The startup world is full of relentless optimism. But you only need to poke your nose out of the tent for a few minutes to see that there are storms ahead. The world economy faces big challenges. Some kind of slowdown is happening in China. US interest rates are about to rise for the first time in a decade. The EU continues to look sclerotic and fragile. Slumping prices for oil and other commodities. War and instability seem to be growing.
As if that is not enough Christmas cheer, these risks finally seem to be hitting the startup world. Mattermark has just reported that VC investment levels have returned to pre 2014 levels – On The Brink.
This is not made to be a super bleak forecast. But we live global and the market for SaaS is everywhere. At least parts of that market are going to feel a squeeze at some point in 2016. We will hear plenty of noise about economic challenges. How can SaaS help? What should you offer your customers if times are tough?
Cost reduction schemes are as traditional in any downturn as tinsel at Christmas. The first shock reaction to bad results is to cut the fat. Some measures can be put in place fast and management are able to show they are taking decisive action.
SaaS can help. Most B2B SaaS products will save their customers time and money. Unlike traditional IT solutions to cost reduction, your SaaS product can be up and running within those short time horizons. IT is often a budget that feels the early cost pressures. Precisely because investment in IT takes time to pay off. Make sure your market knows that SaaS is different. Fast results.
In the next phase of economic strife, business starts to realise that taking out costs does not fix the problem. No matter how fast you cut, things seem to keep getting worse. Consider a contrarian point of view (a little bit). Focus on revenue growth. This is the real problem when the economy goes wrong. Customers stop buying. Markets shrink. Look at what is happening in oil. Demand has dropped a little. And that has turn the delicate balance into a slump.
Please don’t read this as a suggestion to create yet another SaaS for CRM or marketing. Do think about how your SaaS can help your customers grow. Perhaps by freeing up staff time to focus on sales.
Cash is always king. When the economy goes South, the king becomes an absolute ruler. SaaS has an immediate advantage in this environment. Because it requires little or no upfront investment. So not only can your customer access the benefits quick, they will also turn into positive cash flow.
Keep an eye on your pricing. Make sure your customers know the value your SaaS delivers. Think about total cost of ownership (TCO) as well.
Be positive and be there for your customers in 2016. SaaS has an opportunity to help with cost reduction, growth and cash flow. These will be top of customer agendas if the economy turns rocky.
And remember, a rising tide lifts all boats. In other words everyone grows when the economy is strong. The only real opportunity to take market share from your competitors is in a downturn. If times are tough it could be a great opportunity to build the foundations of a SaaS powerhouse. We may also see a tipping point where SaaS takes a huge chunk of the B2B software market.
Have a great New Year.