How to build your product vision without burning through your cash

Managing costs and optimising operational efficiency

Welcome to Part 1 in our new blog series “Optimising Operational Efficiency for SaaS Platform Development”.

Knowing what, when and how to build your platform is critical to effectively scaling your SaaS business. The top reason start-ups fail is running out of cash as a result of poor financial management or failure to raise capital (source: CB Insights). Getting the balance between burn rate and innovation is key.

While it may be tempting to hire the perfect team or build the perfect product off the back of an investment round, is the right approach to ensure overall business success?

Do you really need to build a ‘Ferrari’ to test product-market fit and scale? How can you streamline and build your product vision without burning through your cash too quickly? These are important questions to consider to ensure that your team stays focused on your company mission and business plan.

Do you really need to build a Ferrari?

One of the most important decisions a SaaS business must make is what to build – and when. Beyond the initial ‘minimum viable product’, the challenge becomes balancing ongoing product innovation and development with customer validation and growing revenues.

Following a successful raise, the pressure will be on to quickly deliver the product vision presented so compellingly to investors. You can be forgiven for going full steam into hiring mode, bringing in top talent to build an array of shiny new features and functionality that you believe will gain further traction with a slew of new customers and speed you towards the product-market fit ‘chequered flag’.

Whilst this worked in 2020, in today’s cash-strapped market the need to race is less.

If the uplift in recurring monthly revenues tracks with increased development costs, then that’s great. But what happens when there’s a significant lag (as there often is while commercial teams get used to selling new and improved product propositions to new audiences)? Your burn rate comes under scrutiny and rightly so. You need to course-correct to avoid the unthinkable.

If you’re already gone down this road we’ll look at how to course correct in a moment. First, let’s look at how to avoid the problem. It’s essential to be clear on what you plan to build and hire accordingly. Sounds simple. But it’s not.

The two most common challenges we see are:

The key is to balance these two extremes

Both challenges highlight the need to hire the right team for your product vision and roadmap. This means understanding how to accurately scope your product vision, roadmap and development plan for the budget you now have available. It also means looking at all your talent options; from building your own team to outsourcing.

A key question here is: can you deliver the same value to shareholders, and deliver the product vision and company mission without the high-level burn?

The answer may mean, especially in the current market, curtailing product ambitions and streamlining development plans to preserve an adequate runway to cover any downturns or lag in customer uptake.

Outsourcing certain projects and workstreams can be an effective way of using your budget, particularly by leveraging nearshore teams with the specific skills you need for a specific period. Another benefit of outsourcing is knowledge transfer. When we work with clients, we make a point of helping upskill their teams - a common theme in across our client case studies.

It’s important to remember that not all your new funds are available for product development and innovation. Ongoing maintenance (BAU) and customer support need budgeting, as do sales and marketing. This prudent approach can help you avoid tough decisions later down the line.

But what if you’re already ‘down the line’? Time for that course correction.

What to do next?

Which path to take will depend on the size of your development team, where you are on your scaling journey and product roadmap – and, of course, your burn rate.

At this stage, it’s well worth taking advice from seasoned experts like Blue Hat Associates. As a collective of senior technology leaders, all with years of experience growing SaaS businesses, we’ve had to make these calls before. It’s something our clients value us for.

We can help you reduce your burn rate, right-size your team, supplement skills gaps where required and inject flexibility into your development team for navigating through different trading periods, product roadmap phases and investment raises.

Bringing us in at the beginning, to help with careful scoping and planning, can help avoid future burn rate challenges. But we’re also there to help you out should you hit that bump in the road.

Thanks for reading, we appreciate your time and would love to hear from you. You can email us to book a free, friendly initial chat with one of our Partners

Read Part 2 now: How automation can boost productivity and operational efficiency.

About the author

With so much advice freely available these days, we believe, it’s always good to check who’s writing an article and why. So, here’s a short intro to us, Blue Hat Associates and why we’re sharing our thoughts on this important topic.

As an experienced collective of senior technology leaders, we know firsthand how hard it can be to scale a business. Our mission is to help scaling SaaS businesses achieve their technology and product goals faster and more cost-effectively.

Working across industries, we come across some common challenges our clients are facing and have built our services to address them. As a boutique consultancy, we work closely with our clients to effectively bolster their leadership and development teams to push through their most pressing technology and product problems.

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