Do your small business clients know what their recurring revenue is? Probably not, yet that’s almost certainly where a large portion of their organization’s value lies.
The problem: Crunching that kind of data can be a headache and most small businesses don’t do it. And if they do, it typically is compiled manually in Excel, with a risk that the information can get rapidly obsolete without routine updates.
This is where Saasable, one of the 2021 companies selected by the CPA.com/Association of International Certified Professional Accountants Startup Accelerator, comes in. The company has developed a tool that integrates into accounting software packages such as QuickBooks and creates real-time data on monthly recurring revenue, annual recurring revenue, customer acquisition costs, and the like.
This data can help companies identify trends, develop metrics, monitor churn rates and have a better overall understanding of their business, according to Michael Ly, one of Saasable’s cofounders, who recently sat down for a LinkedIn Live session with CPA.com Senior Director Kacee Johnson. Identifying strong, recurring revenue streams is also a key to higher valuations for businesses looking to grow and gain access to capital, he said.
More and more companies are turning to subscription-based models because customer acquisition costs can be prohibitive, no matter what a firm’s business model might be. That’s not hard to understand – it’s easier and cheaper to hang on to what you’ve already won. Still, Ly recalled being surprised recently to see car washes in Arizona offering monthly fixed fees to customers. The same applies to other unlikely categories, including professional services.
“How can you incentivize and create an experience or product that a customer always would want to repeat and not have to think about buying one at a time?” Ly said. “That’s the idea.”
Ly said the Startup Accelerator has already given his company deeper insight into different software-buying habits, firm transformation strategies, and diversity of business models within the accounting profession. The lessons Saasable and other startup accelerators have learned will be featured in a showcase session at this year’s AICPA & CIMA ENGAGE conference, which will be held July 26-28 in Las Vegas and virtually.
To learn more about the accelerator program, click here.
