When you are first starting up, it is natural to want to get your ducks in a row. Setting up your business, your bank account, filing for IP on your special sauce gets crossed off the list, and then you start pitching your wares.
The challenge in that ‘hurry up and wait for revenue’ stage is not spending your revenue before it comes in by subscribing to software you don’t need.
When I started my second business in 2007, there weren’t the number of seemingly invaluable SaaS applications for me to subscribe to. And I’m thankful for that.
The most important software you’ll invest in—accounting & payroll
In 2007, I bought a copy of Quickbooks—yes, a physical copy, in a box for $140. I rode that software hard for four years with a few nominal annual upgrades. Now I spend over $600/month on accounting software, and there are many days I wonder why I can’t still use my Quickbooks 2007 software.
When in startup mode, you don’t need multiple user licenses which can be a killer with SaaS applications. Don’t invest ahead of what you need.
Sage, Quickbooks, Xero, Zoho, Freshbooks and other accounting packages can get you what you need for between $10 and $25 a month. Save the enterprise software for when you have an enterprise.
I was recently at a Founder Institute event where someone was plugging free accounting software. I’m too old school to think this is a good idea. You don’t know how secure the system is or who is mining your financials.
Whichever accounting program you start with will have a payroll option. Pay attention to how these payroll packages price. If you’re going to be running payroll frequently for many hourly workers, you may not want to pay per check, per pay run. See if you can find a payroll service with a monthly minimum.
If you don’t anticipate paying more than 2 or 3 people for a year or more, your CPA may be able to handle your payroll and may save you hundreds of dollars. In startup mode, hundreds of dollars in savings can make a big difference. It is all of your profits in the beginning so do not give up a penny that you don’t have to.
Do you really need HR software?
Once you’ve got accounting in place, and you’re still waiting for the revenue to come in, you may start planning to keep your people connected. That is a fine idea as long as you’re not subscribing to some application that will charge you $10/month per user for information you could glean by talking to your team.
Besides timekeeping and goal-setting, which can be done in Excel or a Google doc, most of what HR software will do for you can wait until you’ve grown over 5 employees.
Pipeline baby
In your early days, the most valuable analytics you can have are around your sales opportunities. There are free applications for the pipeline, but again, who is using the data?
The recent excitement with Facebook points out why you should be careful about who is poking around in (and possibly sharing) your data. Your business data should be as important as your personal data.
Capterra has a good overview of applications you can consider for lead management. Again, if you have fewer clients and prospects than the minimum SaaS seat license, you likely don't need software to help you track your activity.
Watch out for plug-ins you don’t need
From time to time it is interesting to see what plug-ins are available with your critical apps. You might come up with a better way to track time or share information with your team.
Don’t try things because they are cool, especially when they make it so easy to subscribe.
Figure out what kind of tracking, sharing, and insights are critical to what you are doing, and find only the ones that help you do it simply at a reasonable cost.
Software as a service is fantastic. But only when it is software or a service that you need and can’t do for free.
