Product market fit and pivots
A starting consideration is whether there is actually a replicable sales model. The SaaS jargon for this is Product-market fit and it is closely related to that other favourite term from the Lean Startup – the pivot. Under this methodology you release an MVP (minimum viable product) and see whether customers like it and will pay for it. You then keep tweaking your offering until you find good uptake (product-market fit).
If the tweak is big enough, its called a pivot. Common examples of pivots include changes from or to: customer focus – enterprise/retail; pricing – subscription/freemium/one off; and monetisation – subscription/advertising. Companies that are pivoting are saying that their current model doesn’ work financially and they are still experimenting. Many of these experiments will pay off, but this takes time and money (usually more of both than you expect) and so its generally a very dangerous place to invest.
Note that many companies that are still in this “pivot” phase might have sales, but they most likely don’t have SaaSy sales that are repeatable and ultimately scaleable. The first step of bottom up analysis is therefore understanding what component of sales and sales growth comes from repeatable “product market fit” sales versus one off or experimental sales.