🔆 Designing your SaaS business to become downturn resilient.

🔆 Designing your SaaS business to become downturn resilient.

This morning I met with several #vc and #privateequity professionals from the AsiaPac region.

We discussed the question: “How to identify successful SaaS companies: Key traits to spot in a Red-Hot industry.”

And inevitably, the looming economic downturn mixed into the discussion as well. But, either way, the debate around which key traits to look for is super valuable – whether a downturn or not.

As such, I’ll dig into this topic in the coming weeks, and I will address it by looking at “traction” from three different dimensions.

Traction is a magic word in SaaS. But traction isn’t built in isolation.

It’s not the simple result of a campaign, a product launch, or the win-rate development of your sales team.

Remarkable SaaS businesses design for traction. They put their efforts into three buckets:

  1. Traction Foundation
  2. Traction Momentum
  3. Traction Resilience

Why? Because it’s essential that traction starts, grows, and never stops doing so. And it’s mainly the latter part that most SaaS companies suffer from.

SaaS businesses that design traction across these three dimensions ultimately grow strength around the following metrics:

  • The continuous inflow of high-quality leads into their funnel
  • Better than market average velocity of deals and win rates
  • Continued strong product adoption and customer retention even in a downturn
  • Continued top-line growth when the market slows down
  • Top-tier gross margin that’s easier to maintain at high levels
  • Last but not least – Freedom due to becoming /staying cash flow positive

Question for you to reflect upon

What potential flaws in your business can put today’s solid traction at risk?

 

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