February 16th, 2010 by Duane Jackson
When I started KashFlow I thought a SaaS business would be a relatively simple affair in terms of what the costs would be and where the income would come from. Things never pan out exactly as you expect.
So here I’m going to share some numbers with your from our performance for 2009 and some of our strategy.
If you’re starting or growing a SaaS business then it might be useful for you. If you’re a customer or partner then it’ll hopefully give you an insight into what we’ve been up to and what our plans are.
In 2008 we turned over around £250k and made a very small profit. We were based in a cheap office in Essex and there were only around 4-5 staff. A quick look at my blog from the beginning of 2009 shows we started the year with 2,500 customers.
We ended 2009 with well over 5,000 customers and turned over around £500k. So essentially the business doubled in size.
Despite the extra income, we didn’t make much more of a profit. There are now nearly 17 of us in the company and we’ve ditched the office in Essex and have a lovely place in central London.
Only 60% of our income in 2009 came direct from end-users that pay us monthly subscriptions for using the main accounting software.
The remaining 40% came from the partners that we work with via our Partner Programme. These are mainly accountants of which we now have over 220.
A few percentage points of the revenue is from our add-on automated PayPal accounting service.
Of the £500k we brought in throughout 2009, close to 60% went on salaries and sales commission, about 7% on rent and the remainder is made up of lots of little expenses like hardware, desks, staff training, utility bills and coffee – lots of coffee.
Our phone bill for the year was close to £8k. We have an 0800 number so we pay for all the inbound calls, but the bulk of this was actually outbound sales calls to accountancy practices.
What surprises me is how little we spent on marketing. Far less than 10% of our total expenditure. And a sizeable chunk of that was on a single exhibition.
A big part of our strategy is growing an eco-system around our accounting API. This has grown a lot in 2009. We started the year with less than 10 integrated applications and now have well over 20 with many more on the way.
Really Simple Systems CRM have just started beta testing their integration and we have some cool stuff in the works with Receipt Angel.
The only hiccup we’ve had is with our FreshBooks integration. They were understandably unimpressed with the orginal version of my blog post announcing the integration because it had a sentence that pointed out one of the obvious reasons for integrating – that you could migrate entirely from FreshBooks to KashFlow if you needed a full accounting system rather than just a great invoicing app. So they decided not to list us on their site with all of the other apps that are integrated with them.
Having other applications integrated with us brings a number of benefits. We get exposure to the customer base of the integrated app, our existing customers get more benefit and KashFlow becomes a more compelling offering for potential customers.
It also helps to ensure customers stay with us. We don’t believe in vendor lock in so make it very easy for customers to leave us with all of their data if they want to. If they’re using a number of applications that all feed accounting data back to KashFlow then it’s one less reason to leave us.
We”re continuing to add lots of new functions to our API so developers can deliver more usable products to their customers.
Our iPhone app is on the way very soon too. I promise!
We’ve quietly launched a white-label version of KashFlow already and you’ll see a couple of well known names (including a FTSE100 firm) releasing web-based accounting software this year that is actually KashFlow under the hood. We’re also working hard on the reseller channel and getting some great (poncy buzzword alert!) synergistic partnerships up and running.
We’re not currently planning on actively marketing in other countries – there’s still plenty to do in the UK market. But we’ve been approached by many companies that want to resell KashFlow in all sorts of countries from Iran to UAE and the US, Canada, New Zealand and Australia.
It’s something we originally shied away from. Localising an accounting package isn’t fun. If you’re planning a global SaaS business now go with CRM instead of accounting!
But with the necessary localisation work now done, we’re about to finalise agreements with resellers in two foreign territories.
Needless to say, we expect great things from these partnerships.
We have a good office and plenty of room to grow in to. The expensive hiring of experienced people is done too. So I’m not expecting our fixed cost to increase by much. Although a lot of our new costs were only brought in towards the end of the year, so expenditure will increase in 2010.
We may need to increase our infrastructure costs if our user base continues to grow as it has for the last few months. We now average over 60 trial sign ups every day and we’re working hard on converting those into paying customers at higher and higher rates.
With everything we have going on, I’ll be disappointed if we don’t more than double our turnover to significantly > £1m this year.
So given I expect to double income and keep expenses relatively flat – what to do with the excess money?
We’ll probably start by hiring more developers. It’s important that we continue to innovate and add the new features our customers are asking for.
We’re also already on the look out for an addition to our support team. The vast majority of our new customers come from word of mouth referrals, and this is largely down to the great job the support guys do. So investing in support staff brings in more business.
We really should also be spending a lot more on marketing. People I speak to are always surprised at how little money we actually spend on marketing considering our relatively high profile in the accounting software space.
So it’s exciting to think what we could achieve with a solid marketing plan with some money behind it. The goal is to become the default choice when it comes to accounting software for small business and startups.
I hope that this was useful to someone besides the competitors that seem to be multiplying like rabbits!
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Tags: api, eco-system, profit, receiptangel, RSS, strategy, turnover
Posted in Cloud Computing / SaaS, Marketing, Ramblings, Small Business | 11 Comments »
December 1st, 2009 by Duane Jackson
If you’re a watcher of the accounting software market, you can’t have missed the fact that Microsoft withdrew their accounting product recently. The very short notice on the withdrawal of the software, along with the payroll element being turned off left lots of customers stranded. The customer base was sold to Mamut who don’t have a great track record of looking after bought-in customer bases.
Richard Tyler at The Telegraph has picked up some interesting info from Microsofts PR firm.
Firstly the numbers:
There were 650 companies using the payroll element of the software. This was quite a neat implementation of their Software + Services strategy that I was dismissive of back in February. So the accounting software is locally installed but the Payroll calculations were done externally out in the cloud.
There were 90,000 users of the free version of the accounting software and 10,000 paying customers.
There were some seriously peed off MS customers talking to the media about how the short notice left them high and dry when it comes to paying staff over the christmas period.
Microsoft have stepped in and said it will now pay the 650 customers to use Mamuts payroll software. Good save!
Side Note: Mamut don’t seem to understand SaaS. A press release with the title “Mamut reveals SaaS service for Irish SMEs” caught my eye recently. Further inspection reveals it’s not SaaS at all. They’re just using the services of RentSoft who have technology to allow you to rent software you’d usually buy outright. RentSoft had a relationship with MYOB so I guess that’s how this came about.
Tags: Mamut, Microsoft, Payroll, Richard Tyler, telegraph
Posted in Accounting, Small Business, Technology | 3 Comments »
November 25th, 2009 by Duane Jackson
On Monday I posted a blog entry with the title SEO is no substitute for a marketing plan.
It attracted quite a few interesting comments, but I felt one of the comments deserved to be highlighted.
The below was posted by Ian Hendry from WeCanDo.BIZ.
It’s interesting to note that if you ask someone in the generation below me to ring a doorbell, they use their thumb to do it. This seems weird to me as I use my index finger. But then I haven’t been brought up using my thumbs primarily for texting; if I had then my thumb might also have become to the dominant digit.
It goes to show how new technologies can change habits in a generation. And a new generation could see Google confined to the rubbish heap.
People are now increasingly asking the crowd for answers through Facebook and Twitter rather than combing through hundreds and thousands of pages of historical content on Google.
Stats are already showing how much more time new web users are spending on social networks compared to where we’ve spent our focus.
It makes sense as availability of social networks becomes, through mobiles, ubiquitous that they also ask questions and for recommendations that way too. Why go and sift through a library of answers other people got when I can just ask my followers?
People are asking real people for help rather than depending on a bot and a database, mainly because with real people come real answers.
It’s already happening. Just take a look at the opportunities for business that we’re unearthing through our Twitter Sales Leads tool. Most of the posters of those business needs probably never thought to go to Google.
There’s a chance that depending on Google will become as shortsighted as depending on Yellow Pages seems to our generation of business folk now.
Certainly thought provoking. I intend to test the “doorbell theory” on the next few teenagers I speak to. (Game of Knock-down Ginger anyone?)
So are we currently undergoing a big change in the way we search for information? A change that will be cemented in a few years when todays teenagers join the business world?
Googles Eric Schmidt certainly seems think so. In an article on Real Business he’s quoted as saying:
It’s because of this fundamental shift towards user-generated information that people will listen more to other people than to traditional sources
Assuming it’s a given that the way we (and therefore, our customers) search for information is changing forever, there are a few questions demanding answers.
1) Will Google change quickly enough to embrace this change and retain it’s dominant position? History says not.
2) If not, what new companies are going to rise to the top of the getting-eyes-to-your-site pile? Odds are there’s a sleeping giant in our midst already.
3) How do we, as business owners with products and services to promote, capitalise on this change? Answering this might help answer #2
Tags: facebook, future, Google, search, Twitter, wecandobiz
Posted in Small Business, Technology | 2 Comments »
November 23rd, 2009 by Duane Jackson
After the Global Entrepreneurship Week launch event last Monday I went along to the IoD for the final of The Pitch. Think Dragons Den without the TV cameras.
It was an entertaining afternoon with 6 businesses pitching for a prize package worth £50,000, Anthony Lau, Founder of Cyclehoop was crowned the winner.
One thing that did worry me was the finalists response when asked about their marketing plan. For some of them their entire marketing plan could be summed up in one word: Google. “If you search for x we’re number one on Google”.
It’s something I see way too often. Relying on natural traffic from Google for your sales is a very precarious position to be in. Google can change it’s algorithm overnight and you can drop from page 1 to page 100 – effectively putting you out of business.
Whilst free traffic (as opposed to paid-for Adwords) is highly desirable – and we certainly do well from it ourselves – you should never rely on it as your primary source of new business.
If you’re ranking well now then great – but make sure you use the revenue generated by that traffic to implement a marketing plan so that you’re not so dependent on one source for your livelihood.
What’s almost as worrying is the judges apparent willingness to accept “Google” as an acceptable response to “What’s your marketing plan?”.
It isn’t.
Tags: GEW, Marketing, seo, The Pitch
Posted in Ramblings, Small Business | 12 Comments »
November 17th, 2009 by Duane Jackson
Yesterday was the first day of Global Entreprenurship Week - a global initiative to promote entrepreneurship.
We’re involved in a couple of ways.
Firstly I’m a Young Ambassador (emphasis on the “young” please!) for Enterprise UK, the government-funded agency at the center of it all.
Secondly, we’ve donated £200k of accounting software to them to provide to startup businesses around the UK.
The launch event took place yesterday at the British Library with a conference on entrepreneurship. Yes, it sounds awfully dull but actually it was a very interesting morning with a great line up of speakers.
There was one point made that really grabbed my attention. There was a lot of talk about what government can do to encourage startups. There were some valid suggestions such as lowering tax for startups and payroll costs for your first few staff.
Peter Jones of Dragons’ Den fame got slightly irritated and asked what government has to do with it. The point he was making is that if you’re going to start a business, you’re going to start a business. With or without help from the government. People need to take responsibility for their own lives and not depend on the government. His comments received spontaneous applause from everyone in the audience, myself included.
You do have to take control of your own life and make things happen – no one, least of all the government – is going to do it for you.
David Wei, CEO of Alibaba.com also spoke at the event. He attributes a lot of the entrepreneurial activity coming out of China to the lack of a “safety net”. By which I’m assuming he means the welfare system we have here in the UK. So in China if you have no way of making a living you either embark on entrepreneurial activity of some sort, or you starve. Simple as that.
I didn’t miss the irony of the fact that these comments were coming from an event organised by a government funded group.
So does the government have any part to play in encouraging startups? Do they cause more problems than they solve by putting in place a safety net?
I’m not advocating that we should entirely scrap the welfare system in the UK in favour of the harsh reality of life in China. But it’s certainly food for thought.
Tags: Dragons, GEW, Global Entreprenurship Week, Peter Jones, startups
Posted in Ramblings, Small Business | 8 Comments »
November 2nd, 2009 by Duane Jackson
One of the blogs I read quite often is JoelOnSoftware by Joel Spolsky.
Joel and his blog are a bit of a legend in the software startup space and is a must-read for anyone building a software business.
A recent post there with the title “Figuring our what your company is all about“ caught my eye. Specifically a quote he had on there:
“Kathy Sierra taught me that if you can’t explain your mission in the form, ‘We help $TYPE_OF_PERSON be awesome at $THING,’ you are not going to have passionate users. What’s your tagline? Can you fit it into that template?”
That’s what’s often refered to as an “elevator pitch“. You should be able to sum up what you do in one sentence. That applies to all businesses, not just those in software.
So for us at KashFlow it’d be “We help owners of small businesses be awesome at doing their bookkeeping and accounting”.
So here’s an open invite for you to spam my blog with your elevator pitches using the comment section below.
(I reserve the right to delete comments from competitors, especially if your pitch is better than mine!)
Tags: Elevator Pitch, JoelOnSoftware
Posted in Ramblings, Small Business | 29 Comments »
October 21st, 2009 by Duane Jackson
If you’re building a business that uses a website to sell a product/service or to collect information from visitors then you’ve probably found out that getting people to your website is just the first step in a long process.
Once they’re on your site you need to make sure they do what you want. That might be buying a widget, subscribing to your mailing list or – as in our case – registering to try the software.
For us there’s a further step – converting the trialist to a paying customer, but we’ll leave the detailed discussion of that for another time.
So once you have some traffic coming to your website the next thing you need to do is find out how many of them are doing what you want them to do – “converting” – and then work on improving that conversion ratio.
Initially we started using a free service from Google called Google Analytics. By putting a small piece of javascript on all of your web pages you can get some useful insights into where your website visitors come from and what they do once on your site. You can then set up numerous “Goals” and measure how many people complete those goals. A goal being the desired action such as buying or registering.
You can also measure effectiveness of what Google call a “funnel”. A funnel is usually a goal that consists of a number of steps/pages.
So for us we measured how many people go to our registration page and then how may of those actually complete the registration page. It turned out that of everyone that visited our registration page, only 45% of them actually went on to complete it. So over half of everyone that looked at our registration page sailed off into the sunset never to be seen again.
We’ve managed to gradually improve that to almost 70% by trying a few different things.
The free e-book never made much of a difference. It was 2) and especially 3) that made the big difference.
With the registration funnel now converting at a respectable level, the next thing we had to do was improve on the number of website visitors that went into that funnel – that is, actually go to the registration page.
At first we changed the headline and/or other elements on our homepage and watched Google Analytics to see what happens to the overall Goal conversion rates after the change. The problem with this approach is that there are often too many other factors that interfere with the experiment.
What we really needed to do was a split-test. In a split test you test two pages side-by-side at the same time. Half of your website visitors see one headline and the other half see another headline. You can then measure them against each other without other factors being involved.
Google Analytics has nothing to help here but a different free tool from Google does, enter Website Optimizer.
There are two options. A simple A/B test and a more complicated Mulitvariate experiment. We went with the former.
We created two versions of our home page with just one difference – the headline. Our original said “Easy to use, jargon free Accounting Software” and our alternative page said “The easier to use alternative to Sage and Quickbooks”. Website Optimiser then led us through setting it all up.
All you need to do is paste some javascript code into the two pages and on your conversion page (for us, that’s the page you see once you’ve completed the registration). Google takes care of the rest.
Now a large dose of patience is needed. You need a high volume of traffic and conversions to get a meaningful result.
In the above graph you have time on the x-axis and conversion ratio on the y-axis. It shows that over time the new page (orange) consistently outperforms the original (blue) by an average of 20%.
Interestingly this also demonstrates what I was just saying about external factors. There was a general upwards trend throughout the month on both pages. If we’d just switched from one page to the other and looked at the Goals in Google Analytics we’d have concluded that there was a larger improvement than there actually was.
So we’ve now dumped the original headline and adopted the alternative headline instead. We’ll now start experimenting with other aspects of the page, or maybe other headlines to see just how high we can push the conversion ratios.
Simultaneously we’ll continue working on improving the conversions of trialists into paying customers, a ratio we’ve improved by 100% already so far this year.
I’m really pleased we’ve found the time and tools to do this. What really irks me is that we didn’t do this ages ago. I could sit down and calculate what our revenues and customer numbers would look like if we improved conversions like this years ago – but I’m scared to.
Every day that you’re not actively working on improving your conversion ratios is a day of lost opportunities.
Tags: conversions, google analytics, tools, website optimizer
Posted in Small Business, Technology | 12 Comments »
October 12th, 2009 by Duane Jackson
In 2007 KashFlow won the Software Satisfaction Awards in the Web-based Accounting Software category. Last year we were shortlisted wih Sage, Quickbooks and MYOB in the main Small Business Accounting Software – and amazingly, we won.
Last week at a black-tie dinner at the Royal Courts of Justice this years winners were announced. KashFlow won both the Web-Based Accounting Software category and the main Small Business Accounting Software category.
Rather then a panel of “experts”, the awards are voted on by actual customers. With over 8,000 respondents, this was one of the biggest ever individual pieces of business opinion research ever conducted in the UK.
It was you, our customers, that voted for us to win these awards – so a huge “thank you” to everyone that voted for us.
Tags: awards, ssa
Posted in Small Business, Technology | 5 Comments »
September 8th, 2009 by Duane Jackson
It seems SagePay have been having some technical problems over the past day or so and the problems are ongoing and varied.
If you run a traditional ecommerce website and use SagePay (formerly ProTX) as your payment gateway then potential customers will have been getting to your checkout page, have problems paying and quickly run off to your competitors.
It’s bad enough when problems like this last an hour or two - but 26 hours and counting? I’d be livid!
We moved from SagePay when Sage bought them a while ago – we didn’t want a competitor knowing all of our financials and we also found their support to be less than satisfactory.
We move to IridiumCorp and haven’t looked back since. Their API was great to work with, the support has been top-notch and they even got us a new merchant account that is saving us thousands every year on transaction fees.
Iridium are capitalising on the growing disattisfaction with SagePay and making it easy to move to them. They’ll essentially give you free service for the remainder of your contract with Sage. So you don’t need to worry about waiting until your Sage contract ends.
Enquire now to see what they can do for you – do ask them to look at your merchant account fees too as they could save you money there.
Update: We’ve been affected by this too now. Our VOIP provider uses SagePay, our account ran out of credit and due to the SagePay problems they didn’t automatically top-up our account. So no one in the office could make any calls – including the sales people. Serves me right for being so smug!
Tags: iridiumcorp, protx, Sage, sagepay
Posted in Small Business, Technology | 7 Comments »
September 7th, 2009 by Duane Jackson
With all the hype surrounding Twitter at the moment, it’s easy for people to overlook some of the other very useful sites out there. Especially if you’re new to business and/or social networking
One I’m determined to start making more use of is LinkedIn. They have this to say about themselves:
LinkedIn has over 46 million members in over 200 countries and territories around the world. A new member joins LinkedIn approximately every second, and about half of our members are outside the U.S. LinkedIn exists to help you make better use of your professional network and help the people you trust in return. Our mission is to connect the world’s professionals to make them more productive and successful
They have a video on their “about us” page that is a little bit waffly for my liking, but it gives a good idea of what it’s all about.
The key thing for me about LinkedIn is finding out the best way to contact someone I don’t know.
Let’s say I want to speak to someone at BigCo about a potential business deal. I can search LinkedIn for people from BigCo and see if I know someone that knows someone there – and if I do then I can request an introduction. It takes things to the third degree too – so whilst no one I know happens to know anyone at BigCo – they may know someone that does and I can get introduced through that path. Nice.
It does suffer a fatal flaw like Twitter, Facebook, etc in that it shows how many ‘connections’ (replace with ‘friends’, ‘followers’, etc) you have. So some people add connections to as many people as possible, even if they’ve hardly ever dealt with the person, just to inflate their egos and look important. Not much use when it comes to an introduction.
I’d be interested in hearing from anyone who has taken out one of the “premium” paid-for subscriptions from LinkedIn and found it worhtwhile. Their site isn’t doing a great job of selling me onthe benefits of it.
If you’re a web developer looking for a start-up idea, you could take the LinkedIn concept and extend it to include degrees of trust. I started a discussion about this 3 years ago on UKBF. Someone even kindly started working on the maths. I still think it’s a goer.
UKBF is a very good site to get involved with if you’re interested in networking with others in business.
4Networking seems to really be going places, especially with the off-line meetups they organise. I retract my comments from when they first started, calling them “4Not-working” : )
WeCanDoBiz seems to be more slanted towards referals and leads than networking, but still worth checking out.
Ecademy is an odd one. I never got anywhere with it personally and I found it to be full of life coaches, emotional millionaires and people who wear cardigans (nothing against life coaches or cardigan wearers in moderation!) But I know some people who swear by it.
Any other business networking sites that you can recommend?
Tags: ecademy, linkedin, networking, Twitter, UKBF, wecandobiz
Posted in Small Business, Technology | 8 Comments »
