Risk is something that most seasoned business owners will say comes as part of the territory. But for budding entrepreneurs in a competitive market, risk is something that should not be underestimated. If you are about to launch a brand-new business or build a fledgling brand, then you will know the importance of a business plan. This plan must include potential risks that SaaS businesses may encounter and how to combat them, not only for your peace of mind, but for your investors too. Here we look at the top three risks to consider.
Investors pull out
Companies often rely upon the capital of others to get themselves out of the starting blocks. However, regardless of how good your business plan is or how keen the investors were, investments are subject to change. In a turbulent climate where businesses rise and fall at a rate of knots, you may find the plug is pulled before you even get off the ground. This is why it is advisable to have sizeable savings ring-fenced for such an event in advance. If your investor pulls out, the ring fence allows you to rest easy knowing that you can still continue with a soft launch and buy some time while you find new investors.
SaaS Fails
SaaS businesses are heavily dependent on business-critical software for their daily operations. Unless you are a programmer or developer who has the ability to adapt to software situations, the chances are if your technology failed you would be high and dry. Unlike traditional downloaded software, SaaS relies upon the software developer and/or host to provide access to the cloud-based software. This dependence can leave cloud-based businesses in an unenviable position should either party cease trading or the provision disappears overnight. Although little can be done to stop a provider from going out of business, you can stop it from adversely affecting yours. By implementing SaaS Escrow in your start up plan, you can maintain software access continuity in the event that your provider fails to uphold the provision or goes into administration.
Partnerships break down
When entering into a business partnership, it is vital to discuss your vision and goals from the outset. This should include the agreed financial investment on both sides. Regardless of how many years history you have with an individual, this can all change when you go into business together. By setting out clear boundaries from the get go, you will both be clear on the path forwards. However, should your visions become misaligned or your personalities clash, ensure that you have watertight procedures in place to protect both your investments and your business.
Want to know more about protecting SaaS businesses? Contact LEAAS today on 0800 4561115
