Now is a better time than ever to start a SaaS business. It may seem like there couldn’t be any more apps or platforms, that every industry already has tech solutions to every problem, and that the boom for tech entrepreneurs has peaked. But, there will always be increasingly sophisticated technology to enhance the way a business or a consumer does something they do regularly. Even with a major economic slowdown associated with coronavirus, the long-term prospects for technology are good. And besides, a downturn is the best time to build.
As the CEO of Europe’s largest SaaS conferences and the host of a podcast featuring successful SaaS entrepreneurs, many of whom didn’t come from tech backgrounds, I’ve developed a wide perspective on the most successful ways to build SaaS start-ups. Here’s my universal guide to would-be SaaS business founders — no matter what their background.
1. Identify a problem that can be SaaSified
Every industry has a problem that can be solved by software. There will be some process in your everyday working life that could be performed by AI. So the first step is to identify that for your SaaS business. What problems have you experienced first-hand?
Often tech entrepreneurs leave jobs to design a product for the industry that they work in, because they know its needs. Or they design an app that relates to their personal hobbies. For example, Tim Hegarty, a musician built an app called Bagzit, to give musicians an easy way to host adverts to make money.
How to start a software company in a specific jurisdiction
2. Research the problem
Just because you’ve identified a problem, it doesn’t mean everyone experiences it. Before you go all out in designing a system, do some research to see if there is a potential customer base. Ask colleagues or friends whether they would use a service like the one you envisage.
3. Nail your niche
It goes without saying that you should check out existing SaaS platforms similar to your idea. There may already be lots, but there can still be a market for yours — if you can nail your niche! Sign up to a trial of competitor-like services to build a picture of their offering and what they are missing. Maybe it’s hard to use or doesn’t ‘get’ your industry.
4. Find a co-founder
Building a business with a co-founder will help you massively, as running a business may be one of the hardest challenges you ever undertake.
Aim for similar passion, different skills. You need good working chemistry, which isn’t necessarily the same as social chemistry. Starting a business with a friend has its own challenges, so put business functionality before friendship potential when choosing a partner. In terms of skills, often the one with the initial idea has the creativity nailed, so consider that you might benefit from someone who’s more pragmatic than you or who is experienced in a different area.
Where to start your IT company?
5. Get a landing page
Before you start developing the SaaS product, buy a domain then develop a single landing page. Always go for the dot com domain if you can. WordPress is the standard building platform and you can get an easy-to-apply theme from the marketplace of somewhere like ThemeForest.net. Your aim should be to build proof of the concept. You should be able to use this landing page to attract potential early sign-ups.
6. Deploy a developer
Now comes the big part. You need someone to design the platform, and then develop it. The two stages can be done by people with different skill sets. You can find developers and designers easily on sites like Dribble or Upwork, who will work on a freelance, project or full-time basis. Their fees can vary drastically, and you get what you pay for. If you just want someone to follow instructions that’s your call, but if you’re new to SaaS and you want your designer to think for you, point out problems and make suggestions, be prepared to dig deep.
7. Funding options
Development will be your first big expenditure, so this is the time to decide if you’ll be bootstrapped (self-funded) or venture backed. That depends on whether you are aiming for slow steady growth, or hypergrowth and a winner-takes-all approach?
The subscription-managing software Cledara joined a Saastock pitch competition before they even had a product and ended up winning the competition based on the strength of the idea and built it out after that, going on to get a seed round of $900,000. So there are many ways of doing it.
Top tips for business leaders in times of crisis
Then you have to get your great idea out there. Don’t do paid ads yet because you should build a genuinely interested community first, who’ll buy into the idea before it’s totally ready. Social media, content marketing and Quora forums are great at this stage. Be innovative. You could launch on a platform like producthunt.com which lists new SaaS products for tech enthusiasts to try. Your aim in these precious early days is to find the first paying ten customers that are not personal connections. That’s when you know you have a viable product that people can find value in.
Sounds easy to start a SaaS business? It isn’t. Consider the above to be a framework of what to focus on and when, rather than a quick list to plough through. The one thing to apply through all of these steps is passion. You will need it in bucketloads to overcome the challenges along the way. But if you have total faith that your SaaS platform can offer a great solution to a common problem, then the idea will fly.