need to operate. Start by familiarizing yourself with the fundamentals of Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR), gross margin, expenses, and cash flow.
Outsource what you need to
One of
The more complex your SaaS is, the more attention you need to pay to the legal aspect of your business. Put some effort into your Terms and Conditions (T&Cs) even before you get paying customers. Don’t just ‘wing it’. But don’t overdo it, either: just have a basic framework in place, think about your liabilities, and build a foundation so you don’t regret
If you offer a simple service, you can start by looking at services or businesses that do something similar to yours, even in a different industry or market: check what they highlight in their terms (look out for things like invoicing, confidentiality, obligations, indemnification, warranties, limitations, etc.) and use that as a framework. The same goes for your privacy policy.
If your service falls under regulatory aspects, or you have customers in several countries, you might need to consult or hire (part/full time) legal counsel. For example: if your SaaS helps with investment advice or stores bank records, you are entering a sector that is more prone to regulation and therefore requires more stringent T&Cs. If you have EU-based customers and are handling or storing personally identifiable information, you needed to become
As your business grows and your customers base expands, you will need to engage legal counsel on a more consistent basis: we recently updated our terms to version 3.0 (have a read-through here) and brought a legal counsel in-house for the first time. We also engaged four outside lawyers to review our new T&Cs: two from Malta, one from the US, and one from Germany, to ensure we would cover different territorial concerns for our international customer base.
When you think about implementing a process, define your success criteria first, then identify the sequence of events that will lead you there. You can then review and refine accordingly as you go along, depending on how close you are to your objective.
Some months ago I wanted to lower the financial service fees that impact us, merchant and payment service fees in particular. The success criteria
In the research phase, we discovered that one of our vendors (PayPal) had a simple, scalable process we could enroll in so as our transaction volumes grow, rates automatically go down. So we enrolled and instantly we began receiving
We also discovered that the best way to lower our fees from a banking perspective was to avoid currency conversion fees. We knew we were being impacted by these fees but they were largely hidden from us. It was not until we went digging that we realized how much we were
Ken Weary
VP of Operations at Hotjar
Also, remember that accountability is key: once you define your success criteria, you must make someone accountable for the journey to take you there. If you don’t know who owns a customer’s complaints, for example, then your processes need strengthening.
Most importantly, make processes important from the get-go: you can get by fine as a small team without clear processes, but building them now will provide strong foundations for future growth. After all, business development starts at the center of your business with your operations team.
Here is a lesson I learned from Jason Lemkin: before you reach $10 million Annual Recurring Revenue (ARR), people are not looking at you that much. This is not the time to be complacent: focus on creating a good and structured internal process. When you hit $10 million, suddenly everyone starts looking at you, and you should have everything planned and organized by then.
David Darmanin
CEO at Hotjar
Agile practices have been around for a while to help teams produce more value, faster. Instead of trying to deliver one big project all at once, an Agile team breaks it down into smaller chunks that get released regularly and iteratively.
Measure, iterate, optimize: that’s what Agile execution is all about.
Bob Jelica
Director of Awesomeness at Football Addicts
You don’t have to go all-in right now and create complex processes—in fact, the whole point of Agile is starting small and continuously improving. Start like this:
Use retrospectives on a regular basis to discuss what went well and what did not, review your process, and find bottlenecks and fix them (ps: we have a free retrospective template for you to copy and use, too). A useful business analysis from time to time can get you where you need to be. Hold larger retrospectives to look at the bigger picture too. For example: have quarterly retrospectives to examine what you’ve achieved, what your velocity has been, and whether or not what you shipped aligned with your projections and quarterly goals. This is especially useful for early-stage companies where your growth might be very fast.
If you want to bring Agile into your established organization, you will need to highlight and explain the benefits and get buy-in so the team will want to do it, as opposed to being forced to.
Before you think switching to Agile is a waste of time and money, consider Skype’s case: previously bought for around $2 million, the company moved to an Agile framework practically overnight and was later re-sold for $8.5 million thanks in part to this massive operational change. Sergei Anikin was working there as a manager at the time, and has some insights into how the change played out:
Agile Product Ownership in a Nutshell, Henrik Kniberg
XAwards: Operations and Planning Panel, Antoine Bonello and Ken Weary
XAwards: Execution Panel, Bob Jelica, Sergei Anikin, and Marc von Brockdorff