Looking for a SaaS software business plan? You're in the right place.
A subscription software company has to answer questions that a shop or a service firm never faces. How many seats does a typical customer buy? How many customers leave each month, and how many does the company have to win just to stand still? What does hosting cost per seat, and how many support staff does each thousand accounts need? A blank template will not show what a believable answer looks like.
This article walks through a complete sample plan for CloudSoft, a team-productivity software company in San Francisco, California, section by section. It covers the executive summary, the SWOT and, in particular, five years of financials built from seats, price and churn.
Here's what you'll take away:
- The executive summary: see how a two-round raise, a pricing model and a first-year loss fit on one page, so an investor knows the ask within a minute
- The customer and seat model: learn how accounts, seats per account and price per seat turn into a revenue line you can defend
- Churn and net revenue retention: find out how to show which customers leave, which grow, and what that does to the next three years
- The sales and marketing plan: work out what a self-serve trial and an inside sales team each cost per new account
- Hosting and support costs: separate the costs that follow usage from the ones that follow headcount, so the margin stays honest
- The five-year profit and loss, cash flow and balance sheet: follow San Francisco salaries, hiring and pay raises into the numbers
- The downside case: have an answer ready for "what if seat sales come in 20% short?", with the steps the founders take in response
If you're building a subscription software plan, read this before you write your own. CloudSoft is fictional, so keep what fits your product and change the rest.
In this plan
Looking for a saas software business plan template? The Toolkit builds yours with your own numbers.
CloudSoft in Brief
CloudSoft, Inc. is a software company based in San Francisco that sells a work-management app to companies with 10 to 200 employees. Project boards, shared documents and approval workflows sit in one product, billed per seat per month. It opens for paying customers on January 1, 2027, after a paid beta that began in mid-2026. Co-founders Priya Raman (CEO) and Daniel Okafor (CTO) run the company.
The raise is $1,500,000: $120,000 from the founders, a $980,000 seed round in month 1 and a $400,000 seed extension on Series A-style terms, led by one venture fund, in month 14. $1,388,000 of it is held as cash reserve against the first two loss-making years. The remaining $112,000 buys equipment, legal work, SOC 2 readiness, registration and the launch campaign.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $1,183,500 | $2,666,600 | $4,752,100 |
| Net income after start-up costs | ($592,443) | ($314,285) | $394,832 |
| Closing cash | $409,586 | $420,504 | $706,705 |
The company starts with 210 paying teams on its Crew plan and 22 accounts on its Company plan, all converted from the beta, and ends 2027 with 580 and 75. December 2027 is the first month at operating break-even, although Year 2 hiring brings the monthly loss back. The first full-year profit comes in Year 3, and by Year 5 revenue is $9,343,500 with a net margin of 9.0%.
Revenue depends on how many customers stay. Crew plan accounts leave at 3.0% a month in Year 1, Company accounts at 1.0%, and both rates are planning figures. A second run of the model takes 20% off every revenue line. With later hiring, a smaller marketing budget, a CEO pay cut and no office move, the company stays profitable from Year 3 and year-end cash stays positive in all five years.
Company and Product
Legal name: CloudSoft, Inc., a Delaware C corporation. Founders: Priya Raman and Daniel Okafor, who hold a majority of the shares after the seed round. Office: a coworking suite in San Francisco's South of Market area, moving to leased space in Year 3. Stage: paid beta since mid-2026; general release January 1, 2027.
The product
CloudSoft Workspace replaces the pile of separate tools a 40-person company tends to run: a task board, a folder of documents, an approvals thread in email. A project holds its tasks, its files and its sign-off steps, and a change in one shows in the others. A summary feature drafts a status note from a project's activity, and its model fees are part of direct costs.
Two plans, two ways to buy
| Plan | Buyer | Price per seat | Billing | How it is sold |
|---|---|---|---|---|
| Crew | Companies of 10 to 40 people | $11 a month, $13 by Year 5 | Monthly, by card | Self-serve, 14-day trial with no card |
| Company | Companies of 30 to 200 people | $16 a month, $18 by Year 5 | Annual contract | Demo, security review, order form |
The Company plan adds single sign-on, an audit log, admin controls and a contractual uptime commitment of 99.5% a month. Plan prices rise in steps, not every year: the Crew plan to $12 in Year 3 and $13 in Year 5, the Company plan to $17 in Year 3 and $18 in Year 5. A business that outgrows its Crew plan moves up at renewal. An onboarding package at $5,000 in Year 1 covers data migration and workflow setup.
Targets through 2028
- End 2027 with 580 Crew accounts and 75 Company accounts, about 9,980 paid seats.
- Reach monthly operating break-even in December 2027 and $124,400 of monthly subscription revenue.
- Complete a SOC 2 Type I report by month 8 and move to a Type 2 audit in Year 2.
- Close the $400,000 seed extension in month 14 and reach 1,150 accounts by December 2028.
Where Team Software Sits
How the plan sizes its market
The plan quotes no outside market-size figure, because published estimates for work-management software differ widely in what they count. It sizes the market from its own needs instead. By Year 5 the company needs 1,880 Crew accounts and 360 Company accounts, and winning them takes about 680 and 93 new accounts a year. The sales sections below test whether that funnel is plausible.
Who else a buyer could choose
| Alternative | What it offers | Why a buyer picks it | Where CloudSoft differs |
|---|---|---|---|
| Free and low-cost task boards | Lists and boards for small teams | No cost to start | Documents and approvals in the same product |
| Document suites | Shared files and editing | Already paid for | Tasks and sign-off steps tied to each document |
| Chat-first collaboration tools | Messaging with some task features | Staff already live there | A project record that outlasts the thread |
| All-in-one work platforms | Broad feature sets and templates | Everything in one vendor | Faster setup and a smaller price per seat for a 40-person company |
| Spreadsheets and email | Whatever the team already knows | No change needed | A single place where status can be read |
The table describes categories, not a ranking, and no competitor price is quoted because vendors revise plans often. Whether a buyer sees the product as different enough is the main commercial risk, and the plan answers it with price, setup speed and the Company plan's controls.
Strengths and exposures
| Strengths | Weaknesses |
|---|---|
| 232 paying accounts converted from the beta before launch | No brand outside early adopters |
| Two plans that let a customer start cheap and move up | Crew plan churn of 3.0% a month in Year 1 is high |
| A small team with an engineering-led founder pair | No founder has run a sales team of more than two |
| Opportunities | Threats |
|---|---|
| Growing companies that outgrow spreadsheets and email | Incumbents bundling similar features at no extra cost |
| Company accounts that add seats as they hire | Buyers cutting seat counts when headcount falls |
| Integrations that make the product harder to leave | A security incident or long outage |
Who Buys, and What Makes Them Stay
The Crew plan buyer
A manager at a company of 10 to 40 people: an operations lead, an agency owner or a head of marketing. The company has outgrown a shared folder and a spreadsheet and has no IT department. The manager signs up, invites the team and decides within a trial fortnight. Of 100 trials, about 10 become paying teams, with an average of 11 paid seats in Year 1.
The Company plan buyer
A company of 30 to 200 people where the decision involves a department head, an IT contact and someone who signs contracts. These buyers ask for single sign-on, a security questionnaire and a contract. They average 48 seats in Year 1 and 70 by Year 5, and they stay longer because a migration is expensive.
What makes a customer leave
Small companies close, shrink or consolidate their tools. Crew accounts also lose a champion when a manager leaves. The plan therefore models high Crew churn and does not rely on a better rate arriving.
Seats, retention and growth
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Crew accounts at year end | 580 | 1,000 | 1,330 | 1,620 | 1,880 |
| Company accounts at year end | 75 | 150 | 225 | 295 | 360 |
| Paid seats at year end | 9,980 | 20,100 | 30,790 | 41,855 | 53,400 |
| Monthly churn, Crew / Company | 3.0% / 1.0% | 2.7% / 0.9% | 2.4% / 0.8% | 2.2% / 0.8% | 2.0% / 0.7% |
| Net revenue retention, Company | – | 101% | 107% | 98% | 105% |
| Net revenue retention, Crew | – | 79% | 88% | 82% | 91% |
Net revenue retention here means what a cohort of customers pays a year later, as a share of what it paid before: logo retention multiplied by the change in seats and in price. Company accounts hold about steady and grow when they hire. Crew accounts shrink without new customers, which is why the Crew plan needs 512 to 680 new accounts a year.
From Trial to Contract
The Crew plan path
A visitor reaches the site through search or a template, starts a 14-day trial and invites colleagues. An in-app prompt asks for a card on day 10. No salesperson is involved. At a 10% conversion rate the plan needs about 5,120 trials in Year 1 for 512 paying teams, and each trial costs about $25 in marketing programs.
The Company plan path
A trial that grows beyond 30 seats, or a request from the website, goes to the sales development representative from month 30 and, before that, to the account executive. The steps are a demo, a pilot with a small group, a security review and an order form. The company expects to close 22% of the demos it runs, so Year 1 needs about 270 demos for 59 new accounts. Priya sells the first accounts herself, and the first account executive starts in month 6.
Selling capacity
By Year 3 the company has three account executives and 93 new Company accounts to win, which is about 31 each from roughly 140 demos a year per seller. The plan treats that as a manageable load that leaves room for pilots and renewals.
How the price list is set
Prices step up once every two years, as shown in the product table, and an annual contract fixes the price for its term. The model applies no discounts to the price list. The onboarding package sells to 55% of new Company accounts.
Cost to win an account
| Marketing programs | With sales and marketing payroll | |
|---|---|---|
| New Crew account, Year 3 | $260 | about $510 |
| New Company account, Year 3 | $2,800 | about $8,100 |
A Year 3 Company contract averages $12,240 in its first year, 60 seats at $17. At an 85% gross margin that is $10,404 of gross profit, so the $8,100 cost is repaid in roughly nine months before support and customer success costs. A Year 3 Crew account pays about $1,872 a year, so its $510 is repaid in about four months.
Inbound Marketing and Spend
Where the money goes
Marketing programs cost $311,000 in Year 1 and between $469,000 and $511,000 in Years 2 to 5, which is 26% of Year 1 revenue and 5% of Year 5. A further $24,000 for the launch campaign comes out of start-up capital. Neither figure includes people.
| Channel | Feeds | Year 1 spend | What it is expected to do |
|---|---|---|---|
| Search content and a template library | Crew | $48,000 | Pages that answer how to run a project or approval, each with a trial link |
| Paid search and review-site listings | Crew | $58,000 | Buyers comparing tools; the main source of Crew trials |
| Referral credits | Crew | $22,000 | A month of free seats for a referred account that converts |
| Webinars and partner co-marketing | Company | $38,000 | Sessions with accountants, consultants and agencies that advise growing companies |
| Company demo programs (retargeting ads, intro content, contact data) | Company | $85,000 | Demo requests from department heads at companies of 30 to 200 people |
| Customer events and conferences | Company | $30,000 | Two regional events and one trade show |
| Brand, analytics and tools | Both | $30,000 | Analytics, design assets and a testing budget |
The Crew rows total $128,000, the Company rows $153,000 and the shared row $30,000, which matches the per-account costs above.
Marketing milestones
- January 2027: 210 Crew and 22 Company accounts carried over from the beta.
- June 2027: about 395 Crew and 49 Company accounts.
- August 2027: SOC 2 Type I report in hand and added to the Company sales kit.
- December 2027: 580 Crew and 75 Company accounts, $149,400 of monthly revenue.
Running the Product
Hosting and security
The product runs on a public cloud provider in a multi-tenant design with data kept in US regions. Hosting, storage, email delivery, summary-feature fees and card processing make up direct costs at 15% of revenue in every year. SOC 2 readiness and a penetration test cost $18,000 in the launch budget, and the annual audit fees from Year 2 sit in professional fees.
Support and customer success
Support is by chat and email during Pacific business hours, with engineers on a rota for incidents. One support specialist starts in month 5 and the company adds one in months 19, 32, 44 and 56, which holds the load between 448 and 655 accounts per specialist. Customer success managers cover Company accounts only, at 113 to 150 accounts each. An implementation specialist joins in month 12 to deliver onboarding packages, which would otherwise fall to the account executive.
Engineering and releases
Engineering grows from the CTO and one engineer to the CTO and six engineers by Year 5. Releases go out weekly behind feature flags. The CTO owns uptime and incident response until the platform engineer hired in month 44 takes over the on-call schedule.
The office
Year 1 is a coworking suite for $60,000, with the team in three days a week. A larger suite costs $84,000 in Year 2, and leased space takes $120,000 in Year 3, rising to $180,000 by Year 5. Insurance covers cyber, technology errors and omissions, general liability, directors and officers, employment practices and workers' compensation.
Legal and privacy
- California privacy rules apply to customer data, and counsel determines which thresholds the company meets.
- California's automatic renewal law is aimed mainly at consumer contracts. Counsel decides whether it reaches the card-billed Crew plan, and the checkout and cancellation flow is built to meet it.
- Customer contracts allow data export on request and set out retention and deletion.
- Sales tax on software subscriptions varies by state, and the company registers where it meets a state's thresholds.
Founders and Early Hires
Priya Raman, CEO
Priya spent eight years at two San Francisco software companies, the last four running product and then sales for a mid-size workflow tool. She holds a degree in economics and put $70,000 of savings into the company. She sells the first Company accounts herself.
Daniel Okafor, CTO
Daniel has ten years of engineering experience and built the first version of the product, including its approval workflows. He owns architecture, security and hiring for engineering and put in $50,000.
Where the team is thin
Three gaps stand out. Neither founder has built a sales team beyond two people. Nobody holds finance and operations until the manager joins in month 46. The company has no dedicated security staff. The plan answers them in turn: a sales advisor reviews the first hires, a part-time bookkeeper and a fractional controller work from professional fees, and a security consultant supports the SOC 2 work.
If a founder leaves
Both founders vest their shares over four years with a one-year cliff. The CTO documents architecture decisions as they are made, and the engineering team reviews all changes in pairs.
Advisers and the board
An operator who ran sales at a larger software company advises on the first sales hires. The board is the two founders and the lead seed investor, and the venture fund adds a seat at the extension.
Ownership
The founders hold a majority after the seed round. The terms of the extension are not modeled, and the plan counts no stock-option cost because options use no cash.
Five-Year Forecast: Seats, Churn and Cash
The forecast starts from seats and works up to dollars. Paying accounts, seats per account, a price per seat and a monthly churn rate produce each revenue line, and hosting, support staff and San Francisco salaries produce most of the costs. Year 1 is shown month by month. Years 2 to 5 are annual totals.
Seed, extension and where the cash goes
| Use of funds | Amount |
|---|---|
| Laptops, monitors and test devices | $26,000 |
| Coworking suite deposit and furniture | $14,000 |
| Legal: Delaware C corporation, investor documents, terms and privacy policy | $26,000 |
| SOC 2 readiness and penetration test | $18,000 |
| San Francisco business registration and state filings | $4,000 |
| Launch: website rebuild, pricing pages, launch-week campaign | $24,000 |
| Seed reserve for the first 14 months | $988,000 |
| Extension reserve for the push to profit | $400,000 |
| Total uses | $1,500,000 |
| Source of funds | Amount |
|---|---|
| Founders' savings (two founders) | $120,000 |
| Seed: one seed fund, a strategic angel and six angels | $980,000 |
| Seed extension on Series A-style terms, led by one venture fund | $400,000 |
| Total sources | $1,500,000 |
CloudSoft raises $1,500,000 in equity and borrows nothing. The two founders put in $120,000. A seed fund, a strategic angel and six other angels add $980,000 in month 1. In month 14 one venture fund leads a $400,000 seed extension on Series A-style terms, with a priced round and a board seat, and the plan counts no money beyond it. A bank loan fits poorly: the company has no collateral and no profit yet, and repayments would draw on the reserve while accounts are still arriving. The two reserves total $1,388,000, or 92.5% of the raise. Without the extension the balance would end Year 2 near $20,500, with no room for a slow quarter. Equipment and the suite deposit take $40,000, and legal work, SOC 2 readiness, registration and the launch campaign take $72,000.
Planning figures: accounts, seats, churn and hosting
- Accounts and seats. The Crew plan starts 2027 with 210 paying teams converted from a paid beta and ends the year with 580, then 1,000, 1,330, 1,620 and 1,880 at the end of Years 2 to 5. A team averages 11 paid seats in Year 1 and 15 in Year 5, at $11 a seat per month rising to $13. The Company plan starts with 22 accounts and reaches 75, 150, 225, 295 and 360, averaging 48 seats in Year 1 and 70 in Year 5, at $16 a seat per month on an annual contract rising to $18. Paid seats at the end of Year 1 are about 9,980 (6,380 Crew and 3,600 Company) and about 53,400 at the end of Year 5.
- Churn. Crew plan logo churn is 3.0% a month in Year 1 and falls to 2.7%, 2.4%, 2.2% and 2.0%, which leaves 69% of teams after a year in Year 1 and 78% in Year 5. Company plan churn is 1.0%, 0.9%, 0.8%, 0.8% and 0.7% a month, leaving 89% to 92% of accounts after a year. These are planning figures for a product with a short sales history, and churn is the first number a lender will ask to see tested.
- Net revenue retention. Multiplying a cohort's logo retention by its change in seats and price gives 101%, 107%, 98% and 105% for Company accounts in Years 2 to 5, and 79%, 88%, 82% and 91% for Crew accounts. The Crew plan loses revenue from its existing base every year and depends on new teams. The Company plan roughly holds its revenue and adds seats as customers hire. The dip to 98% in Year 4 comes from a year with no price increase.
- New accounts and trials. Gross new accounts are the net gain plus the accounts lost: 512, 676, 666, 679 and 680 Crew teams, and 59, 87, 93, 95 and 93 Company accounts, in Years 1 to 5. The free trial lasts 14 days with no card, and 10% of trials convert, so Year 1 needs about 5,120 trials and Year 3 about 6,660. Company accounts come from demos, and at a 22% close rate Year 1 needs about 270 demos and Year 3 about 420.
- Onboarding packages. 55% of new Company accounts buy a migration and workflow-setup package at $5,000 in Year 1, rising $200 a year to $5,800. That is $162,300 in Year 1 and $296,700 in Year 5, which makes services 14% of Year 1 revenue and 3% of Year 5. An implementation specialist delivers the packages from month 12, and that salary sits in payroll.
- Hosting and gross margin. Direct costs are 15% of revenue in every year, covering cloud hosting, storage, email delivery, the model fees for the AI summaries and card processing on the Crew plan. In Year 1 that is about $1.65 for each Crew seat a month and $2.40 for each Company seat. Gross margin is 85% before people. Counting the support specialists, customer success managers and implementation specialist, it is 76.8% in Year 1, 66.3% in Year 2, 70.4% in Year 3, 70.5% in Year 4 and 70.9% in Year 5. Year 2 is the low because the implementation specialist works through a year of onboarding that has not yet scaled.
- Support headcount. One support specialist starts in month 5 and the team adds one in months 19, 32, 44 and 56. That is 655 accounts for each specialist at the end of Year 1, 575 at the end of Year 2, 518 in Year 3, 479 in Year 4 and 448 in Year 5. Customer success managers cover Company accounts only, at 150 accounts each at the end of Year 2, 113 in Year 3, 148 in Year 4 and 120 in Year 5.
- Marketing programs cost $250 to $260 for each gross new Crew account and $2,600 to $2,800 for each gross new Company account, plus $30,000 rising to $90,000 a year for events, review-site listings and tools. That totals $311,000 in Year 1 and between $469,000 and $511,000 in Years 2 to 5. People are not in those figures. Charging the content marketer's whole payroll to the Crew plan lifts its cost per new account to about $510 in Year 3. For Company accounts, adding commissions and the sales payroll lifts it to about $8,100, against $10,404 of gross profit in the first year of a Year 3 contract.
- Commissions are 9% of first-year contract value on new Company accounts, which is $49,000 in Year 1 and $127,000 in Year 5. Each salary carries a 27% load for employer payroll taxes, health cover, a retirement match, workers' compensation and California employment-training and unemployment contributions. Pay rises of 3% a year start in Year 2 and sit on their own line, so the wages in the personnel table are launch-year rates. Stock options are not costed because they use no cash.
- Receivables average 25 days and payables 30. Crew plan cards clear within days and Company invoices run on 30-day terms. The model books Company contracts evenly across the year, so it shows none of the cash that annual prepayment would bring forward, and a bad-debt allowance covers Company invoices only. Sales tax on software subscriptions varies by state, and the plan's prices and revenue exclude it.
- Rent covers a coworking suite for $60,000 in Year 1, a larger suite at $84,000 in Year 2 and leased space at $120,000, $156,000 and $180,000 in Years 3 to 5. These are planning figures for a hybrid team that comes in three days a week. Professional fees of $72,000 rising to $115,000 cover counsel, bookkeeping, a fractional controller, tax preparation and the SOC 2 audit. Insurance covers cyber, technology errors and omissions, general liability, directors and officers, employment practices and workers' compensation, at $24,000 in Year 1.
- The model taxes the company as a C corporation at 21% federal plus 8.84% California, after carrying the operating losses forward in full. The $72,000 of start-up costs is not carried forward, which is the cautious choice. Federal and California limits on how much of a loss can offset later profit, and the treatment of software development costs, could bring some tax forward into Years 3 and 4. The model does not include that. A planning allowance covers San Francisco registration and gross receipts tax, which depends on classification. No debt is drawn and no distributions are paid.
Revenue by plan
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Crew plan seats (monthly billing) | $573,800 | $1,251,400 | $2,180,900 | $2,973,600 | $4,095,000 |
| Company plan seats (annual contracts) | $447,400 | $1,166,400 | $2,295,000 | $3,447,600 | $4,951,800 |
| Onboarding and migration packages | $162,300 | $248,800 | $276,200 | $292,600 | $296,700 |
| Total revenue | $1,183,500 | $2,666,600 | $4,752,100 | $6,713,800 | $9,343,500 |
| Growth on prior year | – | 125% | 78% | 41% | 39% |
The Crew plan and the Company plan are close to level by Year 3, at 46% and 48% of total revenue, and the Company plan reaches 53% by Year 5 as contracts grow. Year 2 grows 125% because the base is a young one: December 2027 subscription revenue of $124,400 is a $1.49 million annual run rate, and Year 2 subscription revenue is 1.6 times that. Growth then slows to 78%, 41% and 39% as net account adds flatten while seats per account and prices keep rising. Services fall from 14% of revenue to 3% because they are tied to new Company accounts, which flatten at about 93 a year.
Launch year, month by month
| Month | Crew plan seats (monthly billing) | Company plan seats (annual contracts) | Onboarding and migration packages | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $27,300 | $18,400 | $2,100 | $47,800 | ($85,863) |
| Feb 2027 | $31,000 | $21,900 | $4,200 | $57,100 | ($77,958) |
| Mar 2027 | $34,800 | $25,300 | $6,200 | $66,300 | ($70,138) |
| Apr 2027 | $38,500 | $28,800 | $8,300 | $75,600 | ($62,233) |
| May 2027 | $42,200 | $32,300 | $10,400 | $84,900 | ($54,328) |
| Jun 2027 | $45,900 | $35,700 | $12,500 | $94,100 | ($46,508) |
| Jul 2027 | $49,700 | $39,200 | $14,600 | $103,500 | ($38,518) |
| Aug 2027 | $53,400 | $42,200 | $16,600 | $112,200 | ($31,123) |
| Sep 2027 | $57,200 | $45,700 | $18,700 | $121,600 | ($23,133) |
| Oct 2027 | $60,900 | $49,200 | $20,800 | $130,900 | ($15,228) |
| Nov 2027 | $64,600 | $52,600 | $22,900 | $140,100 | ($7,408) |
| Dec 2027 | $68,300 | $56,100 | $25,000 | $149,400 | $497 |
Revenue grows from $47,800 in January to $149,400 in December. Operating profit before interest, depreciation and tax (EBITDA) is negative in January through November, narrowing from ($85,863) to ($7,408), and reaches $497 in December, the first month at break-even. Year 2 payroll steps up again, so the monthly loss returns until Year 3. The balance sheet shows $409,586 of cash at the end of Year 1. The model's own monthly view is lowest in Dec, at about $352,000 after setting aside 25 days of unpaid invoices. The extension lands in month 14.
Who is on payroll
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Co-founder and CEO | $170,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Co-founder and CTO | $195,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Senior software engineer | $188,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Support specialist | $95,000 | Month 5 | 1 | 1 | 1 | 1 | 1 |
| Account executive | $125,000 | Month 6 | 1 | 1 | 1 | 1 | 1 |
| Content and demand marketer | $125,000 | Month 11 | 1 | 1 | 1 | 1 | 1 |
| Implementation specialist | $105,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Customer success manager | $115,000 | Month 13 | – | 1 | 1 | 1 | 1 |
| Second support specialist | $98,000 | Month 19 | – | 1 | 1 | 1 | 1 |
| Product designer | $150,000 | Month 22 | – | 1 | 1 | 1 | 1 |
| Second software engineer | $192,000 | Month 22 | – | 1 | 1 | 1 | 1 |
| Second account executive | $128,000 | Month 28 | – | – | 1 | 1 | 1 |
| Sales development representative | $82,000 | Month 30 | – | – | 1 | 1 | 1 |
| Third support specialist | $100,000 | Month 32 | – | – | 1 | 1 | 1 |
| Second customer success manager | $118,000 | Month 33 | – | – | 1 | 1 | 1 |
| Third software engineer | $192,000 | Month 34 | – | – | 1 | 1 | 1 |
| Third account executive | $130,000 | Month 35 | – | – | 1 | 1 | 1 |
| Product manager | $172,000 | Month 37 | – | – | – | 1 | 1 |
| Fourth software engineer | $195,000 | Month 40 | – | – | – | 1 | 1 |
| Demand generation manager | $138,000 | Month 42 | – | – | – | 1 | 1 |
| Fourth support specialist | $102,000 | Month 44 | – | – | – | 1 | 1 |
| Fifth software engineer (platform and integrations) | $200,000 | Month 44 | – | – | – | 1 | 1 |
| Finance and operations manager | $135,000 | Month 46 | – | – | – | 1 | 1 |
| Fourth account executive | $132,000 | Month 49 | – | – | – | – | 1 |
| Third customer success manager | $120,000 | Month 50 | – | – | – | – | 1 |
| Sixth software engineer | $198,000 | Month 53 | – | – | – | – | 1 |
| Fifth account executive | $135,000 | Month 55 | – | – | – | – | 1 |
| Fifth support specialist | $104,000 | Month 56 | – | – | – | – | 1 |
| Total payroll incl. on-costs | $912,918 | $1,590,675 | $2,352,675 | $3,640,243 | $4,743,238 |
January starts with three people: the two founders and a senior engineer. A support specialist joins in month 5, the first account executive in month 6, a content and demand marketer in month 11 and an implementation specialist in month 12, which makes seven at the end of Year 1. Year 2 adds a customer success manager in month 13, a second support specialist in month 19, and a designer and a second engineer in month 22, for 11. Year 3 adds six: a second account executive, a sales development representative, a third support specialist, a second customer success manager, a third engineer and a third account executive. Year 4 adds six more, led by a product manager and a fourth engineer, and Year 5 adds five. The founders' $170,000 and $195,000 sit inside costs, so profit is what remains after they are paid. The wages are launch-year rates for San Francisco.
Earnings after tax, year by year
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,183,500 | $2,666,600 | $4,752,100 | $6,713,800 | $9,343,500 |
| Direct costs (cloud hosting, storage, AI model fees, card processing) | ($177,525) | ($399,990) | ($712,815) | ($1,007,070) | ($1,401,525) |
| Gross profit | $1,005,975 | $2,266,610 | $4,039,285 | $5,706,730 | $7,941,975 |
| Payroll incl. on-costs | ($912,918) | ($1,590,675) | ($2,352,675) | ($3,640,243) | ($4,743,238) |
| Rent | ($60,000) | ($84,000) | ($120,000) | ($156,000) | ($180,000) |
| Utilities | ($3,000) | ($4,000) | ($6,000) | ($6,500) | ($7,000) |
| Marketing | ($311,000) | ($469,000) | ($504,000) | ($510,000) | ($511,000) |
| Insurance | ($24,000) | ($38,000) | ($56,000) | ($70,000) | ($80,000) |
| Professional fees | ($72,000) | ($90,000) | ($95,000) | ($105,000) | ($115,000) |
| Software subscriptions | ($36,000) | ($60,000) | ($95,000) | ($135,000) | ($175,000) |
| Sales commissions on new Company contracts | ($49,000) | ($81,000) | ($102,000) | ($113,000) | ($127,000) |
| San Francisco business registration and gross receipts tax (planning allowance) | ($4,000) | ($10,000) | ($18,000) | ($26,000) | ($36,000) |
| Recruiting fees and relocation | ($24,000) | ($36,000) | ($50,000) | ($66,000) | ($66,000) |
| Travel, customer events and conferences | ($20,000) | ($40,000) | ($60,000) | ($70,000) | ($80,000) |
| Equipment replacement and new-hire kit | $0 | ($14,000) | ($18,000) | ($22,000) | ($24,000) |
| Bad debt allowance (annual-contract invoices) | ($2,000) | ($8,000) | ($16,000) | ($26,000) | ($36,000) |
| Annual pay raises (3% a year) | $0 | ($47,720) | ($143,278) | ($337,549) | ($595,318) |
| EBITDA | ($511,943) | ($305,785) | $403,332 | $423,438 | $1,166,419 |
| Depreciation | ($8,500) | ($8,500) | ($8,500) | ($8,500) | ($2,000) |
| Interest | $0 | $0 | $0 | $0 | $0 |
| Income tax | $0 | $0 | $0 | $0 | ($318,862) |
| Net income before start-up costs | ($520,443) | ($314,285) | $394,832 | $414,938 | $845,557 |
| Start-up costs expensed at opening (legal, SOC 2 readiness, registration, launch marketing) | ($72,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($592,443) | ($314,285) | $394,832 | $414,938 | $845,557 |
Year 1 loses $520,443 before start-up costs and $592,443 after them. Year 2 loses $314,285, because the customer success, support, design and engineering hires arrive ahead of the revenue to carry them. Year 3 is the first profit, $394,832 or 8.3% of revenue. Year 4 earns $414,938, a 6.2% margin, as six hires and the cost of pay raises take most of the revenue growth. Year 5 earns $845,557 after $318,862 of income tax, a 9.0% net margin. Payroll including pay raises falls from 77% of revenue in Year 1 to 53% in Year 3, rises to 59% in Year 4 and ends at 57%. Pay raises reach $595,318 in Year 5.
Cash in and out
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($650,414) | ($389,082) | $286,201 | $313,260 | $699,861 |
| Laptops, test devices and suite fit-out | ($40,000) | $0 | $0 | $0 | $0 |
| Funding received | $1,100,000 | $400,000 | $0 | $0 | $0 |
| Loan principal repaid | $0 | $0 | $0 | $0 | $0 |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $409,586 | $10,918 | $286,201 | $313,260 | $699,861 |
| Closing cash | $409,586 | $420,504 | $706,705 | $1,019,965 | $1,719,826 |
Cash closes above zero in every year, and the lowest year-end balance is $409,586 in Year 1. The $400,000 extension in month 14 holds Year 2 at $420,504. After Year 2 the company funds itself, and cash reaches $1,719,826 in Year 5 with no debt and no distributions. The balance is held as a reserve against churn.
Year-end balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $409,586 | $420,504 | $706,705 | $1,019,965 | $1,719,826 |
| Accounts receivable | $81,062 | $182,644 | $325,486 | $459,849 | $639,966 |
| Laptops, test devices and suite fit-out (net) | $31,500 | $23,000 | $14,500 | $6,000 | $4,000 |
| Total assets | $522,148 | $626,148 | $1,046,691 | $1,485,814 | $2,363,792 |
| Accrued hosting and vendor bills | $14,591 | $32,876 | $58,588 | $82,773 | $115,194 |
| Bank debt (none in this plan) | $0 | $0 | $0 | $0 | $0 |
| Paid-in capital | $1,100,000 | $1,500,000 | $1,500,000 | $1,500,000 | $1,500,000 |
| Retained earnings | ($592,443) | ($906,728) | ($511,896) | ($96,959) | $748,598 |
| Total liabilities and equity | $522,148 | $626,148 | $1,046,691 | $1,485,814 | $2,363,792 |
Margins and break-even by year
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -43.3% | -11.5% | 8.5% | 6.3% | 12.5% |
| Net margin (before start-up costs) | -44.0% | -11.8% | 8.3% | 6.2% | 9.0% |
| Payroll incl. pay raises as share of revenue | 77% | 61% | 53% | 59% | 57% |
| Revenue per full-time equivalent at year end | $169,071 | $242,418 | $279,535 | $291,904 | $333,696 |
| Average monthly revenue | $98,625 | $222,217 | $396,008 | $559,483 | $778,625 |
| Monthly revenue needed to cover operating costs | $148,816 | $252,196 | $356,466 | $517,970 | $664,270 |
| Debt service cover (EBITDA / interest + principal) | – | – | – | – | – |
The last two ratio rows set average monthly revenue against the revenue needed to cover operating costs. Year 1 falls short, at $98,625 a month against $148,816 needed, and so does Year 2, at $222,217 against $252,196. Year 3 clears it, at $396,008 against $356,466. Revenue per full-time equivalent rises from $169,071 to $333,696 in Year 5. That is high for a software company of 28 people, and it rests on a self-serve Crew plan that sells without sales staff. A lender would test it first. Debt-service cover has nothing to measure, since there is no debt.
A slower seat-sales case
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $946,800 | $2,133,280 | $3,801,680 | $5,371,040 | $7,474,800 |
| Net income before start-up costs | ($606,058) | ($499,689) | $160,714 | $149,912 | $349,449 |
| Net income after start-up costs | ($678,058) | ($499,689) | $160,714 | $149,912 | $349,449 |
| Closing cash | $337,265 | $179,438 | $254,948 | $325,217 | $558,509 |
In this case all five years come in with revenue 20% below the base case on every line. The founders respond in five ways. Hires from month 16 start six months late, apart from support specialists, who are still hired on time. The sixth engineer and the fifth account executive are never hired. Marketing falls 20%. The CEO takes a 20% pay cut, from $170,000 to $136,000. The company keeps its Year 3 space through Years 4 and 5, with rent rising 3% a year instead of moving to larger offices. Commissions and bad debt fall on their own with revenue. With those steps, year-end cash never drops below $179,438, in Year 2. Net income and closing cash are lower than the base case in every year, and Years 3 and 4 are weak because revenue is down while hiring resumes. Year 1 equity is $421,942, against $507,557 in the base case. If the extension slipped, this case would end Year 2 about $220,600 below zero, so the founders would need a bridge from existing investors or deeper cuts. The model shows year-end balances only, and a lender would also want the lowest month-end balance inside each year.
Sources
- California Franchise Tax Board, corporation tax information: the model uses 8.84% for California. The rate may change.
- Internal Revenue Code, section 11: the 21% federal corporate rate the model applies.
- San Francisco Office of the Treasurer & Tax Collector, business taxes: rates and classification are not quoted, and the plan carries a planning allowance.
- California Attorney General, California Consumer Privacy Act: thresholds for covered businesses; counsel confirms.
- California's automatic renewal law (Business and Professions Code, section 17600 and following): counsel confirms the current text and scope.
- AICPA, SOC 2 reports: the plan quotes no audit fee beyond its own planning figures.
- Prices, trial conversion, churn, salaries and hosting costs are the plan's own planning figures, not market data.
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