Ash Didwania is SVP of Revenue at Resilia, a venture-backed B2B SaaS company where he heads Go-To-Market & Commercial functions.
getty
Only 4% of SaaS companies cross the $1 million ARR mark, and a mere 0.4% cross the $10 million ARR. The vast majority vanish, craving a turnaround story.
Maybe you have a decent product but are struggling to ramp up go-to-market and revenue. Perhaps you raised a round of funding a while ago, but the expected growth never kicked in. Worst, you are running out of cash. These are situations that CXOs at early-stage and growth-stage SaaS businesses deal with all the time, as evident from the above numbers.
Those who do manage to make it go through a series of commercial turnarounds—some are adjustments, while others are significant upheavals. While every business is unique, and a standard SaaS turnaround playbook may be a far-fetched idea, if you are on a shaky boat, here are some key tactics that could help your B2B SaaS business script a turnaround.
1. Rethink your identity.
Too many SaaS businesses die trying to be everything to everyone. This is especially prevalent in venture-backed early-stage and growth-stage SaaS companies, where the pressure to show 10X-plus revenue growth may be the only way to get the next round of funding.
Sustainable SaaS businesses, though, are built on a clear purpose, key problem statement, passionate customer base and a crystal clear identity. Get your executive team in a room and ask yourselves a series of questions: Why do we exist, and what’s the one problem we trying to solve? How much of our business plan and messaging is based on the core problem statement? What part of our target market views our product as a “must have” in its current state?
The answer to the last question may not give you a $10 billion TAM (total addressable market) out of the door, and that is where most companies tend to lose the plot. The desire to demonstrate a massive TAM overpowers the need to crack the market niche that will get you to seven or eight figures in ARR (annual recurring revenue). Avoid the temptation and go all in on your ICP (ideal customer profile), no matter how niche it seems.
2. Eliminate bright shiny objects from your go-to-market playbook.
Are you trying to build your early-stage enterprise SaaS business by chasing million-dollar deals? Reality check: It may not be the most scalable tactic at your stage. You may want to consider switching to a “land and expand” strategy, i.e., maximizing ICP acquisition even if it’s at a lower average contract value with the intent of growing those accounts over time. Remember, recurring revenue and retention matter far more in a SaaS business than flashy million-dollar deals.
The same philosophy applies to hiring. Instead of hiring President’s Club winners from Fortune 500 companies, bringing on board people with a track record of delivering at your growth stage is likely to pay far richer dividends. It’s even better if they have themselves been part of turnaround stories.
Lastly, get obsessed with driving key metrics toward growth stage benchmarks. If you are an enterprise SaaS business, your net dollar retention (NDR) should be above 120%, and your gross dollar retention (GDR) should be above 95% to help you maximize recurring revenue. An LTV/CAC over three will mean you are acquiring customers in a profitable manner and setting up a healthy cashflow. Revenue per employee and cash burn per employee are two other numbers you want to benchmark and fix.
3. Get obsessed with the simple and boring.
Data, adaptability and go-getters on the team combined with a laser-sharp focus on execution within your niche market will not only help you maximize your chances of a turnaround but will likely put your aspirational growth trajectory in sight. The keywords there are focus and execution.
Most sustainable SaaS turnaround cocktails have had a mix of these ingredients: niche over large, data over fancy ideas, scrappiness over strategy, quiet go-getters over flashy stars, customer feedback over internal opinions, measurable outcomes over judgments, coachability and learnings over being right, productivity and effectiveness over protocols, team bonding over extravagant parties, transparency over perception management and simplicity and execution over everything else.
Beyond all of the above, turnaround stories almost always begin with an intentional team that is fully aware of the current state and deeply motivated to trace the path toward sustainability. So if a turnaround is what you are seeking, begin by bringing the entire team into the loop, irrespective of levels or tenure.
Stay tuned for part two of the B2B SaaS turnaround series that will dive deeper into rethinking the identity of the business.
Forbes Business Development Council is an invitation-only community for sales and biz dev executives. Do I qualify?
