To keep your small business budget clutter-free, spring-clean your SaaS overhead.
The proliferation of subscription-based Software as a service (SaaS) in recent years has opened up countless affordable services for efficient small business operations, but once your collection of services grows, the monthly total can add up to a big chunk of cash. A regular audit of your services, like we have done early this year at EPW Small Business Law, likely will reveal some clutter in the form of small (or sometimes not so small) monthly payments that add up over time.
Every type of business is subject to “budget creep.”
While owning and operating a web based business vs. a brick-and-mortar store usually means drastically reduced overhead expenses, web based businesses still have overhead. Overhead includes all non-labor expenses required to operate your business, e.g., administrative costs and marketing costs. A SaaS overhead audit may be particularly revelatory for virtual businesses that may not think in terms of pruning down overhead costs.
The spectrum of software services that a small business may use is wide. At EPW, we have 5 major categories, each with approximately 6 services. Here is the major category breakdown:
- Cash (accounting, bookkeeping, merchant accounts)
- Clients (CRM, database, engagement platforms, legal software, task management)
- Marketing (email marketing, social media management)
- People (in-house communications, payroll, timesheets)
- Tech (web hosting, backup services)
Reviewing services is similar to cleaning a closet; there is always that shirt you are used to having around, but really there is no good reason to hold on to it.
Or maybe there is a dress that was a good investment at first, but it has since lost its luster. For EPW, an example is our switch from Rackspace web hosting ($150/month) to WP Engine ($29/month). We used Rackspace for many years because of its historical reliability, great customer service, and capacity to scale to infinity. Also, there was a time when pricey managed servers were the only other option, so when cloud hosting came along at $150/month, it seemed like a bargain. After a surprisingly negative experience with Rackspace, when we had some major downtime and unsatisfactory customer service, our decision to switch and save became straightforward.
Simple steps to keeping your SaaS overhead lean:
- Make a list of all your services. We have an ongoing Google sheet with services organized by category and monthly cost for easy totaling.
- Identify any services that can be eliminated altogether. The services may have been useful at one point, but your business has evolved, so maybe it is time to let them go.
- Shop around for a better deal on an indispensable service. You may find equivalent or better quality service for a much better price.
Our monthly budget for SaaS is a bit over $1,000 and we are planning to get below that mark as we plan to reduce our biggest SaaS cost–legal research. A recent post by Chris Ronzio — What I Spend on Being Efficient — on the blog of one of our favorite longstanding services, Bench Accounting, also indicates a monthly SaaS overhead of around $1,000. This was good confirmation for us, but clearly the range for different businesses may vary dramatically, and the process of trimming the overhead depends on what is essential and what is dispensable for your business.