How to set up operations for your SaaS startup

What falls under ‘operations’ in an early-stage SaaS startup context? The precise answer depends on who you ask. But broadly speaking, operations are the backbone of your company: the responsibilities and tasks that keep the wheels on the car so that everyone else can focus on driving. 

For the purpose of this article, we’ll take ‘operations’ to mean the supporting functions that keep your business running—finance, legal, processes, human resources, and general admin. 

Read on for an overview of the tasks to expect under all of these categories and advice on how an early-stage SaaS company should tackle them. 

Key insights

Ensure your operations manager—or you, if you’re assuming ops responsibilities for now—does the following things: 

• Learns the fundamentals of MRR, gross margin, expenses, and cash flow

• Shares your financials regularly and transparently with the team

• Manages your basic HR functions 

• Writes your terms and conditions as early as possible

• Builds and records processes for regular workflows, to help your business scale 

What does ‘operations’ mean at a tech startup?

The roles that fall under ‘operations’ in a startup vary depending on its stage of growth and the balance of skills on the team. In a company’s first days, founders usually take on operations tasks themselves, but an operations manager (or ops manager) is usually among the first 10 or 15 hires. 

In an early-stage startup context, the best operations managers are business-savvy generalists, who are confident and willing to step in wherever needed. They will have a fluid and diverse list of responsibilities, spanning both management tasks and the need to get their hands dirty. 

Ops managers might be managing payroll one day, calling a lawyer to draft your terms of service the next, and changing the lightbulbs in the office the next. As a general rule, their task is to facilitate the smooth running of the rest of the business, whilst their colleagues pursue product-market fit. However, operations managers may also take on tasks that impact business outcomes more directly, like helping to set up the company’s sales and marketing function, or developing your first customer support channels. In other words—they could be doing just about anything. 

As a startup grows, the founding operations manager tends to take on a more strategic, decision-making role and delegate more of their day-to-day administrative tasks. 

The 5 key startup operations tasks 

As we’ve seen, the exact definition of ‘startup operations’ is in the eye of the beholder (or rather, the founder). However, most initial ops tasks fall under these 5 categories. 

1. Finance

Establishing the infrastructure of your business’s financials falls under ‘operations’. That means things like opening a business bank account and setting up your company with accounting software (such as QuickBooks or Xero). Your operations manager may also assist in fundraising efforts or plan to bootstrap the company. 

Once these essentials are in place, the operations manager will also be responsible for overseeing the company’s day-to-day financial metrics. They should be familiar with the fundamentals of Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR), gross margin, expenses, and cash flow.

Though an ops manager should outsource what you need to from an accounting or tax perspective, they must be capable of overseeing these numbers and regularly report them to the rest of the team: management transparency is one of the top factors that determines employee happiness. 

This can be as simple as creating an Excel sheet with your main metrics and going through it together every month. 

The early financial sheets of Hotjar, a SaaS company, show that the founding team tracked results and regularly shared them with the company

2. Legal and compliance 

The more complex your SaaS is, the more attention you need to pay to the legal aspect of your business. Your operations manager needs to write out your Terms and Conditions (T&Cs) even before you get paying customers—don’t wait until this becomes an urgent issue. But don’t overdo it, either: just have a basic framework in place, think about your liabilities, and build a foundation so you don’t regret not having done it sooner.

If you offer a simple service, you can start by looking at services or businesses that do something similar to yours, even in a different industry or market. Check what they highlight in their terms (look out for things like invoicing, confidentiality, obligations, indemnification, warranties, limitations, etc.) and use that as a framework. The same goes for your privacy policy.

If your service falls under regulatory aspects, or you have customers in several countries, your operations manager might need to consult or hire legal counsel. For example: if your SaaS gives investment advice or stores bank records, you’re entering a sector that’s more prone to regulation and therefore requires more stringent T&Cs. If you have EU-based customers and are handling or storing personally identifiable information, you need to comply with the General Data Protection Regulation (GDPR) or face hefty fines in the future.  

3. Processes 

How do team members request new software? How often does the whole team get together on a call? Which platform do you use for creating documents? In the first weeks and months of running a startup, day-to-day tasks are ad-hoc, but if you want your business to scale, you’ll need to set up clear processes for how the team works—also known as standard operating procedures (SOPs). Establishing processes falls squarely under the umbrella of ‘operations’. 

Operations managers should set up foundational processes in areas like marketing, customer services, and product development. Naturally, these processes will change as the company grows—but the idea is to set some guidelines for what version 1.0 of your day-to-day workings look like, so the whole team understands what’s expected of them. 

Your operations manager also needs to create an internal knowledge base in a tool like Notion or Confluence, which records the processes your small team uses on a daily basis. While this may seem superfluous now, it’ll be invaluable when any new teammates join—and ensure company knowledge isn’t lost when teammates inevitably leave. 

4. Human resources

In the first months of your startup, human resources may seem like a non-issue—your first hires are likely to be people from your personal or professional network, who require little more than a handshake to trust your offer of employment. However, HR-related tasks quickly snowball and often constitute a large part of an operations manager’s workload. 

Operations managers will typically establish your first set of time off and compensation policies and define your company’s culture. They may also manage payroll and write employment contracts (or heads of agreement, if your founding team mostly consists of contractors). 

Operations managers often find themselves putting out HR-related fires. Life at an early-stage startup is frequently stressful, and you should be prepared for the possibility that early employees might leave on less-than-great terms. That’s why you need to get access to an HR consultant (such as those available via tools like Deel or Factorial) to help them navigate difficult situations fairly and in compliance with employment law.

Ops managers also handle the ‘fun’ elements of your early HR efforts, like commissioning company merch, organizing team-building days, and ordering pizza when the team gets together for the Product Hunt launch. 

5. General admin 

No term makes an ambitious professional’s heart sink like the words ‘general admin’. But in the early days of building a startup, there will be plenty of unskilled tasks that nobody wants to do—and these also fall under ‘operations’. Think: printing business cards, registering for industry events, and collecting mail from the office. 

If your operations manager finds too much of their time dedicated to general admin, consider hiring a virtual assistant. However, remember that it’s often more efficient to undertake smaller tasks yourself than explain them to somebody else. 

Admin is, unfortunately, inevitable in the first stages of growing a SaaS company, so it’s crucial to find an operations manager with good time management skills.

Blog posts

• SaaS Financial Model: Simple Template For Early-Stage Startups, Gary Gaspar

• SaaS Financial Plan 2.0, Christopher Janz and Jason Lemkin 

• You Don't Need HR (Yet!): What Early-Stage Founders Can Do to Build a People and Culture Strategy, Ria Shroff Desai 

• What Does ‘Operations’ Mean At A Tech Startup? Richard Cadman 

• A SaaS Financial Model You’ll Actually Use, Jaakko Piipponen 

• The Ultimate Operations and Strategy Guide for Your Startup, John Delfau

Video and audio

• Startup Operations, MIT BootCamp 

Books

• Extreme Ownership: How U.S. Navy SEALs Lead and Win, Jocko Willink and Leif Babin

• The Lean Startup: How Constant Innovation Creates Radically Successful Businesses, Eric Ries

• The E-Myth Revisited, Michael E. Gerber 

FAQs about startup operations