# The Golden Section Playbook — complete corpus

63 plays and 161 mistakes for building a B2B vertical SaaS company,
in one file.

**Source:** https://github.com/golden-section-tx/playbook
**Attribution:** Golden Section — https://goldensection.com
**License:** Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).
You may share and adapt this material, including commercially, provided you give
credit to Golden Section and license your adaptations under the same terms.
The Golden Section name, logo and marks are not licensed. For alternative terms,
ask: https://github.com/golden-section-tx/playbook/issues

Generated by `scripts/build.mjs` — do not edit.

---

# Part I — The mistakes

## Mistake 1 · Hiring without background checks

`Operations`

Trust but verify… especially when equity is involved.

Prevented by: Employee Agreement.

## Mistake 2 · Letting logic get into the database

`Development`

Never let tech put logic in the database.

Prevented by: Database Selection.

## Mistake 3 · Hiring on the cheap and expecting expertise

`Operations`

There are no ‘deals’ where people are concerned. Don’t hire cheap and expect expertise.

## Mistake 4 · Letting customers dictate the terms

`Sales & Marketing`

Customers pay for value. Don’t let them bully you on terms.

Prevented by: Pricing Matrix, Contract Playbook.

## Mistake 5 · Delivering pricing before value

`Sales & Marketing`

Hearing price before value means selling a commodity.

Prevented by: Value Proposition & Customer ROI, Enterprise Sales Process.

## Mistake 6 · Demoing early in the sales process

`Sales & Marketing`

Customers stay in the sales process for the demo… wait

Prevented by: Sales Philosophy, Enterprise Sales Process.

## Mistake 7 · Not qualifying sales opportunities

`Sales & Marketing`

Blowing valuable time on bad deals wastes money.

Prevented by: Enterprise Sales Process, Pipeline Management & Review.

## Mistake 8 · No meeting cadence with sales

`Sales & Marketing`

No accountability in sales means no sales.

Prevented by: KPI & Strategic Meetings, Pipeline Management & Review.

## Mistake 9 · Building for single tenancy

`Development`

Don't make the mistake of separate databases for separate clients.

Prevented by: Database Selection, Cloud & Server Infrastructure.

## Mistake 10 · Selling phantom product

`Sales & Marketing`

Only sell what you have, stay away from betting on the future.

Prevented by: Sales Philosophy, Product Roadmap Process.

## Mistake 11 · Building without customer knowledge

`Customers`

You better know the problem well to succeed. Better yet, live the problem first.

Prevented by: Customer Segmentation, Buyer Persona.

## Mistake 12 · Wrong programing language

`Development`

Java doesn't go with MS SQL... make sure your stack makes sense.

Prevented by: Database Selection, Application Code & Front End.

## Mistake 13 · Hiring sales for rolodex

`Sales & Marketing`

Rolodex sales people never deliver. Don’t do it.

Prevented by: Sales Philosophy, Sales Org Chart.

## Mistake 14 · Hiring cheap and betting on training

`Operations`

You need experience in building a company. Training is a luxury of big firms. Not small ones.

Prevented by: Training Process.

## Mistake 15 · Focusing on input cost rather than output cost

`Operations · Development · Sales & Marketing`

You pay for output. Don’t measure what’s easy; evaluate what is important.

Prevented by: Unit Economics, Sales Efficiency Ratio.

## Mistake 16 · Running out of cash

`Executive`

Self-explanatory... don’t do it.

Prevented by: Budget Creation, Cash Flow Forecast.

## Mistake 17 · Giving away equity without vesting

`Executive`

Nothing works out the way you think it will. Protect your future self.

Prevented by: Employee Agreement.

## Mistake 18 · Messing up your cap table

`Executive`

Keep it simple silly...

## Mistake 19 · Not communicating with investors

`Executive`

If you don't, then you might as well shut down... keep investors well informed and not only positive stuff.

Prevented by: KPI Dashboard Creation, Board of Directors.

## Mistake 20 · Hip-shot product pricing

`Sales & Marketing · Executive`

Pricing should ALWAYS be informed by customer value. Pricing in a vacuum is either too much or too little or too confusing...

Prevented by: Value Proposition & Customer ROI, Pricing Matrix.

## Mistake 21 · Founder playing ‘lawyer’ on contracts

`Executive`

Don’t play lawyer. Get a good one, keep them focused and make sure your contracts are well designed for their purpose.

Prevented by: Contract Playbook.

## Mistake 22 · No IP protection with employees or contractors

`Executive`

Yikes... not good. Get a lawyer, get that fixed asap. If you need to pay someone to get it signed, then do it.

Prevented by: Employee Agreement, IP & Confidentiality.

## Mistake 23 · Not paying taxes

`Executive`

Uncle Sam is always going to get his...

Prevented by: Audited Financials.

## Mistake 24 · No documentation in code

`Development`

Bad tech process and poor documentation means no scaling potential. You don't want this to hold you back.

Prevented by: Code Level Documentation.

## Mistake 25 · Breaking tech sprints

`Development`

It is tempting to break a sprint and fit one more thing in... it kills your process. Never do it. Not for the biggest customer or the biggest problem.

Prevented by: Product Engineering Process.

## Mistake 26 · All in-house tech team

`Development`

In-house is functionally not possible (or not reasonable) at the early stage. Get a good partner and develop a relationship, even if only for backstop on turnover.

Prevented by: Product Engineering Process, Dev Org Chart.

## Mistake 27 · Overpaying for tech resources

`Executive`

Focus on the cost and quality of the output... its harder to measure but ultimately the right thing to measure.

Prevented by: Dev Org Chart.

## Mistake 28 · Non-technical people hiring technical people

`Executive`

Vetting technical talent is important and nearly impossible without technical know-how.

Prevented by: Dev Org Chart.

## Mistake 29 · Obsession with full-stack engineers

`Executive · Development`

Often this is because the team doesn't like the rigor of proper process and wants to move ‘faster.’ This doesn't scale.

Prevented by: Product Engineering Process, Dev Org Chart.

## Mistake 30 · Outsourcing core product with off the shelf

`Executive · Development`

Don't outsource core functions. If you productize an off the shelf product, you aren't a software company, you are a reseller.

Prevented by: Product Management Process, Product Engineering Process.

## Mistake 31 · Not engineering for scale

`Development`

Scale requires second and third order thinking. Don't be myopic. Think about the future.

Prevented by: Product Engineering Process, Cloud & Server Infrastructure.

## Mistake 32 · Hiring friends or family

`Executive`

Be careful here. You company needs different skills as it scales. If you can't fire someone who isn't a fit anymore then you have a liability that will never go away.

Prevented by: Employee Agreement.

## Mistake 33 · Overpaying for talent... underpaying for talent

`Executive`

Talent is worth what it is worth. If you need a heavy hitter, then you need to be prepared to pay for it. There are no ‘deals’ in this space. Be careful about paying more than market but be fearful about paying under it.

Prevented by: Employee Agreement.

## Mistake 34 · Not aligning interests

`Executive`

People are self-interested. Never forget that.

Prevented by: Employee Agreement, Sales Compensation Plan.

## Mistake 35 · Hasty commission structure

`Executive · Sales & Marketing`

Commission structures are semi-permanent in nature. It is hard to walk one back. Think through self-interest and through your scaling strategy.

Prevented by: Sales Compensation Plan.

## Mistake 36 · No clear roles or accountability

`Executive`

Something goes wrong, someone needs to account for it. Don't tolerate ambiguity here.

Prevented by: Executive Execution, KPI & Strategic Meetings.

## Mistake 37 · No meetings... no minutes

`Executive`

Minutes prove meetings and give accountability for the white space on an org chart. Don't skip them.

Prevented by: KPI & Strategic Meetings.

## Mistake 38 · No agendas for meetings

`Executive`

Meetings without an agenda might as well be a brunch. Nothing will get done.

Prevented by: KPI & Strategic Meetings.

## Mistake 39 · No employee onboarding

`Executive`

Employees are a huge cost center. In the early days, each one could represent 10-20% cost increase to the firm. You need productivity, and you only get it with intense onboarding.

Prevented by: Training Process.

## Mistake 40 · Not vetting investors

`Executive`

One bad tiny investor can tank a business. Good investors want to be vetted, bad ones don't. Do your diligence.

## Mistake 41 · No legal review on investor docs

`Executive`

Hasty investor legal docs are a time bomb. Don't tolerate special deals or last-minute edits. Keep legal engaged.

## Mistake 42 · Not managing investor expectations

`Executive`

Bad expectations can box you into a set of bad choices. Keep investors in the loop but be careful about future expectations.

Prevented by: Board of Directors.

## Mistake 43 · Horizontally scaling

`Executive`

Adjacent markets are equivalent to a new startup. Keep building the one you’ve already got.

Prevented by: Define the Mission, Go-to-Market Strategy.

## Mistake 44 · Buying a trade show booth... most times

`Sales & Marketing`

Trade shows can be valuable. Start small though. Be careful about expecting it to be a one-trick pony that will carry your process.

Prevented by: Go-to-Market Strategy, Sales Funnel Creation.

## Mistake 45 · Scaling hiring without management

`Sales & Marketing`

Inexperienced hires need management. The less experience, the more management is needed. Make sure your org chart has good management in place before hiring.

Prevented by: Sales Org Chart, Sales Metrics by FTE/Role/Team.

## Mistake 46 · Letting sales run product

`Executive`

Sales is an input to product management not the controller of it.

Prevented by: Product Management Process.

## Mistake 47 · Letting dev run product

`Executive`

Dev executes the product vision, it is not the controller of it.

Prevented by: Product Management Process.

## Mistake 48 · Making the product roadmap a trivial doc

`Executive`

The roadmap is the canvas that all constituents in the company fight over to get their vision fulfilled. This is vital to building the right thing.

Prevented by: Product Roadmap Process.

## Mistake 49 · Promising delivery dates to customers

`Sales & Marketing · Operations`

The roadmap is not a customer facing document. It is subject to change and negotiation. Don't box in your team by making one version fixed.

Prevented by: Contract Playbook, Product Roadmap Process.

## Mistake 50 · Unstructured implementations

`Operations`

Implementations are vital to customers experiencing the promised value. They need to be meticulously architected.

Prevented by: Implementation Project Lifecycle.

## Mistake 51 · Hourly not to exceed $x contracts

`Executive`

Never agree to an hourly-not-to-exceed contract. It's a losing outcome regardless.

Prevented by: Contract Playbook.

## Mistake 52 · Fuzzy requirements

`Sales & Marketing · Operations`

It is easy to get exhausted in the sales or account management process and accept bad requirements. Never close the door on discovery until Dev is satisfied. It will always result in a bad experience.

Prevented by: Enterprise Sales Process, Implementation Project Lifecycle.

## Mistake 53 · Bad scoping

`Sales & Marketing · Operations`

Similar to fuzzy requirements; make sure your scope is deliverable, demonstrable, and approved by the decision-maker.

Prevented by: Implementation Project Lifecycle.

## Mistake 54 · Not vetting strategic decisions with knowledgeable counsel

`Executive`

Somethings can be decided quickly, some not. Make sure to identify strategic decisions from tactical and spend time with wise counsel.

Prevented by: Board of Directors.

## Mistake 55 · Betting a channel partner will sell for you

`Executive · Sales & Marketing`

Channel partners are enticing. But selling your product is your responsibility. Channels are distribution mechanisms they aren't distribution itself.

Prevented by: Channel Partnerships.

## Mistake 56 · Betting customers will come if you build it

`Executive`

Start with value. A product without value isn't anything. And value without distribution isn't known. You need both.

Prevented by: Go-to-Market Strategy, Value Proposition & Customer ROI.

## Mistake 57 · Not benchmarking results

`Executive`

How do you know where you are if you don't have a map? Benchmark your company and keep track. The harder to measure, the more valuable the practice.

Prevented by: KPI Dashboard Creation, SaaS Metrics.

## Mistake 58 · Not doing research on a customer before meeting

`Sales & Marketing`

Never ‘learn’ something from a question that could have been answered through research. This shows ignorance.

Prevented by: Buyer Persona, Enterprise Sales Process.

## Mistake 59 · No customer support

`Operations`

Obvious... but it happens a lot.

Prevented by: Support Ticket System.

## Mistake 60 · Not using a support ticket system

`Operations`

Support ticket systems are mandatory.

Prevented by: Support Ticket System.

## Mistake 61 · Not having a knowledge base for customer issues

`Operations`

Don't keep relearning the same issue or reteaching the same solution.

Prevented by: Support Ticket System, Product Level Documentation.

## Mistake 62 · Not doing research on an investor before meeting

`Executive`

Show respect by going into a meeting as prepared as possible.

## Mistake 63 · Building your own support tools

`Development`

Sure, build some support tools, but leverage what you can; especially for support ticket or dev ops.

Prevented by: Support Ticket System.

## Mistake 64 · Customer favorable SLA when not an absolute requirement

`Sales & Marketing`

Lead with value; SLAs aren't value. Don't bring it up unless necessary. Have a ‘standard’ when asked.

Prevented by: SLA Hosting & Support.

## Mistake 65 · Stingy on equity

`Executive`

Equity is how you get good talent for less cash. Don't be stingy. Be smart and put proper vesting in place.

Prevented by: Employee Agreement.

## Mistake 66 · Underfunding product

`Executive`

Your product needs capital. Don't underestimate the cost to build a revenue-commanding product.

Prevented by: Budget Creation, Product Roadmap Process.

## Mistake 67 · Assuming the tech will speak for itself

`Sales & Marketing`

Value sells not tech. You need to sell the value.

Prevented by: Value Proposition & Customer ROI, Sales Deck.

## Mistake 68 · Not accounting for the pain of change in customer behavior

`Sales & Marketing`

Changing is painful, it's a cost beyond the price of your product. The value you provide needs to overcome switching costs as well as your price point.

Prevented by: Value Proposition & Customer ROI, Adoption Process.

## Mistake 69 · Underestimating the effort of fundraising

`Executive`

Fundraising is hard... selling to customers is easier. Raise money from customers first. Double your timeline for raising from investors.

Prevented by: Cash Flow Forecast.

## Mistake 70 · Mistaking communication brevity for clarity

`Executive`

High stakes tasks need clear communication and clear communication takes time. Get it right.

## Mistake 71 · No active data room

`Executive`

A lack of an organized data room results in months long delays for new funding. Keep your systems organized, your deck fresh, and your cash flow managed.

Prevented by: Audited Financials, Contract Register.

## Mistake 72 · Leaving finances to the numbers people

`Executive`

Founders, you are responsible for your cash needs and spends. You can outsource the tactics, but don't outsource the responsibility.

Prevented by: Cash Flow Forecast, P&L Explained.

## Mistake 73 · Thinking linearly when experiencing exponential forces

`Executive`

Exponential growth consumes resources exponentially. We often think linearly. This can be a problem. If you are wrong twice the same direction, assess the dynamic for exponential factors.

Prevented by: Cash Flow Forecast, Unit Economics.

## Mistake 74 · Banking on exponential forces

`Executive`

Exponential growth is hard. Don't bank on it.

Prevented by: Budget Creation, Unit Economics.

## Mistake 75 · Counting deals as won before docs are signed

`Sales & Marketing`

It's not done until it's done. Don't let your team socialize unsigned deals as done. At best it’s silly, at worst it hides the true state of the company and can result in devastation when funds run out.

Prevented by: Pipeline Management & Review.

## Mistake 76 · Letting customers drop CYA comments in meetings

`Sales & Marketing · Executive`

CYA comments (those that are designed to be referenced back to in a later date) are terrible. Create an environment of written specifications and changes only. Be clear on this.

Prevented by: Account Management Process, Contract Playbook.

## Mistake 77 · Ignoring performance reviews

`Executive`

Performance reviews are mandatory. They feel weird early on when everyone knows everyone, but get in the habit of doing this and it keeps accounts short and develops a high-performance culture.

Prevented by: KPI & Strategic Meetings.

## Mistake 78 · Ending up in win/lose ever

`Executive · Sales & Marketing · Vendors`

Look for win-win. If you are being forced to do lose/win, walk away, it's not worth it. Alternatively if you see your team pushing for win/lose address that immediately.

Prevented by: Sales Philosophy.

## Mistake 79 · Giving extra-contractual concessions

`Executive · Sales & Marketing`

Sometimes it pays to be nice and give a concession. Be careful though to document it and ask for something in return. All concessions should be win-win.

Prevented by: Account Management Process, Contract Playbook.

## Mistake 80 · Editing the MSA for a customer

`Executive · Sales & Marketing`

Be careful, and wary, of edits to the MSA. You need to keep your contracts clean. A bunch of one-offs (unless you are $500K+ per customer) will bite you in the end.

Prevented by: Contract Playbook.

## Mistake 81 · Too much reliance on outsourcing

`Executive · Operations · Sales & Marketing`

There are great reasons to outsource like fractional expertise and scaling up tactical execution. Strategic oversight should never be outsourced. As you grow, you need more oversight.

## Mistake 82 · Don't let small investors overwhelm you or your team

`Executive`

Be good to your investors, but be careful to set boundaries. If things get contentious, focus on your large investors and, if necessary, ignore the angry small ones (the angry ones are always small)

## Mistake 83 · Don't let customers overwhelm you or your team

`Executive · Sales & Marketing · Operations`

Vocal customers can be a good thing. But when the relationship gets strained, focus on large customers and, if necessary, fire ones that aren't operating as partners.

Prevented by: Account Management Process, Churn Identification Process.

## Mistake 84 · Apologize for poor performance, but don't own what you don't own

`Executive · Customers`

Own what you can, but put boundaries on frustrated customers and don't own what you aren't responsible for.

Prevented by: Account Management Process, Implementation Hours Tracking.

## Mistake 85 · Ignoring rev-rec

`Executive`

Get a rev rec policy and make sure it is GAAP. Keep good records.

Prevented by: P&L Explained, ARR Schedule.

## Mistake 86 · Not hard-closing financial statements

`Executive`

Hard-close financial statements and don't reopen for edits. Changing historical financials is a sure-fire way to destroy trust with investors.

Prevented by: Audited Financials, P&L Explained.

## Mistake 87 · Bluffing

`Executive · Sales & Marketing · Vendors · Operations`

Don't bluff... ever. It never works.

Prevented by: Sales Philosophy.

## Mistake 88 · No customer contract register

`Executive`

Keep all customer contracts in a register with all relevant information.

Prevented by: Contract Register.

## Mistake 89 · Poor customer contract management

`Executive · Sales & Marketing · Customers`

Keep all customer contracts organized and versioned in the final executed form.

Prevented by: Contract Register, Contract Playbook.

## Mistake 90 · No contractual teeth

`Executive`

Your contracts should be worth defending. Poor remedies in the contract results in a lack of adherence to the contract by counterparties. If a counterparty fails to conform, you need a monetary reason to pursue it.

Prevented by: Contract Playbook.

## Mistake 91 · Engaging in brinkmanship

`Executive · Customers`

Don't engage in brinkmanship. Look for win-win. It never wins to plan to loose.

Prevented by: Sales Philosophy, Account Management Process.

## Mistake 92 · Lack of vendor contract control

`Executive · Operations · Vendors`

Failure to control vendor contracts means auto-renewals, escalations etc. that you don't want.

Prevented by: Vendor Contract Register, Vendor Contract Playbook.

## Mistake 93 · Ignoring a problem

`Executive`

Ignoring a problem results in the problem growing. Don't ignore it. Set time and knock it out.

Prevented by: KPI & Strategic Meetings.

## Mistake 94 · Tolerating brinkmanship

`Executive · Customers`

When faced with brinkmanship, if it is possible to lose, you did something wrong already. Never back down. And don't bluff.

Prevented by: Account Management Process, Contract Playbook.

## Mistake 95 · Tolerating misunderstanding from customers

`Customers`

Don't let your customers misunderstand your offer, intention, or value. Address it every time and address it directly.

Prevented by: Value Proposition & Customer ROI, Account Management Process.

## Mistake 96 · Not using a CRM

`Sales & Marketing`

Always use a CRM and adopt a commission policy that forces compliance.

Prevented by: Sales Funnel Creation, Pipeline Creation.

## Mistake 97 · Switching CRMs

`Sales & Marketing`

Switching CRMs can be the right move; most time it is not. Sales teams complaining about CRM is the norm. Don't let them blame poor performance on CRM.

Prevented by: Pipeline Management & Review.

## Mistake 98 · Tolerating dishonesty

`Executive`

Don't tolerate dishonesty. Address it directly with team members, investors, customers, and vendors. Adopt a zero tolerance immediate consequence policy.

## Mistake 99 · Paying for ‘money finders’

`Executive`

There are a ton of people who will charge you to ‘find money’, don't do it. NOTE: this is different than banking your company for sale or finding a financial partner.

## Mistake 100 · Lack of documented operating processes

`Operations`

Document your key processes.

Prevented by: Quality Management System.

## Mistake 101 · Lack of process ownership

`Operations`

Every process needs an owner.

Prevented by: Quality Management System.

## Mistake 102 · No proof of process conformance

`Operations`

Every process should have a deliverable and evidence of conformance. Demand this.

Prevented by: Quality Management System.

## Mistake 103 · Sweating the small expenses

`Executive`

Some things are worth optimizing for costs, but most aren't. If it's in the ballpark of affordability and you aren't locked in for a long time, then sign and move back to driving revenue.

Prevented by: Budget Creation.

## Mistake 104 · Tolerating non-sales activity from sales team

`Executive · Sales & Marketing`

The only valid activity from S&M is sales activity. Don't let the activity shift to non-core things.

Prevented by: Pipeline Management & Review, Sales Metrics by FTE/Role/Team.

## Mistake 105 · Burning out

`Executive`

Make sure your team has appropriate recharge time. Make sure you do too.

## Mistake 106 · Founder stepping into a subordinate’s process

`Executive`

Once a process is set and ownership is given, then founders need to get out of the way. Stepping back in subverts growth.

Prevented by: Executive Execution, Quality Management System.

## Mistake 107 · Letting AR age

`Executive`

Get on top of AR and do it quickly. Bad AR processes is like running a marathon and then deciding not to cross the finish line.

Prevented by: Accounts Receivable Process.

## Mistake 108 · Fuzzy organizational chart

`Executive`

Every core activity in your company needs a person accountable for it. Don't let overlapping responsibilities cause underperformance.

Prevented by: Sales Org Chart, Dev Org Chart.

## Mistake 109 · Expecting customers to expand without a pitch

`Executive · Customers`

Prevented by: Account Management Process, Adoption Process.

## Mistake 110 · Believing the hype of a company pitch

`Executive`

A pitch is exciting, but be careful to stay grounded. A pitch necessarily must show the financial benefits of success. It can easily disorient founders from the task at hand. Stay focused.

## Mistake 111 · Developing product in a vacuum

`Executive · Development`

Products are dynamic processes of interrelating variables: customer pain, problem frequency, solution believability, solution efficacy, and customer expense. These (and prob more) cant be determined without SMEs working in concert with development.

Prevented by: Buyer Persona, Product Management Process.

## Mistake 112 · Tolerating low resolution product roadmaps

`Executive · Development`

A product roadmap is an investment plan. Don't tolerate low resolution on the plan. Three swim-lanes and quarterly columns is too loose for such an important investment. Get tight.

Prevented by: Product Roadmap Process.

## Mistake 113 · Poor performance: Root cause all missed goals

`Executive · Development · Sales & Marketing · Operations`

Software companies are all about people. Poor performance can become cultural. Dive in on missed goals (budgets, promises, etc.) and find the reasons with your team. Don't let it slip by; even the small stuff.

Prevented by: KPI & Strategic Meetings, Quality Management System.

## Mistake 114 · Accepting the phrase “we’re too thinly staffed”

`Executive`

Every software company, regardless the size, is ‘too thinly staffed.’ This is because every product can go deeper, get bigger, etc. Dev never ends and customers never finish giving requests. Sit in this tension and focus on what you can control.

Prevented by: Executive Execution.

## Mistake 115 · Letting the same issues come up

`Executive`

There are tons of tensions in software companies. Don't let problems keep emerging (similar to #93). When you hear your team talk about a problem more than once, stop and dig in and help them solve it. Unmanaged problems grow like debt and are harder to control.

Prevented by: KPI & Strategic Meetings, Quality Management System.

## Mistake 116 · Not managing expectations

`Executive`

Investment commitments slip, customer interest wanes, potential exit conversations die... life is full of disappointments. Don't magnify them by passing expectations down the line without managing them.

Prevented by: Board of Directors, Account Management Process.

## Mistake 117 · Expecting too much out of software ‘automation’

`Executive · Development`

Software magnifies human potential; it doesn't replace it. Don't expect software to be a silver bullet that can operate without human intervention. Always ask what human intervention is the product magnifying.

Prevented by: Product Management Process.

## Mistake 118 · Protecting the idea too much

`Executive`

Ideas succeed through execution. Stifling execution in the name of protection prevents success.

Prevented by: Go-to-Market Strategy.

## Mistake 119 · Not being firm and clear on terminations

`Executive`

If someone isn't working out, then make a decisive clear move. Don't expect them to catch a hint and leave. Terminate them with grace, honesty, dignity and truth. Be clear and definitive.

Prevented by: Employee Agreement.

## Mistake 120 · Not forcing engineers to QA their own submissions

`Development`

Engineers must QA their own submission. Failure to do so threatens the stability of the product. The QA function should identify root causes on all downstream issues and ensure dev engineer QA occurred.

Prevented by: Product Engineering Process.

## Mistake 121 · Failing to incorporate contingency in customer contracting

`Executive · Sales & Marketing · Customers`

Some customers need to extract a pound of flesh to feel good about a transaction. Its best to have options in your contract that allow you to give that accommodation while still preserving your business. Set a couple out of market elements in the contract.

Prevented by: Contract Playbook.

## Mistake 122 · Not firing a customer

`Executive · Customers`

Sometimes customers need to go. Customer expectations can mess up a product when they aren't aligned. Holding onto customers at all costs will result in disaster.

Prevented by: Account Management Process, Churn Identification Process.

## Mistake 123 · Underinvesting in employee onboarding

`Operations · Executive`

Your team is your most strategic resource. Onboarding the team is the most important process in your company. Don’t neglect it. Don’t expect people can gain context, history and awareness of the plan on their own. Invest in onboarding.

Prevented by: Training Process.

## Mistake 124 · Only selling to one customer.

`Sales & Marketing`

Don't put all your eggs in one basket for one customer. Make sure you are talking to multiple potential customers at one time.

Prevented by: Customer Segmentation, Pipeline Creation.

## Mistake 125 · Getting starstruck by big name companies.

`Executive`

Don't let the name of a company or organization convince you to take part in something just because of who they are. Only take part in something if it will add real value to your company. Your time is valuable. Don't waste it.

Prevented by: Sales Philosophy.

## Mistake 126 · Not having clear messaging.

`Sales & Marketing`

People need to easily understand what your product is. If you don't have clear messaging, you will struggle to sell.

Prevented by: Value Proposition & Customer ROI, Sales Deck.

## Mistake 127 · Making costly business decisions based on investors soft commitment.

`Executive · Operations`

Fundraising isn't completed until there is cash in the bank. Don't make large business decisions based on investor's commitment without having the cash to pay for it.

Prevented by: Budget Creation, Cash Flow Forecast.

## Mistake 128 · Undervaluing culture

`Executive`

Culture Flywheel - the more you invest into your company culture, the more devoted your employees are to the company which helps to have more effective employees which drives revenue.

Prevented by: Define the Mission.

## Mistake 129 · Outsourcing hard decisions

`Executive`

Part of being a founder is making the tough calls. Don’t make other people do this for you. Delegating when you feel the urge to run is a guarantee for failure.

Prevented by: Executive Execution.

## Mistake 130 · Expecting a customer to expand without selling

`Sales & Marketing`

Pay requires work and work requires effort. Don’t expect customers to expand without sales effort.

Prevented by: Account Management Process, Adoption Process.

## Mistake 131 · Busy work

`Operations`

Stop wasting time on things that aren’t going to grow your company.

Prevented by: KPI Dashboard Creation.

## Mistake 132 · Too broad of product

`Development`

Your product needs to be solving a specific need for a specific group of people. The broader the product, the harder it will be to sell. We’ve never seen a product that was “too” small.

Prevented by: Customer Segmentation, Product Roadmap Process.

## Mistake 133 · Switching target customers too quickly

`Sales & Marketing`

It takes time to figure out the correct messaging and channels to reach your customers. Don’t be so quick to pivot to a different customer base. Fitting your product to a need is hard. Ignoring other needs that are responding to you at the same time is harder.

Prevented by: Customer Segmentation, Buyer Persona.

## Mistake 134 · Happy ears with customers

`Sales & Marketing`

Be careful to not just hear what you WANT to hear, but actually hear what the customer is communicating. People don’t like letting others down. They will be indirect with their “no”. Always assume the “no” as a base hypothesis and let the opportunity earn your time.

Prevented by: Enterprise Sales Process, Net Promoter Score (NPS).

## Mistake 135 · Not owning the customer service delivery

`Sales & Marketing`

You need to own every part of the customer journey. If things go awry, understand why and do what you can (within reason) to make the customer experience as seamless as possible. A small product makes this easier!

Prevented by: Account Management Process, Implementation Project Lifecycle.

## Mistake 136 · Not changing the cash model

`Executive`

Your cash model needs to be continually updated (~every quarter) to match what your current reality is to have a realistic view of the cash forecast. It doesn’t matter who you delegate it to, the founder is always responsible for the accuracy and reality of the cash model.

Prevented by: Cash Flow Forecast.

## Mistake 137 · Missing meetings (hiding from hard convos, postponing hard convos, etc.)

`Executive`

When something frightens you, lean in. Avoidance and ignorance will result in the outcome you most fear.

Prevented by: KPI & Strategic Meetings.

## Mistake 138 · Not prioritizing revenue early enough

`Executive`

Revenue should always be top of mind, not matter the stage of the company. It’s your number one.

Prevented by: Go-to-Market Strategy, Pipeline Creation.

## Mistake 139 · Disjointed pricing with sales cycle

`Sales & Marketing`

Your pricing should be inline how long your sales cycle is. The less you charge you customer, the shorter the sales cycle should be (and vice versa). Use 2 weeks for 20K ACV as a guide.

Prevented by: Pricing Matrix, Sales Efficiency Ratio.

## Mistake 140 · Not using Golden Section’s Recruiting arm (or hiring Continuum) and spending too much time hiring

`Executive`

Hiring takes more time than you think. Utilize the resources that Golden Section provides. (If you are using Guide Services, you get 4 free hires every year!)

## Mistake 141 · Disconnecting from partners (isolating)

`Executive`

Being a founder is tough and you will face many challenges. Utilize your partners. They are there to help.

Prevented by: Board of Directors.

## Mistake 142 · Not proactively managing cash

`Executive`

You need to always have a handle on your cash position (i.e., burn and runway). Cash is king! Hopeful thinking isn’t an antidote to chaos. Get caught without cash and you’d be better off running naked through Times Square.

Prevented by: Cash Flow Forecast.

## Mistake 143 · Inviting customer discontent

`Operations`

If you ask someone for what they’re pissed about, you’ll get an answer… if a trash collection company asks people if they smell something, they will smell it whether they actually can or not. Don’t put discontentment in your customers’ mind.

Prevented by: Net Promoter Score (NPS), Implementation Hours Tracking.

## Mistake 144 · Waiting for the perfect product before selling

`Development`

If you wait until your product is perfect to sell, you will never sell anything. Perfectionism will be the death of your company.

Prevented by: Go-to-Market Strategy, Sales Philosophy.

## Mistake 145 · Hiring isn’t enterprise value creating

`Operations`

Hiring doesn’t directly correlate to creating value. Make sure you aren’t depending too much on others to drive revenue for your company.

Prevented by: Unit Economics, Sales Metrics by FTE/Role/Team.

## Mistake 146 · Hire better than you

`Executive`

Don’t be fearful of hiring someone who is better than you at something. You should hire people to fill in your weak spots.

## Mistake 147 · Avoiding tough but proactive decision making

`Executive`

Delaying difficult decisions only makes problems worse. Proactive decision-making prevents crises and builds long-term stability.

Prevented by: Executive Execution, KPI & Strategic Meetings.

## Mistake 148 · Changing value proposition after receiving captial

`Executive`

Stick to the vision investors backed. Pivoting too soon erodes trust, confuses customers, and risks losing momentum. Secure alignment before making strategic shifts.

Prevented by: Define the Mission.

## Mistake 149 · Lacking agility to adapt to market shifts

`Executive`

Markets change, and rigid businesses get left behind. If you can’t pivot when needed, you’ll be watching from the sidelines. Bend so you don't break.

Prevented by: Go-to-Market Strategy.

## Mistake 150 · Prioritizing brand over financial health

`Executive`

A sleek brand won’t save a sinking ship. Flashy marketing and reputation matter, but if your finances crumble, so does your business. Keep the lights on first, then worry about the font choice

Prevented by: Budget Creation, P&L Explained.

## Mistake 151 · Expecting sales hires to sell like founders

`Executive · Sales & Marketing`

Founders forget how long it took them to learn the product and market. New hires need time, training, and clear process to catch up. Don’t just hand off sales and hope, simplify the process, bake in support, and budget for the real cost of getting them fully productive.

Prevented by: Sales Philosophy, Sales Scripts.

## Mistake 152 · Forgetting You're Part of a Bigger Ecosystem

`Executive`

You don’t operate in a vacuum. Competitors emerge, power shifts, and new players change the game. If you aren’t watching the full ecosystem, someone else will, and they’ll use it against you.

Prevented by: Vertical Specific.

## Mistake 153 · Diluting Effort Instead of Concentrating Force

`Executive · Sales & Marketing`

Progress requires concentrated force. Spreading your energy across 25 half-baked strategies won’t get you anywhere. Pick one, apply real weight, and see if it moves. You can’t cheat physics.

Prevented by: Define the Mission, Go-to-Market Strategy.

## Mistake 154 · Revolving Door of Technical Talent

`Development · Executive`

If every product update comes with a new engineering lead, you don’t have a team, you have a temp agency. Talent turnover kills product memory and momentum.

Prevented by: Dev Org Chart.

## Mistake 155 · Services Should Support Product, Not Replace It

`Sales & Marketing · Operations`

If your customers only interact with your team and not your product, you’re running a services business, not a software company.

Prevented by: Product Management Process.

## Mistake 156 · Too Many Conversations, Not Enough Closures

`Sales & Marketing`

If you're always “in talks” but never “signing deals,” you’ve built a vibe, not a sales funnel. A full calendar doesn’t pay the bills.

Prevented by: Enterprise Sales Process, Pipeline Management & Review.

## Mistake 157 · Overbuilding Function, Underbuilding Form

`Development · Executive`

Users don’t experience your product’s codebase, they experience how it feels. Function may be strong, but without form it lands flat. Don’t let utility outshine usability, even great tech dies if no one enjoys using it.

Prevented by: Product Management Process, Application Code & Front End.

## Mistake 158 · Scaling a Broken System

`Executive · Sales & Marketing`

Pushing for volume when the engine is cracked just makes the breakdown faster. Growth only works if the foundation is sound. Pause, check your unit economics and ICP, and then pour gas on it. Don’t sprint the wrong direction.

Prevented by: Unit Economics, Sales Efficiency Ratio.

## Mistake 159 · Quitting Strategy Too Early

`Executive · Sales & Marketing`

Founders kill strategies before they’ve run long enough to know if they work. Outbound email isn’t broken because you sent 200 messages. Advanced teams send 10,000 a week without blinking. Don’t confuse “we haven’t given it enough reps” with “this doesn’t work.”

Prevented by: KPI Dashboard Creation, Go-to-Market Strategy.

## Mistake 160 · Avoiding Debt as a Strategic Tool

`Executive`

Debt is a tool, not a failure. Founders who don’t understand how debt works often avoid it entirely, even when it could extend runway, preserve equity, or reduce risk. Ignorance here quietly limits strategic options.

Prevented by: Cash Flow Forecast.

## Mistake 161 · Disregarding Qualified Opportunities You Didn't Source Yourself

`Executive · Sales & Marketing`

Founders often trust only the deals they originate. Ignoring qualified inbound or partner-sourced opportunities can stall growth and delay access to capital, customers, or strategic leverage.

Prevented by: Sales Funnel Creation, Pipeline Creation.

---

# Part II — The plays

## Executive

### How to Run Executive Execution at a Vertical SaaS Company

**Play:** Executive Execution · **Owners:** Founder, Exec Team · **Cadence:** Continuous · **Stage:** All Stages · **Effort:** — initial, — ongoing

**Summary:** The executive function begins with a clear and compelling vision—why vision statements matter, where they fall short, and how to define one that aligns your team.

**Prevents mistakes:** #36 No clear roles or accountability; #106 Founder stepping into a subordinate’s process; #114 Accepting the phrase “we’re too thinly staffed”; #129 Outsourcing hard decisions; #147 Avoiding tough but proactive decision making

**Templates:** Strategic Planning Template

The executive function in a business is to execute the available opportunity using its strategic resources and unfair advantages to deliver value to customers, receive payment from customers for that value, and ultimately create more enterprise value over time. Golden Section believes that this executive function begins with a clear and compelling vision.

**Why Vision Statements Matter**

Think of building a company like summiting a mountain. The vision is the peak—a somewhat unattainable objective that you are pursuing to change the world. It stretches beyond current capabilities, unbounded by present market forces, capital constraints, or the current limits of your management team. The best visions are aspirational yet directional: they tell everyone in the organization where you are headed, even if the summit is perpetually on the horizon.

A well-crafted vision does three critical things for a vertical SaaS founder:

- **Aligns the team.** When every team member can articulate where the company is going, prioritization becomes simpler. The vision acts as a filter: does this initiative move us toward the summit, or is it a side trail?
- **Creates leverage.** Founders are constantly trying to get leverage on their time, their capital, and their human resources. A clear vision lets a founder delegate with confidence because the destination is understood.
- **Attracts the right stakeholders.** Board members, investors, strategic hires, and partners all self-select based on whether the vision resonates with them. The vision becomes a recruiting tool and an alignment mechanism.

**Where Vision Statements Fall Short**

Have a vision too narrow and you miss opportunity. Stretch too far and you fail at relevancy. The key tension in crafting a vision is finding the space between ambition and credibility.

Perhaps the most common failure is confusing a vision with a mission. The vision is the mountain peak; the mission is the pathway you will take to get there over the next three to five years. The values are the guardrails along the journey. All three are distinct, and all three must work together.

Another failure mode: creating a vision statement that sounds impressive in a board deck but means nothing to the team building the product every day. The best vision statements are specific enough to be actionable and bold enough to be inspiring.

**Characteristics of Great Vision Statements**

The best vision statements share several qualities:

- They are **future-oriented**—describing a world that does not yet exist but could.
- They are **concise**—one or two sentences that anyone in the company can repeat from memory.
- They are **specific to the company**—not generic platitudes that could apply to any business in any industry.
- They are **long-term**—the best visionaries think in decades, not fiscal quarters. Compounding applies to vision just as it does to capital.
- They include both an **aspirational component** and a **realistic range of possibility** for where the firm can be as a result of sustained growth over time.

**The Finance Connection**

Everyone in the world is subject to the same laws of finance. Just as gravity pulls on everyone, compounding and inflation apply to all companies. The best visionaries understand the financial structure required to reach their destination. They can delay gratification for extended periods to let compounding work in their favor. In vertical SaaS especially, the subscription model rewards long-term thinking—recurring revenue compounds when you retain and expand customers over years, not quarters.

**How to Define Your Vision**

1. **Start with purpose.** What problem exists in the world that your company is uniquely positioned to solve? What does the world look like when you have solved it at scale?
2. **Think in decades.** Remove the constraints of your current team, your current capital, and your current market position. Where could this company be in ten or twenty years?
3. **Write it down.** Draft your vision statement in one to two sentences. Test it: can a new hire read it and understand where the company is headed? Can a board member use it to evaluate strategic decisions?
4. **Pressure-test with your team.** Share the draft with your executive team and key stakeholders. Does it resonate? Does it create energy? Does it help prioritize?
5. **Make it a living document.** Review your vision annually. The summit does not move, but your understanding of it deepens as you climb. Refine the language, but resist the urge to shrink the ambition.

### How to Define the Mission of a SaaS Company

**Play:** Define the Mission · **Owners:** Founder, Exec Team · **Cadence:** Annual · **Stage:** Pre-Revenue · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Define your company's mission as the intersection of what you do, how you do it, your present microeconomic environment, and the overarching goal you'll achieve through flawless execution.

**Prevents mistakes:** #43 Horizontally scaling; #128 Undervaluing culture; #148 Changing value proposition after receiving captial; #153 Diluting Effort Instead of Concentrating Force

If the vision is the summit of the mountain, the mission is the pathway you will take to get there. A mission statement defines the tactical next-step strategy for the next three to five years—depending on your organizational aperture for what you want to bite off at one time. It is more grounded than the vision, more specific, and more immediately actionable.

**Why Missions Matter**

A mission statement is the most concise argument for why a company exists and what it is doing right now to move toward its vision. The best missions answer four questions:

- **What** does your firm do?
- **How** does your firm do it?
- **For whom** does your firm do it?
- **What overarching goal** will be achieved if the mission is executed successfully?

When these four elements are clearly articulated, the mission becomes a daily decision-making tool. Every feature request, every hiring decision, every partnership opportunity can be evaluated against the mission: does this help us do what we said we would do, for the people we said we would do it for?

**The Two Components of a Great Mission**

A mission is an essential joining of two components:

- **Economic mission:** What a firm does, how it does it, and a realistic assessment of its present microeconomic environment. This is the practical, grounded half.
- **Aspirational mission:** The overarching goal achieved if the mission is successful. This is the half that connects back to the vision and gives the work meaning beyond revenue targets.

Consider some well-known examples. SpaceX designs, manufactures, and launches advanced rockets and spacecraft (economic mission) with the ultimate goal of making life multiplanetary (aspirational mission). Tesla accelerates the world’s transition to sustainable energy (aspirational) by proving that electric vehicles can be better, quicker, and more fun to drive than gasoline cars (economic). The best mission statements weave both halves together seamlessly.

**Common Mission Statement Failures**

Most mission statements fail because they are generalizations without meaning. Survey executives at well-known companies and ask them to recite their mission. The silence is telling. When a mission is so vague that it could apply to any company in any industry, it fails to serve its primary function: guiding daily decisions.

The missions that work are specific. They name the customer. They describe the mechanism. They set a boundary around what the company does and, just as importantly, what it does not do. For a vertical SaaS company, specificity is your advantage—you serve a defined industry with a defined solution. Your mission should reflect that focus.

**Mission Statements and Your Team**

A mission serves a motivational role in your employees’ lives, but only if it is meaningful. People want to work at companies where they can see how their individual contribution connects to a larger purpose. But motivation through mission alone is insufficient—companies also need to provide for the material needs of their employees. The best companies fulfill both social and economic functions.

The practical implication: craft a mission that your team can rally around, but pair it with compensation, growth opportunities, and a culture that delivers on the economic side of the promise as well.

**How to Define Your Mission**

1. **Start with what you do today.** Describe your company’s core activity in plain language. Avoid jargon. If a stranger cannot understand what your company does after reading your mission, it needs work.
2. **Name your customer.** Vertical SaaS companies have a natural advantage here. You serve a specific industry. Name it. The more specific you are, the more useful your mission becomes as a decision-making tool.
3. **Articulate the mechanism.** How do you deliver value? Through software, through data, through workflow automation? Be specific about your approach.
4. **Connect to the vision.** What happens when you execute this mission successfully? How does it move you closer to the summit? This is where the aspirational component lives.
5. **Test for specificity.** Read your draft mission aloud. Could it describe a competitor? Could it describe a company in a different industry? If yes, it is too generic. Rewrite until it could only describe your company.
6. **Define the Values alongside the Mission.** The values are the guardrails along the journey—they define how you will pursue the mission. What behaviors are non-negotiable? What principles will you uphold even when it is costly to do so? Document these alongside the mission so the team understands not just what you are doing and why, but how you will conduct yourselves along the way.
7. **Communicate relentlessly.** A mission that lives in a slide deck is not a mission. Print it on the wall. Open all-hands meetings with it. Reference it in product reviews. The mission should be so embedded in your culture that any employee can recite it without hesitation.

### How to Build an Annual Budget for a SaaS Company

**Play:** Budget Creation · **Owners:** Founder, CFO · **Cadence:** Annual · **Stage:** Pre-Revenue · **Effort:** 34 SP initial, 21 SP ongoing

**Summary:** Build an annual operating budget that is realistic, comprehensive, and strategically aligned—allocating financial resources against the initiatives that support your annual strategic objectives.

**Prevents mistakes:** #16 Running out of cash; #66 Underfunding product; #74 Banking on exponential forces; #103 Sweating the small expenses; #127 Making costly business decisions based on investors soft commitment.; #150 Prioritizing brand over financial health

**Templates:** Budget Creation Template

A budget tells the story of how a team will execute over a period of time. The goal of a budget is to allocate financial resources against strategic objectives that support the work of scaling a SaaS business. An effective budget should be realistic, comprehensive, and aligned.

#### Realistic

For a budget to be realistic, it must be appropriately linked to past performance or benchmarked with realistic expectations where past performance cannot serve as a guide. The enemy of realism in the budgeting process is blinding optimism of entrepreneurial leadership. As a result, effective executive teams need to access a critical side of their nature when budgeting. Strategic decks, company announcements, and annual reports focus on the future and are optimistic in nature; budgets should be likely achievable. Management teams all too often set budgets that are optimistic from the start and impossible to implement.

A Golden Section Ventures team member served on the board of a growth stage software company recently and saw the optimism vs realism problem first hand. The management team had set a 'board budget' which was reported to the bank for covenant purposes. Then, the management team set a management budget which served as the board's true budget. Next, there was a final budget intended to be a stretch budget. By March, management was only reporting to the 'board budget' and had to be reminded that this budget was intended to be the most pessimistic.

The core problem in their budgeting was a lack of realism. It was plainly obvious to the Golden Section Ventures team members that all three budgets were fundamentally flawed. Each budget included amounts for new sales bookings and sales and marketing expenses. The Golden Section Ventures team member compared those amounts and revealed that in the most pessimistic case, the management team thought they could achieve $0.45 in sales efficiency (total sales & marketing expenses needed to achieve $1 of new ARR bookings). Knowing that the top 25th percentile struggles to beat $0.75 in sales efficiency, it is obvious that the proposed budget will likely be low on the revenue estimate, throwing all the other expense categories out of balance.

#### Comprehensive

A comprehensive budget addresses each of the key strategic goals fully. This means not only does the budget take past performance into consideration, but it is also sufficiently detailed to address each key strategic goal in the following year.

Businesses morph and change. For a budget to be comprehensive, it must take change into account and not just consider past performance.

An easy way to account for change is to precede budgeting with strategic planning. A comprehensive strategic planning process utilizes leadership and key roles within the company to design the most meaningful activities to focus on in the coming phase. The length of the phase is a year for most businesses. Next, a budget impact analysis should be created for each new strategic initiative. The analysis should then be incorporated into the budget and based on past performance.

#### Aligned

Someone must own and manage the budget. Creating a budget and hiding it from the people making cost-based and revenue impacting decisions is like playing a multi-month game and hiding the score. At best, it is ineffective and inert. At worst, it wrecks the business.

An aligned budget requires a few key items:

1. Ownership: Each department and business unit has a budget owner (responsible for the outcome) and a budget accountable lead (someone responsible to know where the group is vs the budget). Any non-departmental budgetary items (special projects etc) must have an owner and an accountable lead.
2. Incentives: Incentives must be based at least in part on hitting or beating the budget.
3. Feedback: Company-wide budgets must be calculated and reported on monthly with owners responsible to explain and contain any variances.

> **The goal:** Create a process of developing, tracking, and maintaining a realistic, comprehensive and aligned budget.

**How can Golden Section Assist?** Golden Section's controller-as-a-service can assist in budgeting and in reporting on the budget.

#### Steps

*Prerequisites:* Strategic planning playbook*.*

1. **Prepare**: Create a budget planning packet that includes at minimum the following data:
    - Historical financials by business unit / department (by budgetary reporting area) on a monthly basis
    - Strategic initiatives (per Strategic planning playbook), and
    - Known cost increase information (i.e. key payroll, key vendors, contract step ups, rent escalations, etc.)
2. Meeting 1: Vision and Delegation
    - Share the goal of this play and the preamble in addition to walking through the company's Strategic initiatives (per Strategic planning playbook) and set a budget leader for the company (usually the CFO or controller). Each strategic initiative must be assigned to a department or to a person if not department related.
    - Set vision and objectives for the budgeting process (ensure each budgetary reporting area leader has a clear understanding of the goal and her responsibility to design a budget that she will lead towards). Also set standards for how the budget should be reported (i.e. explain the exact format and how the budget reporting area leader should ensure it is realistic, comprehensive and aligned). Ensure these standards include examples of what sufficient backup evidence to the budget looks like.
    - Set a deadline for reporting the budget to the budget leader and a date and time for the next meeting (reporting to meeting gap should be at least 2-3 days). The budget leader is responsible for consolidating the reports into one larger document including evidence. For larger teams, the budget leader might also meet with each reporting area leader to critically assess the budget at least once before incorporating.
3. Meeting 2: Budget Review and Defense
    - Share the consolidated document at least 1 day before the meeting. All participants should come prepared to: 1) defend their contribution, and 2) critically assess the other inputs.
    - Open the meeting by assigning roles: time keeper (responsible for keeping the meeting progressing on time and suggesting a sub-meeting when a deep dive starts with the team), secretary (responsible to capture all action items and follow-ups mentioned by the team).
    - Next share the goal of the budget process again, including the strategic initiatives. Explain the purpose behind making budgets realistic, comprehensive, and aligned.
    - Have the budget leader walk through the top level numbers including any gaps between current cash or capital accessible, related to cash or capital needed. This gives each participant an idea of why being critical is important.
    - Next, each budgetary reporting area leader should walk through their budget starting with the largest expense and ending with the smallest.
    - End the meeting with a date when all participants will receive the follow-up and action items as well as a date when those items are due.
4. Meeting 3: One-on-One Meetings
    - Collect the action items and then work with the budget leader to focus the budget and align it with the capital available. Often times, the strategic planning process results in more initiatives than current resources allow. This means tough decisions.
    - Once you and the budget leader have a final report, schedule meetings with any affected reporting area leaders and explain the cuts in context of the broader initiatives of building a strong company.
    - Finalize the budget for presentation to all parties.
5. Meeting 4: Budget approval
    - Present the budget to the board for approval (if required).
    - Recycle Meeting 2 and Meeting 3 if required by board feedback.
6. Incentives
    - Ensure that each budget reporting area has a cash based incentive to hit the budget. This could mean more resources to achieve variable comp related to sales or a % achievement to get a portion of their cash bonus.
    - Ensure that the budget leader also has a cash incentive related to the entire company hitting the budget.
    - Make sure to have a way to address incentives if the budget needs a revision.
7. Budget delivery
    - Present the budget to the entire company
    - Ensure that the reporting area leaders present their portion of the budget to their departments.

#### Troubleshooting

*If your budget includes payroll and the team is too small to sufficiently hide the pay,* then remove payroll from the departmental areas or make it a blank number on the P&L. Payroll and compensation can be managed from the top for smaller teams.

*If you are struggling to get people to care about following up with the budget*, then your incentives are not meaningful enough.

*If all you hear is 'we are too thinly staffed' and 'we cannot possibly accomplish this with these few resources',* be in good cheer as this is the common refrain when running a SaaS company. Remind the team of the vision of the company and the importance to remain focused only on what is most important. Often in SaaS firms, the various requests from customers, partners, vendors, and internal stakeholders, create a fog of strategic confusion that leads to team members running frazzled and incapable of accomplishing anything. Be aware of this. Such feedback in the budget process is indicative of a lack of focus.

### How to Build a SaaS Cash Flow Forecast

**Play:** Cash Flow Forecast · **Owners:** Founder, CFO · **Cadence:** Monthly · **Stage:** Pre-Revenue · **Effort:** 13 SP initial, 8 SP ongoing

**Summary:** Build a living cash prediction model from conservative unit-economics assumptions, update it monthly with actuals, and minimize the investment needed to scale.

**Prevents mistakes:** #16 Running out of cash; #69 Underestimating the effort of fundraising; #72 Leaving finances to the numbers people; #73 Thinking linearly when experiencing exponential forces; #127 Making costly business decisions based on investors soft commitment.; #136 Not changing the cash model; #142 Not proactively managing cash; #160 Avoiding Debt as a Strategic Tool

**Templates:** Cash Flow Forecast Template

Cash is the lifeblood of a software business. It's the lifeblood of every business. According to CB Insights, it is also one of the top 10 reasons for failure. And while that seems obvious that running out of cash results in failure, what is nuanced is the psychological and decision-impact that running low on cash has on the founder and the organization. "Pennywise and pound-foolish\" is not as antiquated a statement as it may seem. Get low on cash and the exponential forces that were propelling your business forward start conspiring your demise. For founders, pressure builds and the body starts exhibiting Eminem "Lose Yourself" opening line symptoms\...

The wise founder loses themselves in the numbers, not the music. They know the levers of cash generation intimately, and they do not outsource this important function to people that have less to lose and less on the line. Take hold.

> **The goal**: Create a cash prediction model and process that can be a living document and receive updates that make future cash projections more accurate.

**How Golden Section can help:** The venture partner can help here. Golden Section can help through templates and best practices.

***Prerequisites:*** Note that you do not have to have significant (or any) revenue to build a competent cash flow forecast. But, you will need informed assumptions on the unit economics from your customers.

#### Steps:

1. **Prepare:** Get some whiteboard time to map out the unit economics of your business. Usually, this centers around the corporate user in the system, and includes what it costs to acquire them, what and when they pay you, the cost to service them, and how often they churn or upsell. We suggest meeting with a cross-section of your team (get more people in the room than just you) and answer these questions:
    - What does a customer cost? This should include your entire sales team cost, as well as the variable expenses (commissions, travel, 3rd party licenses, etc.). Be careful to fully load these expectations for the 'incremental' expense. Hence, do not bank on getting the next sales employee to come in as low on base as your current team. You need to expect market expenses here.
    - What is the customer payment and terms? This can start with your rack rate. But all good models are driven off of averages. It isn't practical to nail the customer distribution against your service levels in a forecast. Instead, think through averages. For instance, what do you expect the average revenue per account to be and why? Also, what will the average customer do in days payable?
    - What is the cost to service them? This always includes your delivery costs (e.g. hosting etc.) but also includes support personnel, support tools, support leadership, services team, etc. Make sure to be conservative here.
    - Churn or upsell or both? What you are looking for here is the net churn effect. What will your customers (in whole) provide in net churn (upsell revenue from current customers less lost revenue -- usually stated in annual terms). High functioning teams experience negative net churn (i.e. upsell \> churn) but be careful about forecasting that if you aren't already experiencing it. Even if you are experiencing it, you may see it is hard to hold as you scale.
    - What are normal metrics for my industry? You may have historical data to investigate trends. If so, congrats! However, even if you do, we suggest looking at some industry benchmarks to build in an expectation of reversion to the mean in your assumptions. Good sources for B2B SaaS are the KeyBanc SaaS survey as well as the OpenView SaaS Benchmark survey. Of course, Golden Section Ventures has a data set as well.
2. **Draft 1:** Armed with the data from Step 1, sit down with the template model and build your forecast. This will take some iteration between metric expectations, hiring, cash available, and investment. You should keep metrics in the 'worse than average' category (unless you have a compelling reason). Next, your goal is to moderate growth and hiring to minimize investment needed while still reaching $5-15M in ARR within 3-4 years.
3. **Feedback:** Next, send your model out to a few people for feedback. You are looking for diversity of thought in this step. You may want a set of people that accomplish the following characteristics: analytical, creative, process oriented, non-conformists, visionaries, and followers. Ask them these questions:
    - What is good about the model?
    - What is bad about the model?
    - What is missing?
    - What is wrong?
    - *Note:* Your model should have a link (or note) to evidence for each of the metrics or changes in the model.
4. **Final Draft:** Incorporate the feedback into the model, but make sure to ensure it is right first. Not all feedback is equal! Once your model is accurate, think through incentives. Who on your team pulls which cost/revenue levers? Make sure they are incentivized to hit the metrics that drive those levers.
5. **Iteration Cycle:** Designate someone on your team to own the model (but not change it). That person (in the early stage it will be the founder, and later the CFO) should update the model with actuals and report to the relevant team members. On iteration, you are mostly looking at the trajectory of the cost/revenue driving metrics. Are they converging to the average? Are they going the wrong way? These metrics (churn, ARPA, acquisition cost, quota attainment) are key drivers to your future cash.

#### Troubleshooting

*My model shows less than $2M cash needed to achieve $15M in revenue*. While this is possible, it is unlikely: what proof do you have of top 10% performance? Be careful about that. In fact, go back and do the whole play over.

*I don't have sales people and so the quota concept doesn't quite work for me*. Understood, that can happen. First, we suggest expecting some sales assistance in the sales process. This may mean a very low quota (or conversely, very high if it is light touch). But if you must, you can remove that part of the model to replace it with a marketing-driven acquisition.

### How to Build a KPI Dashboard for a SaaS Company

**Play:** KPI Dashboard Creation · **Owners:** Founder, Exec Team · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 13 SP initial, 5 SP ongoing

**Summary:** Design a dashboard of meaningful KPIs that reflects your strategic priorities, surfaces bottlenecks, and provides transparency to your team about company health.

**Prevents mistakes:** #19 Not communicating with investors; #57 Not benchmarking results; #131 Busy work; #159 Quitting Strategy Too Early

**Templates:** KPI Dashboard Template

Key Performance Indicators (KPIs) are the instruments by which you make strategic decisions that drive your business. Financial statements are the after-action trip summary of where you went and how you did. Hence, when running a SaaS business you cannot rest your decision making upon the time scales that financial statements require. The feedback loop is too slow.

For KPIs to be effective, they must be meaningful. A meaningful KPI has a few attributes. First, it is near to real time. This doesn't mean actually real time, but rather the time between calculating the KPI and the activity that occurred to create the KPI should be short. Second, it has an obvious action based on the KPI value. A KPI without an obvious action is at best a vanity metric and at worst a distraction. Third, a good KPI is easy to calculate or estimate. The cost of compiling the KPI must be less than the value over the near term of using it to inform decisions. Fourth, and final, it must have someone responsible for it and someone accountable to calculate it.

When working properly, a KPI dashboard lays out the operations of your company and gives you a view into how the strategic equilibrium areas are operating.

KPIs also give management decision leverage. Without a KPI, management may have a hunch and can only convey that hunch through meetings and extended communication. A meaningful KPI can be sent to the responsible party and the appropriate action can be taken. KPIs allow you to infuse 'if-then' logical systems into your business.

> **The goal:** Create a dashboard of KPIs to drive your business.

**How can Golden Section Assist?** Golden Section's venture partner can assist here.

#### Steps

*Prerequisites:* 1.1 Strategic Planning and 1 Executive Execution at a minimum.

1. **Prepare**: Review your one page strategic plan and the crucial numbers (as outlined in *Scaling Up* by Verne Harnish). Think through how each leader in your organization can support the crucial numbers and whether evidence of the efficacy and quantity of that support can be quantified. Share the prompting, the one page strategic plan, and the crucial numbers with each leader. Ask them to prepare a few metrics they believe are KPIs for their reporting area. They should also prepare a presentation justifying why that KPI measure supports the crucial number.
2. Meeting 1: The Numbers
    - Share the goal of this play and the preamble in addition to walking through the company's Strategic initiatives (per Strategic planning playbook).
    - Next, each leader should report on their KPIs. The team's focus in the room should be around whether that number is meaningful (see above) and aligned to support the crucial number.
    - Settle on the KPIs (no more than 2 per person) and incorporate them into a document. Each KPI needs to have a responsible party and someone accountable to calculate it.
    - Settle on acceptable ranges of the KPIs and the actions needed if/when the ranges are blown.
3. Meeting 2: First scheduled KPI meeting
    - Set a process for KPI Review according to the process template provided.
    - Schedule your first KPI review meeting. KPIs should be reviewed often. Normally for a SaaS firm, this means weekly. Set the schedule with your team and have every reporting area report on the measure. Ensure that the time box is consistent for each person (i.e. a methodology is needed to ensure everyone is calculating on the same basis).
    - At the meeting, each person should announce their KPI, and any out of range KPIs should result in the responsible party announcing what has already happened by nature of the if/when logic.
    - The majority of the meeting should be spent on any unexpected circumstances that don't fit neatly into the if/when logic.
4. Incentives
    - Ensure that everyone knows that KPIs are the way a department can ensure it hits its strategic goals and budget attainment. The department leader should have a plan to compensate her team on KPI attainment.
    - Make sure that the teams' incentive structures are clean and that no one is receiving double incentives for the same action (i.e. incentive to hit the strategic goal and another to hit each KPI leading up to hitting that goal).

### How to Run KPI and Strategic Meetings That Actually Change Decisions

**Play:** KPI & Strategic Meetings · **Owners:** Founder, Exec Team · **Cadence:** Weekly · **Stage:** Pre-Revenue · **Effort:** 3 SP initial, 8 SP ongoing

**Summary:** Establish weekly executive KPI reviews and monthly budget and strategic meetings to maintain operational discipline, surface issues early, and keep the organization aligned around priorities.

**Prevents mistakes:** #8 No meeting cadence with sales; #36 No clear roles or accountability; #37 No meetings... no minutes; #38 No agendas for meetings; #77 Ignoring performance reviews; #93 Ignoring a problem; #113 Poor performance: Root cause all missed goals; #115 Letting the same issues come up; #137 Missing meetings (hiding from hard convos, postponing hard convos, etc.); #147 Avoiding tough but proactive decision making

**Templates:** KPI & Strategic Meetings Template

When it comes time to sell a business, all sellers claim that they run the business on processes and systems. However, every sophisticated buyer knows that this is unlikely and discounts the price to reflect the likelihood of a lot of manual intervention. The reason for this discounting rests mainly in the lack of evidence that systems and processes exist. Documentation provides the evidence and, when collected over dozens of months through frequent meetings, that documentation can make a meaningful impact on the exit price of your business.

No one wants to buy a dumpster fire. Especially when the founders are likely to end up with a lot of cash and little reason to stick around and help the buyer. This means earnouts, holdbacks, escrows, and other contingencies on the exit price. But when a buyer can see clear processes and witness management spending a majority of their time on strategic items, with all tactical items handled by other leaders, confidence builds fast, along with the exit price.

In addition to providing great proof for systems and processes at work, these meetings offer useful venues for the management team to get the time-leverage needed to focus on the strategic over the tactical. The types of meetings needed for your company will vary by business type, but in most cases include the following at a minimum:

- KPI review meeting - monthly or weekly
- Budget and financial meeting - monthly
- Strategic initiative meeting - monthly

> **The goal:** Create a meeting rhythm for your company to gain management leverage and document the systems and processes you put in place.

**How can Golden Section Assist?** Golden Section's venture partner can assist here.

#### Steps

*Prerequisites:* Strategic Planning, Budgeting, KPI Creation and Executive Execution at a minimum.

1. **Prepare**: Decide on the meeting rhythm for you and your team. The more frequent the meeting the faster the rhythm of the company. In the early days, weekly might be best. But the rhythm should also take into account the frequency of data collection which might only accommodate monthly meetings (budget vs actual for instance).
2. **Pick a time & create the invites:** Set a time for your meetings and send out invites to the team members responsible to attend. These meetings should be attended by each team member as a hard and fast rule with no exceptions. As a result, pick a time that is unlikely to get interrupted by client engagement or other things (early morning for instance). Once set, don't change, don't cancel, don't accommodate.
3. **Set roles for the meeting:** Your meetings should have the following roles at a minimum:
    - Leader - most likely you.
    - Scribe - the taker, holder, and distributor of the minutes and action items.
    - Time manager - the person responsible to ensure the pace is met.
4. Run your meeting.
    - Always start the meeting promptly on time and note the start time in the minutes (this is vital).
    - Use the same format for each meeting. For instance, departmental KPI meetings should follow the same process (ideally one that is logical like marketing to sales to operations to finance) and report on the same things.
    - Rigorously keep the pace. Any conversations that start to dive into a discussion need to be sidelined and a specific meeting created for that item. The rule of thumb in these meetings is similar to good email practice: act, schedule, or destroy.
    - Store the minutes that need to contain the following at a minimum:
        - Quantitative nature of the report for each KPI or budget area (i.e. the data of the meeting)
        - Action items promised in the meeting and an owner for each item.
        - Past action items from prior meetings and current status.
    - Ask for feedback on the meeting and a score for the meeting (1 out of 5, how on target was this meeting) and store the score (avg is fine) in the minutes.

### How to Run a Board of Directors at a Growing SaaS Company

**Play:** Board of Directors · **Owners:** Founder, Board · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Build an effective board that adds strategic value, provides governance, and creates accountability—managing board composition, meeting cadence, materials, and the crucial relationship between founders and directors.

**Prevents mistakes:** #19 Not communicating with investors; #42 Not managing investor expectations; #54 Not vetting strategic decisions with knowledgeable counsel; #116 Not managing expectations; #141 Disconnecting from partners (isolating)

**Templates:** Board of Directors Template

Boards are widely misunderstood by SaaS founders. Most of the time, boards are comprised of friendly people who are a mix of too unqualified to add strategic value, or are too close to the founder or company to be bold in delivering needed criticism. A board isn't a group to which management needs to 'sell' the vision of the company. Nor is it a venue for delivering a bland report of information better conveyed through written reports than in a meeting. Boards are for dialogue and concise debate. If your board meetings are bland and boring, then you are doing it wrong.

The role of a board is to represent the stakeholders of the business and assist management in maintaining equilibrium (see the Strategic Planning Play). Each member should be qualified and have a specific role. In the broader sense, a board member's legal role is settled, but the strategic role -- how they are adding value - can differ from person to person. Electing a board is important to get right.

When operating correctly, a board gives management the following benefits:

- Air cover for unpopular moves (customer contracting, employee communications, etc.)
- Strategic sounding board for difficult calls
- Accountability to do hard things (if you think it is possible to come back to the next board meeting without having done what you said you would do, then your board isn't value-added)
- Oversight to act right
- Focus on returns to shareholders as a primary metric

> **The goal:** Create a value-added board.

**How can Golden Section Assist?** Golden Section's venture partner can assist here.

#### Steps

1. **Design your board**: If you have a board already, the first step is knowing who is on your board and who you need on the board. These can be two different things. Develop a strategy for what the board should ultimately look like.
    - **Diversity:** Diversity plays a major role, but not necessarily in the way traditionally conceived. When we say diversity, we mean diversity that leads to different thought patterns, not proxies for different lived experiences. When you get people that have scaled sales teams together with people who have implemented a multi stage capital strategy you are getting an interesting mix of diverse views.
    - **Skeptics:** Most of the time, management wants a board of enthusiastic and lenient yes-men. These are not the type of directors you want. A skeptic that requires in-depth analysis and introspection on every point can be very valuable for typically optimistic entrepreneurs.
    - **Incentives:** Every board member needs a reason to give the company their strengths. Sometimes well-meaning founders try to get major investors to join thinking that protecting their investment is the only incentive they need. This is a bad strategy and results in the investor - now board member - making decisions in light of their investment and not for the good of all stakeholders.
2. **Setting expectations:** Next, you should meet with each board member to walk through expectations. At this point, it is good to have a job description for board members already designed so that you are working off of a document. Board members need as much (if not more) onboarding than an employee. This means product demos, customer tours, employee meetings, and the like.

1. **Create the content plan:** Effective board content updates the board members with all the data they need prior to the meeting so that the meeting can focus on the strategic issues and the most critical data elements that management wants to focus on. Here is a good general guideline of the report which should be sent to the board a minimum of 48 hours prior to a meeting:
    - Progress Update.
    - P&L vs Budget
    - Revenue vs Budget
    - Sales & marketing statistics
    - Operational statistics
    - Support metrics
    - Customer satisfaction scores
    - R&D roadmap, changes, and progress
    - Employee headcount and changes
    - Strategic initiatives status and progress
    - New Strategic Data
    - Closed-lost report with reasons
    - Churn report with reasons
    - Employee turnover report with exit interview content
    - Gross margin by customer
    - Support hours by customer
    - Fundraising conversations and progress
    - Risk Update
    - Existing risk overview and status
    - New risk overview and status
    - Resolutions and administration
    - Resolutions approved at the last meeting
    - Tabled resolutions from prior meetings
    - Proposed new resolutions
2. **Set the Board meeting calendar & set roles:** It is best to set the board meeting calendar at least one year out and add to every board meeting the task of creating the meeting for the 13th month out in that meeting. Sometimes it can work to set a xth day of the month as the permanent board date, but this can fall on a holiday or otherwise run into issues. Hence having each board member actively vote on a day helps with attendance. In addition, the following roles are a must on every board:

- Chairman - responsible for setting the agenda and going over the resolutions with management prior to the meeting.
- Secretary - responsible for noting the minutes and facilitating the approval of the minutes.

1. **Feedback and reviews:** While the board does not necessarily 'work' for you, they can benefit from frequent one-on-ones with executive management. These venues are important to establish a rapport in addition to conveying feedback to the board member directly. Almost all of the time this feedback should be encouraging in nature - "I really would love for you to bring up this insight in our next board meeting." In addition to informal feedback, it is helpful to have a formal feedback session with each board member where you can solicit feedback directly from them in addition to express what you want from them.

### What Belongs in a SaaS Employee Agreement

**Play:** Employee Agreement · **Owners:** Founder, COO · **Cadence:** As Needed · **Stage:** Pre-Revenue · **Effort:** 5 SP initial, 2 SP ongoing

**Summary:** Create comprehensive employee agreements that clearly delineate role scope, compensation, IP, reporting, and off-boarding—protecting both your company and your team members.

**Prevents mistakes:** #1 Hiring without background checks; #17 Giving away equity without vesting; #22 No IP protection with employees or contractors; #32 Hiring friends or family; #33 Overpaying for talent... underpaying for talent; #34 Not aligning interests; #65 Stingy on equity; #119 Not being firm and clear on terminations

**Templates:** Employee Agreement Template

Agreements are designed to clarify the relationship between parties. Employment agreements are a particularly difficult agreement type because any disagreement on the terms typically goes in favor of the employee. However, that is only after a disagreement has arisen. The power dynamic between the employer and employee is such that frustrations among current employees are often not expressed.

Take for example an employee that read his agreement to promise him 10% of the profit in his division. But a few weeks after his hiring, the company was reorganized and the employee was put into a larger division of roughly three times the size. The employee might rightly think that this means the variable compensation just tripled.

Management might have missed that nuance or have even had a conversation with the employee about how the compensation arrangement will have to change given the new structure. Obviously, frustration ensues.

> **The goal:** Align employees to the company's objectives and manage risk.

**How can Golden Section Assist?** Golden Section's venture partner can assist here.

#### Steps

1. Draft an Employee Agreement that clearly delineates the scope of the role and compensation details. Make sure that both expectations and compensation are thoroughly, unambiguously detailed in the agreement. The more clearly these details are outlined at the outset, the less resentment and potential conflict in the future.
2. In addition to scope of work and compensation details, Golden Section recommends including protocol for IP, reporting, and off-boarding.
3. Work with your legal counsel to finalize the employee agreement details.
4. Codification. Store your signed Employee Agreements in a cloud-based central backup location for easy reference.

#### Concerns

1. Avoid vague understandings with employees. If the primary metric of the compensation arrangement changes due to strategy change, take the time to address that and clarify with the employee. Failing to do so will certainly result in missed expectations and, at worst, extreme dissatisfaction and turnover.
2. Don't skip the paperwork in favor of expediency. Filling out paperwork in arrears is always trickier than you will expect. It is worth delaying the start, or living with pushed deadlines rather than hastily onboarding an employee who then refuses to sign the proper documents.
3. Don't skip legal. The law is extremely complicated. Employment law is even more so. In most jurisdictions the employee will have the automatic upper hand in a process. Therefore, make sure your documents are legal and that you leverage your legal counsel when dealing with exceptions beyond your normal arrangement.

### How to Protect IP and Confidentiality in a Software Company

**Play:** IP & Confidentiality · **Owners:** Founder, CTO · **Cadence:** As Needed · **Stage:** Pre-Revenue · **Effort:** 5 SP initial, 2 SP ongoing

**Summary:** Protect your intellectual property and trade secrets with IP & Confidentiality Agreements that prove your company took reasonable measures to keep them secret.

**Prevents mistakes:** #22 No IP protection with employees or contractors

**Templates:** IP & Confidentiality Agreement Template

A trade secret gives your company a competitive advantage as long as it remains a secret. Trade secrets include source code, customer lists, business and strategy plans, and employee lists, etc. If your company can prove it took "reasonable measures" to keep an element secret, then there is a legal remedy should an employee misappropriate that information. An IP & Confidentiality Agreement serves as an effective way to prove "reasonable measures" and to protect your competitive position. Don't skip it.

> **The goal:** Protect the IP and confidential information of the company.

**How can Golden Section Assist?** Golden Section's venture partner can assist here.

#### Steps

1. Define your IP and confidential information.
2. Work with your legal counsel to finalize IP and confidentiality agreements.
3. Codification. Store your signed IP and confidentiality agreements in a cloud-based central backup location for easy reference.

### When a SaaS Company Needs Audited Financials — and How to Prepare

**Play:** Audited Financials · **Owners:** Founder, CFO · **Cadence:** Annual · **Stage:** Growth · **Effort:** 21 SP initial, 21 SP ongoing

**Summary:** Engage auditors to produce audited financial statements that instill investor and customer confidence, reveal operational issues, and demonstrate governance maturity to potential acquirers.

**Prevents mistakes:** #23 Not paying taxes; #71 No active data room; #86 Not hard-closing financial statements

**Templates:** Audited Financials Template

A reminder that your goal is eventual exit. To achieve an exit at a high multiple, you need to convince a buyer they are purchasing a well-run, ethical business that will continue delivering predictable results after the acquisition. That confidence is earned with evidence of processes, systems, and financials that are above reproach. To that end, Golden Section recommends hiring a third-party auditor to verify your annual financial statements.

> **The goal:** Create a pattern of trusted financial results.

**How can Golden Section Assist?** Golden Section's venture partner can assist here.

#### Steps

1. Pick your auditor. Use the template provided to weigh considerations.
    - Typically, you can request a written proposal from the auditor outlining the scope of work and process.
    - Some firms set a range of cost in advance.
2. Engage an auditor and work with that auditor to deliver annual audited financial statements.
3. Codification. Store your audited financials in a central location for easy reference.

#### Important points

1. Size -- you might not find this relevant until your company is at $2M in sales, but it is worth working toward that before you are at that level. For instance, you can identify the firm you want to use and hire them for a compilation or review instead of an audit to get to know them.
2. Scope -- don't let your auditor run away with the scope. If your financial records, contracts, schedules are all well organized, the audit will be smooth and reasonably priced.

### What Insurance a B2B SaaS Company Actually Needs

**Play:** Insurance · **Owners:** Founder, COO · **Cadence:** Annual · **Stage:** Pre-Revenue · **Effort:** 5 SP initial, 2 SP ongoing

**Summary:** Secure the essential insurance policies (E&O/professional liability and D&O) that protect your company, directors, and investors from catastrophic financial risk.

**Templates:** Insurance Template

There are two types of insurance products that Golden Section, in particular, recommends purchasing in order to protect your investment and company. The first is Errors and Omissions (E&O) Insurance. An E&O policy protects your company, employees and other professionals against claims of inadequate work or negligent actions. E&O Insurance is professional liability insurance for tech companies. There are many types of professional mistakes that could potentially cost your customers time and money; you want to protect yourself from such claims.

Your company should also have Directors & Officers (D&O) Insurance. A D&O policy protects the personal assets of your directors and officers, and their spouses, if they are personally sued by employees, vendors, competitors, customers, investors, etc for wrongful acts in managing the company. Most directors won't agree to join your Board of Directors without a D&O policy in place.

Having such insurance policies in place to protect your company and personal assets is wise. Additionally, when you look to raise your first round of funding, any potential investor will want to see these policies in place to protect their investments as well.

> **The goal:** Purchase the right kind of insurance products to protect the investment.

**How can Golden Section Assist?** Golden Section's venture partner can assist here.

#### Steps

1. Consult an insurance agency to receive coverage options and quotes on E&O and D&O policies.
2. Sign up for coverage.
3. Know what you are buying -- insurance is opaque and the process is intentionally expedited to skip important questions from the buyer. Don't let that happen. Know what you are buying and keep good notes so that you know when it becomes relevant and where you are exposed.
4. Codification. Store policy and coverage information in a central location for easy reference.

## Sales & Marketing

### How to Build a Go-to-Market Strategy for Vertical SaaS

**Play:** Go-to-Market Strategy · **Owners:** Founder, Exec Team · **Cadence:** Continuous · **Stage:** Pre-Revenue · **Effort:** — initial, — ongoing

**Summary:** Define a cohesive go-to-market strategy that ties together product-market fit, vertical focus, customer segmentation, sales and marketing alignment, and distribution channels.

**Prevents mistakes:** #43 Horizontally scaling; #44 Buying a trade show booth... most times; #56 Betting customers will come if you build it; #118 Protecting the idea too much; #138 Not prioritizing revenue early enough; #144 Waiting for the perfect product before selling; #149 Lacking agility to adapt to market shifts; #153 Diluting Effort Instead of Concentrating Force; #159 Quitting Strategy Too Early

**Templates:** Go-to-Market Strategy Template

Our goal is to streamline the processes required to build your company so that it sees repeatable, scalable, profitable growth and is positioned for prime valuation for future acquisition. Ultimately, we believe that building your company according to the processes outlined in this playbook will accelerate, increase and smooth your sales engine and your growth.

The first stage of building a solid business is ensuring a product/market fit. Co-founder of Netscape and premier VC Marc Andreessen(https://pmarchive.com/guide_to_startups_part4.html), who coined this phrase, explains, \"Product/market fit means being in a good market with a product that can satisfy that market.\" A start-up can only be as successful as its market allows. Even if you have the A-team selling a superb product, if that A-team is selling it to the wrong market, they won't be successful. No amount of stellar marketing can make a company selling hospital beds to teenagers successful. Instead, we need to find the market that needs the product we are selling. We need a solid product/market fit.

We will first go through plays that will clarify the appropriate market and customer for your product and, more generally, your go-to-market strategy. With that foundation, we will turn to the next set of plays, which build out your sales and marketing engine.

### How to Set a Sales Philosophy for a B2B SaaS Company

**Play:** Sales Philosophy · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 5 SP initial, 3 SP ongoing

**Summary:** Ground your go-to-market strategy in a process-oriented sales philosophy built on Moore's technology adoption curve—so you approach the right prospects with the right product at the right time.

**Prevents mistakes:** #6 Demoing early in the sales process; #10 Selling phantom product; #13 Hiring sales for rolodex; #78 Ending up in win/lose ever; #87 Bluffing; #91 Engaging in brinkmanship; #125 Getting starstruck by big name companies.; #144 Waiting for the perfect product before selling; #151 Expecting sales hires to sell like founders

#### Background

There is no magic to sales. It is a process like any other, complete with the end goal of satisfied customers. We want to maintain that process-oriented outlook to sales and marketing as we strategize. We want to turn the sales and marketing blackbox into a definable, predictable series of goals, milestones and dependencies so we can build and maintain high growth over time.

To that end, it is important to have a theoretical understanding of a company's growth model before we refine your company's go-to-market strategy. We believe one of the best frameworks for understanding a company's growth model has been created by Geoffrey Moore in his book, \"Crossing the Chasm.\"

Generally, Moore argues there is an adoption curve for new technologies. There exists a certain, small group of individuals, labeled \"Innovators,\" who will be your first customers. These are the techies who are always up for trying a new, unproven technology. As a company, you can deliver your core, minimum viable product to them, and they will gladly experiment with it and give you important feedback to refine your development and direction.

Once you have exploited your Innovator market, you progress as follows:

1. Early Adopters: While not necessarily willing to try an unproven product, these Visionaries search for new-to-market tools to get a competitive edge. They are willing to pay more for your product than an Innovator, but will expect a whole product as opposed to the minimum product. At this stage you are still highlighting the innovation of your product, but only selling when you can prove improvements in productivity. The Chasm: After exploiting these two groups, your company will need to \" cross the chasm\" as you enter the mainstream market. The key to crossing the chasm is having a fully developed, \"whole\" product and a convincing ROI story for your customers.
2. Early Majority: After crossing the chasm, you are pursuing a much larger group of customers who no longer see your product as \"new\" but as \"mainstream.\" These are the pragmatists who have high expectations for your company and will also fuel major growth for your company.
3. The Bowling Alley: as you first begin exploiting the early majority cohort, you are in the \"bowling alley.\" Here, your strategy will be to pursue one \"head pin\" client who will then help you win the next. Again, the early majority group is one of pragmatists, and they want to stay with the herd rather than getting left behind.
4. The Tornado: once you have made significant impact in the bowling alley, your company will enter \"the tornado,\" during which you will experience rapid growth and sales. By this point, it is key to have developed a highly efficient channel to deliver and implement your product within your client companies and then ensure adoption.
5. Late Majority and Laggards: The final stages of growth will include the remainder of your addressable market. This is considered \"Main Street,\" where your sales, marketing, and customer strategies are refined and in place.

The sales process rewards the disciplined, those who efficiently use their resources to approach the right prospects with the right product at the right time. We will walk you through the process of defining that disciplined strategy so that you have a repeatable and scalable sales process.

#### Play

1. Before we do a more rigorous discovery process to identify market, customer segment, buyer personas, and value propositions, we would like you to use the framework above to brainstorm potential customers and then individuals (not necessarily in the same companies you already listed) that fit into each category in the adoption lifecycle.
2. Given their needs and motivations according to Moore, brainstorm what value proposition your company makes to companies / individuals in each group (ie what is the value prop to an Innovator? How does that differ from the value prop to an Early Adopter?).
3. Brainstorm what product features would add value according to each group's needs and motivations.

1. Brainstorm what liabilities or weaknesses your company needs to overcome in order to successfully sell to each group.
2. Finally, in a theoretical, hindsight exercise, brainstorm what might prevent your company from crossing the chasm and entering the mainstream market.

We think this exercise establishes a strong foundation for future exercises. And as we get deeper into the weeds in future plays, we think this will serve as an important high-level reminder of your goals and needs as a company.

### How to Sell Vertical-Specific Software Into Your Industry

**Play:** Vertical Specific · **Owners:** Founder, Exec Team, Sales Lead · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 34 SP initial, 8 SP ongoing

**Summary:** Identify and focus on a specific vertical where your product solves critical pain points, enabling quality revenue, deep expertise, pricing power, and efficient customer acquisition.

**Prevents mistakes:** #152 Forgetting You're Part of a Bigger Ecosystem

**Templates:** Vertical Specific Template

At this point, you have a product you believe in; one designed to solve a real pain point. As we have just discussed, your product/market fit needs to be rigorously examined to set your company on a high-growth trajectory. Thus, selling to anyone who will buy your product is not a sufficient sales strategy. This approach spreads your company too thin across potential markets and prevents you from fully and efficiently tapping into any one or two specific ones. Worse still, the iterative cycle of sales and customer feedback informing product development cannot work when you are spread thin. Instead, thoughtfully identifying a specific market segment, or vertical, for your company to exploit is a much more efficient and effective sales strategy. There are several benefits to creating a vertical-specific product offering:

1. *Quality Revenue*: by pursuing a vertical in which your product is truly capable of solving the pain points of your customers, you earn revenue you can count on over the long term. Developing your product to answer the pain points of a specific vertical makes your product truly indispensable to your customer and reduces churn.
2. *Expertise*: limiting your company to one or two specific verticals allows your team to dive deep into a narrow issue, understand it thoroughly and then address it fully and effectively. The company can develop a deep understanding of a customer's pain points, their sources and how to fix them.
3. *Reputation*: with the expertise your company has honed, you can earn the reputation as a thought leader in that industry. Over time, a reputation such as this gives your company the advantage of possible virality and pricing power.
4. *Sales Efficiency*: instead of casting a wide net, your sales team will be able to address a focused, targeted group of potential customers you know benefit from your product. This makes the sales process run more smoothly and allows the sales team to maintain direction and gain momentum. Your sales team will maximize sales efficiency by developing a repeatable sales process and selling to prospective clients most likely to purchase, thus reducing acquisition costs. Bringing on customers who are the best fit for your product earns you higher quality revenue that has lower churn and greater upsell potential.
5. *Product Efficiency*: focusing on a tight vertical enables the iterative feedback loop that turns customer feedback into a competitive moat to hone your product. The opposite, however, results in an enormous amount of technical debt as the fixed costs of competing in a particular vertical start to compound and eventually crush your business.

**The impact:** Identifying the best vertical for your company will impact the activities of all areas of your company: development, sales, marketing, and executive. It allows your company to pursue a deep understanding of a particular niche, make a significant impact for your customers in that area and establish a defensible market position in your vertical. Your team will need to revisit this discussion regularly to ensure correct vertical identification and to explore new opportunities for growth within the vertical and in new verticals.

> **The goal:** Identify one or two verticals in which your product is most adept at solving a customer's pain points.

#### Steps

1. **Prepare** by inviting players who have a deep knowledge of internal operations (i.e. Head of Sales, Head of Development, Head of Marketing, Executive team) and external factors (i.e. client-facing sales team, industry experts, etc.) Ask each person to come prepared with their thoughts on the possible verticals for your company and major market trends. Make sure someone (if not everyone) in the room has personal and direct experience with the customer issues being addressed.
2. Meeting 1: Vision and Delegation
    - Share company's overall goal and objectives in the mid and long term, painting the picture for where the company is going and what is most important to it.
    - Set vision and objectives for vertical identification process.
    - Identify 4-5 potential product/market combinations for exploration.
    - Assign research to appropriate player.
    - Data will be both qualitative and quantitative.
    - Qualitative: ask those responsible for researching qualitative factors to report back pertinent information that will allow the team to assimilate the positive and negative information to assign a rating to that factor. Remind team that **interviews (customer, expert salespeople, etc.) are a great source of information.**
    - Quantitative: for current product metrics, use your CRM to isolate opportunity data from the past year. Many market opportunity numbers can be found through the Bureau of Labor Statistics.
    - Set deadline for data collection.
3. Meeting 2: Scorecard Creation
    - Assimilate data.
    - Discuss factors as a team to assign a point value for each factor.
    - Allow the person responsible for researching that factor to present the data.
    - Allow team discussion to assimilate and refine that information. Set an expectation that data will be thoroughly discussed. It is important for the team to play "devil's advocate" during this time. While optimism regarding a particular vertical may lead discussions, to have a full picture of each factor, risks and counterpoints need to be fully explored. There is a time for optimism and excitement, but this is not it.
    - As a team, assign a value to that factor, with 1 being the weakest, or a liability to your company, and 5 being the strongest, or an asset to your company.
    - Sum the factor totals to create a scorecard for each of your possible verticals. The vertical with the lowest value will likely be the weakest option and the vertical with the highest value will likely be your company's strongest option.
    - Add a variable for the number of factors that must go well and the probability of success; pick high probability, low complexity verticals.
4. Meeting 3: Gut Check and Planning
    - After a period to process the findings in Meeting 2, reconvene to discuss the findings.
    - Do the top one or two verticals sit well with the team?
    - How do market trends play with these top verticals? Does the vertical play well with future developments and trends in this field?
    - In a post-mortem review of your company, what would be the reason this vertical failed?
    - Choose one or two verticals for your company to align itself with.
    - Brainstorm how the company can shift to align itself in the chosen verticals and the order of operations to accomplish this.
5. Ongoing questions:
    - How can we improve our position within this vertical?
    - Operational Improvements:
6. What do others do better than us?
7. Why do we lose sales?
8. What expertise / credentials do we need to develop?
    - Product improvements:
9. Are we solving for the right pain points? Is there a more foundational problem we're not addressing?
10. Can we address the pain point in a better way?
11. Can we address the pain point more completely? Are there additional, related pain points we could also be solving?
12. What do our customers want to do with our product they can't do now?

#### Troubleshooting

*If you're struggling to identify potential verticals,* think of different markets or customer profiles that experience the pain that your product solves. Your potential verticals may be in different industries or demographic categories. Now is the time to explore all prospects and not be limited in thought.

*If you're struggling to provide enough meaningful metric data for potential verticals,* use the alternate metric strength section instead. With the section, you won't be using historical data as in the primary metric section. Rather, you will be projecting potential metrics based on your targets and assumptions to see which vertical is the best candidate. Begin by listing your Target ARR (end of year 3) across all products.

Estimate the projected ACV and win rate for each product/market combination. With these assumptions, you can calculate the annual \# closes and demos that would be required to reach your target ARR. From there, you can assign a probability that your company would be able to deliver those metrics for each product.

*If you already are focused on a few verticals and have some traction,* then use this exercise to focus your energy on which verticals deserve the most attention. A key indicator that your team is suffering from a lack of focus is a crushing product backlog with deadlines that seem insurmountable. This normally occurs when several different verticals that need different solutions are crammed into one product.

### How to Segment Customers for a B2B Vertical SaaS Company

**Play:** Customer Segmentation · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 21 SP initial, 8 SP ongoing

**Summary:** Within your chosen vertical, segment customers by firmographic traits to identify the most valuable segments worth pursuing—enabling focused product development, targeted marketing, and pricing power.

**Prevents mistakes:** #11 Building without customer knowledge; #124 Only selling to one customer.; #132 Too broad of product; #133 Switching target customers too quickly

**Templates:** Customer Segmentation Template

After identifying your company's vertical(s), strategize how best to develop the business to win in each vertical. Your goal is to establish a defensible market position within the vertical, and you need to figure out where to start. We need to identify the traits your highest quality customers share and then target prospects who share those traits.

To clarify the difference between a vertical and customer segmentation, consider this example: Before the vertical identification process, Alpha Company had three potential product/market combinations, and, through the process, identified one vertical as the most attractive: selling CRM software to hotels. As a next step, Alpha Co needs to determine which segment of hotels to sell to in order to meet its target of $10M ARR by the end of Year 3.

To attain this target, Alpha needs to develop its product and tailor its sales and marketing strategies to meet the particular needs of a specific cohort of hotels; at this beginning stage, it is unlikely Alpha can provide a CRM product that meets the unique needs of both boutique hotels and large, multinational chains. It is unlikely that Alpha's S&M team can effectively deliver a convincing message and value proposition to a similarly diverse range of potential customers. So, Alpha Co begins a customer segmentation project to identify who its highest quality customers are and what factors those high quality customers have in common. Through its analysis, Alpha Co identifies commonalities shared by its highest quality customers: non-multinational boutique hotels located in large cities. This insight leads Alpha to develop its go-to- market strategies to pursue sales to prospects who share these qualities.

**The impact:** Determining which customer cohorts make the highest quality customers continues the process of refining your company's go-to-market strategy and gaining a foothold in your vertical. It is an important step in the process to direct the efforts of your sales, marketing and product teams, increase your sales efficiency, and earn higher quality revenue.

> **The goal:** At the end of the process, your company will have identified the two or three top customer cohorts.

#### Background

When considering potential segments to pursue, keep in mind the linear relationship between Customization and ACV (Annual Contract Value). For simplicity sake, you can assume a linear relationship; as Customization increases, so does ACV. This makes sense.

The power of this thought exercise, though, is considering the area below the line connecting customization and ACV - contracts that require high customization and deliver a lower-than-expected ACV. This is death valley and is not revenue that is worth pursuing. When considering segments, make sure that the level of effort required to deliver your value proposition matches the ACV.

#### Steps

1. **Meeting 1: Vision and Hypotheses**
2. Set vision and specific objectives for Segmentation process.
3. Preview work plan, timeline and needs from stakeholders.
4. Brainstorm potential segmentation hypotheses. There may be a large number of possible factors, and some may be less obvious than others. This is a good time to get significant input from others in different areas of your company.
5. Identify at least 10 segmentation hypotheses.
6. Depending on the time and amount of customer data you have, you may explore more segmentation hypotheses. The more customers, and therefore customer data, you have, the more hypotheses you can include. You will need the number of customers to significantly outsize the number of segmentation hypotheses so that meaningful relationships can be established.
7. Define who and what characterizes a high quality customer. As with segmentation hypotheses, the attributes that make a high quality customer are unique to your company. It is important to determine a quantifiable, standardized definition, however, that will support this segmentation analysis. Again, this would be a good opportunity to get input from others in your company.
8. Factors that may contribute to a customer's quality score:
    - ACV
    - Historical contract expansion
    - Historical contract churn
    - Cost of acquisition (including a factor for length of sales cycle and/or number of touchpoints)
    - Need for support
    - Need for special usage development / support
    - Purity of desired 'ROI' and value prop (cascading or complicated value-props lead to customer trouble)

1. Factors can be weighted in determining customer quality to more accurately reflect the importance of various components.
2. Exploration:
    - Assign Customer Quality Score for each historical and current customer using formulas you developed in prior steps and CRM data.
    - Collect data for each segmentation hypothesis.
3. Analysis:
    - Analyze data to determine any relationships between customer quality and segmentation factors.
    - This is not a rigorous, scientific data review. Rather, you are looking for relationships between variables and quality.
    - The relationship does not need to be linear; in other words, as a variable increases, the customer quality value does not necessarily need to increase.
    - Look for clusters (i.e. all multinational companies are in the top quartile of customer quality) to guide your analysis. Support clusters you find by checking to see if a relationship holds (i.e. are there any multinationals in the bottom quartile?).
    - Determine whether each factor has a positive (makes a better customer), negative (makes a worse customer), or neutral (ambivalent) effect on customer quality.
    - Finish the analysis with a final assessment for each factor. This one line definitive statement will clearly indicate the impact each factor has on customer value.
4. Verification:
    - Single out the two or three factors that have the strongest relationship with customer quality. These are the customer segments your company will pursue.
    - Confirm the relationship between the identified segments and customer quality by performing a simple average of customer quality for the customers who qualify for a specific segment. Is the average customer quality as high as you were expecting for that segment?
    - Finally, check that the identified segments align with your company's market objectives.
    - Estimate the market size of each segment. Using your company's SAM size, determine each segment's percentage of SAM. It is also helpful to estimate each segment's potential growth to ensure room for future growth for your company.
    - Sum the % SAM for all identified segments. A good rule of thumb is that the % SAM totals at least 25%. This represents a good starting point for your go-to-market strategy. If the total is less than 25% SAM, then it may be appropriate to reconsider the chosen segmentations.
    - Send template with data, analysis, and verification to team members present at Meeting 1. Ask for each person to review the data and findings in preparation for feedback at Meeting 2.
5. Meeting 2: Gut Check and Planning
6. After a period to process the information sent, reconvene to discuss the findings.
7. Do the top segments sit well with the team?
8. How do market trends play with these top verticals? Does the vertical play well with future developments and trends in this field?
9. Formally identify two or three customer segments for your company to align itself with.
10. Brainstorm how the company can shift to align itself in the chosen segments and the order of operations to accomplish this.
11. Codification:
    - Gather your conclusions in a presentation or document to store and communicate to additional stakeholders (board members, investors, new employees etc). Refer back to this document periodically to assess your hypothesis as your business develops.

#### Troubleshooting

*If you're struggling to identify possible segmentation factors*, use the following(https://openviewpartners.com/blog/customer-segmentation/#.XbcnduhKg9B) categories(https://openviewpartners.com/blog/customer-segmentation/#.XbcnduhKg9B) to direct your thoughts: (1) geography (in terms of location or reach), (2) type of industry, sub-industry or customer served, (3) product use, (4) company size (in terms of revenue, employees, etc), (5) product delivery model, or (6) special use or needs. Do any of these variables seen in your customers potentially make them a higher quality customer to you?

*If the process seems forced or you feel it is arbitrary,* then you likely don't have sufficient customer representation on your team. To solve this, reach out to a few customers, buy them lunch and use the time to dig into the factors or bounce your hypothesis off of them.

### How to Build Buyer Personas for B2B SaaS Sales

**Play:** Buyer Persona · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 21 SP initial, 5 SP ongoing

**Summary:** Create detailed buyer personas for each customer segment—mapping decision-makers, their pain points, success metrics, and buying criteria to drive focused sales and marketing.

**Prevents mistakes:** #11 Building without customer knowledge; #58 Not doing research on a customer before meeting; #111 Developing product in a vacuum; #133 Switching target customers too quickly

**Templates:** Buyer Persona Template

A common phrase is that a sales team doesn't sell to a company but to a person. So, we want to add one more perspective to inform your go-to-market strategy by creating an archetypal buyer persona. A buyer persona will paint a picture for your teams to keep in mind as they sell, market and develop your product. A persona adds flesh to specific key buyers in your segments -- who they are, their challenges, needs, motivations and goals -- so that your company can be best prepared to serve those key buyers.

A very important note here is to create a buyer persona relevant to where you are in the technology adoption curve \[for more information, see Play: Overall Sales Philosophy\].

Are you just beginning and in the Innovator stage? Then you must create personas for both the companies and then the people within those companies who would be classified as Innovators. Don't try to sell to people or companies later in the adoption curve than where you are. It won't be worth the effort.

**The impact:** Through this process, you will identify the buyer most likely to purchase your product within each segment and then add information to elucidate that buyer's decision-making process. In all, your company will gain a deep understanding of who they are selling to and their needs. This will position your company to develop and deliver what your customers truly want and intuitively understand how to market, price, sell, and expand your product. Teams at high-growth companies have high internal and external expectations set on them, so a focused, detailed go-to-market strategy that includes personas will enable them to reach their targets.

> **The goal:** Create a persona of your ideal customer, including information such as demographic, role within company, pain points, needs, and uses for product. As much as possible, rely upon qualitative data (ie customer interviews and focus groups) and quantitative data (ie user analytics, internal data on sales process and support calls, customer multiple-choice surveys through Survey Monkey, etc) to inform this process rather than assumptions.

#### Steps

1. **Meeting 1: Vision and Brainstorming**
2. Preview work plan, timeline and needs from stakeholders.
3. Brainstorm specific mandate. What are the questions that need to be answered regarding the buyers in your customer segments? Is it understood who the buyers are? What are their pain points? Motivations? Buying roles? Buying criteria? Buying process? Decision-making authority? Use of other tools?
4. **Internal Research**: Aggregate existing internal knowledge on the personas to form a hypothesis of what each persona looks like.
5. Following the direction and questions set out at Meeting 1, interview key internal players to build out hypotheses on the personas.
6. Example questions to ask each team:
    - Sales Team:
7. Is there a typical sales process? What does it look like?
8. Who are the key players in the process? What are their titles and roles?
9. What are their needs and motivations?
10. What makes them pull back from the process?
11. Who are our competitors?
12. Why does our company win or lose when evaluated against competitors?
    - Marketing Team:
13. What is the current marketing strategy and why?
14. How has that marketing strategy evolved and why?
15. What value propositions get the best response?
16. What is our RAS per marketing vertical?
    - Customer Success Team:
17. What have you learned from the implementation process regarding how the product is used?
18. How would customers like to use the product?
19. Where are they struggling to use the product correctly?
20. What changes are customers suggesting?
21. What kind of complaints do you receive?
22. Why do customers churn?
    - Product Team:
23. Who did you develop the product for?
24. Why did you add certain features?
25. What features have you not added and why?
26. Collect and aggregate data systematically to form persona hypotheses based on the information collected so far. At this point, you should have a fair picture of:
    - The key buyers and users (specific role within company) within each segment.
    - For each persona:
27. His business role
28. Buying role
29. Key criteria (needs, challenges, requirements)
30. Current software ecosystem
31. Existing solution (that your product would be replacing)
32. **External Research**: Conduct external research to clarify, update and expand on your draft personas.
33. Develop any external research tools you are going to use: Interview guides, focus group guides, surveys, etc.
    - A word on Interviews: customer interviews are a very important part of building out a buyer persona. What better way to understand the thought processes of your buyer than by asking the buyer herself?
34. It is important to be prepared with questions drafted beforehand. Plan on asking no more than 10 questions so as to not overwhelm your interviewee. Mainly ask open-ended questions. Sometimes helpful to include a few quantitative questions using a 1-5 scale.
35. Always begin your interview by introducing yourself, your company, and what you are trying to learn.
36. A very good way to start an interview is with an open-ended question regarding how the problem at hand has affected the interviewee and what she has done to try to address it. An open-ended question like this allows the interviewee to explain her process to you and might reveal factors that had not previously been discussed.
37. Coordinate the logistical details of primary research interviews and surveys.
38. Conduct interviews and surveys.
39. Analysis
40. Standardize responses from raw interview notes.
41. Aggregate all interviews, surveys and other data collected.
42. Analyze data, building a persona for each segment that answers the team's mandated questions from Meeting 1. Persona should include:
    - Business Role:
43. What is she responsible for?
44. What does it mean for her to be successful?
45. What problems does she want to solve (in her words)?
46. How technically savvy is she?
    - Role in buying process:
47. How does she get involved in the process?
48. What is her decision-making authority?
49. Who does she influence and who is she influenced by?
    - Use of Product:
50. Will she use the product? If so, how does it fit into her product ecosystem?
51. How does the product benefit her? What is the value proposition to her?
52. What feature will she use? What undeveloped features does she want?
53. How often or how much will she use the product?
    - Buying Criteria:
54. What characteristics matter most to her (ie performance, tech, ease of use, etc)?
55. What are her concerns related to the product?
56. Who are competitors? How they out- and under-perform our product?
    - Engagement Insights:
57. Create an Elevator Pitch.
58. Create a Marketing Message to describe your solution.
59. Send aggregated raw data, analysis, and persona presentation to team.
60. Meeting 2: Gut Check and Planning
61. After a period to process the information sent, reconvene to discuss the findings.
    - Do the personas sit well with the team?
    - Is there additional color that needs to be added?
62. Brainstorm how the company can shift to align itself to better use the information included in the persona and the order of operations to accomplish this. Particularly, consider:
    - How to tailor
63. Messaging
64. Sales process
65. Pricing model/level
66. Product bundle
    - Create segment-specific sales and development goals
67. Codification: Gather your conclusions in a presentation or document to store and communicate to additional stakeholders (board members, investors, new employees etc). Refer back to this document periodically to assess your hypothesis as your business develops. Everyone in your company needs to know your buyer personas because these characters will also be involved in your implementation, support, and renewal processes.

**One Step Farther**: Create a negative persona, or the prospect who is not worth engaging. This will maximize your resources for high potential prospects and keep your acquisition costs low and sales productivity high.

#### Troubleshooting

*If you're struggling to provide enough meaningful information to construct the personas,* start with our alternative Value Matrix. It is a simplified version of the personas and is a good starting place. With more sales experience and customers, you can add to the value matrix over time to more fully flesh out the personas.

#### Structurally Drawn From:

http://cdn2.hubspot.net/hub/366266/file-1826191113-pdf/eBooks/Buyer-Insights-eBook-Final.pdf

### How to Build a Value Proposition Around Customer ROI

**Play:** Value Proposition & Customer ROI · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 13 SP initial, 5 SP ongoing

**Summary:** Quantify the specific value your product delivers to each buyer persona and customer segment—translating features into business outcomes and financial ROI.

**Prevents mistakes:** #5 Delivering pricing before value; #20 Hip-shot product pricing; #56 Betting customers will come if you build it; #67 Assuming the tech will speak for itself; #68 Not accounting for the pain of change in customer behavior; #95 Tolerating misunderstanding from customers; #126 Not having clear messaging.

**Templates:** Value Proposition & Customer ROI Template

Pain, Claim, Gain, as in Customer Pain (need), Your Claim (solution) to the Customer's Gain (ROI).

The value proposition of your solution is what will carry prospective customers through the sales process. It is their recognition that what you offer will not only address their pain, but yield a marked gain. Starting at the very beginning of the sales process, prospects must see the value in your solution.

**The impact:** Generally, your value proposition will be used throughout your marketing and sales process. You will then be accountable to customers to deliver on your value proposition so they renew term after term. Additionally, a Customer ROI figure will serve as the backbone to your demo and streamline your development process. Ask the question - how can we further improve our Customer's ROI?

> **The goal:** You should end with monetized figures totaling the cost of the problem you are solving and the savings your customer will see with your product. These figures will then be used to calculate an ROI and create your product's value proposition.

#### Background

It is important to nail your value proposition as it will be a key factor in many purchase decisions for early adopters \[see Play: Overall Sales Philosophy\]. Resist the temptation to overestimate any savings; your goal is to maintain trust and credibility. Expect that prospects will push back on different aspects of your value proposition. Make sure it is bullet-proof and be prepared to defend it.

In addition, value-oriented pricing uses the value proposition as the justification for your pricing. You will need clear and compelling evidence for your value proposition.

#### Steps

1. What is the problem? What precise problem are you solving?
2. What is the cost of the problem in real dollars?
3. Brainstorm all intangible and tangible costs due to this specific problem. Some elements to consider: effects on labor, reputation, time, workflow, deals held up, or missed opportunities.
4. Monetize these costs.
5. What is your solution?
6. What is the value of your solution in real dollars?
7. Brainstorm all potential sources of value a Customer may experience while using your product. Some elements to consider: how your product improves a Customer's current and future workflow, use of time, allocation of resources, reputation or ability to solve future constraints.
8. Monetize these savings. Resist the temptation to overestimate any savings; your goal is to maintain trust and credibility.
9. Calculate ROI. ROI = (Total Savings - Cost of Product) / Cost of Product
10. Note: The cost of product here is the actual amount a customer will pay to acquire your product (ie a monthly fee), not the cost of the problem that you monetized in Step 2.
11. How are we unique?
12. Craft your value propositions using the ROI and uniqueness factors you have gathered. It is helpful to start with a longer description to get your message across and then distill it into its most concentrated form.
13. Include these figures (cost of problem, value of solution, ROI), along with supporting information, in your demo and marketing materials.

#### Troubleshooting

*If you're struggling to identify the value of your product to a Customer,* consult with stakeholders outside the sales team, including customers in the form of a focus group, industry experts, and developers. You are looking for those with a unique perspective who can help the sales team develop a more robust picture of the value of a product.

*Intangible contributions to a product's value are difficult to monetize*. Instead of forcing a dollar figure to these intangibles like reputation or other social elements, Golden Section recommends including them in the ROI Analysis as a separate list of \"Intangible Value.\" A list such as this allows your company to include these intangibles without losing your credibility for forcing a definitionally subjective valuation.

### How to Build a B2B SaaS Sales Deck That Closes

**Play:** Sales Deck · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 21 SP initial, 8 SP ongoing

**Summary:** Design a compelling sales presentation that tells a bigger change story, teases the Promised Land, presents features as magic gifts, and backs it all with customer evidence.

**Prevents mistakes:** #67 Assuming the tech will speak for itself; #126 Not having clear messaging.

**Templates:** Sales Deck Template

Your sales deck is an opportunity to put your company and product in the context of a bigger story. Your goal is to create an emotional frame for your product and put it in the context of a bigger, compelling narrative prospective clients can buy into. We see your sales deck as an epic novel in which you are the Fairy Godmother getting Cinderella (your customer) to the ball.

**The impact:** You have a unique opportunity through your sales deck to create an emotional pull to your product. A good sales deck will speak to a prospect's meta-desires and show them how your product is absolutely necessary to achieving those desires. Numbers will interest prospects but the emotional storyline you create will be what sticks with your prospects.

> **The goal:** Create a strategic, memorable story telling why your product matters. A sales deck is usually created in PowerPoint (24slides.com(http://www.24slides.com/) is another good resource), and used during in-person meetings and to generate marketing material.

#### Background

To reiterate, the goal is not to create a deck outlining your product's features. In fact, product features will take a backseat. The goal instead is to tell your product's story in the context of your customer's story. A sales deck built on your product's story will invite more conversation, create urgency, and tell your buyer exactly how your product will help them achieve their goals.

We recommend using Andy Raskin's advice(https://openviewpartners.com/blog/the-greatest-sales-deck-ive-ever-seen-its-zuoras-and-its-brilliant-heres-why/#.XcnNCehKg9B) on creating a compelling sales deck. According to Raskin, a persuasive sales deck contains the following elements and follows the outline below:

1. \"Name a Big, Relevant Change in the World\"
2. This is the grand picture. You need to share what is at stake and create a sense of urgency. Specifically name the stakes and how you can uniquely help your prospects end up on top.
3. This is not the time to discuss your company, product, or team. Rather your goal is to prove to prospective client that you understand their needs in the context of this big change and intimately understand how to help them succeed.
4. To build confidence in your grand picture, it is often helpful to show a building trend related to the relevant change in the world.
5. Traditional advice is to start a pitch with the problem. Raskin's advice is a mind shift: get prospects to think aspirationally first instead of focusing on a problem.
6. \"Show There'll be Winners and Losers\"
7. Your goal is to show that inaction means losing.
8. Only with your product will your customer be able to win in the change underway.
9. \"Tease the Promised Land\"
10. At this point, you have created a change story and created an urgency by discussing winners and losers. Next, you will want to paint a picture of what could happen because of a partnership between your company and the prospect's.
11. You are still not giving details on your product but giving an outline of what you could make possible for your prospect.
12. You want to make this \"Promised Land\" attractive but difficult for them to achieve without your company's help.
13. The Promised Land is crucial, as it will stick with your listeners. They will likely use the image/tag line you create here to share with others what your product does.
14. \"Introduce Features as 'Magic Gifts' for Overcoming Obstacles to the Promised Land\"
15. Now, you can explain why it is difficult to reach the Promised Land without your product.
16. This part of the deck should include the \"fairy godmother\" aspects of your product and will be the most detail you give regarding your product.
17. What are the magic gifts your product offers to get a prospect to the Promised Land.
18. \"Present Evidence that you can make the story come true\"
19. They'll be skeptical, so must leave with convincing evidence you can in fact bring them to this Promised Land.
20. This is a good time to include customer testimonials and outcomes to build confidence.

Generally, it is crucial to be very rigorous and diligent in your approach to sales and marketing. Every qualified sales meeting is very important and worth spending significant time preparing for. Don't wing these meetings. Rather it will pay off to tailor your sales deck to each prospect. Consider whether to tweak your language regarding the Promised Land or Magic Gifts for a particular prospect. In the last slides, include customer success stories for customers who have a similar story to your prospect or a customer whose reputation would influence your prospect.

#### Steps

1. Find and review several example sales decks to get a vision for how other companies have structured theirs and what works well and what doesn't. You can search online or through SlideShare. Additionally, some companies will post their sales decks on their websites.
2. Using the background information above and the example sales decks you've found, brainstorm your Big, Relevant Change in the World.
3. Once the team has selected the most compelling change, write a description summarizing it. You will use this description to outline your thought process behind choosing this Big Change and how it affects your vertical.
4. Also, choose a catchphrase that encapsulates this change. This catchphrase will be used widely in your sales and marketing materials and lingo. It is like a slogan that will be used in materials and by sales reps to remind prospects and customers of the importance of your product.
5. Finally, brainstorm any historical trends that can be used in the pitch deck to support your case for the Big Change.
6. Brainstorm and decide what will happen to those who lose out in the Big Change and those who win.
7. What data can be used to support your assertions? Or what company case can be used as an example to illustrate your point?
8. Brainstorm and decide what the Promised Land will look like. What will the prospect's life look like because of your product in the context of the Big Change?
9. Brainstorm and decide the obstacles the prospect will face in reaching the Promised Land if they don't have your product?
10. What Magic Gifts does your company offer to smooth the way to the Promised Land in light of these obstacles?
11. It may be helpful to work backwards here. What edge does your product offer? What advantage would your product give someone when they are facing obstacles?
12. Create an exhaustive list of customer success stories with relevant information (quotes, testimonials, data, ROI, etc.) for you to use
13. Take all of this information and put it in a PowerPoint. Use the example sales decks you reviewed at the beginning of the process to inform your formatting, images, font, etc.

### How to Run an Enterprise Sales Process for Vertical SaaS

**Play:** Enterprise Sales Process · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 34 SP initial, 13 SP ongoing

**Summary:** Build a repeatable enterprise sales process that clearly defines stages, qualification criteria, and resource allocation—enabling predictable forecasting and rapid new hire ramp-up.

**Prevents mistakes:** #5 Delivering pricing before value; #6 Demoing early in the sales process; #7 Not qualifying sales opportunities; #52 Fuzzy requirements; #58 Not doing research on a customer before meeting; #134 Happy ears with customers; #156 Too Many Conversations, Not Enough Closures

Your Sales Process outlines the steps necessary to take an opportunity to close. In detail, it systematizes your sales teams' methods for prospecting, sales calls, qualifying leads, closing, etc. The sales process is an important living document in which your sales team will accumulate best practices for engaging and converting prospects.

The goal of an enterprise sales process is to create a scalable, repeatable process whereby new team members can onboard quickly and confidently and know how and where to do what. In addition to offering confident onboarding, an effective enterprise sales process aligns sales investment with the customer journey and with the likelihood of closing, thereby reducing risk and increasing return potential.

For instance, if the first step in your process involved an onsite demo with several experts on your team then, regardless of how good you are, you would be wasting money. A first meeting is a low probability customer event (let's say 5% likely to buy). If your onsite demo costs $10K of travel, time and energy, then that customer meeting would cost $200K per closed deal. If, however, your investment of $10K occurred at the 90% likely stage, then the total effective investment would be only $11.1K per closed deal. The degree of effort at each stage needs to be compelling enough to ensure that a likely close, perfect fit customer keeps engaged with the process, but not any more expensive than that.

**The impact:** In defining a Sales Process, you will establish best practices in the pursuit of a repeatable and scalable sales approach. You create structure and efficiency that empowers your sales team, keeps them accountable, prevents engagement mistakes (that could lose you a client), and allows accurate sales forecasting.

> **The goal:** Create a Sales Process and tailor it to each segment/persona.

#### Background

A scalable enterprise sales strategy allocates resources to the best opportunities, or the ones most likely to close. Moreover, a well-designed enterprise sales strategy walks a customer through a journey. It neither pulls nor pushes, but instead gently guides.

Successful strategies highlight the problem, define the cost, and then show how your solution can solve it and create value.

You will create a sales process that plans out and documents each step, from lead generation and qualification to win and transition. In general, each stage should be completed with verifiable evidence before progressing to a new stage. This evidence should make the founder and management team comfortable expecting that the customer is truly at that step.

It is helpful to assign probabilities of closing the customer to each stage of the process. Under normal conditions, qualified deals (i.e. after the qualification stage) should close with a 15-25% probability. These probabilities allow your team to understand what a customer is worth at each stage on a probability-weighted basis. This allows you to align your sales and marketing investment against these stages. The investment allocated to each stage should be less than the incremental value of surpassing that stage.

An effective sale requires a lot of moving parts. Building a sales process assumes the following prerequisites:

- Compelling value proposition
- Established marketing channels and active leads
- Existing sales team
- Existing marketing collateral
- Existing enterprise contract structure
- Reference clients

Once the sales process is created, a best practice to adopt is to host a daily standup within the sales team on any deals in the closing or contracting stages. This ensures deals close to the finish line get the attention necessary to get them across. Often, deals can stall at the end because sales feels like the contract is in the bag.

We recommend establishing a sales meeting rhythm that includes:

- *Daily* standup with sales team -- focus on getting appropriate attention to high probability deals.
- *Weekly* pipeline review with sales team -- focus on the top of the funnel and ensuring the pipeline stays filled.
- *Weekly* pipeline review with sales leadership and senior leadership team -- focus on opportunities near closing and any friction between sales and other departments.
- *Monthly* sales performance meeting with sales leadership and senior leadership team -- focus on the actual results against plan as well as any feedback from results that informs capacity required to achieve the plan.

In addition to management control systems, the sales organization should be producing the following reports:

- Pipeline report -- deal number and value in stages
- Pipeline additions/subtractions
- Close won report
- Close lost report
- Rotting deals report
- Sales rep metrics

During the creation of your sales process, we recommend you empower your team with templates, scripts, and processes. A successful customer journey requires high quality content, proposals, demos and presentations. Accomplishing this with a team requires leveraging templates, scripts and processes.

From our experience, here are the minimum templates needed:

- Company pitch deck with templatized customer customization
- Customer value proposition or return on investment slide
- Proposal template
- Customer meeting / demo agenda template
- Site visit agenda template
- Contract and work order form

Scripts are useful to ensure the team is communicating a consistent message. The larger the opportunity the more latitude sales professionals typically have in crafting a message. In these cases, scripts are typically replaced by processes and a form to create a custom script.

Here are a few examples of areas where scripts can be helpful:

- Lead gen initial call and solution overview
- Company description
- Demo
- Proposal delivery
- Reference site visit overview
- Contract delivery

A well-designed enterprise sales strategy is essential to the success of any B2B SaaS company. It ensures limited resources are aligned to support the most likely deals. This increases the velocity of revenue and results in better capital efficiency.

In a B2B SaaS seed stage firm there are thousands of things to do each day. It can feel overwhelming. One of the most powerful things a founder and team can do is focus on designing a scalable enterprise sales strategy. It will become a piece of key IP and enable predictability in the business as it grows.

#### Steps

1. **Call a meeting for initial draft.** Set up a meeting with the players for this play.
    - Send the play to the players and ask them to read it before the meeting
    - Send information you have on the company's compelling value proposition
    - Set aside enough time to map out the plan (3 hours minimum)
2. **Initial draft meeting.** At the meeting, cover at least these items:
    - Who is our sweet spot customer (enterprise level) - get granular
    - What is their problem (in $ value)
    - How does our solution solve this problem
    - What do they need to believe to take a chance on our compelling value proposition
    - Map out the journey -- create stages with the first stage being 'unknown to company' and then define the characteristics of the customer (problem, knowledge of problem, beliefs about the problem, and knowledge of your solution) as well as what they are 'thinking'. Define what you will tell them to get to the next stage of buy-in. Each stage should be small enough and the ask easy enough to ensure an uninitiated 3^rd^ party would agree that a rational person would proceed (given that they had the same problem etc.)
    - Designate a 'draft writer' to write up this journey into the Sales Process document
    - Designate a 'process owner' to review/approve the Process and to set a project plan for all the remaining elements that are needed (scripts, templates, proposals, reports, meetings, agendas, etc.)
    - Set up a check-in meeting in 60 days or so.
3. **Use the template** as a starting point to create your company's specific offerings and your clients' specific profile.
4. **60 day check-in.** Meet with the same team to check-in on the process. Ask:
    - What's working?
    - What's broken?
    - What's missing?
    - What's wrong?
    - The Process Owner should incorporate the answers into the template
    - Set up a meeting in another 90 days and repeat this process
5. **Success.** Your team will know it has reached success when these check-ins are not producing actionable results and your sales efficiency ratios are in industry leading ranges.

### How to Write Sales Scripts for B2B SaaS Teams

**Play:** Sales Scripts · **Owners:** Sales Lead, SDR · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Develop battle-tested sales scripts and talking points that help SDRs, AEs, and the team deliver consistent messaging while allowing room for authentic relationship-building.

**Prevents mistakes:** #151 Expecting sales hires to sell like founders

**Templates:** Sales Scripts Template

The sales process is a series of conversations with people. Scripts are helpful to keep your sales team on message and speaking to the right concerns at the right stage in the sales process. The larger the opportunity, the more latitude a sales rep will typically have in crafting a message specific to the prospect. In these cases, scripts can be replaced by processes and a form to create a custom script.

**The impact:** Scripts ensure the team is communicating a consistent message.

> **The goal:** Create scripts, particularly for Lead Generation calls and demos. We also recommend scripts for:

- Company description
- Proposal delivery
- Reference site visit overview
- Contract delivery

#### Background

Generally, scripts can be a bit of a turn off. Often, people using scripts become glued to them and sound like robots. If that is a concern, it might be more helpful to create conversation guides and deliver them to your sales reps as such.

At every step of the sales process, a sales rep needs to tie his point to WHY it is important to the prospect. Don't rely on prospects to make this connection; make it clear and obvious.

As we've stated, sales is a rigorous process that rewards the prepared. It is worth the investment to research a person and a company before any conversations or meetings. Tailor your conversations and your questions to that person and company and to their relevant position on your persona list.

Finally, incorporate key language you created in your sales deck to use throughout your scripts and sales process. Think of the key language like taglines, or motifs, that will stick in a prospect's mind and tie to your company.

*Specific Notes re the Demo*: Never show a feature that is not guaranteed to work. Moreover, never show product functionality that is not attached to an aspect of your value proposition. It will just be noise that distracts a prospect from the value they can receive from your product.

#### Steps

1. Use the templates provided to put together components of scripts. Use your discretion to guide whether you leave the components in the form of a conversation guide fully fleshed out in a written script.
2. You have already generated many of the components of these scripts. Reference your personas, value propositions, and sales deck to find the information you need.
3. Personalization: As we mentioned above, the bigger the sale, the more personalized the scripts need to be. Opportunities for personalization include addressing pain points specific to the prospect, customer success stories specifically related to the prospect. Even talking points related to value propositions that would be particularly appreciated by specific people within the prospective company (i.e. Dan, we don't want you missing your daughter's birthday ever again to address this issue) should be added.
4. Codification: As your sales team becomes more practiced in producing demo scripts, you can reduce your involvement. Regardless, it is a good idea to create an accountability system. It is a deal-killer for a Sales Rep to lead a demo unprepared, and so you want to create a system that requires preparation. To that end, requiring Reps to upload a demo script to the CRM *prior* to a demo is a good check on the system.

### How to Build Channel Partnerships for Vertical SaaS

**Play:** Channel Partnerships · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Growth · **Effort:** 21 SP initial, 8 SP ongoing

**Summary:** Identify and manage channel partners (resellers, integration partners, service providers) that can accelerate customer acquisition and expand your market reach.

**Prevents mistakes:** #55 Betting a channel partner will sell for you

**Templates:** Channel Partnerships Template

A company can form channel partnerships with other companies to increase its exposure or improve its product offering for buyers. You can choose to partner with another company to enhance your efficacy in marketing, sales, service, support, or improving your solution for mutual customers.

**The impact:** Channel partners are often effective means of increasing bookings, reducing CAC, or reducing churn at all stages of a business. It is particularly helpful to young companies, however, who are still refining their sales, marketing and product approaches. Usually at an early stage, a company has a minimum viable product offering and few customers. Through channel partnerships, the company can leverage other company's networks and products to deliver a more complete product to an established customer base quickly.

> **The goal:** Understand how channel partners can assist you in delivering and selling a product and evaluate whether a partnership is the most effective use of time and attention.

#### Background

Types of Channel Partners:

1. Referral Partners: generate leads in return for commission payments
2. Strategic/Technical Partners: typically integrate technology to improve product offering and customer's return on investment
3. Sales Partners: sell your product on your behalf. Often will improve your brand by tying yours to theirs

#### Steps

1. Answer the following questions regarding channel partnerships:
    - *What will this partnership accomplish for our company?* Will it add functionality to our core product? Will it give our product exposure to a new market? How will it affect our profitability, either by increasing MRR or conversion, decreasing CAC or churn, or some other metric?
    - *Is this an efficient use of my time right now?* Building channel partnerships is time-intensive and necessarily takes resources away from other aspects of building your business. Are the core components of your company (product, product/market fit, value proposition, etc.) fully developed and are you ready for the next step?
    - *What channel support will you need to provide?* Channel partners can never be as good as a sales force driven by you or your team. So how will you support the channel? Is it defined? Do you have the team? Are the incentives aligned to drive channel results?
    - *Is it feasible?* Regarding potential Sales Partners, will you be able to train your partner to sell your product on your behalf?
2. Assign metrics to qualify whether a channel partnership should be introduced. Some considerations when qualifying partnerships, include:
    - What is your strategic intent with this partnership agreement?
    - How can that be measured?
    - How are we going to compare the performance of the partnership to (1) our own performance or (2) the performance of other potential partnerships?
3. Assign metrics to measure the performance of channel partnerships. At the end of the day, a channel partner is selling your product just as your sales team is, and so the performance of a channel partnership should be measured by the same metrics, including:
    - Unit Economics like LTV, CAC, CAC payback
    - Sales Metrics, like sales efficiency, conversions, win rate, etc.
4. Codification: Create a process to judge potential partnerships and then to track the performance of existing ones. Assign a person responsible for making sure the process is followed. Make sure to identify the responsible person to share metrics and decisions with. Finally, share the process and any related documents with each person involved.

### How to Build a B2B SaaS Sales Funnel

**Play:** Sales Funnel Creation · **Owners:** Sales Lead · **Cadence:** Monthly · **Stage:** Pre-Revenue · **Effort:** 13 SP initial, 8 SP ongoing

**Summary:** Define your sales funnel's stages, milestones, timeframes, and conversion rate benchmarks to guide sales activity, maintain deal momentum, and identify bottlenecks.

**Prevents mistakes:** #44 Buying a trade show booth... most times; #96 Not using a CRM; #161 Disregarding Qualified Opportunities You Didn't Source Yourself

**Templates:** Sales Funnel Creation Template

Regardless of whether you have formalized the structure of your company's sales funnel, your company's growth is dependent on it. At the most fundamental level, your sales funnel is fed by leads, which then pass through definable stages in the sales process until the lead closes to become a customer. A company generates many more leads than it actually converts to customers, decreasing the number of leads as they pass through the funnel.

#### The Top of the Sales Funnel

Detailing your company's sales funnel helps your sales team focus on the right actions. The most important task to focus on is how to get as many leads to the next stage of the funnel as quickly as possible. Rather than focus on how many people clicked on your email, focus on how many leads were moved from unknown to known. This shift in priorities shifts the problem-solving focus. Rather than figuring out how to get more people to click on an email (which doesn't directly impact the number of new customers), your team will strategize to reduce time and friction within a particular funnel stage and thus minimize the number of leads lost in that stage. This metric will affect your company's bottom line.

Reviewing lead performance through a defined sales funnel also helps a company maximize the potential of the leads generated. When bookings fail to meet targets, a company doesn't necessarily need to jump to generate even more leads. Instead, there may be bottlenecks and inefficiencies within the funnel that can be identified and then addressed with the help of the funnel structure and tracked metrics. With an efficient and optimized funnel in place, a sales team can then add more leads to the top of the funnel with the expectation that those resources will be fully optimized.

**The Impact:** Formalizing your company's sales funnel defines the swim lanes for your sales team. By setting definable stages in the funnel, expected conversion rates, and time frames for each stage, your team has created a process and expectations to guide their activity. They also have a keener understanding of how they can impact a lead as it moves through the process. Finally, the sales team can regularly review team and individual performance compared to objectives to see what areas need improvement.

> **The Goal:** To create a sales funnel specific to your company. This will be used to educate and train your sales team, manage your sales pipeline, identify leaks and opportunities in your funnel, and ultimately, optimize your conversion rate.

#### Background

A sales funnel has three fundamental stages: Awareness, Consideration and Decision.

1. In the Awareness stage, a buyer becomes aware of a problem and looks for a solution. A lead is only truly a lead if he is aware of his problem and looking for a solution; if he is not, then he won't be motivated to pursue your solution. The Awareness stage also includes the buyer becoming aware of your specific solution.
2. In the Consideration stage, a buyer is considering whether your solution will answer his constraints (effectiveness, workflow, authority, time, money, etc). Discovery, demos, site visits, and proposal delivery are common sales activities during this stage.
3. In the Decision stage, a buyer takes all the information they have previously discovered to make a decision. Contract delivery, review, and negotiations are common sales activities during this stage.

#### Steps

Answer the following questions to create your Sales Funnel.

1. What are the basic stages of engagement with prospects? Look through your company's sales process to identify your generalized stages.
2. Typically, a company will begin with some form of lead generation, followed by qualification.
3. Proper qualification is very important to maintaining your sales team's efficiency and productivity. A mature company won't compromise their efficiency pursuing leads that are unlikely to close. Time is a limited resource, and it is best spent pursuing leads that have the highest likelihood of close.
4. Given the identified stages of engagement, what general activities define these stages for your company?
5. What are the specific tasks that need to be accomplished during each stage?
6. What is a specific, measurable milestone that flags when a lead is ready to move to the next stage in the funnel?
7. Here it is crucial to select a very concrete milestone indicator. One of the key benefits of a sales funnel is preventing prospects from idling at any one stage too long and growing cold. When it is clear that a lead has moved to the next stage, and therefore needs to be approached with different information and deliverables, then you're much more likely to maintain momentum.
8. How long should it take for a lead to move through each stage in the funnel?
9. You can use historical information to judge the time required to progress through a particular stage and tweak it to force process improvement.
10. The benchmarks you create here will help the sales team keep the sales process on target to maintain momentum with individual leads and also to meet forecasted conversion targets.
11. What is the conversion rate from each stage to the next in the funnel?
12. Again, historical data can be used to estimate these rates, which then can be adjusted to stretch the sales team.
13. Comparing actual numbers to the conversion rate benchmarks chosen will help identify bottlenecks within the funnel.

### How to Create a Sales Pipeline for B2B SaaS

**Play:** Pipeline Creation · **Owners:** Sales Lead · **Cadence:** Weekly · **Stage:** Early Traction · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Quantify actual deal flow across your sales stages to forecast revenue, calculate required SDR headcount, and track progress toward bookings targets.

**Prevents mistakes:** #96 Not using a CRM; #124 Only selling to one customer.; #138 Not prioritizing revenue early enough; #161 Disregarding Qualified Opportunities You Didn't Source Yourself

**Templates:** Pipeline Creation Template

While a sales funnel represents the sales process of an organization and expected conversion rates between each stage, a sales pipeline quantifies actual leads within the pipeline and shows a company where its money is within the process.

**The impact:** Your pipeline can be used to estimate how many SDRs your company needs to meet your bookings target, and how many leads each SDR needs to generate. This feeds the funnel to get the number of conversions to meet your targets. The pipeline can also be used to forecast revenue and compare forecasts to actuals.

> **The goal:** Model your company's pipeline in order to get a thorough understanding of the value of each stage and how your sales cycle affects lead progression.

#### Steps

1. Thoroughly examine the pipeline template provided. Make sure you understand how the numbers relate to each other and how time affects overall flow through the pipeline.
2. Set up your own pipeline. This is usually done through your CRM rather than an excel document like the template provided.
3. Evaluate the cost of a lead as it goes through your sales funnel. Can the contract support the costs?

#### Troubleshooting and areas to avoid

*Managing an expensive funnel*. We once ran a company that would have $85K of investment in a sales opportunity just before the contracting stage. This represents a huge amount of investment. The deal could fall apart due to a personality rejection or misreading an email or a mistimed joke. As a result, we built gates at different stages of our funnel (see 2.33 Sales Funnel Creation) and also our pipeline gained increased executive scrutiny at different stages. For instance, onsite demos cost $10K and usually occurred when the opportunity was already $40K invested. Therefore, executive approval was required as was a meeting with the sales team and demo team to approve the onsite demo.

### How to Run Pipeline Management and Review for B2B SaaS

**Play:** Pipeline Management & Review · **Owners:** Sales Lead, Exec Team · **Cadence:** Weekly · **Stage:** Early Traction · **Effort:** 8 SP initial, 8 SP ongoing

**Summary:** Conduct weekly pipeline reviews to track deal progression, identify stuck deals, forecast close probability, and allocate leadership attention to high-impact opportunities.

**Prevents mistakes:** #7 Not qualifying sales opportunities; #8 No meeting cadence with sales; #75 Counting deals as won before docs are signed; #97 Switching CRMs; #104 Tolerating non-sales activity from sales team; #156 Too Many Conversations, Not Enough Closures

**Templates:** Pipeline Management & Review Template

A pipeline needs to be actively managed to ensure your actuals will meet your targets.

**The impact:** Active review and management of your pipeline allows you to detect bottlenecks and issues when they are still minor. You also stay on top of deal flow which minimizes deal rot.

> **The goal:** Create a process to monitor the health of your pipeline and proactively respond to deal rot.

#### Steps

1. Use the PDCA methodology described in Play: Quality Management Systems and the template provided to create a process to review and manage your pipeline.
2. Considerations
    - *Goal:* The goal of regular pipeline review is to identify weaknesses in the sales process and then iterate and improve your approach. To that end, it is good to set the expectation that these review meetings are to improve strategy rather than serve as a passive catch-up on what has happened. You want to maintain a proactive focus instead of a reactive one.
    - *Review Cadence:* Golden Section recommends the following meeting cadence and agendas.
    - Weekly meetings
3. Participants: Sales Team
4. Agenda
    - Status of Sales Pipeline
    - Current lead needs
    - Market / competition intelligence collected
    - Set priorities for week
    - Monthly meetings
5. Participants: Sales Team and Senior Leadership
6. Agenda
    - Review of metrics
    - Plan adjustments for next month to stay on target for quarterly goal
    - Quarterly meetings
7. Participants: Sales Team and Senior Leadership
8. Agenda
    - Review of pipeline and wins in prior quarter
    - Review of sales team performance in prior quarter
    - Plan adjustments that need to be made moving forward
    - Set targets for next quarter
    - *Adjustments to the Sales Process*: Golden Section recommends discussing and planning adjustments to the sales process in each monthly and quarterly meeting. Generally, Golden Section recommends applying the agile method of designing and performing small experiments to measure results. This process ensures only changes that have the desired effect are made and prevents resources from being wasted on ineffective changes. To lead the conversations regarding sales process adjustments, it is helpful to have a regular set of questions to be discussed each review meeting.

Pre-determined, regular questions allow your sales rep to come to the meeting prepared and keeps the conversation going in the direction you want it to. [These questions](https://openviewpartners.com/blog/sales-pipeline-reviews/#.XiDK0shKg9A) are helpful:

- What positive (or negative) progression has taken place since the last review?
- What new opportunities have been added to the pipeline since the last review?
- Which objections have surfaced most often, when did they occur, and what was the response?
- What is the level of certainty that the deals are fully qualified to the company's criteria?

- What is the probability / likelihood of closing each of the deals?
- What new leads have entered the pipeline since the last review?
- How much commitment has been given in relation to each opportunity in the pipeline?
- Are the proper decision makers engaged in each deal, and has a champion been identified?
- *Actionables*:
    - Revising deals down in the pipeline: You have previously defined the criteria required to move a deal from one stage of the pipeline to the next \[See Play: Pipeline Creation\]. It is important to consider how to identify a lead that needs to be moved back in the pipeline. For example, if a deal does not pass a stage in the pipeline in the lag outlined in your funnel, then it should be pushed back to the prior funnel stage. A pipeline needs to be trusted to accurately predict revenue. To that end, it is important to put measures in place to protect your pipeline from being inflated.
    - Nurturing to prevent deal rot: What steps can be put in place to address deals that have lost momentum?
    - Re-engagement for lost leads: Leads do stall. It is helpful to have a classification system to label stalled leads and guide your re-engagement. For example, you could classify a lead as "poor timing," which would then automatically tag that lead for a follow-up in 6 months to re-engage.

- *Deliverables*: Weekly reports are a good interface to keep the entire team up-to-date on the status of the pipeline. Metrics to include in this weekly report include:
    - Pipeline report -- deal number and value in stages
    - Pipeline additions/subtractions
    - Close won report
    - Close lost report
    - Rotting deals report

#### Troubleshooting and areas to avoid

*Too much focus on anecdotal stories in the pipeline*. It is easy for pipeline meetings to devolve into story telling. Sales people are relational and love sharing stories. Likewise, founders enjoy hearing good news. This mix can result in the pipeline review meeting becoming a story telling hour where two or three tenuous anecdotes that sound hopeful hijack the entire meeting. All parties will leave feeling 'good' about the status of the company but with little to no progress to show for it. This will end poorly. As a founder or manager, your job is to limit anecdotes, focus on process, data and KPIs. Your opportunity qualification criteria should be rigorously applied which will ensure the stage data on your pipeline will reveal the proper state of the pipeline.

*Non-sales related complaints by under-performing sales team members.* People don't like to miss targets. It is uncomfortable. As a manager your job is to come alongside your team and encourage them, look for ways to support them, and otherwise help them achieve their goal. We have found that underperforming sales team members will look to non-sales related things to 'own' when their pipeline is languishing. For instance, a team member may complain that the CRM isn't working for them and that they will dedicate time this week to customizing it and 'ironing out the problems'. Do not let this happen. Sales should focus on selling! The tools of selling are not required to get a sale; they are helpful, not essential. When sales can claim a non-sales related 'win' it distracts from what is truly important. When those issues pop up, it is your job to discern if the issue is real and, if so, then own it yourself so that sales can remain focused.

*Sales people working on non-qualified accounts.* This happens all the time and happens quietly. We have found that when the job gets hard and opportunities push out, sales team members will start discussing their unqualified moonshot deals. If you hear a sales person mention a non-qualified deal twice, it's a good sign that you need to take action. Ignoring this will result in low sales performance. Take the sales person aside and help them evaluate the qualification of that connection. If there's a strategic benefit to it, ask them to transfer the relationship to you; if not, help them see they need to drop it.

### How to Build a SaaS Pricing Matrix

**Play:** Pricing Matrix · **Owners:** Founder, Sales Lead, CFO · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 21 SP initial, 8 SP ongoing

**Summary:** Design a value-based pricing matrix that captures the ROI you deliver to customers while remaining simple enough to reduce sales friction and support billing.

**Prevents mistakes:** #4 Letting customers dictate the terms; #20 Hip-shot product pricing; #139 Disjointed pricing with sales cycle

**Templates:** Pricing Matrix Template

Pricing is a critical variable in your company's success; your product needs to be priced appropriately to gain traction among customers. It also affects your go-to-market strategy, sales process and cycle, net churn rate, as well as your bottom line.

Determining an appropriate price is often one of the biggest challenges a team will face. Pricing needs to be reviewed and reset regularly.

**The impact:** The price of your product is tremendously important. In regards to the customer, it affects their willingness to buy and their perception of your product. The price directly affects your revenue and indirectly your ability to position yourself for growth within your market.

> **The goal:** Create a pricing matrix that is simple for your sales team to use and sets your company up to achieve your growth and revenue objectives.

#### Background

Fundamental pricing approaches:

1. Value-based: You price your product at some percentage of your value proposition. The value of your product aligns with the ROI your customer sees in using it.
2. Competitor-based: you price your product according to how your competitors have priced their product.
3. Growth-based: You price your product by some sort of growth metric (like number of users, set of features or depth of use) that allows your per account revenue to grow over time as the customer's company grows. The rationale behind this approach is that your product gets an early foothold at a lower price, becomes an irreplaceable component of your customer's workflow, and then grow as you customer's company grows.

Golden Section advocates for a value-based pricing structure. Using the value proposition to justify pricing is asking the customer to engage in an investment rather than a cost. People inherently resist costs and seek investments. We are wired to be loss-averse and gain-seeking. As a result, the ROI you can provide needs to be compelling. The size of the ROI (which is the amount of value your solution brings over and above its price) differs in different industries. A lot depends on the current buying environment and how the buyers are used to hearing ROI. However, in most cases a 3x ROI in 12 months or less is usually compelling.

Note that the firmness of the cost of the problem your solution solves is linearly related to the amount of ROI the customer expects. For instance, if your solution could prevent a $1M problem but the likelihood of that problem occurring is less than 2%, then your product is a bit more like insurance than an investment and as such won't command a large price. The reason for this is that the customers will ask 'how likely is that $1M cost to occur' and decide to haircut the cost by its probability factor (if they don't do this actively, then they will subconsciously) and conclude that the effective cost is only $20K. Hence, your price is likely to need to be beneath $7K to be compelling. If, however, you can demonstrate a $1M problem that occurs with a high frequency and your solution solves it, then your pricing can be closer to $300K per year. The probability of the cost matters.

Finally, the true value proposition will only become clearer over time. Make it a practice to go back to customers to check your assumptions: Did your solution deliver on your proposed value? Are there additional, unexpected areas of added value?

#### Steps

How to price your product:

1. *ROI*: This has previously been calculated in the Customer ROI play.
2. *Discount Factor*: Determining a discount factor is more art than science. As discussed above, a prospective customer will discount your ROI based on a number of factors, including time for value proposition to manifest, cost of problem you are solving (is this a big problem or a minor one?), probability of risk, and visibility of risk for which your product is solving. Generally, the discount factor will need to be higher the lower the risk, visibility, or cost of the problem and the longer the timeline before any value manifests. It is helpful to use the components below to judge your discount factor.
3. *Customer Return*: Generally, we have found a 3x ROI in a 12 month period to be a compelling reason to purchase.
4. *Discount Rate*: Generally, a customer will want to see some kind of economy of scale. Moreover, you want to incentivize the use of your product by additional users. To that end, it might be a good idea to offer a higher discount rate as more users are added to a subscription. Number of users might not be the best metric for your product; consider if number of providers, number of locations, or some other metric is more aligned with your value proposition.
5. *Terms and Sales Discretion*: This is a good spot to spell out the terms your company requires for a sale and what level of discretion a sales rep has to modify these terms without approval.
6. Pass it by leadership to confirm it meets their expectations and growth objectives.
    - Internal sources
    - Sales Reps have direct experience selling your product. They know buyer's needs, priorities and concerns. How would this work? What aspects need to be improved to support a higher price?
    - CRM Data: You can do some preliminary research into a pricing hypothesis using past data. What is the average ACV by product, segment, persona, etc? How has that price changed over time and how has it compared with your list price? As the average price changed, did it affect your win rate, sales cycle, or churn?
    - External sources
    - Win-loss Interviews: Interview a few key buyers to get their honest feedback on the buying process. What value did they understand your product would deliver? What has been the product's actual value to them? How would this price affect their buying decision?
    - Competition: Run some comps. Who are your competitors? What product exactly are they delivering and at what price point? How are they packaging that product?
    - Test group: Deliver the matrix to a select group of Sales Reps who are selling to different segments, personas, locations, etc. A diverse group like this will give you a clearer sense of how the matrix affects sales across your vertical. Gather feedback from these Sales Reps: quantitatively, how did the new pricing matrix affect ACV, win rates, days to close, etc? And qualitatively, how did it affect sales conversations and the sales process?

7. Rollout and iterate over time.

#### Notes

1. Keep it simple, silly. A simple pricing structure is easier for a sales team to manage, easier to use by an executive team making revenue forecasts and targets, and easier for a customer. As we discussed in the Funnel Creation play, we want to minimize friction and concerns at every point for prospects; a simple, straightforward pricing structure does that. A simple pricing structure is also easy for a sales rep to explain. Simplicity needs to be balanced with a pricing structure that allows your company to maximize revenue from customers based on their willingness to pay.
2. You don't need to beat your competition on price but on the whole package.
3. It's alright to price higher than you're comfortable with. First of all, if you price too low, a prospect may subconsciously undervalue your product and never convert. Think of a bottle of wine: you assume a $100 bottle of wine is of higher quality than a $10 bottle based on price tag alone. If you set a higher price point, you are implicitly setting yourself as a high-quality provider. However, you need to make sure you can deliver on this implicit promise.
4. Another benefit to a higher price: The more customers pay, the more they will expect and so the more feedback they will give you in terms of bugs, product quality, realized value. Moreover, when you price higher, you engage customers in more detailed conversations regarding their needs, thresholds and priorities. Through this, you get much better insight into how a buyer perceives the value of your product. While this sounds like a burden rather than a blessing, feedback like this is crucial to developing a strong product, message and company.
5. Finally, at a higher price point, you will generate higher revenues which allow you to invest in more R&D to improve your product and cement your market position over time.
6. You want to balance extracting revenue from a customer with churn. It's alright to leave a little money on the table; this can always be captured as upsell/expansion in the future.
7. To maintain your margin, it's often helpful to combine your higher-margin products/services into one line item. This will help reduce churn in any one of those line items.
8. You will need to review your pricing matrix often as your product and market evolve.
9. A note on enterprise sales: Enterprise-level buyers are not as concerned with price. They are looking to make a large investment in a product that truly meets their needs. To that end, enterprise sales usually entail a good deal of customization which makes a standardized pricing matrix less applicable to these deals.

### How to Structure a B2B SaaS Sales Compensation Plan

**Play:** Sales Compensation Plan · **Owners:** Founder, Sales Lead, CFO · **Cadence:** Annual · **Stage:** Early Traction · **Effort:** 13 SP initial, 5 SP ongoing

**Summary:** Build a compensation plan that aligns incentives with company strategy—balancing base salary for stability with commission/bonus structure that drives right behaviors.

**Prevents mistakes:** #34 Not aligning interests; #35 Hasty commission structure

**Templates:** Sales Compensation Plan Template

A Sales Rep is often paid differently than other employees: they typically earn a relatively low base salary supplemented with commissions. This comp plan aligns the company's and the sales rep's interests to earn the biggest pay off for both the company and rep.

Regardless of the comp plan you set for an individual sales rep, it is crucial to have it in writing and then have a system in place for tracking bookings and assigning commissions. When the time comes for a liquidity event, you will need to be able to show commissions paid out over the past two years. Now is the time to put in place a process to account for these commissions and save yourself headache in the future.

**The impact:** Compensation is a powerful tool to motivate your sales reps. ROI, from the company's perspective, is huge when additional compensation motivates improved sales productivity.

> **The goal:** Create a sales comp plan and then establish a system for tracking it.

#### Background

*A word on motivating incentives:* According to the Harvard Business Review(https://hbr.org/2012/07/motivating-salespeople-what-really-works), there are different classes of performers on the sales team -- Stars, Core Performers, or Laggards. Members from each cohort respond differently to different aspects of comp plans.

- Stars are intrinsically motivated to pass any target, but will stop working when a ceiling on compensation is imposed. Specifically, they can be motivated by:
    - Removing ceilings on commissions
    - Creating overachievement commissions
    - Creating contests with multiple winners. HBR references a study that found that when there are multiple prizes, Stars perceive that Core Performers have a chance to win a prize and are therefore motivated to work harder than they would if there was only a single prize.
- Core Performers, the middle children, get the least attention. It is worthwhile, though, to work to motivate Core Performers; they are, after all, typically the largest cohort in the sales team. They are also the people closest to the Star category and so can most easily be incentivized to cross the boundary. Specifically, they can be motivated by:
    - Providing multi-tier targets and compensation. For example, the bottom tier target can be set to the median value of the company's historical sales attainment. The middle tier target can be set to the top quartile and the top tier target set to the top 10% of attainment.
    - Offer gifts other than cash for lower-level target prizes in company- wide competitions. Core Performers expect Stars to take home the top cash prizes, but if non-cash, substantial prizes are offered for the lower-level targets they remain motivated to compete for them.
- Laggards need the competition and accountability of metrics and individual guidance to make their quota. Specifically, they can be motivated by:
    - Providing shorter-term, pace-setting goals such as quarterly bonuses
    - Creating a naturally competitive, yet friendly environment
    - Using carefully designed benchmarks to set expectations

#### Steps

1. Using the template provided, set the range in base salary that your company is willing to pay. Considerations:
    - The base needs to be low enough to not satisfy a Sales Rep. You want him to be motivated to meet his target deal value and earn the commissions associated with that.
    - The base needs to be affordable to your company.
    - The base needs to provide a good starting point for the Sales Rep to reach her desired income. In other words, the entire package needs to be believable for the Sales Rep.
2. Set the target value of annual contracts closed, or quota, for the Sales Rep.
3. Set commission rates. We advocate for a tiered commission structure to encourage over-target sales.
4. Codification: At your next round of funding, potential investors will look at your sales compensation plans and actuals. To prepare for that, put in place a system to codify and track the following:
    - Actual commissions paid out
    - Actual commissions compared to industry benchmarks
    - A log tracking how the commission structure has changed over time. This information can be used to prove how your sales process is driving results. You can show the productivity of your sales organization and how you have used levers to maximize that productivity.

#### Best Practices for Compensation

1. The person receiving bookings should also be compiling commissions.
2. Never pay commission more than once. For example, if a Sales Rep upsells an account in the future, he only receives commission on the delta. He does not receive commission on the entire new value of the contract.
3. Never pay out a commission before payment on that contract is received; commissions should be strictly post-client payment. This expectation reduces time a contract spends in AR, is cleaner, and prevents any need for clawback terms.
4. Be generous on the fringe to encourage the results your company wants. For example, set a minimum contract value to qualify for a commission.
5. Don't pay out commissions for unqualified deals (ie deals that have not passed the Qualifying Calculation Worksheet in the sales process). These deals are an inefficient use of company resources to begin with, and often increase churn and burn up time. You don't want Sales Reps inflating their quota and commissions with contracts that don't lead to quality revenue and happy customers.

Additionally, you can consider refusing commissions on contracts that are not tracked appropriately in the CRM or who have not been approved by a supervisor.

6. Don't sign any customer contracts that allow client drawback. This preserves your revenue and it also prevents any headaches with clawing back a Sales Rep's commission.

### How to Structure a SaaS Sales Organization

**Play:** Sales Org Chart · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Growth · **Effort:** 5 SP initial, 3 SP ongoing

**Summary:** Design an efficient sales organization structure—choosing between the Island, Assembly Line, and Pod models to fit your company's culture and scale with revenue growth.

**Prevents mistakes:** #13 Hiring sales for rolodex; #45 Scaling hiring without management; #108 Fuzzy organizational chart

**Templates:** Sales Org Chart Template

You've hired one sales person and are growing quickly. To sustain that momentum, you hire more. How are you going to structure your sales team? There are three common approaches: the horizontal Island structure, the Assembly Line approach, and the hybrid Pod model.

**The impact:** Organization occurs naturally, so it's best to preempt that natural organization with the model you feel fits best with your company culture and sales process.

> **The goal:** Consider the pros and cons of each model in relationship to your company's culture and objectives to determine which sales team organizational model will work best for your company.

#### Background

There are three different approaches to structuring a sales team.

*The Island*: this is a more traditional, individualist approach to sales team structure. In this structure, each Sales Rep is responsible for carrying their leads through the entire sales process from generation to close.

Pros:

1. Sales Reps get to see the entire sales process and are more committed to meet overall company targets.

Cons:

1. This typically leads to a more competitive team environment since each SR is independently competing with the others to meet quota.

*The Assembly Line:* in this approach, you break down the sales process into different functions and assign a team to cover each area. The four teams are generally: Lead Generation, Sales Development Representatives, Account Executives, Customer Success.

1. The Lead Generation team is responsible for developing leads, researching demographic and pertinent information, and creating new accounts in the CRM.
2. The Sales Development team qualify leads. They establish initial conversations, gather information to develop the appropriate sales strategy for that lead, identify the decision-making process within the prospect's company, and qualify the lead.
3. Account Executives are responsible for closing the deal. They give demos, prepare proposals, send contracts, negotiate, and ultimately close the deal.
4. The Customer Success team receives the account once a deal is closed. They work by the account management process, onboarding new customers and then work to ensure adoption and expand accounts in the future.

Pros:

1. Specialization like this allows each team to deeply explore the process within their function and improve it. They intimately experience any weaknesses in a process and will work to fix them. Each area of the sales process becomes highly efficient.
2. Each team is also solely responsible for a given task, so it becomes easier to isolate any bottlenecks in the funnel.
3. Under this structure, it is much less likely for a prospect to get stuck too long at a particular stage. A team is naturally incentivized to move a prospect quickly through their sphere of influence and then to pass it along.
4. With an assembly line structure, your sales process is more scalable and can keep pace as your company grows and the sales process becomes more complex.

Cons:

1. This would be difficult for a small sales team to accomplish.
2. Certain roles (like Sales Development reps) might be hard to retain; it is a particularly repetitive, low creativity, and unrewarding component of the sales process.
3. As a team, you have to be very disciplined at recording customer needs, values, etc. A customer could quickly become frustrated by repeat questions, or important information could be lost in the transfer between teams.

*The Pod*: this approach is an iteration of the assembly line structure. Instead of having a large Lead Gen team and a large SD team, etc., a pod is created with one SDR, one AE, and one CS rep. A person inside the pod is responsible for a specialized sales role and the combined pod is responsible for the entire sales journey of a specific group of customers. Success is measured on the pod level, and pods can be specialized in different verticals, personas, locations, etc.

Pros:

1. In the pod model, you blend the competitive approach of the Island with the team approach of the Assembly Line, resulting in a more collaborative, yet still competitive sales team.

Cons:

1. There is less opportunity to isolate individual sales rep's efficacy and push them to compete and grow.

#### Steps

1. Using the template provided, consider where your sales team is now and where you would like them to be in the future.
2. Using the organizational framework given above and the vision you have for your sales team, list the pros and cons of each organizational model for your company.
3. Choose the model that most suits the present needs and culture of your company

### How to Read a SaaS P&L — Line by Line

**Play:** P&L Explained · **Owners:** Founder, CFO · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 5 SP initial, 3 SP ongoing

**Summary:** Understand the core P&L structure and metrics that acquirers, investors, and board members focus on—revenue, cost of goods sold, gross margin, operating expenses, and EBITDA.

**Prevents mistakes:** #72 Leaving finances to the numbers people; #85 Ignoring rev-rec; #86 Not hard-closing financial statements; #150 Prioritizing brand over financial health

**Templates:** P&L Explained Template

The Profit & Loss statement is a fundamental accounting report, and we expect that you have experience with it already. Here our aim is to simply remind ourselves of the flow of profit and costs through the P&L and how these numbers affect other metrics down the line. We will turn to more SaaS-specific metrics next.

### The SaaS Metrics That Matter — and How to Calculate Them

**Play:** SaaS Metrics · **Owners:** Founder, Exec Team · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 3 SP initial, 13 SP ongoing

**Summary:** Master the SaaS-specific metrics (MRR, ARR, NRR, CAC, LTV, churn) that define business health and unlock capital—and understand how they connect to unit economics.

**Prevents mistakes:** #57 Not benchmarking results

**Templates:** SaaS Metrics Template

The long-term viability and profitability of your company is dependent on efficient, strong growth. Rather than just aiming to report growth, a company should strategically and thoughtfully pursue healthy revenue that will support the company in the long run.

There are many SaaS-specific metrics a company can track. However, in the beginning, we recommend tracking a focused set of key metrics that point to the health of aspects of your company that investors will consider in the next round of funding or an acquisition.

A SaaS company is essentially in the business of producing bonds. Each customer contract represents a new bond developed. The value of that bond is the market value of the revenue for the SaaS segment the company trades in (usually 4-8x top line revenue). There isn't much a firm can do about what the market values the bond at, but a firm can manage the cost to produce the bond. In a SaaS firm, the cost to develop the bond is equivalent to the customer acquisition cost (CAC). In most cases, the CAC should also include any unpaid services or support necessary to get the customer settled into an average existence (i.e. into a position expected to result in average churn). This is why CAC to customer lifetime value is such an important comparison.

**The impact:** Build a clear understanding of what each metric is, how it is calculated, and what it points to. These are not just numbers to store away on a dashboard, but numbers to guide your strategy and growth decisions at all stages of growth. A template is included to compare your company's metrics to industry benchmarks.

> **The goal:** Develop a deep understanding of SaaS metrics and how your metrics compare to industry averages. We will create a dashboard to display the metrics for regular review in a future process.

#### Steps

1. Understand key metrics using the definition chart in the template provided.
2. Fill in the template with your company's numbers.
3. Compare your company's metrics to the industry's benchmark and decide where to refine your processes.

### How to Calculate SaaS Unit Economics

**Play:** Unit Economics · **Owners:** Founder, CFO · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Model the financial return of each customer cohort to understand if your business is inherently profitable—enabling capital-efficient growth and demonstrating unit economics to acquirers.

**Prevents mistakes:** #15 Focusing on input cost rather than output cost; #73 Thinking linearly when experiencing exponential forces; #74 Banking on exponential forces; #145 Hiring isn’t enterprise value creating; #158 Scaling a Broken System

**Templates:** Unit Economics Template

Most fundamentally, you are working to build a strong company that will be well-positioned for acquisition. You are building a foundation that will put you in an attractive position and pay dividends at the next liquidity event. To do this, you need to focus on the metrics that VC and PE firms focus on. In addition to product strength and market strength, these firms look closely at unit economics as an indicator of your company's long-term health and profitability.

**The impact:** Customer economics, or unit economics, show a company's ability to grow and become profitable in the future, even if that company is not currently profitable.

Aligning your company's strategy to pursue strong unit economics, rather than solely growth, shifts the focus from a short-term drive for growth to a longer-term pursuit of strong unit economics. This transition will ultimately lead your company to be much more profitable in the long term.

> **The goal:** Gain an understanding of the components of unit economics and what those components represent. Then align your company's growth strategy with the pursuit of strong unit economics.

#### Steps

1. **Understand the Unit**

**Unit:** It is important to understand what unit we're referring to -- one customer. Our unit economics express a specific value per customer and is much easier to interpret and use than an aggregated total for your customer base. A basic example is costs growing as your company grows. In itself, this observation is not particularly helpful at exposing what is really going on and where opportunities for improvement exist. More nuanced unit economics will show how your company is performing per customer over time.

2. **Explore the template** to get a full understanding of what LTV and CAC represent, how they are calculated and what information you can get from them.

### Which Sales Metrics to Track by FTE, Role, and Team

**Play:** Sales Metrics by FTE/Role/Team · **Owners:** Sales Lead, CFO · **Cadence:** Monthly · **Stage:** Growth · **Effort:** 8 SP initial, 8 SP ongoing

**Summary:** Track sales productivity metrics by rep, role, and team to identify top performers, weak links, and where to invest coaching or additional resources.

**Prevents mistakes:** #45 Scaling hiring without management; #104 Tolerating non-sales activity from sales team; #145 Hiring isn’t enterprise value creating

**Templates:** SaaS Metrics by FTE Template

While elements of the sales process fall outside the control of your sales team (I.e. ultimately whether a company chooses to purchase), the sales process can be managed to produce a set number of closes. We want to empower your sales team to thoroughly understand the control they exert over the sales process and the objectives they need to meet to reach their defined goal. Implementing a system for the regular review of individual and team sales metrics accomplishes these goals.

**The impact:** Establishing a metric-focused sales approach helps your team to focus its efforts on the activities that most impact movement through your pipeline. Opportunities will flow more effectively through your pipeline, resulting in higher revenue production for each sales rep and for the team.

> **The goal:** Align the sales team around a key set of sales metrics and establish a system to track and regularly review these metrics to inform sales team strategy.

#### Background

**Potential metrics to track:** Ultimately, you want to track metrics related to the details/steps that actually move deals forward, or shut them down. Look through the template Golden Section has provided to learn more about the sales metrics we recommend tracking.

Additional possibilities include:

1. Lead data
2. Response time
3. Conversions
4. Loss reasons
5. Seasonality trends
6. Revenue factors (new, churn, upsells)
7. Length of sales cycle
8. Average deal size (per customer segment)

#### Steps

1. **Preparation:** Research and then choose 3-4 sales metrics you believe would be most effective to track. Also, thoughtfully prepare to share the vision for using a metric-based approach to the team.
2. Meeting 1: Vision and Brainstorm
3. Share company's overall goal and objectives in the mid and long term, painting the picture for where the company is going and what is most important to it.
4. Set vision and objectives for establishing a metric-based sales approach.
5. Identify the 3-4 sales metrics you would like to track and why.
6. Ask for feedback from the team. This will increase buy-in and allow room for insight from the team. Would they change or add any metrics?
7. Decide on 3-4 metrics your team wants to track. Any more metrics than this will dilute the insight and focus that comes from tracking them. Your team can only concentrate on meeting and improving on a few metrics at a time.
8. Determine the processes for tracking and reviewing metrics.
9. Ongoing efforts: Track and course-correct
10. Weekly meetings: Sales Team
11. Agenda
12. Status of Sales Pipeline
13. Current lead needs
14. Market / competition intelligence collected
15. Set priorities for week
16. Monthly meetings: Sales Team and Senior Leadership
17. Agenda
18. Review of metrics
19. Plan adjustments for next month to stay on target for quarterly goal
20. Quarterly meetings: Sales Team and Senior Leadership
21. Agenda
22. Review of pipeline and wins in prior quarter
23. Review of sales team performance in prior quarter
24. Plan adjustments that need to be made moving forward
25. Set targets for next quarter
26. A note on course-correction: The effort put into tracking and monitoring sales metrics is only worth it if the team is held accountable to reaching their metrics. When you fall behind on one metric, what can be done to get back on track? If the team is regularly falling behind, where is the issue or bottleneck? What can be done to solve it?
27. Make sure to share the metrics with the company as a whole and use information discovered to give appropriate feedback to appropriate teams, even outside the sales team.
28. Some additional advice on coaching Sales Reps: https://openviewpartners.com/blog/how-to-coach-a-b2b-sales-team-to-win-bigger-and-better-deals/

#### Special Case: Ramping Up

As a new sales rep joins the team, there is a natural period of ramp up as she gains understanding of your company's product, customer and sales process. She shouldn't and can't be held to the same metric objectives as established sales reps.

Performance objectives can be set from the first week of work for a new hire, but the objectives should mirror your sales process. These initial performance objectives should simultaneously give your new rep the experience she needs while allowing her time to improve her effectiveness. If the first step in your sales process is to set meetings, then a first week's objective could be related to setting a specific number of meetings.

Overall, the period of ramp up will track with your sales cycle. If your sales cycle is three months, then it will take at least that long for a new sales rep to get up to speed.

### How to Calculate and Improve Your Sales Efficiency Ratio

**Play:** Sales Efficiency Ratio · **Owners:** Founder, Sales Lead · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 3 SP initial, 5 SP ongoing

**Summary:** Calculate your sales efficiency ratio (the magic number) to understand if your sales and marketing investment is generating returns—critical for demonstrating unit economics.

**Prevents mistakes:** #15 Focusing on input cost rather than output cost; #139 Disjointed pricing with sales cycle; #158 Scaling a Broken System

Golden Section wants to highlight one particular sales metric: the Sales Efficiency Ratio. To grow right, you need to get your sales efficiency ratio right. We hear stories of companies who spend anything to grow at any cost with no regards to efficiency. That strategy only works in rare cases when you have a product with the potential to reach mega-MRR sales. If you don't have that class of potential with your product, you must consider efficiency.

In fact, the sales efficiency ratio is directly related to the value of your company. At a basic level, every B2B SaaS company is a bond-creation machine. The sales organization turns the feedstock of raw cash and, through an intentional process, converts it into customer contracts. Those customer contracts, if customers are onboard and activated well, yield long term income streams (the gross margin).

Assuming normal churn, that income stream can be capitalized much like a bond into an enterprise value. The cap-rate will include risk of churn change, growth rate (expansion potential) and a variety of other things. But, most importantly, the enterprise value of that customer will be compared to the acquisition cost. This comparison unlocks an entire new pool of value for the company; the developer premium. When a B2B SaaS firm can show that it can convert $0.50 into $1 ARR which sells for $8 because of the lack of churn and expansion potential, that firm has value outside the value of the customer contracts because the company itself has knowledge and processes that can make that conversion happen.

**The impact:** Tracking and adjusting to maintain an optimal sales efficiency ratio gives your company strong financial fundamentals, which will increase your company's valuation and allow you to take on non-diluted capital in the next series of funding.

> **The goal:** Understand how sales efficiency is calculated and what it represents. Put in place a system for tracking and adjusting to keep the ratio near 0.7.

#### Background

Generally, the sales efficiency ratio, called by some the \"Magic Number,\" quantifies how much incremental revenue you generate from your spend on sales and marketing.

Specifically, it shows the ratio of the S&M expenses spent in the prior period to the annualized recurring revenue booked in a period as a result of that spend. For example, if in October a sales team booked $85K in new ARR (including upsells) and the sales organization cost the firm $42.5K in expense in September, then the sales efficiency ratio for that company in October would be $0.50. This indicates that this firm can produce $1 of new ARR for each $0.50 of sales and marketing expense. This is an incredible number.

The ratio is looked at by potential investors to benchmark your company's sales efficiency to comparable companies. The goal is to maintain a number of 0.70 or less; more than 0.7 indicates a less than efficient S&M spend, and less than 0.7 indicates it might be time to spend more money on S&M activities.

The sales efficiency ratio is the inverse of the CAC payback period, which calculates the number of months necessary to \"earn\" back your S&M costs to win a particular client.

One caveat, however, is that the CAC payback usually just considers gross margin in its analysis.

#### Steps

1. Review the trends on a monthly and quarterly basis
2. Schedule a meeting with the sales organization
    - Distribute the trends calculated above prior to the meeting
    - Brainstorm at the meeting a stretch goal for sales efficiency improvement
    - Identify two-to-three strategies to pursue that will impact the sales efficiency ratio
3. Distribute meeting minutes, assign responsibilities for strategies, and execute
4. Refine and repeat

## Customer

### How to Build an Account Management Process for B2B SaaS

**Play:** Account Management Process · **Owners:** CS Lead · **Cadence:** Bi-Annually · **Stage:** Early Traction · **Effort:** 3 SP initial, 5 SP ongoing

**Summary:** Establish a structured account management process to ensure customers realize ROI from your product—increasing satisfaction, adoption, retention, and expansion revenue.

**Prevents mistakes:** #76 Letting customers drop CYA comments in meetings; #79 Giving extra-contractual concessions; #83 Don't let customers overwhelm you or your team; #84 Apologize for poor performance, but don't own what you don't own; #91 Engaging in brinkmanship; #94 Tolerating brinkmanship; #95 Tolerating misunderstanding from customers; #109 Expecting customers to expand without a pitch; #116 Not managing expectations; #122 Not firing a customer; #130 Expecting a customer to expand without selling; #135 Not owning the customer service delivery

**Templates:** Account Management Process Template

As soon as a prospect signs his contract, he becomes a customer. As a customer, the expectations set during the sales process to secure the contract are now promises the firm must deliver. Among those promises, one of the most important is the return on investment demonstrated.

While you will be creating a generic account management process applicable across your company as it scales, it is crucial to manage accounts with an informed and empathetic approach. You are forming a lasting, interconnected relationship with a person.

**The impact:** By outlining an account management process, you proactively work to improve customer experience, leading to the fuller adoption of your product, higher retention, and greater revenue. One ounce of churn prevention is worth pounds of preserved top line growth rate.

> **The goal:** Create a thoughtful, thorough process to guide accounts through the four stages of account management: onboarding, adoption, renewal, and offboarding.

#### Background

At each stage of account management, it is crucial to set proper expectations for customers. Typically, your customers have hired you to provide a service outside their expertise, and it is your responsibility to lead the way and to proactively share what they should expect at a given stage, what they are going to see, who is responsible, and what the customer is responsible for.

Set realistic expectations. There is no need to engage in an underpromise, overdeliver set-up. Be transparent at all times.

Throughout the entire account management process, it is important for the account manager to know the customer. The account manager needs to be informed on the individual customer's priorities, needs and expectations. To be empathetic, they must read the customer and judge how to effectively deliver information. Your company needs an account manager who knows how to inform a customer that he knows what is important to that customer.

Finally, an account manager is your customers' advocate within your company. Your account manager needs to have access to different teams within your company to communicate the customer's experience -- how needs are changing, how their needs are not being met, where are there opportunities for increased embedding into a customer's workflow. Generally, your account manager is focused on hospitality and should have a good sense of the business case your product is being used in.

The account management process has four stages. These include onboarding, value established (or adoption), renewal and offboarding. These four stages are designed to follow the customer lifecycle from the promises established in sales through to the realization of those promises and onto continued expansion and value delivery.

The last stage, offboarding, may seem strange. Why would we plan on offboarding a customer? The reality is that not all customers are a fit. Hence, a good process ensures orderly offboarding for the sake of the company's reputation and the benefit of the customer.

The first stage, onboarding, is the most crucial. Sales has closed the customer with an emotional and empathetic appeal by demonstrating the promised land. The customer is expecting to arrive in the promised land. If they find the desert, they won't be happy.

Hence, you need a handoff from sales into account management to ensure proper knowledge transfer on the definition of the promised land from the perspective of the customer.

The second stage, adoption, is similarly important. Its success is a function of high quality onboarding. Without adoption, the customer will not reach the 'promised land.' For the customer to be a raving fan and refer new business or be a reference, they need to reach the promised land.

The third stage, renewal, is administrative in nature. If the prior two stages are done well, the renewal stage will feel automatic. In fact, this stage can become so smooth that some companies are tempted to overlook it. This is a mistake. This low drama, but crucial step will ensure that the hard work of the first two stages is realized into a renewal. SaaS company multiples are heavily impacted by the customer churn metric. Renewal is the process whereby customers are 'anti-churned.' Of course, its the work of the sales team, the onboarding process, and the adoption process that ensure the customer will not want to churn at renewal.

The fourth and final stage is offboarding. It may seem strange to focus on that as an account management step. The reality is that no process is perfect. Motivated sales people will push deals through qualification, customers will outgrow solutions, management will take a flyer on a new market\... things happen. If your company can no longer get that customer to the promised land or if a better promised land emerges for that customer (you get outcompeted), having a well designed offboarding process is crucial. Without one, each customer exit is a drama laced, self-induced dumpster-fire. You don't want to keep a customer that wants to go.

#### Steps

1. Complete the following two plays, Onboarding and Adoption, in order
2. Codification and Use.
    - Set a process around how to use your account management process. Do employees need to document that each process is being followed? How are KPIs shared (ie in what format, frequency, to whom)? How are insights shared with the larger team?
    - Distribute the process and supporting documents, checklists and guides to the appropriate people.
    - Train employees on expectations and how to use the process and supporting documents.
    - Meet regularly with key players involved in each process to review KPIs, identify weaknesses and iterate for improvement

### How to Build a SaaS Customer Onboarding Process

**Play:** Onboarding Process · **Owners:** CS Lead, Implementation · **Cadence:** Per Customer · **Stage:** Early Traction · **Effort:** 13 SP initial, 8 SP ongoing

**Summary:** Design a methodical onboarding process that gets customers to their first value milestone quickly, sets clear expectations, and establishes the foundation for long-term success.

**Templates:** Onboarding Process Template

The successful onboarding of a new customer is a critical process for your company to master. Onboarding includes several steps: transitioning knowledge from the sales team, handing off the relationship from sales to account management, setting up a customer's invoicing account, granting access to your product, training, and establishing support channels. A customer forms her first lasting impressions of your product and your company during this period. It is essential that the description of the 'promised land' that the customer signed onto is preserved, maintained, repeated and tracked.

**The impact:** Establishing a process for successful onboarding directly impacts a customer's adoption, the tone of the rest of your relationship, and the likelihood of future churn and expansion.

> **The goal:** Create a robust customer onboarding process that preserves the definition of the promised land for customers, reiterates that definition, outlines the internal steps for the customer to reach it, and establishes clear metrics for when that is achieved.

**Background**

Your goal during onboarding is to align a customer's perceived value of your product, a perception developed during the sales process, with the actual value they experience when using the product. You need to be able to show a customer that the value proposition you made is achievable. Ultimately, a customer needs to understand what your product can do, how to do it, and then how to realize his particular goals.

In order to deliver on these objectives, you will need a solid understanding of the customer who is onboarding so you can deliver the specific value proposition this particular customer has bought. Moreover, you will need to be prepared to deliver concise and clear training materials to get a customer quickly up to speed using your product. A quick delivery is important to maintain the momentum gained during the sales process and drive adoption.

The goal during onboarding is not to get a customer to expert user status, but for their perceived value to equal their realized value. This means helping them get closer to knowing the promised land and chart a path to get there. Leave secondary features for later exploration and focus on what was communicated and what they bought into during the sales process. Otherwise, you risk overwhelming a new customer and their losing sight of the features they most need to use.

#### Steps

Process Generation.

1. *Person Accountable*: You should always name a specific role accountable for this function. Golden Section advocates that the person accountable for onboarding customers have a specific, specialized role within your company. For example, have a Solutions Expert (SE) who handles all aspects of the onboarding phase, ensuring successful implementation, training, and understanding of support channels. Once onboarding has been completed, the SE should hand-off the account to the Account Executive.
2. *Process Steps*: Set out clear, discrete steps to define each of the following processes that must be completed during onboarding.
    - *Hand-off from Sales*. We recommend having a specific process in place to ensure hand-off happens in a timely manner with sufficient transfer of knowledge. Possibly let a signed contract be a trigger for the Sales Rep to fill out the provided Customer Profile template. The Customer Profile must then be passed to and acknowledged by the SE.
    - *Invoicing / Account Creation*. See Play: A/R Management for guidance on an invoicing process.
    - *Implementation*. This includes any set-up and granting access or licenses that needs to occur for a customer to actually use your service. Particularly for enterprise products, the implementation process can be intricate and time-intensive. See Play: Implementation Project Life Cycle for help creating an Implementation plan.
    - *Customer Training.*
    - Product Use Training. See the more detailed notes below for guidance on training.
    - Familiarize the customer with your company, particularly support channels. This is an important component of training. You don't want your customer to not know how to get support.
    - Adoption Metric. Identifying an adoption metric is a useful tool to ensure successful onboarding. The ultimate goal of onboarding is to get a customer to initial adoption, and the high-touch period of onboarding should not be terminated before it is achieved. The adoption metric your company chooses will be highly specific to your product. However, consider factors that drive usage and indicate a product has been adopted (ex 50 forecasts generated). The success of the adoption metric signals that the customer is well on its way to the promised land and no longer needs SE support.
    - *Hand-off to Account Manager.* Once the adoption metric has been met, what needs to be done to pass the account back to the Account Manager?
3. *Concluding Event*: What is the final outcome of the process that signals onboarding is complete? We don't want any processes to be left in limbo.
4. *Timeframe.* How long should this process take? It is important to keep a steady cadence to these processes to maintain momentum. Remember that even small onboarding processes should be mapped (1 hour onboarding meetings) and tracked.

1. *Key Performance Indicators (KPIs):* What metrics can be tracked to indicate the efficiency and effectiveness of this process? You don't want this process to be heavier than necessary, but you also don't want to short-change it.

Post-onboarding surveys, account manager surveys, and renewal/churn data can all inform the efficacy of this process.

1. **Codification.** Golden Section recommends creating a checklist from the above processes for your SE to follow. Each task must be completed before onboarding is complete and the account can be handed back to an account manager.

Specific Notes on the Training Process.

Preparation is key. The first step to successful onboarding is a clear understanding of a customer's needs and expectations.

1. Create an Internal Training Cheat Sheet. Using the customer segments you have previously developed (ref Play: Customer Segmentation), create an Internal Training Cheat Sheet for each segment. Questions to answer on the Cheat Sheet:
    - *What is the specific value proposition to this segment?* Justify why your product is a good fit for this segment and what solution you are providing to what need.
    - *How do our most retained customers in this segment use the product?* Analyze the use case for your most satisfied customers to explore how to replicate that success.
    - *What are the MINIMUM features of your product that will get a customer from this segment to realize the value proposition (the promised land)?* One key to onboarding is to make it as simple as possible for your customer to feel like an adept user of your product. Do not overwhelm them with irrelevant information or features that don't speak to their minimum needs. Reduce the noise and help them focus on realizing their minimum value proposition during this time.
2. Create Training Guides. Using the cheat sheet you just created, develop Training Guides for each segment to teach a user how to use the identified set of minimum features.
    - A Training Guide *must* lead a customer to immediate, relevant, easy action on your platform.
    - A Training Guide can take many forms, including training checklists, interactive onscreen guidance, automated process walkthroughs, and onboarding videos.
    - Golden Section recommends Training Checklists as an effective tool to give to customers during this process. A training checklist breaks down the larger workflow into meaningful, smaller steps. The outline form of a checklist gives a customer context for what they are doing and why, sets expectations for what he should be able to do by the end, and also anchors a customer's memory so the workflow becomes routine.

Once the process has been in operation for a few months, experiment with new methodologies to improve the onboarding process. Over time, your goal is to decrease customer time-to-value and increase quick wins.

Recently onboarded customers are a valuable resource to help identify opportunities for improvement. Reach out to a few customers who have finished onboarding in the prior 45-60 days. It is likely unhelpful to ask customers onboarded less recently as the onboarding experience will be less fresh in their minds.

Questions to ask: When did your ah-ha moment occur? What prompted it? What part of the process could have been improved? Take this information back to your team to draw insights and improve the onboarding process.

Additionally, it is helpful to track cohorts of onboarded customers to measure improvements in your onboarding process. Questions to consider when analyzing improvements: did the onboarding process take less time? How long did it take for this cohort to reach full adoption? How many from this cohort would be classified as weak engagement? How many from this cohort are expert users? In the long run, how were churn and expansion affected?

Unless the modification is urgent, don't rush iterations. Allow enough time for the results from previous iterations to become apparent before making more. You will need at least the average length of onboarding to see any results.

### How to Drive Product Adoption in B2B SaaS

**Play:** Adoption Process · **Owners:** CS Lead, Product · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Drive deeper product adoption after initial onboarding to increase customer feature utilization, reduce churn, and unlock expansion opportunities.

**Prevents mistakes:** #68 Not accounting for the pain of change in customer behavior; #109 Expecting customers to expand without a pitch; #130 Expecting a customer to expand without selling

**Templates:** Adoption Process Template

Once a customer is onboarded, they should be adept at using your product to meet their needs. They understand and can see results from the value of your product. However, your job is not over! You have already invested in establishing a deeper, working relationship with the customer that now needs to be nurtured. The foundation of your continuing partnership is a mutual relationship and trust. As you continue investing in your customer relationship, the customer becomes fully adopted.

The definition of full adoption is when the customer has arrived at the promised land AND that the customer acknowledges it. Sometimes, customers have a hard time remembering the reasons they bought a product and whether other solutions might be better. The chaos of life creeps in and ushers them toward change. Your goal is to continue re-emphasizing the definition of the promised land that started in the sales process (and probably the pre-sales process) and migrated through onboarding and into adoption. When the customer reaches the promised land, they should know. If they don't know they've reached it, you aren't communicating well enough.

**The impact:** A fully-adopted customer pays dividends for your company. Once a customer is fully adopted, the likelihood of their churn decreases and their expansion increases. VC Tomasz Tunguz highlights the impact of churn: "A healthy, growing SaaS company with -5% churn has 73% higher revenue than one with 5% churn." This increase in revenue substantially adds to your top-line revenue without any increases in CAC. Moreover, a fully-adopted customer has the potential of becoming an advocate for your company.

> **The goal:** Create a process to maximize the adoption of your customers.

#### Background:

At a high-level, the adoption process is relatively straightforward: deepen relationships and improve product value. These are your two goals. But in pursuing those goals, the customer needs to be aware of the definition of the promised land and their progress toward arriving there. Constant reminders are key.

#### Steps

Process Generation.

1. *Person Accountable*: You should always name a specific role accountable for the function of maximizing adoption. For ongoing customer relations tasks like these, you may choose someone from the sales team, such as an account manager.
2. *Process Steps*: Define each of the following processes that must be completed during adoption.
    - *Hand-off from Onboarding Team*. We recommend having a specific process in place to ensure hand-off happens in a timely manner with sufficient transfer of knowledge. Specifically, we recommend the hand-off process be triggered when the adoption metric is met (see Onboarding Play).
    - *Support*. What is the process for a customer to get product support?
        - The support process needs to be extremely fine-tuned to maintain customer trust and goodwill.
        - How does a customer request support? (This needs to be extremely simple and easy to figure out. One recommendation is to get a specific phone number for support-related needs and include that phone number in the email signature line of every person in the company.)
        - Who responds?
        - What is the time frame for response and completion?
        - How is a support ticket tracked?
        - What is the process for communicating bugs and product fixes to the development team?
        - How is a support ticket marked resolved?
        - Is there an SLA in the contract? Does this customer have a specific SLA or custom SLA that differs from the norm? This SLA check must be in the final process.
    - *Ongoing Communication / Relationship Building:* In a busy start-up, this important component will not happen without intent. What process can you set in place to ensure it happens? Some considerations:
        - Set a quota. Each account manager needs to meet a weekly quota for number of meetings with current customers. Get current customers talking with these four questions from Verne Harnish's book, "Scaling Up":
            - How are you doing?
            - What's going on in your industry/neighborhood?
            - What do you hear about our competitors?
            - How are we doing?
            - And, of course, a reminder of the promised land and the progress toward it.
    - Proactively identify customers who are not spending sufficient time in your product. Reach out to them to schedule time to help them more fully utilize the product and become an expert user. This will proactively help manage churn also.
        - Set aside regular time for team members to share the insights they have gleaned from customer conversations and discuss how to make these insights actionable. Without a defined mechanism to share these insights, they get lost in the daily workload.
        - Your process here needs to be able to identify:
            - Customers who need to be re-onboarded (turnover).
            - Customers who need to be resold (excessive turnover or acquisition).
            - Customers who have outgrown the original promised land or customers whose needs have migrated since the initial sale.
            - Customers who have forgotten about the promised land and need a reminder.
    - *Expansion.* Upsells and account expansion will only come from strong relationships. To this point, you have proactively detailed processes to establish a foundation of trust and relationship. What process can be employed to capitalize on those relationships?
3. *Concluding Event*: What is the final outcome of the process that signals it is complete? We don't want any processes to be left in limbo.
4. *Timeframe.* How long should this process take? It is important to keep a steady cadence to these processes to maintain momentum.
5. *Leading Indicators (KPIs):* What metrics can be tracked to indicate the efficiency and effectiveness of this process?
6. ***Codification.*** Create supporting documents (checklist, workflows, support ticket system, etc.) to make sure the processes that have been designed are implemented.

Iterating.

It will be an on-going process to drive improvements in customer relationships, product, features, and user interface with the goal of full customer adoption.

Some considerations if the KPIs start showing signs of process weakness:

1. Weak Customer Engagement: did you lead the customer to the right features? Did you understand their needs appropriately? Does the customer lack the resources or capacity to use your product? How can you better align perceived value to experienced value?
2. Declining Engagement: Why is a solid user falling off? Did your champion leave or get promoted? Bigger company changes (acquisition, new focus), personnel issues?

### How to Run Net Promoter Score (NPS) in B2B SaaS

**Play:** Net Promoter Score (NPS) · **Owners:** CS Lead · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 5 SP initial, 8 SP ongoing

**Summary:** Implement a Net Promoter Score program to measure customer satisfaction, identify promoters, detractors, and passives, and drive continuous product and customer experience improvements.

**Prevents mistakes:** #134 Happy ears with customers; #143 Inviting customer discontent

**Templates:** NPS Template

Net Promoter Score (NPS) represents the proportion of your client base who classify themselves as \"promoters\" of your company and can be used as a proxy for the number of satisfied, loyal customers you are serving. It can also be used to indicate your company's potential for virality and word-of-mouth growth.

The reason NPS is important is that it is one of the best indicators of churn. In addition, it's a quick and easy survey to implement. It can be used to inspect several layers of users in complicated enterprise products beyond just the economic decision maker.

And, if tracked over a long period of time, it can inform strategic goal making and show potential buyers a history of customer-responsiveness which improves exit multiples.

**The impact:** It is clearly an important metric to follow and quantifies a typically intuitive hunch for how satisfied your customers truly are. NPS becomes even more useful when tracked regularly over time. It provides feedback on any refinements your company makes to its development or customer success processes. You can also analyze NPS in relation to customer demographic or product use data to gain insights on whether any cohorts are feeling particularly satisfied or dissatisfied. Drilling down into the \"whys\" can help refine your customer strategy and product offerings.

> **The goal:** Create a process for calculating and tracking Net Promoter Score on a regular cadence, so that you have two years of NPS data at the time of acquisition.

#### Background

Your NPS is calculated from the survey responses you receive from your customers. The survey asks a customer one question: \"On a scale of 0-10, how likely are you to recommend \[your company\] to a friend or colleague?\"

A person who responds with a likelihood between 0-6 is classified as a **\"Detractor.\"** This is a person who could potentially hurt your company's reputation when they talk with others about your company.

A person who responds with a likelihood of 7 or 8 is classified as **\"Passive.\"** Their account to colleagues will not be negative enough to detract from your company or positive enough to promote it.

A person who responds with a likelihood of 9 or 10 is classified as a **\"Promoter.\"** These are the people who will generate word-of-mouth referrals and whose enthusiasm for your product might lead to virality.

The individual scores are used to calculate NPS:

NPS = (Number of Promoters -- Number of Detractors) / (Total Number of Respondents) × 100

A score can range from --100 (100% of respondents are Detractors) to +100 (100% of respondents are Promoters). You are calculating a percentage but NPS is always expressed as an integer (i.e. 60).

#### Steps

1. Set up a process for sending regular NPS surveys. Questions for your team to consider:
    - Should our NPS survey be anonymous?* We highly suggest that your survey results are NOT anonymous. You will lose much of the power of your NPS results if you cannot segment your responses to uncover underlying trends. Moreover, you will lose the ability to follow up with promoters and detractors. However, if they are anonymous (for small customer bases) you should request demographic data so that you can segment (new customer, modules used, etc.)*
    - Who should we send our survey to?* Your aim is to create a randomized, statistically significant survey result. Using the equation for sample size n, with a 95% confidence level and 10% margin of error, you would need a sample size of roughly 250 respondents to reach statistical significance. Of course, not all of your survey recipients will respond; in fact, the benchmark is a 15% response rate. This requires you to send a NPS survey to a minimum of 1,700 customers. If you have that many customers, use an online randomization tool to randomly choose the 1,700 survey recipients from your customer base. You may not have that many customers at this point. In that case, you will want to send a NPS survey to all of your customers.*
    - How often should we send it?* When sending a NPS survey to your entire customer base, we recommend sending it no more than once every six months. No one customer should receive a survey request more frequently than once every six months. When deciding what time frame would be best for your company, consider that you need to allow your company the time to assimilate, respond and improve the processes that need improvement before sending a new survey. You want to be able to see the impact of your process improvements in your next survey. Finally, keep in mind events that may affect your customer when scheduling a survey so that your results are not biased by one-off occurrences like new product launches or website maintenance.*
    - Do we send out follow up questions?* The primary NPS question, \"\...how likely are you to recommend us\...,\" cannot be changed; certain groups establish industry-specific NPS benchmarks which require the survey question to be identical. However, the NPS survey provider often allows your company to ask follow-up questions. Which follow-up questions would provide the most valuable information to your company? You could gear this opportunity for one or two open-ended questions towards questions that ask for feedback regarding product improvement, customer service, etc.*
    - How do we send out NPS surveys?* There are many NPS survey services available online. We recommend you outsource the implementation of your process to one of them.*
2. Analyze your survey results.
3. Store your NPS data with any historical NPS data. Be sure to include raw data and responses to follow-up questions.
4. Report a NPS dashboard to key players, including members of the Exec team. Elements to include in your NPS dashboard:
    - Your overall NPS score
    - Raw numbers of Promoters, Passives, and Detractors
    - A chart showing your NPS score over time. On this chart, highlight key events that may have affected the NPS score (i.e. product improvements, new products, new processes, etc.)
5. Break down raw data into different cohorts. You can:
    - Track changes in scores from specific companies over time (i.e. how has Company ABC's score changed in the past two years? Did Company XY's score improve since their Detractor rating last survey?)
    - Filter survey responses by customer support staff with whom the customer works to show the effectiveness of a team or employee.
    - Track responses across specific demographics, products, services, or uses. Do clients who use your product for a specific purpose return a higher promoter rating than the average? Or clients in a particular industry? You can use information gleaned from this analysis to check your vertical and segmentation strategies and refine your sales and marketing approaches.

Possible segmentations to analyze:

- Company size or stage (i.e. start up, enterprise, etc.)
- Location
- Sector
- Product/service
- Pricing plan
- Account age
- Customer persona
- Product usage
- User activity
- Frequency of service calls

1. Respond to customers in a timely fashion.
2. Respond directly and with positivity to any Detractors. Before responding to them, look through their CRM account so that you can have an understanding of what issue(s) may have turned them into a Detractor. Be sure to listen, empathize, and not overpromise.
3. Respond directly to any Promoters. Before responding to them, brainstorm with your team how you can best harness the potential value a Promoter could bring. Do you have an Advocacy Program?
4. Look through those survey respondents who are on the edge of the next category, such as a Detractor who has given you a 6 or a Passive who gave you an 8. What can be done to improve their experience? These are marginal players who can provide benefit to your company for potentially minimal effort.
5. As a team, consider how to react as a company to survey responses. Considerations include:
    - What are the most valuable segments based on your analysis? Do you need to realign company strategy to take advantage of those segments?
    - How can you improve your marketing, sales and service processes to improve customer identification and experience?

As stated at the beginning, the power of the Net Promoter Score is found in the insight and action that follows the survey.

#### Troubleshooting

*If you're struggling to get enough survey responses,* there are a few tactics you can try to improve your response rate. First, make sure you are sending a survey request to the product user, not the product buyer; these may be different people. Second, reach out personally before the survey request is sent to let your customers know how important these responses are to you and how your company will be using them to improve the customer experience. If needed, you can follow up after the survey request is sent also, reminding recipients to respond. A response deadline might be helpful to motivate responses too.

### How to Run Accounts Receivable at a SaaS Company

**Play:** Accounts Receivable Process · **Owners:** CFO, COO · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 8 SP initial, 13 SP ongoing

**Summary:** Establish an accounts receivable process to monitor customer payments, collect on time, manage payment disputes, and maximize cash flow.

**Prevents mistakes:** #107 Letting AR age

**Templates:** AR Process Template

Cash is your lifeblood, and available cash is driven by the health of your A/R. As your company grows, your A/R account will naturally grow as well. However, it is important to keep a close eye on your A/R account and manage it proactively rather than only paying it mind when there is a cash crunch.

When it is time to sell the business, a buyer will look at the collection history and how the customers have paid historically. In addition, poor AR processes result in more working capital needed and for a B2B SaaS company, working capital is expensive. This is especially the case if the sales organization is high performing.

**The impact:** Proactively managing your collections with an A/R strategy will ensure that your actual cash position mirrors your budgeted position, preventing surprise cash crunches and stress.

> **The goal:** Establish an A/R strategy to effectively manage your cash flow.

#### Steps

#### Create an A/R Process

1. Review any process you currently have in place around invoicing and collections. What is working? Where is there weakness?
2. Consider the best practice process below.
3. Brainstorm and establish the A/R management process that would work best given your company's structure, product, and constraints. Be sure to include specifics (time frame, people, deliverables) to make this process as actionable as possible.

#### A/R Best Practices

1. *Person Accountable*: One specific person needs to be tasked with collections. It is too important of a job to not specifically allocate resources towards, and is too easily put off when left to individual account managers. The person responsible for collections should be detail-oriented and reliable, and have strong interpersonal skills. At the end of the day, this person will be establishing relationships with other people and asking them for money; getting the money is often easier for people who can easily connect to others.
2. *Process*:
    - Include a 'billing on signing' term in the contract. The sooner the process gets started, the sooner you will collect. Moreover, your customer is still excited about your product and is likely to pay quickly.
    - Transition. As soon as a contract is signed, the Sales Rep alerts the Collections point person and sends the contract.
    - Invoice! This seems obvious, but this step can easily get missed in the transition from contract to onboarding. Also, a specific due date should be listed on the invoice; "due in 30 days" is vague enough (30 days from when?) to be easily ignored.
    - Track. What accounts are approaching a due date?
    - Contact customer.
    - Five days prior to the due date, reach out to billing department at the customer's company to give a friendly reminder and check in on the status of the payment.
    - On the day the payment is due, reach out again if the payment hasn't been received.

- *A note on Renewals*: The above process will be the same for renewals except for the transition stage. Either a Sales Rep or the Collections point person needs to track when an account is approaching a renewal date. A process then needs to be put in place to decide who will contact the customer prior to a renewal contract being sent to check whether there is an opportunity for account expansion.

1. *Deliverables*:
    - Daily cash report. We recommend the Collections point person email a daily cash report to the management team. This report should include the day's cash balance, an itemized accounting of current A/R and A/P, and sources/amounts of any cash credits or debits. We believe a daily cash report keeps your company's cash balance at the forefront of your minds, encourages transparency and accountability, and prevents any surprises.
    - Monthly A/R KPIs. Choose KPIs to judge your A/R management process. We recommend tracking Days Sales Outstanding (DSO) and a historical comparison of billings versus collections (\# and $) in a month.
2. ***Codification:*** Using the provided template, record your A/R Management Process and expectations for Deliverables and tracking KPIs. Inform the appropriate people.

#### Iterating

The A/R process you first set can always be improved. Over time, use the monthly KPIs to identify where improvements can be made.

1. *Questions to consider*:
    - What is driving our expanding A/R line?
    - Do we need to drive the A/R down?
    - Are we acquiring customers we shouldn't?
    - Is there a particular segment causing issues?
    - Are our customers happy?
2. *Potential Improvements to Billing and A/R Cycle*:
    - Shorten cycle time:
        - Use recurring credit card or direct deposit payments if appropriate
        - Track product delivery and shorten delivery cycle. Deliver faster; get paid faster
    - Eliminate mistakes:
        - Is transition happening in a timely and effective manner?
        - Are invoices being sent quickly?
        - Are they being sent to the correct person for the correct amount?
    - Improve business model:
        - Eliminate mistakes so as to not upset the clients, which could delay bill payment
        - Improve the implementation process to drive adoption and keep clients happy

### How to Build and Maintain an ARR Schedule

**Play:** ARR Schedule · **Owners:** Founder, COO, CFO · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Create an ARR schedule that tracks all customer contracts by cohort, predicts future revenue, and identifies at-risk accounts.

**Prevents mistakes:** #85 Ignoring rev-rec

**Templates:** ARR Schedule Template

ARR is the key metric for your company. It is a measure of your growth and directly tracks your creation of enterprise value. To this end, it is a tremendously important factor to track.

There is not one standardized definition for ARR. Golden Section recommends, however, that you only use committed, fixed recurring fees to calculate ARR and exclude one-time fees like implementation or consulting.

Thoughtfully tracking your ARR in a schedule and keeping it current will result in better confidence in your business processes when the time to exit arrives. This is because a primary area of diligence when selling a company is revenue. A messy ARR schedule causes concern about the revenue number itself which can result in a lower exit price. As a seller, you don't want to be arguing what is and what is not revenue. You want to have a consistent approach over several years expressed in the same format for tracking revenue.

Another area the ARR schedule helps is in defining what makes up revenue. Most enterprise software firms will have a range of customer contracts for different situations. In addition, contracts change, but you might not have updated earlier customers onto the new contract. This complexity causes concern from buyers. Clearly illustrating ARR next to a customer with information on the type of contract that customer is on will alleviate this concern.

**The impact:** An ARR Schedule can be used to easily calculate, forecast and communicate ARR and growth metrics within your company and to potential investors.

> **The goal:** Create an ARR Schedule and a process for its regular update.

#### Steps

1. Enter customer contract information into the ARR Schedule template provided. You will need to enter the Customer Name, Contract Iteration, Beginning Date, Term, and ACV. The remaining information will populate automatically.
    - *Company Name:* It's tempting to include contracts that are in the process of being signed in ARR calculations. Golden Section strongly recommends you not do this. Only include contracts that are officially won and signed. This maintains sales team motivation to move contracts through that last stage and also prevents your ARR numbers from becoming inflated. Since they are a good estimator to use in forecasting your cash position, it is key to keep this number as close to accurate as possible.
    - Iteration: To maintain the accuracy of historic month MRR, any changes to a company's MRR (either because of account expansion, reduction, etc.) need to be entered on a new line with the effective date representing the first date of the altered contract. Additionally, renewed contracts should be considered new contracts and also entered on a new line.
    - Contract Number: This is the number from the contract register that outlines the contract which that ARR comes from (see Contract Register Play).
    - Months: Additional months can be easily added to the schedule as needed by copying the formulas out.
2. With the initial ARR Schedule created and updated, generate a process to ensure it is kept up to date and used appropriately. Use the PDCA (Plan, Do, Check, Act) process template to document this process. Considerations:
    - *Deliverables:* Golden Section recommends that the monthly value for ARR and growth rate calculated in the ARR Schedule be included on your management team's KPI Dashboard. This is an important number to keep close tabs on. Generally, when the time comes for exit, you will be valued on some multiple of your ARR.
3. Optional: many companies like to track cohorts of contracts (i.e. cohort based on contract sign month, product update, process update, pricing, etc.) to get insight into the effect of changes on the adoption, expansion and churn habits of customers. The ARR Schedule is a good place to track those cohorts.

### How to Build a Customer Contract Register

**Play:** Contract Register · **Owners:** COO, Legal · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 5 SP initial, 3 SP ongoing

**Summary:** Maintain a master contract register that tracks all customer contracts—renewal dates, terms, pricing, and key obligations—as your primary source of revenue truth.

**Prevents mistakes:** #71 No active data room; #88 No customer contract register; #89 Poor customer contract management

**Templates:** Contract Register Template

Golden Section believes it is best practice to create a master contract (see play: Contract Playbook) and then a contract register to track contract dates, highlights and any deviations from the master contract. Creating a contract register gives you a dashboard that you can quickly reference, use to improve your billing, collection and renewal processes, and assist you at your next capital event.

The contract register will be vital when exiting. Buyers want to know what they are buying. And for a software company, they are principally buying contracts. Hence, they need an efficient way to understand each contract. If you are doing $10M in sales with 1,250 different companies, it will be administratively impossible to read every contract. But, nonetheless, this is what is needed. Therefore, keeping the register clean (grammatical, visual, etc.) increases buyer faith in your representations and will ultimately lead to a faster and more lucrative exit.

**The impact:** A contract register adds transparency into the black box of contracts. It gives you quick insight into contracts approaching the end of their terms so you can proactively manage renewals, escalations and billings, improving your overall cash flow. Additionally, a contract register is a document any future investor will want to see.

Again, your contracts comprise the enterprise value of your company, and so a potential investor or buyer will want to see the contracts they are purchasing.

> **The goal:** Design a contract register to track all customer contracts and their key terms. We believe this should be the cleanest document your company possesses, with no misspellings or unique fonts.

#### Steps

1. Assign version codes to the existing contract templates your company has used.
2. Assign existing contracts to the appropriate version code.
3. Enter relevant information into the template provided.
    - Regarding Key Differences, summarize in bullet-point summary key deviations in this particular contract from its template. For example, if this contract has a maximum annual escalation of 5% instead of the 7% written in the contract template, write "edit: maximum 5% annual escalation."
    - *A note on neatness and accuracy*: This is not simply an internal reference document. It will be used in the future by potential buyers/investors to analyze the value of your company. You want to keep this document as clean and accurate as possible. You do not want to raise any red flags or give a buyer any opportunity to lower your valuation.

#### Codification

Save this document to its own folder. In this folder also save any versions of the contract templates and executed contracts. Continue adding to this document and saving contracts as they are executed.

### How to Build a Contract Playbook for B2B SaaS

**Play:** Contract Playbook · **Owners:** Founder, COO, Legal · **Cadence:** Annual · **Stage:** Early Traction · **Effort:** 13 SP initial, 5 SP ongoing

**Summary:** Establish standard customer contract terms and a negotiation process that protects your company while remaining competitive—covering data rights, assignment restrictions, SLAs, and liability.

**Prevents mistakes:** #4 Letting customers dictate the terms; #21 Founder playing ‘lawyer’ on contracts; #49 Promising delivery dates to customers; #51 Hourly not to exceed $x contracts; #76 Letting customers drop CYA comments in meetings; #79 Giving extra-contractual concessions; #80 Editing the MSA for a customer; #89 Poor customer contract management; #90 No contractual teeth; #94 Tolerating brinkmanship; #121 Failing to incorporate contingency in customer contracting

**Templates:** Contract Playbook Template

To maximize the impact of a strong contract on your company's growth and value, Golden Section recommends working with your legal counsel to assemble a contract playbook. A contract playbook is a document that outlines your standard contractual terms, a short justification for those terms, and any acceptable or unacceptable variations.

1. Having different versions of contracts, especially when they differ in critical ways, is a value killer at your next round of funding. Potential investors or buyers are fundamentally buying your contracts, not your product, and so will want specific terms in your contracts. If there are differences between their needs and the existing contract terms, investors may significantly discount your value.
2. It is your goal to create a scalable, efficient sales process. Streamlining the contract process as much as possible prevents lag on your part when the time comes for contract negotiation. You will have a contract template and a set process for term negotiations, reducing the need for executive or outside legal input. Spending less time in contract negotiation prevents stalls in your pipeline. You will also have clear boundaries for what terms are unacceptable for your company and can walk away from prospective deals more quickly if mutually agreeable terms can't be found.

3. A contract playbook aligns all players (executive team, sales team, legal counsel). This can be particularly helpful for the sales team; it will save time for them to know upfront what terms are acceptable to your company and which ones will kill a deal so they can negotiate with a prospect more efficiently.
4. Compiling a contract playbook is a financial investment. Even though you will need to pay legal fees to get assistance creating it, having a contract playbook will likely save your company money over time. Many decisions and scenarios will be considered at once in a more thoughtful and efficient approach so that you don't need to engage your attorney for future one-off questions as often.

**The impact:** In addition to being the core of your enterprise value, contracts protect your interests and manage your risk. Contracts are vitally important. Well-managed contract execution can assist the scalable, efficient growth of your company and increase your enterprise value.

> **The goal:** Create a contract playbook to streamline the contract negotiation process and maximize the value of your executed contracts.

#### Background

By the time you reach contract negotiation, you have typically invested considerable time and resources into moving this prospect through your pipeline. Your sales rep is motivated to close this deal - a return on the time spent, quota attainment, and earned commission are all within reach - and does not want to lose it over terms that may not impact him. However, the executed contract is crucially important to your company and is not a stage to be glossed over. Poorly negotiated contracts can be costly in terms of resource cost, potential for revenue loss, addition of risk, and future devaluation.

1. Streamlines the contract negotiation process so that deals do not stall in this late stage of the pipeline.
2. Sets standards for contract terms and a process for negotiation so that your company does not enter into unacceptable contracts. Standards align the interests of your Sales Reps and your company.

#### Steps

1. Analyze previous contracts and create playbook
    - What are the key terms most important to our company? In other words, in which areas are we most vulnerable to risk and need to protect? Additionally, which terms affect key revenue drivers and need to be optimized?
    - Use this information to fill out the *Section, Term,* and *Standard Agreement Language* columns.
    - Why did we use this language on the standard agreement? How does this term affect our company? Why is it important?
    - Use this information to fill out the *Justification* column.
    - How have prospects responded to our standard language in regards to this term? What portion of prospects raise concerns over it? How serious are the objections? What, specifically, are the objections? Has the sales team found any responses that effectively counter a prospect's objections?
    - Use this information to fill out the *Common Customer Objections* and *Response to Objections* columns.
    - What alternative language have we used in past contracts in regards to these key terms?
    - In retrospect, would we use those terms again?
    - How have those alternative clauses affected our ability to do business, risk, revenue, customer relationship and customer retention?
    - *Note:* It is especially important to get input from the executive and sales team to answer these questions. These are not straightforward answers. Rather, different perspectives, needs and priorities need to be understood and balanced to identify the right approach to balance risks and rewards that align with company objectives.
    - Use this information to fill out the *Acceptable Fallbacks* and *Unacceptable Fallbacks* columns.
2. Rank the *Acceptable Fallbacks* in terms of company preference. This will set the process for contract negotiation.
3. Codification and Use
    - Set a process around how to use the playbook: does the contract negotiation process need to be documented? When does an altered contract need prior approval?
    - Distribute the contract playbook among the executive and sales team.
    - Train the sales team on expectations and how to use the playbook.
    - Update regularly.

A note on contract negotiation strategy: Not all customers will negotiate terms, but enough will that a negotiation strategy should be considered to put your company in a prime spot to get the most beneficial terms. To that end, we recommend putting one blinking, red button term in your contract. This would be one term that stands out from the rest as particularly weighted in your favor. For those customers who need to negotiate, this blinking red button will anchor their criticism. As the negotiation process continues, the customer can focus their attention on that one issue, avoiding negotiation on other terms. Additionally, if the customer raises objections on other terms, you have a lot of room to fall back on the blinking, red button term in return for not moving in regard to additional objections.

Generally, Golden Section believes you can stand by your contract without caving; a customer only negotiates a contract when the ROI you're offering is not strong. Your contract should leave you and your customer on equal footing. However, if the customer is forcing negotiations, Golden Section recommends never altering your terms without having an ask in return.

**Term: Data Rights**

#### BACKGROUND

If the opportunity presents itself down the road to monetize the data that you have accumulated from your core business, then your company needs to have the data rights to capitalize on that opportunity. Without data rights at the outset, it is very difficult to retro-actively obtain them.

Additionally, in certain regulatory environments where data owners intellectual property may be determined by legislation, your company can end up having data on its system that doesn't actually belong to the company. Additionally, your company can be at risk if someone uses your product for illegal activities. Having a strong Data Rights clause in your customer contract protects you so you're not responsible for the data on your product and also allows you to use and monetize the data in your product.

#### IDEAL STANDARD LANGUAGE

1. Work with your legal counsel to develop Ideal Standard Language for this term.

**Term: Assignment w/o Approval**

#### BACKGROUND

When it comes time to sell your company, you are fundamentally selling your customer contracts. Your customer contracts are the inherent value of your business. If your customer contracts do not have an Assignment without Approval term, then each customer will need to approve the reassignment of the contract to the buyer. This adds uncertainty and a potential pitfall to the buying process. No matter how nice, a customer will likely use this situation as an opportunity to squeeze you. You don't want a customer to be able to renegotiate because of reassignment.

#### IDEAL STANDARD LANGUAGE

1. Work with your legal counsel to develop Ideal Standard Language for this term.

**Term: Billing on Signing**

#### BACKGROUND

To reduce your AR cycle and improve your cash flow, you want to do all you can to collect payments as quickly as possible. Golden Section recommends including Billing on Signing in your customer contracts so that you can bill as soon as a contract is signed, when a customer is most excited about your product.

#### IDEAL STANDARD LANGUAGE

1. Work with your legal counsel to develop Ideal Standard Language for this term.

**Term: 3 year term / 24 month renew**

#### BACKGROUND

A 3 year term length is actually a placeholder; in reality, for B2B companies specifically, Golden Section recommends you negotiate the longest term you can. As previously mentioned, when it comes time to sell your company, you're selling your contracts, and a contract is worth more the longer the remaining term.

From an operational perspective, a longer term also buys your company more wiggle room should there be any operational problems; you can resolve the problem with enough time remaining in the contract to repair the customer experience. Additionally, the longer the term, the more equality that exists between your company and the customer; with a longer term, you're not indentured to serve that one customer because the customer can't churn whenever they want.

#### IDEAL STANDARD LANGUAGE

1. Work with your legal counsel to develop Ideal Standard Language for this term.

**Term: Annual Escalation**

#### BACKGROUND

Through this term, you can give your company the opportunity to escalate the customer price before the expiration of the contract term. Typically, this term will set a maximum allowable annual escalation.

As discussed in the Play: Customer Contract Playbook, Golden Section advocates for a blinking, red button in your contracts to anchor your customer's attention and negotiations. The Annual Escalation term is a great opportunity for a red button. For example, you could set a specific, high percentage as the maximum annual escalation. During negotiations, you could retreat all the way back to no escalation. However, Golden Section has found success countering with an objective, outside standard percentage (ex nominal healthcare CPI) rather than falling back all the way to zero.

#### IDEAL STANDARD LANGUAGE

1. Work with your legal counsel to develop Ideal Standard Language for this term.

**Term: Dispute Int % and Late Payment Penalties**

#### BACKGROUND

The terms regarding Dispute Interest Percentage and Late Payment Penalties are your leverage to prevent lengthy disputes and late payments, which can be very costly in terms of lost revenue, missed opportunities and time sucks for your company.

It can take up to three years to get a judgement in the case of a dispute. If the case is decided in your favor, the customer is required to pay pre- and post-judgement dispute interest. Golden Section recommends including the highest dispute interest allowable by law in your contract to disincentivize a customer from engaging in a suit. Additionally, if the dispute rate is not specifically set in the customer contract, you are limited to the maximum set by the state. In Texas, the statutory dispute interest is 6% and in other states, it is de minimis.

Late payment penalties should be very punitive and clearly detailed. With some of our companies, Golden Section has set a high flat late fee, which we recommend because it is easy to understand and encourages on-time payments. A punitive late fee needs to be worded so that late payment causes default.

One important prerequisite to late payment penalties: your company must have in place an effective invoice process delineated in the contract. You need to be able to say you invoiced properly, according to the procedures outlined in the contract, so that there are no disputes.

#### IDEAL STANDARD LANGUAGE

1. Work with your legal counsel to develop Ideal Standard Language for this term.

## Operations

### How to Build a Quality Management System for SaaS Operations

**Play:** Quality Management System · **Owners:** COO, CS Lead · **Cadence:** Monthly · **Stage:** Growth · **Effort:** 21 SP initial, 13 SP ongoing

**Summary:** Establish documented processes and quality standards that ensure consistent, predictable customer outcomes—creating the operational predictability acquirers value.

**Prevents mistakes:** #100 Lack of documented operating processes; #101 Lack of process ownership; #102 No proof of process conformance; #106 Founder stepping into a subordinate’s process; #113 Poor performance: Root cause all missed goals; #115 Letting the same issues come up

**Templates:** Quality Management System Template

The current entrepreneurial ethos seems to eschew process and rigor in exchange for flexibility and growth. Even rigorous project management methodologies like Agile are often misunderstood and manifest as a free-for-all with zero attention to documentation. Golden Section believes the key to high-performing B2B SaaS founders and teams is an understanding of the power of processes and how leveraging it can yield a faster growth rate and more aligned team.

**The Impact**: A working quality management system results in consistent customer deliverables and experiences. Ultimately, a well-functioning quality management system yields the maximum exit multiple because it gives comfort to the buyer that they are buying a set of systems that produce consistent output.

> **The Goal**: Establish and improve processes leading to continual operational improvement.

#### Background

The PDCA methodology - Plan / Do / Check / Act - is very simple:

1. Plan - identify your problems
2. Do - test potential solutions
3. Check - study results
4. Act - implement the best solution

This is the same process advocated in the Lean Startup for continual improvement and experimentation. While the Lean Startup is recent, manufacturing and service companies have used PDCA to foster continuous improvement for more than fifty years. Edward Deming popularized the process but referred to it as the "Shewhart cycle." (https://en.wikipedia.org/wiki/PDCA).

Implementing a process-oriented approach is simple. The key here is to not overthink or over-architect it. More process-oriented approaches die from overkill than from lack of rigor. In the B2B SaaS world, it is key to get buy in and have the documented processes used.

#### Steps:

1. Design a process template. We have included a template with the process considerations we believe are the most important. This template is one that all your processes will follow, so add any additional factors that are important to your company.
2. Identify the high-priority processes that need to be created first. Generally, if there is an area with multiple, similar failures, there is a need for process improvement. Some of the areas we have found processes to be most valuable for B2B SaaS founders and teams include:
    - Support escalation process
    - Customer contracting process
    - Sales to support/implementation handoff process
    - Invoicing and revenue receiving process
    - Customer contract renewal process (even if contracts auto-renew)
    - Employee onboarding process
    - Vendor onboarding process
3. Identify the process owner. She will be in charge of ensuring the process is followed and responsible for engaging with people who violate the process. We have found most people can truly handle only a few processes. The process owner will also ultimately be responsible for creating the final version.
4. Design a process. Think small. Like New Year's resolutions, processes are easy to make and tough to follow, so we recommend establishing a longer-term rollout plan for a few key processes.
5. Identify a proof of process. Well-designed processes will have proof of completion. For instance, if a customer contracting process requires a contract to be internally reviewed by the CEO if over $50k per year, then there should be evidence that such a review happened (ie an email approval saved alongside the contract). This evidence proves the process worked, and it is essential as you scale.
6. Codification. Any process is worthless unless your team can access them fluidly. Think through how you operate. The key is access and access control. There are some processes you might want to ensure are kept confidential. However, we recommend creating a process repository to house those processes that your team will be implementing.
7. Audit your processes. Once you have your process running for about a month, it is a good idea to hold an internal audit to review its robustness. This should be kept simple. We recommend meeting with the process owner(s) and selecting a few process items at random to be demonstrated. After a day or two, the process owner should be able to supply evidence that the process was or was not followed for those selected points. The results of this audit should be logged and any process violations documented with a follow-up to determine the root cause and revisions.

### How to Run an Implementation Project Lifecycle for B2B SaaS

**Play:** Implementation Project Lifecycle · **Owners:** Implementation Lead · **Cadence:** Per Project · **Stage:** Early Traction · **Effort:** 21 SP initial, 13 SP ongoing

**Summary:** Define a structured implementation project lifecycle that reliably delivers customer success—scoping, planning, execution, testing, and go-live phases.

**Prevents mistakes:** #50 Unstructured implementations; #52 Fuzzy requirements; #53 Bad scoping; #135 Not owning the customer service delivery

**Templates:** Implementation Project Lifecycle Template

We have discussed the various aspects of the Onboarding process in depth (see Play: Onboarding) and would like to turn to the Implementation Project Lifecycle to detail the implementation phases and processes.

**The Impact:** A systemized approach to proper planning, continuous communication, precise testing and deployment, and satisfactory project delivery will make your implementation process more cohesive, consistent, and efficient and ensure customer satisfaction. Ultimately, scaling is impossible if the customer onboarding process (onboarding and adoption) are not well designed and process oriented.

> **The Goal:** Create repeatable, results-driven guidelines to direct implementation and adoption.

#### Background and Best Practices:

There are five comprehensive phases of the Implementation Project Lifecycle (IPLC) that begin immediately following the successful execution of a sales contract. They are designed to provide clients with a seamless transition from their existing systems to your system while ensuring all aspects of clients' operations in both business processes and functionalities are totally satisfied by your system.

1. Phase One: Planning and Requirements Definition
2. Phase Two: Systems Design, Data Conversion, Custom Development and System Configuration
3. Phase Three: User Acceptance Testing and Conversion Validation
4. Phase Four: Deployment
5. Phase Five: Project Close-Out

Phase One of the IPLC is the initial discovery phase. It involves two critical key processes: (1) Planning and (2) Requirements Definition. The goal of Phase One is to work jointly with the client to ensure mutual success by setting up proper expectations, achieving a common project implementation plan and preparing the client to adapt to the changes required by the new system.

1. Phase One Trigger: Project Kick-off Planning Session. Most implementations are not about the technology or the software behind them, but they are all about the business processes and the people executing these processes. Focus on the client business processes and the functionalities of your product to enhance these processes. Think about the relationship with the client personnel to adapt to the changes brought forth during implementation.
2. Phase One Processes:
    - Planning: During a planning session, develop the following with input from the Client and then share openly with Client:
        - Project Charter - the objectives and goals of the project
        - Project Governance plan - the framework for decision making and escalation of issues
        - Staffing plan - to assemble your team
        - Communication plan - to facilitate communication of status, risks and issues
        - Quality Management plan - to ensure the highest quality of service and delivery
        - Risk Management plan - to assess and manage risks throughout the project
        - Change Management plan - to incorporate and regulate changes
        - Project Schedule, including milestones and a schedule for Status Meetings - to manage the timeline with tasks, resources and deliverables
    - Requirements.
        - Project Manager must have understanding for the following
            - What is the main business objective of the project?
            - Why does the client need this solution?
            - What are the client's business requirements? In other words, what is the current basic work process and how will your system fit into that process?
            - What are the other additional requirements?
            - What are the client's technical problems?
        - Additionally, the system requirements must be analyzed and developed to deliver:
            - Data Conversion Plan
            - System Requirements Specifications (SRS) including Business Requirements, Functional Process Requirements, Non-Functional Process Requirements and Gaps Remediation Documents
            - Final Scope Documents
3. Proof of Process: Final Scope Documents reviewed and signed-off by Client

Phase Two of the IPLC is the Realization Phase, in which the Project Manager, the Systems Architect and selected members of the Project Team are intimately involved to achieve the following objectives: (1) design and implement business and process requirements, (2) conduct final implementation in the system and overall test, and (3) certify and release of the system for Go-Live operations in Phase Three.

1. Phase Two Trigger: Review and Sign-off of Final Scope Documents from Phase One
2. Phase Two Processes:
    - System Design with Sign-Off Phase Gate, including
        - Design Solution Architecture
        - Design System Infrastructure
        - Design Data Conversion Map and Data Conversion Plan
        - Create Functionality Test Scripts by Process
        - Create Data Conversion Audit Scripts
        - Define UAT Environment Checklist
    - Data Conversion
        - Implement Data Conversion Maps
        - Run Data Conversion
        - Generate and Review Exceptions
    - Any Custom Development with Sign-Off Phase Gate per Development Agreement
    - System Configuration and Testing with Sign-Off Phase Gate
        - Setup Test/Production Infrastructure
        - Review and Certify Solution Architecture Design
        - Configure Applications
        - Conduct Internal Pilot
        - Conduct Conference Room Pilot with Client
3. Proof of Process: Review and sign-off with client the following documents
    - Solution Architecture Acceptance
    - Data Conversion Acceptance
    - Custom Development Acceptance

Phase Three is often called the Final Preparation Phase. In this phase, the Final Configuration, which is composed of the systems and the data structures used in the Conference Room Pilot Sessions including all the resulting revisions, is replicated onto the new system installed at the client's site. The Project Manager then plans and orchestrates the User Acceptance Test (UAT) and the final Data Conversion Validation at the client's site in preparation of "Go-Live" in Phase Four.

1. Phase Three Trigger: Sign-off on the three documents required as Proof of Process in Phase Two
2. Phase Three Processes:
    - User Acceptance Test (UAT) - performed with the Client Project Manager and Client Project Sponsor to review all test scripts and select test scripts, use cases and integration tests to most effectively illustrate the full power of the product
    - Data Conversion Validation - to ensure that new databases are free of data discrepancies, missing data, and data abnormalities
3. Proof of Process: Review and sign-off with client for each functional group using the UAT Acceptance documents

The purpose of Phase Four: Deployment is to complete the final preparation including user training, system management, and cut-over activities to finalize the readiness to "go live". This final preparation phase also serves to resolve any open issues. Once the phase is completed successfully, the client is ready to run their business on the new system. The goals for the deployment of the new system are the (1) smooth and on schedule installation, (2) without any significant problems, (3) to the complete satisfaction of the client.

1. Phase Four Trigger: Sign-off on the UAT acceptance documents in Phase Three
2. Phase Four Processes:
    - Develop Deployment Plan - to include plans for End-User Training, Deployment Process, Validation Checklist, Contingency Plan, Data Conversion Plan, Post-Deployment Production Support Plan, Quality Check and Acceptance
    - Develop Back-out Strategy - to anticipate any potential problems and mitigate their impacts on the overall project, and identify Go/No-Go decision points for each contingency
    - Conduct Training
    - Execute Deployment Plan
    - Post-Deployment Support, or Transition-to-Support Timeline
3. Proof of Process: Execution of Deployment Plan

The goal of Phase Five: Project Close-Out is to officially close the Project. All outstanding issues must be resolved by the Implementation Team and the client transitioned to support.

1. Phase Five Trigger: Execution of Deployment Plan
2. Phase Five Processes:
    - Review and Close Open Issues
    - Review Business Benefits with Client - to review with Client all business drivers and business measurements that were defined in the Project Management Plan at the start of the project in Phase One. Project results, including all changes in the Change Management Plan, must be compared against the goals set at the outset. This review should be presented to executive management, including the Client Executive Sponsor and Client Stakeholders.
    - Summarize and Review Lessons Learned - Project manager must summarize and share all lessons learned during this implementation for the purposes of internal process improvements.
    - Receive Sign-Off on Go-Live and Close-Out - It is very important for the Project Manager to receive a formal sign-off on the Go-Live or Deployment Phase that the Client has acknowledged the full and complete execution of the Deployment Plan discussed in Phase Four: Deployment. This acknowledgement is key for the Project Manager to complete the remaining tasks of closing-out the project: Documentation and Transition to Support.
    - Transition to Support
3. Proof of Process:
    - Client sign-off on Go-Live and Close-Out
    - Completed Project Close-Out Checklist
    - Transitioned to Support

#### Steps

Use the PDCA methodology described in Play: Quality Management Systems and the template provided to create a process for each phase of the IPLC.

Use the Best Practices above to guide your IPLC but tailor it to your company's specifics.

### How to Track Implementation Hours and Costs

**Play:** Implementation Hours Tracking · **Owners:** CS Lead · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 5 SP initial, 5 SP ongoing

**Summary:** Track the man hours required to fully implement each new customer so you can price implementation fees accurately, invoice overages, and evidence implementation costs at exit.

**Prevents mistakes:** #84 Apologize for poor performance, but don't own what you don't own; #143 Inviting customer discontent

Implementation can be time-intensive and costly to your company. Often SaaS companies with products that require a more customized or intensive implementation process will charge their customers an upfront implementation fee in addition to the monthly recurring subscription fee. Since an implementation fee will be calculated based on estimates of the time and labor required to onboard a customer prior to actual implementation, it is important to track your inputs so that you can accurately estimate and then charge your company's cost to implement, plus margin.

**The Impact**: A data-based estimate of the amount of time an implementation process will require allows you to bill appropriately for implementation. Additionally, tracking the number of hours spent implementing a customer allows you to take advantage of invoicing additional hours over the initial estimate if allowed by your customer contract. In either case, having data on how much an implementation costs and ensuring that data is robust and convincing will help during an exit.

> **The Goal**: Establish a process to track the number of man hours required to fully implement a new customer.

#### Steps

1. Use the PDCA methodology described in Play: Quality Management Systems and the template provided to create a process for tracking implementation man hours by customer. Considerations:
    - What is considered an implementation activity?
    - Where/how should it be tracked?
    - Do we want to set targets for implementation hours per customer?
    - What milestones or dependencies should be tracked by time to better understand the resource cost over the project lifecycle?
    - How do we respond if a customer's implementation process surpasses the amount of man hours we estimated? Some SaaS contracts allow for additional hours to be billed to the customer. If we have a similar term, what is the process to invoice additional man hours?

### How to Set Up a Support Ticket System for B2B SaaS

**Play:** Support Ticket System · **Owners:** CS Lead, CTO · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 13 SP initial, 8 SP ongoing

**Summary:** Implement a ticketing system that captures customer issues, routes them efficiently, tracks resolution, and provides data for support process improvement.

**Prevents mistakes:** #59 No customer support; #60 Not using a support ticket system; #61 Not having a knowledge base for customer issues; #63 Building your own support tools

**Templates:** Support Ticket System Template

The quick and effective resolution of support needs is vital to customer satisfaction. A survey(https://d16cvnquvjw7pr.cloudfront.net/resources/whitepapers/Zendesk_WP_Customer_Service_and_Business_Results.pdf) conducted by Dimensional Research and Zendesk found that 66% of B2B customers stopped buying a product after a negative customer service interaction, while 62% of B2B customers bought more after a positive customer service interaction. To reiterate, a customer had a support need (a potentially negative experience) and *expanded* their account in response simply because the company responded effectively. Interestingly, timeliness of response had the biggest impact on customer satisfaction; 69% of customers pointed to a quick resolution of their problem to justify their good customer service experience. On the other hand, 72% of customers attributed having to explain their problem to multiple people as the cause of their negative customer service experience.

We point out these numbers to underline how important it is to have a process for responding to and resolving support requests.

**The Impact**: A well-designed support ticket system improves customer service satisfaction, which protects and potentially grows your revenue.

> **The Goal**: Establish a support ticket system that ensures the timely response and quick resolution of customer support needs.

#### Background

There are sophisticated subscription products available to automate your support ticket system. At the beginning stage of your company, you can also track customer support requests yourself. Regardless, the process is similar:

1. Identify: How do you identify support issues? Typically, identification will occur when a customer directly contacts you. But how do they contact you? It is good to have a single, separate support phone number that is broadly publicized to your customers to make the process as easy to initiate as possible for a customer. Additionally, consider whether there are additional modes of identification relevant to your company (ie automatic detection to monitor loss of service or bugs before your customer notices or social media monitoring).
2. Record: How and where are support tickets recorded? What information is necessary to collect to ensure the customer is appropriately engaged, the problem is fully resolved, and patterns in issues can be identified to flag opportunities for improvement?
3. Manage and Track: What process needs to be put in place to ensure the necessary people are notified and involved in resolving the issue? How can you ensure the ticket is addressed in a timely manner?
4. Resolve: At what point will the support ticket be marked as resolved? Who needs to be informed of support needs? How are support needs going to be leveraged to improve your knowledge base and make continual service improvements? How do you ensure the customer is satisfied with the resolution?

#### Steps:

1. Use the PDCA methodology described in Play: Quality Management Systems and the template provided to create a support ticket system. Considerations:
    - Who provides support? In B2B SaaS, your product is often highly technical, which makes the traditional tiered support model where a support call is first taken and then escalated to more qualified individuals inefficient. In all likelihood, the support ticket will be escalated and so you're causing unnecessary inefficiency by insisting on a tiered escalation model. Golden Section has found success having your SEs take on support for the accounts they have supported during the implementation phase. A SE is technically inclined and well-versed in the product and can often resolve support issues quickly and effectively. Moreover, they already have a relationship with the customer and knowledge of the customer's use case to maximize the effectiveness of their support.
    - Who needs to be informed of support needs? In some instances, the support request is not actually a support need but a new feature request. In that case, the request needs to be kicked back to a sales lead to facilitate the conversation.
    - How do you make sure that insights and opportunities for improvement learned from the support process get to the right people to push process and product improvements?
2. Create an issue tracker to track your support ticket system. A template has been provided, but modify it to fit your company's specific needs.

- Issue Ref No. - Use to reference the support ticket number or issue number from your support or dev ticket system.
- Issue Name - The at a glance descriptive name of the issue.
- Issue Description - Long form overview of the issue.
- Customer Owner - Customer point of contact on the issue
- Resolution Description - Common description of 'resolved' - treat this as a statement.
- Value Description - A description that links the issue to the value the customer receives when the product is delivering for them.
- Owner - Internal company owner of the issue
- Next Step - The immediate next step to be taken on the issue
- Status - Status of the issue; example Status gates could include Reported, Discovery, Dev, Implementation, Complete
- Complete? - Yes for when the issue is complete.
- Email Customer - Link an email to the customer owner for the issue.

*A note on making the best of a frustrated customer*:

The confluence of development, sales, implementation and support will certainly create confusion and friction. To a certain extent this is unavoidable but still leads to dissatisfied customers. We believe customer dissatisfaction should be seen as an opportunity.

- Seek first to understand - but vocalize your intent. Be sure to give customers the space to share their frustrations without interruption. This probably means hearing things you know are incorrect. Don't worry, you can address that later. Stepping in to correct in that moment risks shutting down the conversation all together. The customer will still share their frustration, but next time it won't be with you but with a competitor.
- Be careful with promises. Most people's default response to hearing about broken things is to start to fix them or commit to a timeline to solve them. It is easy to let the urgency of the complaint cause a hasty promise, but the key to delivering a true resolution to the customer is knowing the context of the issue and what is required to truly resolve it. Instead, Golden Section recommends making a list of needs and committing to review the list with your team.
- Focus on value rather than the issues. Frustrated B2B SaaS customers come to you with issues, typically in the form of feature requests or bugs. These frustrations can also be seen as symptoms of the root cause: lack of value. To achieve a value-based approach, we recommend the following order of activities to create an achievable definition of success. Rather than allow a customer to create a laundry list of issues that aren't accretive to the value of the system, your conversations will be focused on delivering improved value.

1. Spend some time thinking through the value the customer was expecting.
2. Look at whether the main source of frustration is aware of that value promise.
3. Engage the customer in a value conversation to resell the value promise.
4. Invite the customer to share with you the current status of the value received.
5. Create a framework with the customer to track the value going forward.
6. After focusing on the value, engage the customer on the list of issues.
7. Follow-up! Set a cadence on meetings internally and with the client, and do not be afraid to engage the customer on a pushed deadline. This happens in business. When a customer's issue is pushed back, hopefully it is because something else that also benefits them took precedence. In the rare case that it does not, it is still best to proactively engage them with the news with no ambiguities.

### Which Support Metrics to Track at a B2B SaaS Company

**Play:** Support Metrics · **Owners:** CS Lead · **Cadence:** Monthly · **Stage:** Early Traction · **Effort:** 5 SP initial, 5 SP ongoing

**Summary:** Track support performance metrics—response time, resolution time, satisfaction, volume trends—to ensure quality support while managing costs.

**Templates:** Support Metrics Template, Implementation & Support CSat Scores Template

If you want it to be managed, it has to be measured. Quality support is a key component of the success and retention of your customers. It should be measured and tracked.

**The Impact**: Tracking and highlighting key support-related metrics will keep your company accountable to providing quality and timely support and will increase the number of positive support interactions.

> **The Goal:** Identify the support-related metrics that help your company improve its support system and establish a process to monitor those metrics.

**Steps:**

Identify the 3-4 metrics that will give key insight to the effectiveness of your support system. We believe a successful support system can be boiled down to two components: timeliness and customer satisfaction. To that end, we recommend the following metrics:

- Time to 1st Response: the median number of hours that elapsed before a first response is issued to the customer.
- Time to Full Resolution: The median number of hours that elapsed before a ticket is fully resolved.
- Customer Satisfaction: the average customer satisfaction rating following all support ticket resolutions.

1. Use the PDCA methodology described in Play: Quality Management Systems and the template provided to create a process for tracking and internally sharing these metrics. Considerations:
    - How often should the metrics be updated?
    - What are your targets for each metric?
    - With whom should the metrics be shared?

### How to Set SLAs for Hosting and Support

**Play:** SLA Hosting & Support · **Owners:** CTO, COO · **Cadence:** Annual · **Stage:** Growth · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Define clear Service Level Agreements that commit to uptime, support response times, and support hours—setting customer expectations and establishing operational targets.

**Prevents mistakes:** #64 Customer favorable SLA when not an absolute requirement

**Templates:** SLA Hosting & Support Template

As a company, you contractually commit yourself to a minimum level of service standards when signing a Service Level Agreement. An SLA establishes service performance standards to which your company must conform. There are additional aspects of an SLA, including KPIs to measure compliance with set performance standards, timeframes for resolving hosting issues, and compensation agreements if performance standards are not met.

**The Impact:** A strong SLA clearly states the service expectations a customer can have for your company, preventing future disagreements. It also protects your company if a dispute does occur by outlining what the performance expectations are, exceptions to these commitments, and limits to compensation.

> **The Goal:** Understand the implications of the common components of an SLA and decide the maximum service specifications to which your company can contractually commit.

#### Background

#### Components of a Service Level Agreement

1. *Basic Service Specifications.* Outlines the services that your company provides with precise specifications. For example, your SLA may state that you provide "certain online tools to perform all account and server management tasks." The basic service specifications should also include a clear delineation of company and customer responsibilities. Finally, it will granularly outline the support your company will provide to maintain the service (i.e. network connectivity, server availability, maintenance, storage, data integrity, etc.)
2. *Desired Performance Levels.* The SLA will clearly set the minimum performance level in regards to service availability, frequency of disruptions, downtime, service request responsiveness, etc.
3. *Monitoring Process*. The exact monitoring process will be outlined for monitoring performance levels.
4. *Reporting Process*: The process which a customer follows to report issues, along with contractual response times, will be included. This is an important aspect of the SLA for your company to outline to protect yourself in case of disputes.
5. *Compensation*: Finally, a SLA will set contractual compensation due to the customer in the case your company fails to meet the set performance standards.

#### Steps

With the help of your legal counsel, draft the maximum service standards to which your company can commit. Using these, your company can draft a standard SLA with fallback provisions without committing yourself to an unachievable standard.

Key Clauses to consider(https://hostadvice.com/blog/the-importance-of-a-good-web-hosting-service-level-agreement-sla-when-choosing-a-hosting-service/):

1. Uptime Percentage. An uptime percentage standard will be set in the SLA. Typically, the standard is 99.8% - 99.999%. An uptime percentage of 99.999% ("five 9s") translates to a marginal service downtime of 5.26 minutes per year, or roughly 6 seconds per week. No one truly attains that standard, and that is important to point out in SLA negotiations. Providers attain that standard through the definition of "downtime." Downtime refers to the amount of time a customer can't access your product due to network or service failure but does not include the time required to perform scheduled or emergency maintenance. Thus, some SLAs will include a term that allows a planned maintenance event to be called within 1 hour of downtime so that the time will no longer be counted as a network or service failure and will not be counted against your uptime percentage.
2. Response time. The maximum amount of time that can pass before a representative from your company must respond to a support request.
3. Backup and Restoration. This clause will mandate how frequently data backups must occur and how fast data needs to be restored afterwards.
4. SLA Compensation or Credits. This sets the maximum compensation a customer can get from your company for performance outside the standards set in the SLA. We have seen SLAs that require any compensation to be requested in a short time frame (e.g. the month following the month in which the metric was not met) and limited to a certain percentage of the monthly subscription fee.

### How to Identify Churn Before It Happens in Vertical Software

**Play:** Churn Identification Process · **Owners:** CS Lead, Sales Lead · **Cadence:** Monthly · **Stage:** Growth · **Effort:** 8 SP initial, 8 SP ongoing

**Summary:** Build a systematic process to identify at-risk customers before they churn—analyzing usage patterns, engagement signals, and health scores to trigger retention interventions.

**Prevents mistakes:** #83 Don't let customers overwhelm you or your team; #122 Not firing a customer

**Templates:** Churn Identification Plan Template

Churn is a revenue killer. You already spent the S&M cost to acquire that customer and then they churn cutting off a source of cheap, recurring revenue. A high churn rate is also a red flag to potential buyers; it alerts a buyer that at least some aspects of your product fall short of expectations and work needs to be done back at the drawing board to get the product/market fit and value proposition aligned.

To some extent, however, churn will occur. It is your responsibility to put in place a churn identification plan as a predictive tool. By having a system to predict customers who are at risk of churning, you can proactively engage them rather than waiting to be reactive.

With proactive engagement, the goal is to reduce churn.

**The Impact**: Early identification of high churn risk customers gives your team the opportunity to proactively address value shortfalls and reduce churn rates.

> **The Goal**: Create a system for identifying churn risk and a process for addressing customers who are then identified as churn risk.

#### Steps

1. Meeting 1. Vision and Hypotheses
    - Set vision and specific objectives for Churn Identification
    - Preview work plan, timeline and needs from stakeholders.
    - Brainstorm potential churn predictors. Generally, churn can follow from issues around expectation management, issues with product/use case fit, the loss of a key user, budget or internal changes, competition, or negative customer experiences. To organize your search for the factors that predict churn for your customers, we recommend beginning at a high- level. Using your team's expertise, make hypotheses of the individual factors within each of the following buckets that may predict churn: subscription details, use, support and customer satisfaction.
    - Identify at least 10 churn predictor hypotheses.
    - Depending on the time and amount of churned customers you have, you may explore more churn hypotheses. The more churned customers you have, and therefore data, the more hypotheses you can include. You will need the number of churned customers to significantly outsize the number of churn hypotheses so that meaningful relationships can be established.
    - Assign people responsible for collecting and analyzing data.
2. Exploration
    - Collect the list of churned customers.
    - Collect data indicators for each churn hypothesis.
3. Analysis
    - Analyze relevant case data from past churned customers to determine any relationships between churned customers and churn hypotheses.
    - This is not a rigorous, scientific data review. Rather, you are looking for relationships between variables and quality.
    - The relationship does not need to be linear; in other words, as a variable increases, the likelihood of churn does not necessarily need to increase.
    - Rather, look for clusters (i.e. all churned customers had Pro subscription plans) to guide your analysis. Support clusters you find by checking to see whether a relationship holds (i.e. are there Pro customers who don't churn?)
    - Determine whether each churn hypothesis has a neutral or positive effect on churn.
    - Finish the analysis with a final assessment for each factor. This one- line, definitive statement clearly indicates the impact each factor has on customer value.
4. Meeting 2. Gut Check and Process Generation.
    - After a period to process the information sent, reconvene to discuss the findings.
    - Do the churn predictors sit well with the team?
    - Are these predictors leading or lagging indicators? Is there a more fundamental predictor you should explore?
    - Formally identify the churn predictors you would like your team to use.
    - Using these churn predictors, generate a process to proactively identify customers who constitute a churn risk and then engage them to minimize the churn risk.
    - Process checks: be sure to include specific, measurable indicators to show whether the process is working. For example, how does the churn rate track over time? What about among the cohorts with risk factors? Is there improvement or did we miss the churn indicators? Does something else need to be tracked or product/process improvements made?
5. Codification. Gather your conclusions and process in a document to store and communicate with the appropriate team members.

### How to Build a Customer Training Process for B2B SaaS

**Play:** Training Process · **Owners:** CS Lead · **Cadence:** Per Customer · **Stage:** Early Traction · **Effort:** 8 SP initial, 5 SP ongoing

**Summary:** Develop a customer training program that enables customers to maximize value from your product, reducing support burden and improving retention.

**Prevents mistakes:** #14 Hiring cheap and betting on training; #39 No employee onboarding; #123 Underinvesting in employee onboarding

**Templates:** Training Process Template

Generally, training is a strategic tool to increase the value of your product to a customer and to reduce churn. Training during the Onboarding process is discussed in the Customers playbook. Here we will discuss retraining efforts.

**The Impact**: The training process can be turned into a strategic asset to your company with the goal of increasing a customer's value and reducing churn.

> **The Goal**: Generate a training process that protects your company from incurring non-reimbursable training expenses and improves customer experience.

**Background**

A worst case scenario: a customer tells you he is not seeing the value in your product and as you dig into the why, you realize he is not fully utilizing key features of the product and needs a refresher training to use them appropriately and fully. He agrees, so you book travel to conduct an on-site training. You fly there, stay in your hotel room, and early the next morning meet him at his office. However, the office that day is in chaos as the team is busy managing their own operational crisis. Your customer can't take the time for training that day, and you head back to the airport. In the end, you have spent a considerable amount of time and money to train a customer, who didn't actually get trained and is no better at using your product and finding no more value than beforehand. He churns a few months later at the expiration of his contract.

To prevent this unproductive expense to your company and to improve the efficiency of additional training efforts, Golden Section recommends generating a process for additional training. We believe there are three broad occasions when additional training is required:

1. Ad-hoc ROI training when a customer is not getting the value they were expecting.
2. Client-Requested training when a customer requests additional training for new users, new features, new workflows, etc.
3. Incremental Feature Training when new features are added or updates are made.

#### Steps

1. Generate a process around each of the three additional training indicators. Considerations:
    - *Process trigger*: What condition needs to occur to set off this process for additional training?
    - *Training process*: Who will be responsible for the additional training? How will it happen?
    - *Training location*: Will training occur at the customer's office or yours? One helpful strategy is to offer unlimited free training in your office. This puts the financial and time burden on your customer.
    - *Training cost*: Will you charge for additional training or not? If so, additional training fees and invoicing procedures need to be included in the customer contract. Golden Section recommends requiring payment in advance for additional training. In the worst case scenario above, the customer did not receive training in the end and may dispute any training invoice you send after the fact.

- *Proof of process:* What is the metric that will indicate the process is complete? Will it be some form of the adoption metric identified as a proof of process in the onboarding process?

1. A note on super-users: Two of the companies founded by Golden Section team members contractually required a super-user at each client company. The super-user would be trained during the onboarding process and then as new features or updates were released, the super-user would then train others within their own company. If possible, Golden Section believes this is an ideal model. The presence of a super-user is well-correlated with product adoption within the customer's company; the super-user typically takes on the advocate role within that company which leads to fuller adoption and lower churn. Moreover, transferring training responsibilities to the super-user reduces the training burden on your own company.

## Development

### How to Run Product Management at a Vertical SaaS Company

**Play:** Product Management Process · **Owners:** Founder, CTO · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 34 SP initial, 8 SP ongoing

**Summary:** Build a product management process that ensures you're building the right thing—researching customer problems, prioritizing features, and managing the roadmap systematically.

**Prevents mistakes:** #30 Outsourcing core product with off the shelf; #46 Letting sales run product; #47 Letting dev run product; #111 Developing product in a vacuum; #117 Expecting too much out of software ‘automation’; #155 Services Should Support Product, Not Replace It; #157 Overbuilding Function, Underbuilding Form

**Templates:** Product Management Process Template

There are two primary functions in a small dev team: Product Management and Product Engineering. The Product Management team is generally led by a Product Manager and is focused on researching and prioritizing what to build. The Product Engineering team is tasked with engineering both the process and the technology to deliver the product. In other words, the Product Management team is charged with building the right thing, and the Product Development team is charged with building the thing right.

Dev is a highly process-oriented activity. Golden Section believes your company is much stronger when the processes are designed and in place and you've clearly delineated who is responsible for what activity. Having a great process can help minimize risks and prepare for unforeseen challenges once your development goes full speed.

> **The goal**: Develop a product management process to ensure you are building the right thing.

#### Background

*Role and Responsibilities of a Product Manager:* A Product Manager bridges market signals and the engineering team, translating customer pain and market opportunity into a product vision and roadmap. He is often an industry expert with a clear understanding of the industry's workflow, common issues and general environment.

A Product Manager is responsible for establishing product vision and features, setting a roadmap and feature definition for each product or product line, and then assuring product/market fit. Generally, the Product Manager sets the priorities for the dev team and interacts frequently with the Software Architect and Lead Engineer to determine the technical feasibility and effort level for new projects.

*An Overview of the Product Management Process:*

The product management process is the entire process of visioning, planning, executing, and exiting a product. In the era of product led growth, the definition of what involves the 'product' has expanded. The product manager is responsible to manage the product management process across this entire lifecycle.

Creating a product is chaotic. Nothing about it is smooth or easy. Good products require dealing with the chaos; embracing it in the right way and pushing through. But not all chaos is the right kind of chaos.

When Nietzsche uses the word chaos he is not referring to disorder but rather the space between potential and creativity. In our post-modern Western context, however, the word 'chaos' embodies both disorder and the creative potential to which Nietzsche refers. Poor process, unqualified personnel, logical errors, these are all examples of ineffective chaos (e.g. disorder). Embracing it doesn't give birth to a dancing star, it gives birth to the leviathan -- the embodiment of 'disorder' chaos.

Faced with this tension, how can an enterprising founder navigate the product development process to give birth to the dancing star without creating the leviathan? How can one know what chaos to embrace and what chaos to avoid? These are crucial questions.

*Good chaos* is the pathway from the *safe status quo of now* to *the unrealized potential of your creativity*. Like John Lewis said, "get in good trouble" in order to form a more perfect union. But too often, founding teams get into the wrong trouble, and stuck in ineffective chaos, give birth to leviathan instead of a dancing star.

Golden Section has partnered with more than 350 founders across more than 50 industries to navigate this crucial question. Getting it right means the cost to birthing the dancing star is significantly lower than teams that fumble around in the dark before finding it. Of course, companies that end up birthing the leviathan never survive so comparisons are impossible.

*Strategy - Conceive and Plan*

So many products begin without proper planning. In some ways this is inevitable. No founder knows exactly what the end-product should look like when starting out. The customers will have a say in what features matter most and ultimately whether the product has value. But the inevitability of future change does not excuse starting out with no expectation of an end-result.

Creating a product charter or vision document is a good way to fight against this urge. It outlines the things that are important to consider. Some of these things are unknowable at the beginning. For instance, which features the customers will like most. Others are more tangible. For instance, how much downtime can customers in this industry tolerate or what DevOps expectations of reliability and performance should be pursued. These represent more tangible goals that should be a part of every product vision.

At Golden Section we recommend the following checklist to assess whether a product vision document is sufficient:

#### Product Concerns

- Key user workflow based on different roles
- Key user interactions, key transactions
- Role based access control and user permission
- Expect user volume, application performance and uptime
- Regulatory Compliance (i.e. HIPAA, PCI etc)
- Support / customer success interface
- Usage data needed and dev-ops interface

#### Process Concerns

- Repeatable and effective development process (e.g. Scrum)
- IT tools that support the adopted development process
- Adopted development process should fit the current stage of the company (Minimum Viable Process for Minimum Viable Product)
- Team roles and responsibilities, specialization and collaboration
- Establish development metrics
- 5-year staffing plan

Diving into development to build a product without a minimum vision document that satisfies the checklist above is sure to create the leviathan rather than a dancing star. Golden Section project managers and technical team leads have witnessed teams still reeling from the negative side effects of a hasty start years after product launch. This is one of the most critical points of leverage in an R&D organization.

At Golden Section, we recognize that the non-technical founders will often feel lost by the terminology of product development and require help. We have oriented our engagement structure to provide experienced product management talent to our clients to ensure proper planning. This saves smart founders millions in incentive equity and compensation where others struggle to hire technical leaders to plug this hole.

*Strategy -- Product Roadmap*

Listening to 'the wind' might work for Cat Stevens, but it doesn't work for a multi person engineering organization. An organization is made up of individuals pursuing a common aim. This common aim needs to be defined. For an R&D organization, this is a product roadmap. It specifies the sequence in which the product vision will be realized.

For early stage teams, a roadmap might seem like a useless exercise designed to make investors happy and check a box for funding. This couldn't be further from the truth. It ensures that everyone on the team (even if the team is just two people) understands the order of priorities.

The roadmap must be accompanied by a product roadmap meeting in which the key constituents of the company can vie for their perspective of what is most important. Sales will push for features, dev-ops and support for reliability, and the executive team will push for perceived competitive advantages. At the intersection of these competing tensions is the dancing star. When one of the voices is too loud or too intransigent, the leviathan starts moaning.

When 'the wind' controls this process, the result is chaos. Experienced founders have witnessed the chaos created by a roadmap hijacked by the sales team. This is one of the common ways a process results in the leviathan. The product initially may succeed in achieving sales, but the lack of reliability results in a hostile customer base.

Conversely, technical founders can often fall into another ditch by continually building reliability into the product at the expense of customer-facing features. This results in no sales which is just as bad. Mediating this tension is the role of the product roadmap process.

There are two ends to the spectrum of poor product control. On one side of the spectrum are teams that follow the age-old mantra that "the squeaky wheel gets the grease." In these organizations the product creation process is hijacked by self-interested sales team members and loudest customers. As a result, the engineering team is forced to work on urgent but not important issues. This puts the product in a continual state of catch up.

The other side of the spectrum can be best illustrated by what Alan Cooper described in his book: "The Inmates Are Running the Asylum." On these teams, engineers are deciding what to build. These teams build products that have a lot of cool new tech features, but they don't meet customer expectations or provide meaningful value.

The mission of product management is to achieve the balance of the above two tensions. Always work with customers and the tech team to find product market fit, shield engineers from sales, and help the engineering team focus on addressing the important strategic items one iteration at a time. The best way to achieve this tension is through a well-controlled roadmap.

At Golden Section, we recommend a product roadmap process with the following minimum components:

- Product roadmap meeting frequency at least every quarter (monthly for early stage)
- Roadmap 'resolution' should show no more than 3 sprint cycles in one unit
- Each module should have a swim lane, and reliability should have its own lane
- The roadmap should have an 'owner' in the company (the product manager) that is responsible for versioning the roadmap after each meeting and controlling the file of the most recent version

#### Steps

1. Given the background and best practices listed above, what aspects of your Product Management process need to be improved?
    - Do you have a regular Product Management meeting cadence?
    - Do you have a Product Manager?
    - If yes, is your Product Manager tasked with ensuring Product/Market Fit?
    - Are the responsibilities of your Product Management team and Product Engineering team clearly delineated?
2. Using the PDCA methodology discussed in Play: Quality Management Systems, codify a Product Management Process that aligns IT and business goals.

### How to Build and Run a SaaS Product Roadmap

**Play:** Product Roadmap Process · **Owners:** Product Manager, CTO · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 13 SP initial, 8 SP ongoing

**Summary:** Create a transparent product roadmap that balances customer requests, technical debt, and strategic initiatives—communicating direction while maintaining flexibility.

**Prevents mistakes:** #10 Selling phantom product; #48 Making the product roadmap a trivial doc; #49 Promising delivery dates to customers; #66 Underfunding product; #112 Tolerating low resolution product roadmaps; #132 Too broad of product

**Templates:** Product Roadmap Process Template

A product roadmap is a high-level visual summary that maps out the vision and direction of your product offering over time. A product roadmap illustrates major features and their release schedule. It is a guiding strategic document as well as a plan for executing the strategy.

> **The goal**: Create a product roadmap to guide the direction and timeline of your product development process.

#### Background

A roadmap is a high-level strategic document that contains overall information on the project. Strategic roadmaps usually state a vision and long-term goals. The Product Manager is responsible for creating and maintaining the roadmap.

In the case of agile product development, a roadmap can be arranged in themes. Themes are multiple tasks that a team must complete and are somehow connected. For instance, a theme may sound like "enhance page-loading speed," which entails a handful of actions. Grouping the information around the themes makes a roadmap highly flexible and updatable, which is a great fit for sprint-based development.

The best advice concerning strategic road mapping is to include only important information. Otherwise, you risk turning your roadmap into a clumsy scheme, difficult to understand and maintain.

It is important to realize your roadmap will change over time. It is a flexible document that needs to be kept up-to-date in order to be effective. Golden Section also recommends creating a routine Product Management meeting (likely, quarterly) to update and publish the roadmap companywide.

#### Steps

1. Given the background and best practices listed above, what aspects of your Product Roadmap management need to be improved?
    - Do you have an up-to-date Product Roadmap?
    - Is there a specific person in charge of maintaining and updating it?
    - Is it published company-wide?
    - Is the roadmap used? If not, what can be improved to make the roadmap effective and useful for your dev team and company?
    - Do you have a regular Product Management meeting cadence?
2. Using the PDCA methodology discussed in Play: Quality Management Systems, codify a process for creating (if applicable), updating and using a product roadmap to maintain a company-wide vision and direction for your product.

### How to Run a Product Engineering Process for B2B SaaS

**Play:** Product Engineering Process · **Owners:** CTO, Engineering Lead · **Cadence:** Continuous · **Stage:** Pre-Revenue · **Effort:** 34 SP initial, 13 SP ongoing

**Summary:** Establish product engineering practices—sprint discipline, code review, testing, CI/CD—that ensure quality, speed, and predictability in feature delivery.

**Prevents mistakes:** #25 Breaking tech sprints; #26 All in-house tech team; #29 Obsession with full-stack engineers; #30 Outsourcing core product with off the shelf; #31 Not engineering for scale; #120 Not forcing engineers to QA their own submissions

**Templates:** Product Engineering Process Template

As mentioned in the Play: Product Management Process, the Product Management team works in conjunction with the Product Engineering team. While the Product Management team focuses on building the right thing, the Product Engineering team is responsible for building the thing right. There are two elements to building the thing right: Process and Engineering. We will discuss proper Product Engineering process in this play.

> **The Goal**: Establish a comprehensive and effective process to optimize your company's delivery of the right products for your customers.

#### Background

*Release Cycle Overview*

The development process is divided into releases. A release cycle starts from a previous stable release and plan. Releases are achieved by a Scrum process, an iteration-based agile development process. Each release is broken into Sprints. A Sprint is the basic unit of development in Scrum. The Sprint is a timeboxed effort; that is, it is restricted to a specific duration.

Each Sprint starts with a Sprint Planning event that aims to: define a Sprint Backlog, identify the work for the Sprint, and make an estimated commitment for the Sprint goal. At the beginning of a Sprint, the Scrum Team holds a Sprint Planning event to communicate the scope of work that is intended to be done during that Sprint. During the first half, the whole Scrum Team (Development Team, Scrum Master, and Product Owner) selects the Product Backlog Items that might be achievable in that Sprint.

During the second half, the Development Team decomposes the work items (tasks) required to deliver those Product Backlog Items, resulting in a confirmed Sprint Backlog. Once the Development Team prepares the Sprint Backlog, they commit (usually by voting) to deliver tasks within the Sprint. During daily development, code is committed to the code repository. Before code is committed, it will be peer reviewed and team reviewed.

Each Sprint ends with a Sprint Review and Sprint Retrospective that reviews progress to show to stakeholders and identify lessons and improvements for the next Sprints. Scrum emphasizes having a completed working product at the end of each Sprint. During each sprint, the code is fully integrated, tested and documented.

Benefits of maintaining a disciplined Sprint Process:

- Incremental approach breaks complex software modules down into simpler mini-features
- Accommodates change easily
- Improves ROI through frequent and regular delivery of value to the business
- Increased visibility (progress, obstacles, risks, etc.)
- Shorter cycles produce working software and incremental product quickly
- Progress measured by running tested software
- Early and regular process improvement driven by frequent inspection
- Solves the common problem of a user not knowing what they want until after they see an initial version of the software.

*Best Practices in the Sprint Process*

- Maintain a set Sprint rhythm and discipline.
- Golden Section recommends each Sprint last 2-4 weeks.
- Always start a Sprint with ready-to-go user stories (produced by the Product Management team)
- Break each user story into the smallest sizes
- Ensure no dependencies exist in the current Sprint's user stories
- Be diligent at assigning user story size (either Fibonacci sequence or T- Shirt size) to maintain the momentum and accountability that defines the Sprint process
- To that end, close out a Sprint when the timebox is met, regardless of whether the user story is finished
- Establish Sprint Metrics and then monitor them. Potential Sprint Metrics include:
    - User Story Points per Sprint
    - Successful Sprints ratio (met when finished all user stories set for that Sprint)
    - Defects per release
    - Release defects per KLOC
    - Pre-release defects per KLOC
    - $Cost per KLOC
    - Production Defects Fixed Efficiency (within 48 hours)
    - Engineer Hours per KLOC

*Best Practices in Version Control*

GitHub is generally used for Version Control efforts. Version Control Process should include:

- Code is maintained by trunk and branch. A trunk is used for stable, versioned releases, while branch is for rapid, small releases.
- Codes are reconciled between trunk and branch
- Unit Testing, Automated Build and Continuous Integration processes are in place for each build and release
- Quick-Fix Engineering (QFE) is conducted on trunk to deal with defects in between releases.

*Best Practices in QA Process*

Golden Section recommends establishing a rigorous quality assurance process for your software that includes:

- All code is unit-tested before being committed to the version control server.
- Automated Build and Continuous Integration processes are in place for each build and release.
- Fully leverage available DevOps and CI/CD tools and process.
- Utilizing these tools will help your company accelerate application development and development lifecycles, building quality and consistency into the automated build and release process, and increase your release frequency while reducing defects.
*Best Practices in Configuration Management (CM)*

- All Production configuration changes go through a change control
- All configuration changes are tracked, tested, and documented
- A Roll-back Contingency Plan is in place in the case of unforeseen outcomes

#### Steps

1\. There are many elements necessary to build an executable, successful process to guide your Product Engineering Group. Using the Best Practices above and the PDCA methodology detailed in the Play: Quality Management Systems, create the standards and expectations that will guide your Product Engineering Group's delivery process.

### How to Choose a Database for a B2B SaaS Product

**Play:** Database Selection · **Owners:** CTO, Engineering Lead · **Cadence:** As Needed · **Stage:** Pre-Revenue · **Effort:** 21 SP initial, 5 SP ongoing

**Summary:** Choose a database technology (SQL, NoSQL, etc.) that matches your product requirements for consistency, scale, query patterns, and operational simplicity.

**Prevents mistakes:** #2 Letting logic get into the database; #9 Building for single tenancy; #12 Wrong programing language

**Templates:** Database Selection Template

<p>With a process in place to ensure your dev team is building the thing right, attention now needs to be paid to ensuring your company is utilizing the proper technology. Database selection is a key technical decision. The database is foundational to your technology and can cause serious issues if not chosen well.</p>
<p class="goal-callout"><strong>The Goal:</strong> Systematically decide which database best serves your company's needs and priorities.</p>
<h4>Background</h4>
<p><em>Best Practices in Database Management:</em></p>
<ul><li>Allow Multi-tenant Architecture at the database level</li><li>Do not allow multiple databases on a single customer (opposite of Multitenancy)</li><li>Streamlined Database Schema to simplify each release</li><li>Locate business logics on Web Services layer (i.e. code level) instead of Database level to reduce complexity in version updates.</li><li>Prioritize reducing Technical Debt in the Database Level. This improves the database performance and prevents data from being accumulated in the wrong structure, which would make future clean-up and migration extremely difficult</li></ul>
<p><em>Golden Section's Pros and Cons for Popular Databases:</em></p>
<h4>Oracle 12c</h4>
<p>Ideal for: Large organizations that handle enormous databases and need a variety of features.</p>
<h4>Pros</h4>
<ul><li>You'll find the latest innovations and features coming from their products since Oracle tends to set the bar for other database management tools.</li></ul>
<ul><li>Oracle database management tools are also incredibly robust, and you can find one that can do just about anything you can possibly think of.</li></ul>
<h4>Cons</h4>
<ul><li>The cost of Oracle can be prohibitive, especially for smaller organizations.</li><li>The system can require significant resources once installed, so hardware upgrades may be required to even implement Oracle.</li></ul>
<h4>MySQL</h4>
<p>MySQL is one of the most popular databases for web-based applications. It's freeware, but it is frequently updated with features and security improvements.</p>
<p>Ideal for: Organizations that need a robust database management tool but are on a budget.</p>
<p>This database engine allows you to select from a variety of storage engines that enable you to change the functionality of the tool and handle data from different table types. It also has an easy to use interface, and batch commands let you process enormous amounts of data. The system is also incredibly reliable and doesn't tend to hog resources.</p>
<h4>Pros</h4>
<ul><li>It's free.</li><li>It offers a lot of functionality even for a free database engine.</li><li>There are a variety of user interfaces that can be implemented.</li><li>It can be made to work with other databases, including DB2 and Oracle.</li></ul>
<h4>Cons</h4>
<ul><li>You may spend a lot of time and effort to get MySQL to do things that other systems do automatically, like create incremental backups.</li><li>There is no built-in support for XML or OLAP.</li><li>Support is available for the free version, but you'll need to pay for it.</li></ul>
<h4>Microsoft SQL Server</h4>
<p>Ideal for: Large organizations that use a number of Microsoft products.</p>
<h4>Pros</h4>
<ul><li>It is very fast and stable.</li><li>The engine offers the ability to adjust and track performance levels, which can reduce resource use.</li><li>You are able to access visualizations on mobile devices.</li><li>It works very well with other Microsoft products.</li></ul>
<h4>Cons</h4>
<ul><li>Enterprise pricing may be beyond what many organizations can afford.</li><li>Even with performance tuning, Microsoft SQL Server can gobble resources.</li><li>Many individuals have issues using the SQL Server Integration Services to import files.</li></ul>
<h4>PostgreSQL</h4>
<p>Ideal for: Organizations with a limited budget that want the ability to select their interface and use JSON.</p>
<p>This database management engine can be hosted in a number of environments, including virtual, physical and cloud-based environments. The latest version, PostgreSQL 9.5, offers larger data volumes and an increase in the number of concurrent users. Security has also been improved thanks to support for both DBMS\_SESSION and expanded password profiles.</p>
<h4>Pros</h4>
<ul><li>This database management engine is scalable and can handle terabytes of data.</li><li>It supports JSON.</li><li>There are a variety of predefined functions.</li><li>A number of interfaces are available.</li></ul>
<h4>Cons</h4>
<ul><li>Documentation can be spotty, so you may find yourself searching online in an effort to figure out how to do something.</li><li>Configuration can be confusing.</li><li>Speed may suffer during large bulk operations or read queries.</li></ul>
<h4>MongoDB</h4>
<p>MongoDB is designed for applications that use both structured and unstructured data. The database engine is very versatile. There is a comprehensive selection of drivers available, so it's easy to find a driver that will work with the programming language being used.</p>
<p>Since MongoDB wasn't designed to handle relational data models, even though it can, performance issues are likely to crop up if you attempt to use it this way.</p>
<h4>Pros</h4>
<ul><li>It's fast and easy to use.</li><li>The engine supports JSON and other NoSQL documents.</li><li>Data of any structure can be stored and accessed quickly and easily.</li><li>Schema can be written without downtime.</li></ul>
<h4>Cons</h4>
<ul><li>SQL is not used as a query language.</li><li>Tools to translate SQL to MongoDB queries are available, but they add an extra step to using the engine.</li><li>Setup can be a lengthy process.</li><li>Default settings are not secure.</li></ul>
<h4>Steps</h4>
<ol><li>Identify selection criteria. Use the template provided to identify the 5-6 factors that are most important to your company. It is unlikely one database can answer all your needs, so the priorities you identify will drive the decision.</li><li>Identify a database shortlist. Using Golden Section's list of popular databases above, choose 3-4 databases you want to evaluate.</li></ol>
<ol><li>Enter your identified selection criteria and database shortlist into the template provided.</li><li>Research whether each database on your shortlist meets the selection factor. For factors that don't lend themselves to a simple "meet" or "does not meet," you can rank to what degree the factor meets your needs (i.e. 5 = closely meets, 1 = does not meet).</li><li>Upon completion of your decision matrix, choose the database that best meets your needs and priorities.</li><li><strong>Technical Debt:</strong> Work with your dev team to identify and then mitigate sources of Technical Debt in your Database Level.</li></ol>

### How to Structure Application Code and Front End for SaaS

**Play:** Application Code & Front End · **Owners:** CTO, Engineering Lead · **Cadence:** Continuous · **Stage:** Pre-Revenue · **Effort:** 34 SP initial, 13 SP ongoing

**Summary:** Establish standards and practices for application code quality, architecture, and front-end user experience—ensuring maintainability and customer delight.

**Prevents mistakes:** #12 Wrong programing language; #157 Overbuilding Function, Underbuilding Form

**Templates:** Application Code & Front End Template

If the Database level is the bottom layer of your technology, the Application Code, or the Business Logic Layer, is the middle tier. The top tier is your Front End, or UX and UI.

> **The Goal:** Identify and address performance issues in your Business Logic and Front End.

#### Background

*Best Practices in Business Logic:*

Golden Section recommends adopting a "modular," Microservices architecture design as opposed to a monolithic design, which often causes features to break each other. Unlike monolithic architecture, Microservices are fine-grained and lightweight, easy to maintain, and more modular. This style is more elastic and resilient.

Specifically, Microservices is an approach to software development in which a large application is built as a suite of modular services; small, independently versioned, and scalable customer-focused services with specific business goals, which communicate with each other over standard protocols with well-defined interfaces.

Microservices solve challenges of rigid systems by being as modular as possible. They help build an application as a suite of small services, each running in its own process and are independently deployable. These services may be written in different languages and may use different data storage techniques. Microservice results in the development of systems that are scalable and flexible.

*Best Practices in Front End / UX and UI:*

The front end is how your customer interacts with your product, and the ease of interaction dictates their experience. UX and UI design are two different elements of a single consumer experience: UX refers to the user experience, which focuses on how something works and how people interact with it, while UI, or user interface, focus on the look and layout.

User Experience Design is the process of manipulating user behavior with a product by using data to inform the design process and continual updates to the usability, accessibility, and desirability provided in the interaction with a product.

Software is HumanWare. UX design is not an afterthought of software engineering. It is fundamental for your software's success and adoption.

- Golden Section always recommends using a User Interaction designer to play and optimize the UI prior to it actually being developed.
- A great UX design team engages and empathizes with users to understand their experiences and motivations.
- Design your UI to be responsive. The responsive UI design is a design concept in which a website displays the same content on all devices. However, the content is styled differently depending on the available space. Good responsive design will make a big improvement on the user experience.
- Consider your navigation trees: make sure they are not overly complex with multiple levels. This complexity makes using your product difficult for untrained users.
- Always make the Search feature prominent and easy to find.

*Best Practices in Code Quality:*

- Establish a coding style, which is a set of rules or guidelines used when writing the source code for a computer program. Golden Section believes following a particular programming style helps programmers read and understand source code conforming to that style and prevents errors from being introduced.
- Establish a Code Quality Review Process, leveraging a tool like SonarQube to assist. SonarQube can quickly generate reports covering code quality issues such as reliability issues, security issues, maintainability issues and code duplications.
- For source code management and documentation, GitHub is a popular platform for developers to collaborate and track progress. Golden Section also recommends using various 3rd party integration (i.e. Slack, CircleCI, Marker.IO) together to streamline the development flow.

*Best Practices in Application Performance:*

- Establish an App Performance measurement (Apex). Golden Section recommends using the right standard Apex measurement. Application Performance is estimated in terms of accuracy, efficiency, and speed of execution.
- There are many tools that provide performance monitoring. Golden Section recommends leveraging tools like New Relic's analytics for application performance monitoring (APM). New Relic delivers real-time and trending data about your web application's performance and the level of satisfaction that your end-users experience.

#### Steps:

1. Given the background and best practices listed above, what aspects of your Business Logic and Front End process need to be improved?
    - Do you have microservices designed in your software? If so, can you describe what each microservice does and how they interact with each other?
    - Do you have a UI/UX designer working on your software? If so, please describe your UI/UX design process and how it's embedded in the dev process?
    - Is your software responsive on the following devices: desktop, mobile phones, tablets?
    - Can you describe what tools or standards you use to ensure your coding style and quality?
    - Have you performed any performance test for your software? If so, can you describe the tool, the procedure, and the result?
2. Create an actionable plan to address any improvements that need to occur.

### How to Set Up Cloud and Server Infrastructure for B2B SaaS

**Play:** Cloud & Server Infrastructure · **Owners:** CTO, DevOps · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 21 SP initial, 8 SP ongoing

**Summary:** Plan cloud infrastructure for high availability, scalability, and backup/disaster recovery—assessing your current setup against best practices and creating a plan to close the gaps.

**Prevents mistakes:** #9 Building for single tenancy; #31 Not engineering for scale

**Templates:** Cloud & Server Infrastructure Template

The decisions you make when setting up your server and cloud infrastructure affect your ability to maximize the efficiency of your software development and deployment.

> **The goal:** The infrastructure should be set up in a way that is cost efficient, performant and secure.

#### Background

Cloud Infrastructure is shared pools of configurable computer system resources and higher-level services that can be rapidly provisioned with minimal management effort, often over the Internet. Advocates note that it often allows companies to avoid or minimize up-front IT infrastructure costs. Cloud Infrastructure can be managed much more efficiently than traditional physical infrastructure, which typically requires that individual servers, storage, computational and networking components be procured and assembled to support an application. With cloud infrastructure, DevOps teams can deploy infrastructure programmatically, as part of an application's code.

There are three aspects of server design that we want to optimize: high availability, scalability, and backup / disaster recovery.

*High Availability*: a characteristic of a system which aims to ensure an agreed level of operational performance, usually uptime, for a higher than normal period. Availability refers to the ability of the user community to obtain a service or good or access the system, whether to submit new work, update or alter existing work, or collect the results of previous work. If a user cannot access the system, it is - from the users' point of view - unavailable. Generally, the term downtime is used to refer to periods when a system is unavailable. Modernization has resulted in an increased reliance on these systems. For example, hospitals and data centers require high availability of their systems to perform routine daily activities.

There are three principles of systems design in reliability engineering which can help achieve high availability.

1. Elimination of single points of failure. This means adding redundancy to the system so that the failure of a component does not mean failure of the entire system.
2. Reliable crossover. In redundant systems, the crossover point itself tends to become a single point of failure. Reliable systems must provide for reliable crossover.
3. Detection of failures as they occur. If the two principles above are observed, then a user may never see a failure -- but the maintenance activity must.

*Scalability / Auto-scaling*: Scalability in the context of cloud computing can be defined as the ability to handle growing or diminishing resources to meet business demands in a scalable way. In essence, scalability is a planned level of capacity that can grow or shrink as needed.

Autoscaling is a method used in cloud computing, whereby the number of computational resources in a server farm, typically measured in terms of the number of active servers, scales automatically based on the load on the farm. It is closely related to and builds upon, the idea of load balancing.

*Backup, Disaster Recovery Assessment*: Cloud-based backup and recovery solutions enable you to backup and restore your business-critical files in case they are compromised. The cloud technology enables efficient disaster recovery, regardless of the type or intensity of workloads. The data is stored in a secure cloud environment architected to provide high availability. The service is available on-demand, which enables organizations of different sizes to tailor DR solutions to their needs.

*Best Practices in Server / Cloud Infrastructure Design:*

- Always have both onsite and offsite backup in place
- Virtualize the server

#### Steps:

1. Given the background and best practices listed above, what aspects of your Cloud and Server infrastructure need to be improved?
    - Do you have your infrastructure designed to ensure high availability for your software? If yes, can you describe the details of your system design related to that?
    - With your current infrastructure configuration, is it scalable?
    - Do you have autoscaling configured?
    - Do you have backup and recovery mechanisms implemented? If yes, can you describe them?
2. Create an actionable plan to address the issues identified.

### How to Build a Security Process for a B2B SaaS Company

**Play:** Security Process · **Owners:** CTO, Security Lead · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 21 SP initial, 13 SP ongoing

**Summary:** Implement security controls—server security, role-based access control, strong passwords, encryption, and penetration testing—to protect customer data.

**Templates:** Security Process Template

Security is a very crucial part of your product. Both inside your application and in between your infrastructure, you should have a robust set of security rules and a strict implementation. Network security consists of the policies and practices adopted to prevent and monitor unauthorized access, misuse, modification, or denial of a computer network and network-accessible resources.

> **The goal**: Create a robust set of security rules and implementation processes to protect the security rules.

#### Best Practices

The following are aspects of the security process that need to be considered:

#### Server Security

Golden Section recommends:

- Conducting an annual security assessment (alternatively, you can hire an "ethical hacking" group to do a penetration test -- see below)
- Establish a "Shared Responsibility" policy with your clients on security responsibilities
- Establish both Technical and Administrative safeguards
- Encrypt your database

**Role Based Access Control (RBAC)**: User Roles should be well-defined for your software to control who can access what resources.

#### Application Security

*Passwords*: Passwords should be chosen so that they are hard for an attacker to guess and hard for an attacker to discover using any of the available automatic attack schemes. Requiring a strong password for each user who can access the system should be your first line of defense when dealing with security reinforcement.

Common requirements for a strong password:

- Use at least 8 characters
- Use a mix of lowercase and uppercase letters, numbers, and symbols
- Avoid names and dictionary words
- Stay away from patterns and predictable formulas
- Create unique passwords for all accounts

*Password rotation:* Password rotation refers to the changing/resetting of a password(s). Limiting the lifespan of a password reduces the risk from and effectiveness of password-based attacks and exploits by condensing the window of time during which a stolen password may be valid.

*Data Encryption / Transmission Encryption*: Even Julius Caesar used encryption for his communications. The method was shifting the alphabet by three characters. Golden Section also recommends encryption. Data encryption in the cloud is the process of transforming or encoding data before it's moved to cloud storage. Typically cloud service providers offer encryption services --- ranging from an encrypted connection to limited encryption of sensitive data --- and provide encryption keys to decrypt the data as needed.

*Penetration Test*: A Penetration Test, also colloquially known as a pen test, pentest, or ethical hacking, is an authorized simulated cyberattack on a computer system, performed to evaluate the security of the system.

The process typically identifies the target systems and a particular goal, then reviews available information and undertakes various means to attain that goal. A penetration test target may be a white box (which provides background and system information) or black box (which provides only basic or no information except the company name).

A gray box penetration test is a combination of the two (where limited knowledge of the target is shared with the auditor). A penetration test can help determine whether a system is vulnerable to attack, whether the defenses were sufficient, and which defenses (if any) the test defeated.

There are a number of penetration test tools, including:

1. **Acunetix** is an automated web application security testing and ethical hacking tool. It is used to audit your web applications by checking for vulnerabilities like SQL Injection, cross-site scripting, and other exploitable vulnerabilities.
2. **Nmap**, short for Network Mapper, is a reconnaissance tool that is widely used by ethical hackers to gather information about a target system. This information is key to deciding the proceeding steps to attack the target system.
3. Metasploit
4. **WireShark** is free open-source software that allows you to analyze network traffic in real-time.
5. **John the Ripper** is a (free) password cracking software tool
6. **Nikto** is an Open Source (GPL) web server scanner which performs comprehensive tests against web servers for multiple items, including potentially dangerous files/programs, checks for outdated versions of servers, and version specific problems on servers. It also checks for server configuration.
7. **SQLNinja** is a SQL Server injection & takeover tool
8. **Wapiti** is a web-application vulnerability scanner, Wapiti allows you to audit the security of your websites or web applications. It performs \"black-box\" scans (it does not study the source code) of the web application by crawling the webpages of the deployed web app, looking for scripts and forms where it can inject data.
9. **Kismet** is a network detector, packet sniffer, and intrusion detection system for wireless LANs.

#### Steps

1. Use the template provided to judge the security of your server and application. Working with your Product Manager, answer whether each component of security is currently in place and related details.
2. For components not in place, task your Product Manager and team as necessary to put those security elements in place.

### What Security Documentation a B2B SaaS Company Needs

**Play:** Security Documentation · **Owners:** CTO · **Cadence:** Annual · **Stage:** Early Traction · **Effort:** 13 SP initial, 5 SP ongoing

**Summary:** Determine which regulatory security standards (PCI, GDPR, HIPAA, ISO 27001) your company must comply with and put a process in place to maintain compliance and documentation.

**Templates:** Security Documentation Template

Security compliance is a legal concern for organizations in many industries today. Regulatory standards like PCI DSS, HIPAA, and ISO 27001 prescribe recommendations for protecting data and improving information security management in the enterprise.

Aligning your technical, operational and security standards with these regulatory standards - and following appropriate documentation practices - is crucial to protecting your company.

> **The goal:** Determine which regulatory standards your company needs to comply with and put in place a process to maintain compliance.

#### Background

*PCI*

Payment card industry (PCI) compliance refers to the technical and operational standards that businesses must follow to ensure that credit card data provided by cardholders is protected.

*GDPR*

The General Data Protection Regulation 2016/679 is a regulation in EU law on data protection and privacy for all individual citizens of the European Union and the European Economic Area. It also addresses the transfer of personal data outside the EU and EEA areas.

*HIPAA*

HIPAA (Health Insurance Portability and Accountability Act of 1996) is United States legislation that provides data privacy and security provisions for safeguarding medical information. The law has emerged into greater prominence in recent years with the proliferation of health data breaches caused by cyberattacks and ransomware attacks on health insurers and providers.

#### Steps

1. Is your software currently compliant to any security compliance standard?
2. If so, which ones?
3. Do you need security compliance you don't yet have? If so, create an actionable plan to comply and earn certification.

### How Much Code-Level Documentation a SaaS Team Needs

**Play:** Code Level Documentation · **Owners:** CTO, Engineering Lead · **Cadence:** Continuous · **Stage:** Pre-Revenue · **Effort:** 8 SP initial, 8 SP ongoing

**Summary:** Maintain code-level documentation that helps developers understand architecture, key decisions, and how systems work—reducing onboarding time and enabling maintenance.

**Prevents mistakes:** #24 No documentation in code

**Templates:** Code Level Documentation Template

Source code documentation is an important tool to optimize the workflow of development teams and improve the communication efficiency between departments. Golden Section advocates for a source code documentation policy as a part of your development Standard Operating Procedure. This will allow your team to keep track of everything happening in your development projects and to easily see exactly what has changed at the code level.

> **The goal**: Generate a code level documentation policy to explain code logic and track modifications to source code and to help resolve conflicts when merging updates.

#### Steps

1. Use the PDCA methodology described in Play: Quality Management Systems and the template provided to create a source code documentation policy.
2. Considerations:
    - A source code document is a technical section that explains how the code works. The aspects of the code that have the greatest potential to confuse should be covered. The main users of the source code documents are software engineers.
    - Try to keep the document simple by making short sections for each element and supporting them with brief descriptions. Source code documents may include but are not limited to the following details:
        - HTML generation framework and other frameworks applied
        - Type of data binding
        - Design pattern with examples (e.g. model-view-controller)
        - Security measures
        - Other patterns and principles
    - Golden Section recommends using GitHub for Source Code Management. Besides version control, GitHub can also help track project progress by issues, and its social feature will help with communication in teams. Below are some GitHub best practices to follow:
        - Before you push your change, in the Summary field of the comment, type a short, meaningful comment message including two parts:
            - Classification of change (category list will be needed for developers);
            - A brief and clear summary of the change (1-2 sentences).
        - Additionally, add some more details / information in Description if necessary.
        - We also recommend the developer team maintain README files and Wiki pages in each project to help the whole team stay on the same page.
        - Source codes might be shared with third parties, so it is indispensable to add a header to each source code with notice that explicitly states the code is the company's intellectual property. In the header, it is also necessary to elaborate on the purpose of this section of code.
        - We suggest equipping a detailed source code policy for various languages and usage. Make it clean and readable for internal team/clients.

### How to Build Product-Level Documentation for B2B SaaS

**Play:** Product Level Documentation · **Owners:** Product Manager · **Cadence:** Quarterly · **Stage:** Early Traction · **Effort:** 13 SP initial, 8 SP ongoing

**Summary:** Create comprehensive product-level documentation—requirements, technical design, user manuals, quality plans, and API docs—to codify internal knowledge and prepare for your next equity round.

**Prevents mistakes:** #61 Not having a knowledge base for customer issues

**Templates:** Product Level Documentation Template

Product Level Documentation exists to explain product functionality, unify project-related information, and allow for the discussion of all significant questions that arise between stakeholders and developers. In general, product documentation includes requirements, tech specifications, business logic and manuals.

> **The goal**: Establish a robust set of documentation surrounding your product to codify internal knowledge and processes and in preparation to share this documentation in the next equity round.

#### Best Practices

*Write just enough documentation*: There is a middle ground between no documentation and too much documentation. Golden Section recommends you find that middle ground and document only the necessary and relevant information.

*Consider documentation as an ongoing process*. Set a process for keeping your documentation up-to-date so that it doesn't become stale and useless. Consider automatic version control to manage the updating process.

*Treat documentation as a collaborative effort*. While one person should be responsible for the documentation, the products of the documentation process should be created by the team.

#### Components of Product Documentation:

*Requirements Specifications Document:* this document outlines the product you have built, including its purpose, features, functionalities, and behavior. It is typically created with input from both your operational and technical teams to align the company on the purpose of the product you have created. It includes such details as how this product fits into the company's objectives, the technical, business and user assumptions the company has made, use cases, and what the product will not be.

*Technical Design Document*: this should include the main architectural decisions, including a software design document, architecture and design principles, user stories, and a diagrammatic representation of the solution.

*Development Plan / Product Roadmap:* Reference Play: Product Roadmap

*User Manual:* this is a user guide to teach the people using your product how to properly use the system. You will likely include workflows, processes, descriptions of features, and a troubleshooting guide. The more thorough this document is the fewer support calls you will have.

*Installation and Maintenance Manual*: this manual describes the requirements and workflow to properly install and maintain your product.

*Quality Management Plan*: this is an analog of a requirement document dedicated to testing. This document sets the required standard for product quality and describes the methods to achieve this level. The plan helps to schedule QA tasks and manage testing activity for product managers, but, it is mainly used for large-scale projects. The Quality Management plan includes:

- *Test Strategy*: this is a document that describes the software testing approach to achieve testing objectives. This document includes information about team structure and resource needs along with what should be prioritized during testing. A test strategy is usually static as the strategy is defined for the entire development scope.
- *Test Cases*: a detailed list of the actions required to verify each feature / functionality of a product.
- *Test Case Specifications*: this document is a set of detailed actions to verify each feature or functionality of a product. Usually, a QA team writes a separate specifications document for each product unit. Test case specifications are based on the approach outlined in the test plan. A good practice is to simplify specifications descriptions and avoid test case repetitions.
- *Test Checklist*: a list of tests that should be run at a particular time. It represents what tests are completed and how many have failed. All points in the test checklists should be defined correctly. Try to group test points in the checklists. This approach will help you keep track of them during your work and not lose any. If it helps testers to check the app correctly, you can add comments to your points on the list.
- *Test Plan*: this document is typically one to two pages that describes what should be tested during any specific test. This plan includes: a list of features being tested, testing methods, the time frame, and the roles and responsibilities of those involved.

*API Documentation:* Nearly any product has its APIs or Application Programming Interfaces. Their documentation informs developers how to effectively use and connect to the required APIs. API documentation is a deliverable produced by technical writers as tutorials and guides. This type of documentation should also contain the list of all available APIs with specs for each one.

*Standards:* The section on standards should include all coding and UX standards that the team adheres to along the project's progression.

#### Steps

1. Many of these processes have already been put in place and plans created. Here we want to ensure proper documentation of your work. Use the template provided to judge the codification of your product documentation. Working with your Product Manager, answer whether each component of documentation is currently in place and related details.
2. For components not in place, task your Product Manager and team as necessary to put those components in place.

### How to Keep an Open Source Register — and Why Buyers Ask for One

**Play:** Open Source Register · **Owners:** CTO · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 3 SP initial, 3 SP ongoing

**Summary:** Maintain a register of all open-source licenses and dependencies used in your product so you can disclose them to potential buyers.

**Templates:** Open-Source Register Template

Much like your English professor wanted to see a Works Cited page, potential buyers will want to see all the open-source material your code uses disclosed.

> **The goal**: Create a simple register of all open-source licenses used and dependencies.

#### Steps:

1. Task a member of your dev team with identifying all open-source licenses and dependencies used.
2. Fill in the appropriate information on the template provided.

### How to Keep a Software License Register

**Play:** License Register · **Owners:** CTO, COO · **Cadence:** Quarterly · **Stage:** Pre-Revenue · **Effort:** 3 SP initial, 3 SP ongoing

**Summary:** Create a register of all product licenses you have issued so you can track who has access to your product system, critical dates, and security credentials.

**Templates:** Register of All Licenses Template

Just as you created registers for customer and vendor contracts, Golden Section recommends creating a register of all licenses. This will allow you to easily track who has access to your product system, critical dates, and security credentials.

> **The goal**: Create a register of all product licenses and a process for maintaining the register.

#### Steps

1. Assign product codes to your product models.
2. Assign the appropriate product codes to your existing licenses.
3. Enter relevant information into the template provided.
    - Security Credentials should be tracked as well. Golden Section recommends organizing and archiving all security credentials that will be used by the client after handover. All logins, keys, and resources associated with each set of credentials should be listed and described.
    - *A note on neatness and accuracy*: This is not simply an internal reference document. It will be used in the future by potential buyers/investors to analyze the value of your company. You want to keep this document as clean and accurate as possible. You do not want to raise any red flags or give a buyer any opportunity to lower your valuation.
4. Codification: Use the PDCA methodology described in Play: Quality Management Systems and the template provided to create a license register policy. Save this process and register to its own folder. Continue adding to this document and saving licenses as they are executed.

### How to Structure a SaaS Development Organization

**Play:** Dev Org Chart · **Owners:** CTO, Founder · **Cadence:** Quarterly · **Stage:** Growth · **Effort:** 5 SP initial, 3 SP ongoing

**Summary:** Design an engineering organization structure—defining roles (product manager, BA, tech lead, engineers, QA), team organization, and reporting lines—that scales with growth.

**Prevents mistakes:** #26 All in-house tech team; #27 Overpaying for tech resources; #28 Non-technical people hiring technical people; #29 Obsession with full-stack engineers; #108 Fuzzy organizational chart; #154 Revolving Door of Technical Talent

**Templates:** Dev Org Chart Template

A dev team consists of dedicated professionals who can develop, test, and deploy a Story, Feature, or component. The team typically includes software developers and testers, engineers, and other dedicated specialists required to complete a vertical slice of functionality.

> **The goal**: Create a scalable, clear and accountable development organization that can hit cost and time targets and communicate clearly to the rest of the organization.

#### Background

A development team is typically comprised of the following roles: Product Manager, Business Analyst (BA), Technical Team Lead (TTL), UX/UI Engineer, Business Logics Engineer, Web Services and Microservices Engineer, Database Engineer, Quality Assurance Engineer (QA), and Software Architect.

*Product Manager:* A Product Manager is responsible for guiding the success of a product and leading the cross-functional team that is responsible for improving it. It is an important organizational role --- especially in technology companies --- that sets the strategy, roadmap, and feature definition for a product or product line.

Generally, a Product Manager's responsibilities include:

- Leading the product team (not necessarily the engineers)
- Prioritizing projects and tasks
- Allocate resources
- Keep product and project on schedule
- Maintain communication with company's operational teams

*Business Analyst*: A BA is someone who analyzes user workflow, translates user needs into software user stories, and makes user stories ready for development. A BA's output is the engineers' input. High-quality BA output is a prerequisite for efficient and effective development.

Generally a BA's responsibilities include:

- Analyze requirement and user workflow
- Write user stories
- Create related project documents
- Communicate with client
- Work with developers
- Validate development against user stories

A BA's job is to make sure you build the right thing, QA's job is to make sure you build the thing right!

*Quality Assurance Engineer:* A QA is someone who tests all aspects of product quality, including functionality, usability, performance and security. In DevOps, a QA is generally involved in the entire project development lifecycle so he can guide the product quality.

Generally, a QA's responsibilities include:

- Create comprehensive, well-structured test plans and test cases
- Design and implement quality testing activities
- Define and coordinate corrective actions
- Track quality assurance metrics

*Technical Team Lead:* A TTL is someone who manages the engineers to accomplish the product vision as outlined by the Product Manager to the specifications outlined in the user stories by the BA.

Generally, a TTL's responsibilities include:

- Provide input in the Sprint Planning and Sprint Retrospective meetings
- Provide feedback for estimation and quality of user stories by BA
- Run daily standup meetings with engineers
- Solve and own all roadblocks observed by engineers

*UX/UI Engineer, Business Logics Engineer, Web Services and Microservices Engineer, and Database Engineer:* The engineers on a development team will vary with the specifications of the product required. But they should always work for a technical team lead and be responsible to build what the BA has specified. This tight process ensures that the output can be verified by the QA and the product creation process smoothed out over time. Errors ought to be attributed to either: 1) faulty requirements that didn't meet customer objectives, 2) miscommunication from customer to BA, 3) miscommunication from BA to engineers on user story (i.e. bad user story), or 4) engineer not accomplishing user story, or 5) QA missing a non-conforming user story output.

*Software Architect*: A Software Architect designs and develops the software ecosystem.

Generally, a Software Architect's responsibilities include:

- Ensuring systems integration and interoperability
- Overseeing the database design
- Overseeing middle-tier business logic
- Overseeing the UI and front-end development

*A note on outsourcing*: Software outsourcing is an arrangement made by a business to hire a third party software contractor to do the software related work that could have been done in-house. But, developing a complete software application in-house demands both money as well as time. Once you start your outsourced software project with your provider, the last thing you want is for the outsourcing partnership to deteriorate into an order-taking relationship with developers who only do what they're told. When processes backslide, innovation is back-burned and continuous improvement is forgotten, you've officially arrived at low-performance outsourcing.

High-performance outsourcing requires consistent attention, assessment, and enhancement to remain optimized. Golden Section recommends using a partner like Golden Section to help navigate an engagement and find the right team for your company. Golden Section provides periodic engagement review with you and your development partner to manage expectations, ensure that milestones are achieved as scheduled and that your software is stable and scalable throughout the life of your software engagement. Potential issues should be identified and addressed before they become real problems that put your software at risk.

**Different organizational structures:**

#### Technical Product Owner Org Structure

This structure is meaningful when the product owner is technical and the product is technical by nature. It preserves the function of the engineering roles to execute what the product owner specifies and ensures accountability of what to build and whether it achieves goals within the product owner's purview. The weaknesses are that the TTL and product owner will need an extremely good working relationship to avoid downstream negative effects.

#### Customer Responsive UI Led Product Organization

This structure works for products that require rapid and meaningful customer engagement in the UI/UX of the product. It allows for better and more meaningful engineering tasks which will likely include UI with the user story. The QA is shown as its own vertical but could easily be within the TTL's organization for smaller teams. The weakness here is speed of communicating to the engineering group. This structure, despite providing flexibility to customers, needs to be monitored closely to ensure customer approvals occur quick enough to feed the engineering organization with input for productive work.

#### TTL-centric Engineering Driven Product Organization

This structure works well for products that are relatively simple in specification. Product owners are required to submit vision to the TTL and work with the BA directly. However, the BA reports to the TTL. This matrix allows the entire engineering function to work under the guidance of the TTL and for the TTL to be responsible to execute the vision the product owner specifies. This can breakdown on complex products where the product owner's vision isn't clearly specified enough, leading to incorrect outputs from the TTL's process.

*Note on organizational structure:* product organizational structures can accommodate a lot of complexities. There isn't one right answer for a product or team, but it is worth considering the roles, inputs, and accountability structure to ensure that there are clear lines.

#### Steps

1. Create a Team Responsibility Accountability Consulted Informed (RACI) Chart for your dev team. This chart will define the responsibility each role will take on and help facilitate effective communication.
2. Fill out the roles for your organization with at least one name in each role (at the early stage it is okay to have one person listed multiple times).

## Vendor

### How to Build a Vendor Contract Register

**Play:** Vendor Contract Register · **Owners:** Founder, COO, CFO · **Cadence:** Monthly · **Stage:** Pre-Revenue · **Effort:** 2 SP initial, 13 SP ongoing

**Summary:** Maintain a master register of all vendor contracts—tracking renewals, pricing, key terms, and obligations to ensure you're getting fair deals.

**Prevents mistakes:** #92 Lack of vendor contract control

**Templates:** Vendor Contract Register Template

Vendors are often not given much thought. After all, the service they provide is not core to your business plan but rather enables you to pursue your company objectives. We believe that occasional attention should be paid to vendors for three reasons:

(1) Just as your customer contracts are the target asset of potential buyers, vendor contracts are the liability they are taking on. It behooves you to do some upfront work to keep vendor contracts ready for inspection when the time comes. Be sure to include detailed notes on account status and communication.

(2) Upon sale, you will need to affirm that none of your contracts is in dispute or in technical non-compliance. A buyer will also want to make sure a vendor is not giving you un-contracted benefits that could expire during the transaction.

(3) Depending on the expense category, vendor expenses directly affect your Gross Margin or your EBITDA. Either way, they affect your bottom line. Just as in our personal lives, expenses need to be kept in line. Potential buyers and investors look at your GM and EBITDA to judge your profitability. As a company, you need to have money in the bank to pursue the sales, R&D and growth strategies that help you achieve your goals.

**The impact:** A vendor contract register is a helpful tool to track your vendors, expenses, and contract terms. You are tracking renewals and notice terms so that you are fully prepared for bills and can send in timely termination notices if needed.

> **The goal:** Build a Vendor Contract Register in an easily accessible template.

#### Steps

1. Assemble all the current vendor contracts to which your company is party. Past vendor contracts would be helpful as well.
2. Enter relevant information into template provided.
3. Codification: Save this document to its own folder. In this folder also save all past and current executed contracts. Continue adding to this document and saving contracts as they are executed.

### How to Build a Vendor Contract Playbook

**Play:** Vendor Contract Playbook · **Owners:** Founder, COO, CFO · **Cadence:** Annual · **Stage:** Pre-Revenue · **Effort:** 3 SP initial, 1 SP ongoing

**Summary:** Establish negotiation strategies and standard vendor contract terms that protect your company while maintaining positive vendor relationships.

**Prevents mistakes:** #92 Lack of vendor contract control

**Templates:** Vendor Contract Playbook Template

We are not recreating the Customer Contract Playbook as a Vendor Contract Playbook; there is no need for you to create and propose contracts to a vendor. Instead, we will create this playbook to highlight the key terms your company should consider and negotiate prior to signing a vendor contract. There are risks and benefits that need to be balanced in a contract. The terms that most affect your business should be identified, ideal terms listed, and walk-away terms defined prior to signing contracts to streamline the process and prevent expensive or limiting mistakes.

**The impact:** A Vendor Contract Playbook will streamline your vendor contract negotiations and help you maintain clarity on what terms are most important to your company. This preparation will help ensure your company gets the service and products it needs to get the job done on terms that benefit you.

> **The goal:** We will walk through a process to identify vendor terms that impact your company the most, what terms would be ideal and a process for approving vendor contracts.

#### Steps

1. Identify which vendor contract terms affect your business the most. These could be terms that add unacceptable risk, remove control, add variability, or reduce your ability to increase revenue or customers.
2. *Ideal Agreement Language:* what are the ideal terms to help your company meet its objectives?
3. *Justification:* Give a short description of why to codify your thought process.
4. *Acceptable Fallbacks:* If a vendor is unwilling to sign to your ideal term, what would be an acceptable fallback? Rank in terms of preference.
5. *Unacceptable Fallback:* What is an unacceptable fallback? Where is the line to indicate it is time to walk away from this vendor negotiation?
6. *Approval Process*: Does there need to be an approval process for deviations from the ideal agreement language? What does that look like?
7. Codification and Use
8. Set a process around how to use the playbook: does the contract negotiation process need to be documented?
9. Distribute the contract playbook to the appropriate players.
10. Train those players on expectations and how to use the contract negotiation playbook.
11. Update regularly.

We recommend the following two terms, Multiyear Price Lock and Assignment without Approval, as two terms to include in your contract playbook.

**Term: Multiyear Price Lock**

Multi-year price locks are very valuable at keeping your costs predictable and your forecasted EBITDA accurate. Push for them. It might also be worth a slightly higher price. Remember your goal isn't the lowest price you can squeeze the vendor into, the goal is a good relationship. It is worth remembering how you would like your customers to treat you during negotiation and reciprocate that with your vendors.

**Term: Assignment w/o Approval**

As mentioned in the Customer section, when it comes time to sell your company, you are fundamentally selling your contracts, including vendor contracts. A buyer wants to know what its expenses will be upon purchase. If your vendor contracts do not have an Assignment without Approval term, then your vendors will need to approve the reassignment of the contract to the buyer. This adds uncertainty and a potential pitfall to the buying process. No matter how nice, a vendor will likely use this situation as an opportunity to increase their contract value. You don't want a vendor to be able to renegotiate their contract at the moment you have the least leverage, so include an Assignment without Approval term in your vendor contracts.