Business foundations

In recent article, we looked at what checklist items you should look for in a SaaS supplier for your business critical applications. We included security accreditations and a solid reliable support team and a long track record of client retention.

One of the most important factors now is financial stability of your critical suppliers. If your supplier goes bust, the outcome for your business is unpredictable. A key part of many crashes over the last two hundred years is the domino effect of good businesses being taken down by bad businesses.

Due to the pandemic, we have lived through challenging times. Like many historical downturns, it will be followed by more economic turbulence. This time it looks like the war in Ukraine will have many side effects. In previous crashes and recessions and macro economic financial upheavals, more businesses failed after the recession than on entry or during the down times. So now is the key time to check out your SaaS supplier.

At AXLR8, we did this market analysis recently. AXLR8 have a strong balance sheet and have never borrowed money. This careful financial approach has meant personal sacrifice but has left us financially much stronger than our competitors. Losses in the down times are covered by hard earned reserves. This is important because our clients rely upon us for their operational systems – now and in the future.

We recently benchmarked our balance sheet against competitors. Like us they must pay wages and keep servers running in the cloud. Both are expensive with unpredictable costs – especially for security enhancements to counter ever increasing threats. One way they may be saving money that is invisible in customer service, is to skimp on expensive security upgrades. This is the equivalent for your business, of an airline not bothering with maintenance and pre flight safety checks on their aircraft.

With a simple Companies House check, we discovered that we have been competing in most of our core markets with our own positive balance sheet but this is not the rule. There are companies with one employee who have been steadily drifting more and more negative for years. What will his clients do if his wife tells him to go and get a proper job? Worse, there are two companies with fantastic websites and a few good references who are £250k underwater and one has not published their accounts for two years! They should swallow their pride and merge or sell out because they are risking huge damage for their clients.

So, take five minutes to check out your SaaS supplier and assess the consequences of their failure. If you are about to buy a system, again, check their finances not just how nice their website and screens look.