What would Channelcorp like you to be thinking about as a result of reading about the income statement impacts of your engagement in a recurring revenue driven cloud or based business?
As you model the financial dynamics of your business you will see the pattern and structure of revenue acquisition is dramatically different in cloud and SaaS based business then it is in an on premise business. The differences, as you will see, are material enough to have an impact on your working capital and cash flow planning.
On the expense side your key management challenges are going to be in the areas of marketing and sales (to control customer acquisition costs) and the degree to which your offer and your IP have been packaged to allow for cost control on the technical side.
Managing for profit in a cloud or SaaS based business requires general management and especially sales management to focus on and closely manage a different set of metrics then are generally managed in the on premise environment. This requirement will have an impact on the people and skill sets you use to build out your business.
When it is all said and done your financial modeling will show that you and your team are looking at a business opportunity that could take 15-36 months until it starts to show an accounting profit and 24-48 months until all of the cash you have invested in the business has been returned to you.
At Channelcorp we have spent a lot of time and resources modeling what we expect may be the impact on your income statement of engagement in a recurring revenue based cloud or SaaS business. For more precise engagement in the modeling of your business’ income statement do not hesitate to engage in the 30-DAY RISK FREE PILOT of LivePlan brought to you by Channelcorp and CDN.
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Margaret and Bruce Stuart founded Channelcorp in 1989. The firm is a global leader in the assistance of reseller, distributor and vendor clients. Channelcorp specializes in the business model transformation that is required in the face of the structural changes to recurring revenue driven business models in the worldwide IT business (www.channelcorp.com/services.php). Channelcorp publishes and sells four industry- leading books and 12 white papers (www.channelcorp.com/publications.php).