At a Glance
The SaaS industry is evolving rapidly, with several new entrants foraying into the market every month. But merely having a good idea is not enough. It would help if you had an idea that either solves a new problem or solves an existing problem in a better way to survive and thrive in this industry.
You’ve seen the stories once and then again. That person who was bankrupt is now cashing in and has created the next unicorn saas business. There must be something to this mad gold rush right? This new rush that everyone is talking about is Software as a Service, or commonly called SaaS. The answer we seek is how we can building that SaaS product that’s viable!
The SaaS industry is evolving rapidly, with several new entrants foraying into the market every month. But merely having a good idea is not enough. You would be at an advantage if you had an idea that either solves a new problem or solves an existing problem in a better way to survive and thrive in this industry.
It’s fast, exciting and changes occur in the industry like wind changes direction. This does not mean that you just have to survive but you can actually succeed in what you are doing!
Customers won’t care about any particular technology unless it solves a particular problem in a superior way.Peter Thiel, Co-Founder, PayPal
Though getting a start in the SaaS industry is not that difficult, ensuring sustained patronage from your customers is a herculean task. Many SaaS entrepreneurs have ventured into this dynamic industry without realizing the herculean effort required to turn a good idea into a successful one. To help you avoid all the pitfalls and fast-track your journey to success, we have created a list of steps to help you along the way. So, let’s explore the wonderful world of SaaS and how you can be the next “billion-dollar” story.
The young entrepreneurs looking for ways to start a SaaS business must understand that a SaaS business is not a cakewalk. You need to be determined to put in all your efforts and have a robust and passionate drive to materialize your goal. For a successful SaaS business, you need to anticipate what your customers want before they realize it.
Businesses can’t afford to react to what their customers want; they need to anticipate their needs.Parker Harris, Co-Founder, Salesforce
There is no doubt that way into the future for software companies is through the cloud. As per a latest report, almost 73% of enterprises are looking to shift almost all of their apps to the cloud. Hence, the time is right for you to foray into the market, but you ought to make sure that you take the right steps at the right time.
Starting a SaaS business from scratch
The excellent returns that a successful SaaS business offers is a big draw for many budding entrepreneurs. Hence, it is not surprising that Gartner predicts the global cloud service market to breach the $200 billion mark in 2021 as compared to $175 billion in 2020. To get a big exit, your focus should be on creating a robust software system that adds value for the users. But how can you ensure that? Well, here are some of the most critical steps in starting a SaaS business that will help you navigate your path in this complex journey: –
- Conduct Research: – The first significant aspect that needs to be noted is that you must conduct thorough market research before starting a SaaS company. It is essential to check and re-check your project plan and whether it will be worth the efforts before investing any of your resources. So, what aspects you must cover through market research? Here is an overview: –
a) Expand your knowledge regarding the industry. Learn about the various SaaS apps, the latest SaaS trends, how to leverage the benefits of SaaS and PaaS, and gauge your market size. For this, you can attend webinars, summits, and trade shows that will help you to gain useful insights into the industry.
b) Determine and understand your target audience. You cannot expect everyone to love and adore your SaaS offering. Investing your time, energy, and money in pleasing every customer would be a foolish thing to do. Instead, you must find out about your potential customers and devise ways to reach them. Get details about your possible audience through their age, gender, education, occupation, and locations that will help you to target them better.
The best way to acquire new customers is to make your current customers excited and happy about your productsMikkel Svane, Co-Founder, Zendesk
c) Identify your competitors. Learn and gather as much information as possible about your rival companies to stay ahead of the competition. Find out about the products that your other competitors are being launched, their distinct features, and how many times they update the software. If possible, you must also devise ways of analyzing their revenues, pricing models, and annual reports. When you learn both about your rival companies’ strengths and weaknesses, you would be able to identify which approach will be beneficial to your own company and which mistakes to avoid.
- Prepare a Plan: – To start a SaaS company, you must prepare a business plan that will help you focus and stay on the right track during the whole development procedure. There are precisely two-steps which you can follow i.e.
a) Create a traditional and detailed plan to write down your business ideas covering all aspects of your business from market research and analysis, financial management, and essential projections.
b) Prepare a lean business plan. It is time saving as all the essential points are outlined briefly. This lean plan requires just a single page where everything is listed and hence is a shorter method than the traditional one. Also, since the lean plan idea is brief, you can easily edit and update it and present it to your colleagues, investors, and potential customers for instant feedback.
- Build a Prototype: – Build a prototype of the actual product before building the original product. It is more like an incomplete project, a draft that you can show to your investors for better visibility and giving them a fair idea of what you will produce in the future. The prototype will be a test examination allowing your potential customers to view the product’s essential features. This approach will give you a glimpse of how the target audience will accept your original product. After taking the necessary feedback from your clients, you can even change or alter your plans according to their demands.
- Devise a Revenue Strategy: – The pricing strategy should be the fourth concern before starting a SaaS company. Mixing various revenue models can be beneficial to you and ensure you a steady income avoiding financial risks. Here are a few monetary strategies to help you: –
a) You can get easy and instant revenue for your SaaS app if you provide built-in advertisements. As the main features of the SaaS product will be free, it will also attract a lot of potential users. But do not give in to too many advertisements as it can hamper the user experience.
b) Another easier method of making money is to settle for a flat pricing strategy wherein you will be charging the users monthly or annually. There is an exclusive trial period for this model and a definite policy on how many users can be accommodated on a single account.
c) You can even charge money from your users based on how much storage capacity they require. Usually, industries or companies allocate some storage space for their free users, after which the users need to pay for the extra storage. This strategy enables your users to be familiar with your SaaS company and the services you provide, encouraging them to upgrade the storage space when the limit is exceeded.
- Build a Team: – Your last and final step in building a SaaS start-up is to get in touch with experts who will assist you in preparing the SaaS app. The professional team should consist of a business analyst, a project manager, frontend and backend developers, QA engineers, and UX designers. Without the help of these skilled professionals, you would not create a noteworthy SaaS application that will leave a mark on your potential customers.
There are multiple benefits associated with SaaS that makes it a desirable business model. A large number of businesses are moving to the cloud to enjoy a worry-free life by renting services for reduced overheads. So, if you are looking for a low-overhead business with a recurring revenue model with minimal capital investment, then starting a SaaS business is a step in the right direction. But do remember that unbridled determination, passion, and devotion are required from your side for taking your idea from a thought into something tangible that gets you the returns you desire. If you’re lacking some of these, just look into the news and take a look at the latest unicorns in the market. I’m sure that will pump your excitement to get your product idea a reality!