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SaaS Growth Strategies: When to Grow Slow & When to Step on the Gas

SaaS Growth Strategies Grow Fast or Grow Slow

SaaS businesses stereotypically pursue rapid growth. The dream seems to go like this: Jump out of the gate, sprint toward some venture capital funding, get a massive cash infusion to launch into the stratosphere, pull in massive revenue numbers, impress everyone, and crescendo in an exit that makes you a millionaire.

Somewhere along the line, as a side note, you will likely spend some time actually building a business… hopefully even one you like or that does some good for some people. But in most of these narratives, the project of actually nurturing a business seems secondary to the goal of making all the money in the shortest time possible.

But what if this race-to-the-finish isn’t your dream? What if you’re more excited by the idea of carefully and steadily building up a business that you love, maintaining control of it, making some profit, and enjoying your life? What if you like the idea of deciding what to do as each stage comes along?

There’s a strong case to be made for growing your SaaS business slowly and steadily. It's a strong case for only seeking the money you need to grow at the pace you’re comfortable with; for growing at a pace that will allow you to sustain a life outside your business venture; for concentrating on the business itself, on making it the best that it can be, and making your customers ridiculously happy.

Here are 5 sustainable strategies for growing a successful SaaS business:

1. Grow slow: laser-focus on your product-market fit

One thing that too often goes by the way side when SaaS companies are growing rapidly is a focus on the customer and product-market fit. Once you start forgetting about your customer’s feelings and needs, you are in dangerous territory. A founder that wants slow and steady growth will always concentrate on giving their customers exactly what they want. Spend a large amount of time finding product-market fit in your niche market, and then serve that niche adamantly.

2. Gain an accurate picture of your metrics

Wait to raise money for growth until your business is humming along and you know exactly how your profit-making-machine functions. If you put a dollar into customer acquisition, do you know exactly how many dollars you can expect to come back in sales or subscriptions? You should. That way, when you seek funding to grow, you’ll know exactly how you’ll pay it back and what you will get in return for the cost of borrowing.

3. Only borrow as much as you need

Some companies that grow fast by taking a massive amount of financing are actually biting off more than they can chew. Their growth may be on a faster trajectory than they can handle. They may start letting things slip, or find they can’t do everything well; there’s a reason startups often have staff morale issues after the first few years. Companies that are growing slow and steady will be very strategic about how much they borrow. Ask yourself if you know exactly how you will use each dollar and how much return you’ll get.

4. Use the right funding sources

Some types of lenders are better geared toward supporting you in growing your business at the pace you desire. For example, the revenue-based financing that Lighter Capital provides is specifically designed to help SaaS startups grow at a self-directed pace that accounts for the natural ebbs and flows of the business cycle and the vicissitudes of life. Plus, founders retain full ownership of the company with this type of funding, reducing the need to grow massive to recoup more at exit.

Download Lighter Capital's Startup Funding Playbook

Raise capital the right way at the right time

For growing startups, funding and cash flow go hand in hand. This practical, easy-to-use playbook helps you get strategic with fundraising so you can stay focused on running your business.

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5. When it comes to quality, be relentless

SaaS, more than other business models, requires keeping your customers happy month after month. It’s essential to keep them around, which requires a very high level of investment in the particulars of your business. Concentrating on management and operational strength is far more important than flashy theatrics. As Ken Cho, CEO of People Pattern, puts it:

“Creating a long-term, durable SaaS business means putting craftsmanship over showmanship.”

As the saying goes, “slow and steady wins the race.” Taking this approach won’t necessarily make you the one that grows the fastest, or ends up the richest, or changes the world the most (though maybe!).

But it is likely to ensure that you end up building the company you want and living the life that makes you happiest. And that sure sounds like winning to us.

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