Can you do small-time SAAS

There was recently a post on Phil Wainewright's SAAS blog about how to manage the finances of a SAAS solution. "The scary" part of the post to me is the amount money needed and the share size of even a medium sized SAAS business. Is it possible to have a decent size SAAS service in Europe where a 1000 server solution is a big and rare phenomenon.

Well, I think that for niche SAAS applications there is a good chance. And even with a 10 server installation you could run a solution for 1000 users and earn a decent profit. But the principal economic math running it is the same as with big solutions. Every new customer brings new demand for capacity and service and therefore means upfront investment. The revenue is collected afterwards so the cashflow should be calculated with good care.

A wisdom of economics: companies don't go bankrupt because they have negative net profit, they go bankrupt because they run out of money. This is true also vice versa - a business can have really good net profit, but can still go bust because it runs out of money.