Late last year I started digging into the startup financial model. My whole career has been about how a business works. I don’t do blue sky strategy. I am not a system and process ops guy. I design, analyse and improve business models. This is the systematic view that works in my curious brain. I find myself poking around in a lot of different ideas. When I can see what works, I can help fix most things.
SaaS is the leading business model
In the startup world most things come back to software as a service (SaaS). Most of the businesses I am trying to help are SaaS based business models. The best startup ideas I see are SaaS based. The mechanics of the SaaS business model make sense. SaaS Metrics and the startup financial model hang together well.
I have learned a whole lot about SaaS by working with some great companies. I read and follow a bunch of great people who share interesting stuff. (You can go here for my quick guide to the best SaaS reading).
Revenue Models don't add up
Over time though I have realised that there are some things which don’t quite add up. For example the sales model, some aspects of the economics, typical customer revenues. The experts view doesn't fit with my experience of real startups. I couldn’t make sense of this. Then it struck me when I was reading a post from AdEspresso. All the great stuff I read online is about SaaS companies that sell to the enterprise. But the companies I talk to are aiming at SME customers.
How are SMEs different?
So I started to think about why selling SaaS products to SMEs might be different. If so, what would that mean? This feels like it might be a long journey but here is what I have found so far:
SMEs want to take advantage of new digital technologies. There is a great small business market out there for SaaS companies.
Helping small business change
At the heart of any successful business software is change. Adopting any software product requires business change. In a big organisation there will be managers and consultants to drive this. For an SME change is much harder. It takes time and focus. It risks the precious business that the owner has spent so long building up. You need to take away the pain as far as possible. You need to provide the encouragement and show the benefits.
I would love to learn
I want to help great SaaS companies serve the SME market. I love consulting for startups. Helping find the right growth tools. I am fascinated by SaaS customer acquisition strategy. I understand the revenue models. How can those SaaS metrics work better when selling to SMEs? What kind of small business consulting and advice do startups need?
I would love to hear from startups, entrepreneurs, growth hackers or customers. What are your ideas about how best to tackle SaaS for SMEs. Let me know your thoughts in the comments below. Or subscribe to my newsletter and receive my SaaS Revenue Model absolutely free.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.