How SaaS Helps Cut Small Business Costs

When you have to lay off staff, software-as-a-service can often make up the difference, especially in sales and marketing

Using SaaSm Starr can run his marketing with just one employee Matthew Mahon

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By Jeremy Quittner

December 5, 2008 at 5:00 AM UTC

This article is for subscribers only.

Every business wants a hot niche, and Starr Tincup had one. In 2003, the Fort Worth marketing and advertising startup decided to cater to software makers in the human resources industry—and quickly signed 20 customers. Then the growing pains set in. By 2005, staff had ballooned to 80 from 4, plus more than 200 contractors. But revenues were just $2.5 million, and soon Starr Tincup was $500,000 in debt.

After three months of meetings with accountants, consultants, sales experts, and a mentor, co-founder Bret Starr made the painful decision to cut 75% of his staff. "We had a big sales team that was not providing value," he says. Since sales and marketing would now be managed by just one person, Starr's advisers suggested two hosted software applications to make that job easier.