The SaaS Growth System: The Six Phase Process for Scaling & Exiting

About this article:?This article builds on last week’s?How to Scale a B2B SaaS Company . If you haven’t seen that yet, you can?download the guide here . To learn more about our SaaS CEO Coaching service working directly with Ryan, visit?www.hillcanyon.com . We also have a 12-week SaaS CEO Group Coaching Program beginning on May 1 that you can?learn more about here . You can?download the below article as a PDF here .

I’ve been coaching SaaS CEOs informally since 2010 and professionally since 2016.

I’ve taken what I learned building iContact as CEO/co-founder from $0M to $50M ARR, and then selling the firm for $169M to a public company, and created a repeatable process and structure around it.?

I now use this structure to guide SaaS CEOs through the same growth, scaling, systematizing, and exiting process for their own firm.

So far I’ve coached the CEOs of Tatango, Green Packet, Seamless.ai, Pipeline CRM, Block Aero, Datalyse, and Revenue Accelerator. I work directly with no more than 4-5 clients at a time.?

While I’ll sometimes give free advice to startup entrepreneurs who are still working on achieving product-market fit – where my process really starts to help is when there’s enough data to estimate the?unit economics?(the cost and value of what a new customer is worth to you). That’s when the scaling magic happens.?

Once a firm as $1M+ in ARR and at least 50 or so customers – there’s enough data to model to calculate your unit economics (ARPU, Churn, Lifespan, LTV, CAC), I can help a lot with scaling up customer acquisition based on unit economics and then systematizing, professionalizing, and helping the firm prepare for later stage venture-rounds (if needed) and an exit (if desired).?

At that point it’s simply a game of:

• How do we acquire as many customers as possible through online and offline channels where the cost of acquisition is lower than the present value of the incremental customer (in terms of cash flow if bootstrapped or long-term enterprise value if venture-backed).
• And how do we build the team and the capital stack needed to deliver the solution to customers with high excellence over and over again.

In the above diagram, we tend to come in at Stage 3 (Scaling Up) and Stage 4 (Systematizing) when you are preparing for a sale. This usually is around years 2-5 for a company and is always after product-market fit has been achieved. Though I’ve been through the entrepreneurial process many times (and even wrote a book on it called Zero to One Million), today we are mid-stage and end-stage advisors.?

Here are the ten areas I coach SaaS CEOs on...

I often will work with a CEO for 1-5 years – sometimes all the way through to an exit. Here are the ten areas I coach the CEOs I work with on.

Initially we use a lot of SaaS math, and then later help you recruit and retain the right executive team and investor base to achieve your eventual target outcome. The full six phase process is described below.

So you can think of Hill Canyon as a firm that helps SaaS firms scale from $1M to $50M while systematizing, professionalizing, and preparing for an exit. Hill Canyon is currently myself and junior partner, Mike Gavela who’s worked directly with me since 2015.

With each of the CEOs I work with – the very first thing I attack is the?unit economics?and the?lead acquisition channels. If we don’t have our head wrapped firmly around those – we won’t get anywhere.

While I generally work with B2B SaaS CEOs, I’m open to working with B2C SaaS companies as long as they are above $1M+ ARR. The customer acquisition process for B2C SaaS companies is very similar to the SMB experience I had at iContact. There, when we get to the outbound sales process we focus you on going after channel partners instead of direct customer acquisition.?

Let’s now go through all six phases that I work with my SaaS CEO clients.

Phase One: Calculate Unit Economics By Channel

Phase Two: Top of the Funnel Optimization

Phase Three: Conversion Optimization

Phase Four: Expanding Your Sales Team

Phase Five: Growing Existing Customer Accounts

Phase Six: Professionalizing, Systematizing, & Exiting

Phase One: Calculate Unit Economics By Channel

Step one is determining (as accurately as possible) what your CAC (All in S&M CAC), Churn, Lifespan, LTV, and Max CAC is. See my separate guide “How to Scale a SaaS Company ” for how to calculate all your unit economics.?

When we work together, we help you calculate your unit economics:?

1. For the entire business
2. For each product or market segment
3. For each channel

Once you’re able to get good data on Unit Economics by Channel & Market Segment – we help you interpret it, understand it, and then scale up.

Generally at this point we can tell at a glance which channels we’re not making full use of – which channels are profitable – which channels need to be scaled – and which channels can be pulled back.?

Some firms choose to put this data into a visible dashboard, others keep it in a spreadsheet. As long as you have it and it’s calculated monthly, you’re good.

To read the rest of this article for free, visit our blog at https://hillcanyon.substack.com/p/the-saas-growth-system-the-six-phase