In 2011, Netscape co-founder Marc Andreessen optimistically predicted in an essay published by The Wall Street Journal that B2B software innovation would disrupt numerous industries over the next decade. “More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.” Fast-forward to 2020, his prediction has stood out to be true. The software has disrupted almost every vertical out there. As more and more software companies move toward cloud-based solutions, SaaS has grown to become the world’s most popular software delivery model. Numerous SaaS startups have been formed, and these companies, with their solutions & services, have been able to scale and expand faster than companies; thanks to cloud-based deployment. A 2020 SaaSBOOMi report says, “The Indian SaaS industry has more than 150 startups that have an ARR of more than $1 M.”
But building a SaaS company isn’t enough. Despite the high popularity of SaaS, founders are still required to jump over many hurdles to make it big and establish a global presence. In this blog, we have covered some of the key metrics and best practices that are essential to taking any B2B SaaS enterprise to the next level and catering to a wider clientele.
“80% of companies that successfully expand their businesses cross-border are B2B enterprises,” says Priya Rajan, Managing Director of US-based Silicon Valley Bank – a subsidiary of SVB Financial Group that has helped fund more than 30,000 startups. “The first thing is for founders to understand the market well. Timing is key,” she continues. Priya believes that founders should compare the metrics of their company and competitors in the target market. A brief comparison in terms of ARR, the competence of the team, ideal funding levels, fund-raising intervals, and business metrics, can be very helpful in identifying the right time to venture into the target market. Priya highlights the metrics that should be analyzed before expansion:
- Competence of the team
- Is the ARR sufficient to scale?
- Have enough funds been raised to compete with incumbents?
However, expanding and scaling a B2B business is not a joyride. “Founders need to keep a keen eye on various business metrics and plan the expansion accordingly. Scout the market, meet the market, and scale the market,” says Anand Jain, Co-founder of CleverTap – a SaaS-based customer lifecycle management and mobile marketing company that is catering to more than 8000 customers across 5 continents. Anand believes that founders and the senior management of B2B SaaS startups that are looking to scale globally should identify customer profiles that would be interested in buying the base product. The key highlights of the scout-meet-scale model are:
- In the scout the market phase, discover how the market buys by analyzing Ideal Customer Profiles (ICPs) and align only with familiar ICPs
- Progress to meet the market phase only if you meet some revenue milestones, say $2 M in ARR from target geographies. Establish ground presence with a few employees
- Once you have an ARR of $5 M from the target geography, advance to the scale the market phase. Set up operations so that your business can self-sustain in that geography
Another important factor that comes to mind while scaling a B2B business is the revenue. Most startup founders generate some traction, to begin with, but fail to skyrocket their revenue streams. Manav Garg, the founder of Eka Software Solutions – a global leader in providing digital commodity management solutions driven by cloud, blockchain, machine learning, and analytics, shares his mantra of boosting the revenue stream. He says, “There are four fundamentals to scaling the revenue of a B2B business from $1 M to $10 M. But the basics are sizing the market and finding a use-case that can be tweaked and repeated time and again.” He believes that the fundamental use-case of any B2B company should be extremely scalable. “It is only then that you will achieve product-market fit”. Manav highlights the four metrics to track:
- Size the market correctly – Identify potential customer bases and work on the repeatability of the fundamental use-case of the product
- Arriving at product-market fit – Scale the use-case to meet the needs of customers across several demographics
- Product-led growth – Let the product drive sales and GTM strategy. The product itself should drive 30% to 40% of sales
- Referrals – Get as many referrals as possible. B2B businesses are built on top of referrals
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