Efficient Strategic Planning for Your SaaS Start-up: 5 Steps for a Productive Year-End Planning Process

As we near the end of 2021, many companies have started considering their goals for the year ahead and are looking to translate those into a strategic, actionable plan. Whether you’ve already begun outlining your plans or your planning will run into the beginning of 2022, if you’re here and beginning the process, you’re already on the right track.

Is year-end strategic planning really necessary?

Short answer: Yes, absolutely. 

Year-end planning is crucial in furthering your company’s success because it defines the goals that drive actions for the following year. It ensures alignment between the leadership team, board, and investors as they work together to intentionally pause and define what the company is and what it wants to be. The process encourages teamwork and collaboration toward a common goal, and transparency helps foster a positive culture. Importantly, it informs the financial projections, which will later factor into measuring the plan’s success. The strategic planning process takes time and can be an intricacy-filled challenge—even for those who have gone through the exercise before—and it’s different every time. 

While final strategic plans will always vary between companies due to differing starting points, goals, stakeholders, and needs, there are consistencies that have enabled us to refine the planning process. Whether you’re a start-up looking for investors or a company with a few years under its belt looking to grow, the following five steps outline the year-end process every SaaS company should follow.

Five steps to SaaS year-end planning:

1. Know your baseline
   Before you begin planning for the future, you need to know where you stand in the present. Don’t even start thinking about your strategy until you have verified every suspicion or number you have in your head with concrete, data-derived actuals.
   
   While many companies use GAAP and cash flow numbers as a basis, SaaS companies must also consider the metrics unique to their business models. Being able to forecast is key, particularly in this arena. Consider your ARR (annual recurring revenue) and LTV (customer lifetime value), and then also factor in your CAC (customer acquisition costs) when forecasting. While these numbers should come from your data so you can leverage them into your forecasting, they present a whole other set of calculations that are very important to get right. Because of this, it’s generally a good idea to have an expert weigh in.
   

2. Align goals
   Various departments within the organization need to work together, and setting out what each is trying to accomplish now can help bolster productivity later—while also ensuring everyone agrees on the direction of the company as well as the steps needed to lead it to success.
   
   Confirm the company’s goals for the next 18-36 months, considering elements such as the product road map, sales targets, and markets; then work backward and align departmental goals accordingly.
   

3. Define the company goals
   The next step is to create department goals that align with those of the company’s; however, you also need to define your company’s goals more strongly.
   
   Within your company’s overall objectives, consider how the individual departments contribute to the company plan. Ask what the departments need to accomplish for the company to meet its overall goals—and then keep a record of those elements. Also consider which scenarios exist to enable your company to achieve the desired results in more or less time, based on spending and available resources. As is often the case in planning, specificity is key.
   

4. Identify resources
   At this point in the process, you’ll have your company goals, departmental goals that align with those of the company, and a general list of how you’ll work through the departments toward successfully meeting objectives. The next step is for department leads to identify which resources—staffing, tools, and third parties—they need and already have to execute the departmental and company targets successfully.
   

5. Present initial budgets
   Having created their list of resources, department leads should present their initial budgets within the context of their department goals feeding into company objectives. This presentation should include company leadership and other department heads to ensure a collaborative, thoughtful, unified process.
   

After going through this initial process, it’s important to set time to review each department’s budget and bring in additional stakeholders. This process as a whole can take a matter of weeks or more likely 2-4 months, with the latter being commonplace for many SaaS companies. 

The sooner you begin the process, the better off you’ll be. And while it can take time, by following the above or enlisting the help of a professional, it is a process that is both possible and well worth the effort.

Hustling throughout the year to acquire customers or complete a fundraise will always be required to achieve exponential growth, but it can feel an awful lot like flailing if you don’t have a clear plan and clear targets to measure what’s working and what’s not (and your level of success) along the way.