Software as a Service (SaaS) business is booming. There is huge opportunity in starting a SaaS company, and the numbers look really tempting. Gartner predicts that the global revenue from SaaS businesses will surpass $244.6 billion in 2020. Where there is opportunity, there lies risk. As a SaaS startup, you are treading on thin ice with no backups.
Unless you have strong funding, acquiring capital to fuel your business idea is another worry. While these thoughts keep you up at night, you should also read up on the journey of Uber, Airbnb and Slack that made it despite the odds. This post discusses the journey right from the moment you get an idea for a SaaS company. Read on to find out what to do next.
Research your market
The idea of a SaaS business might strike you anywhere. Ordering groceries online was once a novel concept, but someone’s idea made it possible. The secret lies in researching the needs of your target market. Find out anything and everything about users, execution and adoption of your potential SaaS idea.
The objective of this research is to find out whether the idea has potential, or it is a mere waste of time. Getting answers to these questions will save both time and money. Otherwise, your SaaS business trajectory will be similar to this:
- Think of an idea
- Go to the bank and get a loan
- Get no customers and struggle to make ends meet
- Start a GoFundMe as the last step
- Fail in acquiring funds and giving up
When Treehouse Logic started in 2009, the company aspired to bring customization software in retail. They wanted brands to buy the customization solution and apply it on their websites. Customers would be able to build their own product on the site and the brand would fulfill it. Little or no research went into the customer’s end.
Soon, Treehouse team realized that the customer did not have time to customize outfits. They went to a brand because they already liked the designs. Only a little fraction of those customers was interested in customization. With a heavy heart and loss of funds, Treehouse Logic shut down and learned their lesson.
Create a plan
If the market research yields positive results, you should focus on building your business plan. Have you ever seen an episode of Shark Tank? Aspiring entrepreneurs should watch the show to learn how critical it is to have an elaborate business plan.
Whenever an entrepreneur pitched an idea to the venture capitalists on the show, a series of questions ensued. Anyone who has to fund your SaaS business would ask a plethora of questions down to the last detail. A failure of foresight will result in losing this battle in the first round.
Some steps to include in your business plan are:
- Prove the importance of your idea
- Explain its importance and route in the market
- Highlight potential problems
- Set goals, timelines and expectations
- Make a budget
- Create a financial plan with predictions
Each step will educate you more about your plan and prepare you for the world out there. SaaS businesses have it tougher because they need to document potential risks and their ability to overcome the risks. Zirtual, a digital assistant service, was forced to lay off 400 employees because of financial mistakes and miscalculations.
Gather a strong team
You cannot go to a battle without an army. Similarly, you will have a hard time creating the world’s next big SaaS brand without a strong team. In Zirtual’s example, the company failed to recognize the need of a CFO and made big financial blunders.
It is common for aspirants to think that they can do everything, but it is not humanly possible. Make sure that you get people onboard who are just as passionate about your idea as you are. If you are transitioning to SaaS, involve industry experts in your process and put your best foot forward.
Invest in those all-important tools
To ensure your team is able to host brainstorming sessions and collaborate on key points, invest in those all-important remote working tools. Some good options are join.me, Asana, and TeamViewer. They’ll ensure your team is able to coordinate regardless of whether they’re using a desktop computer or mobile.
You can also consider investing in smart devices that you give to your team for corporate-only use. Alibaba has a lot of cheap smartphones that you can buy in lots once the pandemic situation improves. This way, you’ll equip your remote teams with all the tools and devices they need to stay productive and come up with stellar ideas while on the go. It’s an upfront investment, but it’s going to pay off in the long run.
Network your way to the top
Building a SaaS brand is not easy. One of the best ways to get the word out is by becoming a master networker yourself. Most successful SaaS business owners once went out of their way to tell people about their new initiative. Tinder is a mobile dating application worth more than $10 billion today. When it first launched, the cofounders spread word by hosting a frat party at University of Southern California. There was only one rule to attend the party: you had to download Tinder.
Every person who attended the party became a user of Tinder, and word spread fast. Next, Tinder’s CMO Whitney Wolf went to all sororities nearby and got people to sign up with their most attractive photo. This first push gave Tinder 15,000 initial sign-ups. When you believe that you have a strong product, you have to become a salesperson and ambassador for it. Networking not only helps build the brand, it might also introduce you to a valuable resource.
Be open to change
SaaS businesses do not have the comfort of staying in the same zone for decades. Working in a high-paced technological world means that the tables can turn overnight. Those on the fore front should have a flexible outlook towards things and an ability to get out of their comfort zone. Because sustainability is a rule of life, SaaS startups should aim to minimize software wastage to save up for rainy days. Moreover, you should prepare a disaster recovery plan to overcome unforeseen situations. Do not expect things to remain the same as they were when you started.
For many SaaS companies, change means more growth. During coronavirus lockdown, Slack has signed more deals for online workplace solutions than ever. Once they were able to send employees to self-isolation, Slack worked harder to supply seamless business solutions to people around the world.
Bottom line
It is exciting to be a part of the SaaS community. Some of the most diverse solutions was created in this field and there is more to come. Of course, anyone with the motivation and right knowledge can follow in the footsteps of ex-unicorns and craft their own success story. Success isn’t guaranteed, but it’s certainly worth trying for something that can change your life around for good. Start something and keep at it for a year or two to see whether or not you’re on to something. Also, implement the tips mentioned above as they’ll ease your path towards your very first funding.