Why SaaS Founders Need to Watch Outgoings as Much as Income

Here are some practical tips to help you keep your cashflow in check and manage your outgoings effectively:

• Create a Spreadsheet: While your accounting package may provide an overview of your finances, having a separate spreadsheet to monitor your income and outgoings daily can give you a more detailed and organised perspective. This will allow you to see where your money is going and identify areas where you can reduce costs.

• Put Money Aside: On days when your sales are high, it's tempting to celebrate and splurge on unnecessary expenses. However, it's essential to put some money aside on these high-income days to cover your outgoings on the low-income ones. This will prevent any cashflow shortages and keep your business running smoothly.

• Review Your Subscriptions: As a SaaS business, you may have various subscriptions for software, tools, or services. While these may seem like small expenses, they can add up and quickly impact your cashflow. Take a critical look at your subscriptions and cancel any that are not essential to your product or service. Consider cheaper alternatives, negotiate better deals with your current providers or even downgrade to a cheaper package.

• Change Suppliers: It's always a good idea to regularly review your suppliers and see if there are more cost-effective options available. For example, if you're using a specific cloud hosting service, research other providers and compare prices. By switching to a lower-cost supplier, you can significantly reduce your outgoings and improve your cashflow.

• Balance Your Direct Debits: If you have multiple direct debits and standing orders going out at different times of the month, it can be challenging to ensure they go out when you have enough in your bank to cover them. Consider rearranging these payments to balance them out throughout the month, so you're not hit with a large amount going out all at once. This will help you avoid any unexpected financial strains.

• Cut back on 'Nice to Have' Expenses: As a SaaS entrepreneur, you may feel the pressure to invest in the latest tools and gadgets to stay ahead of the competition. However, it's crucial to evaluate whether these expenses are necessary or just 'nice to have.' If they don't directly contribute to your product or service, consider cutting back on them. Do you really need that shiny new monitor this month?

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