SaaS Economics by David Skok

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SaaS entrepreneurs need an Excel spreadsheet model and graphs that show the cash flow trough that happens to SaaS, or other subscription/recurring revenue businesses that use a sales organization. These kinds of SaaS businesses face a cash flow problem in the early days, because they have to invest up front in sales and marketing expenses to acquire customers, and only get payments from those customers over a delayed period of time. I refer to this phenomenon as the the SaaS Cash Flow Trough. The model also compares the cash flows of businesses that charge monthly to those that are able to charge their customers for a year’s payment in advance.

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  • Our crew are making their lists of presos which will win next year in 2011 for most click-thrus and this one is my choice hands down.

    I think this will become required reading soon for any start-up looking to make it in 2011.

    ~Clint
    @cazoomi
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