SaasWebinar For Startups

Learn the basic skills and requirements for starting your own Software As A Service (SaaS) business from scratch.

Introduction

The software-as-a-service (SaaS) business model has taken the business world by storm over the last decade. There’s a reason for this: SaaS businesses have a lower entry barrier than traditional businesses. Business owners claim that the love for SaaS products prompted them to rethink their business ideas. These businesses can be very profitable, and they’re usually more agile and innovative than their larger counterparts.

Additionally, the SaaS industry is growing at an incredible rate. The global SaaS market is estimated to reach $334 billion by 2027. So, if you’re thinking about starting a SaaS company in 2024, there are things to start thinking of like customer acquisition, LTV, metrics, lifetime value, minimum viable products, and etc. These are all related to SaaS companies. What are you waiting for? Now is the time to start a SaaS company!

What Is SAAS?

SaaS means Software as a Service. It’s a cloud-based approach of delivering software to users. Instead of buying and installing software, SaaS users subscribe to applications accessible from any compatible device over the internet. These servers may get located far away from the user’s physical location.

What Is a SAAS Company?

SaaS companies are businesses that offer SaaS solutions; they use software to provide a service to customers. These firms are in charge of the entire SaaS product development and/or lifecycle, from conception to completion, including hosting and maintenance. Customers can access and use the software remotely, typically through the internet. SaaS companies often have a subscription-based pricing model, with customers paying a monthly or annual fee to use the software. Some SaaS providers also provide a freemium or free trial period during which customers can use the software for a set period of time before deciding whether to subscribe.

SAAS Gain

Imagine a scenario where you have to be updating and maintaining your software applications on your own constantly? With SaaS, this is not applicable. With SaaS you gain access to use the most recent software versions without the hassle of ongoing maintenance.

Why SAAS?

Unlike traditional software, where users pay a one-time fee for a perpetual license and additional cost for maintenance and updates, SaaS operates on a subscription basis. In SaaS, users pay a recurring fee for access to the software solution. Users can access software applications via the internet. This means they don’t have to worry about the technicalities of infrastructure, maintenance, or updates. Businesses don’t have to worry about purchasing expensive hardware or maintaining the software, as the provider takes care of all of that.

But that’s not all, SaaS has several advantages over traditional software. Since the provider manages the software, it’s always up-to-date, ensuring users can access the latest features and security updates. Seems interesting right? In this webinar, we are going to explore the variances of SaaS. Let’s dive deeper and see what it has to offer! At the end of this webinar, you will be able to pitch your niche on the SaaS business to startup.

Understanding SAAS Technology

The coming of cloud-based computing led to the emergence of SaaS. Cloud computing provides specialised services via the internet, typically involving access to servers, networking, and data storage. Before the advent of SaaS, businesses seeking to update their computer software had to procure CDs containing the updates and install them onto their systems, which could be tedious for larger organizations. However, with SaaS these organizations now have the softwares already setup and running in the cloud. So they login via the app or web browser and connect to the service provider’s network to gain access to the desired service. Companies in various sectors, such as technology, finance, entertainment, utilities, etc have all been at the forefront of adopting SaaS technology. I hope with this brief explanation, you have understood SaaS meaning.

Who Needs SAAS?

SaaS solutions are beneficial in a variety of individual and business scenarios:

• Individuals use SaaS applications especially when there are no other options in the market that require offline usage.
• Startups and small businesses will find SaaS handy when they don’t have the time, capital or expertise to build their own applications or host applications on-premises.
• Larger companies may use SaaS technology for short-term projects or applications that aren’t needed all year long.
• Any company can benefit from SaaS technology when dealing with applications that require both web and mobile access. SaaS implementation can be fairly straight forward and self-provisioned for simple applications accessible via public clouds.

Types Of SAAS Technology

SaaS solutions come in various types, each designed to serve specific business needs. Let’s take a closer look at some of the most popular ones!

• CRM Software: Managing customer data, tracking customer interactions, compiling business information, and automating sales processes are all made easy with CRM Software. This software helps you stay on top of your customer relationships, ensuring your business runs smoothly.
• ERP Software: If you want to integrate various business functions into a complete system, ERP Software is your go-to solution. It improves efficiency and enables information sharing across the organization, helping you streamline operations.
• Accounting Software: Organizing finances and ensuring proper tracking is crucial for business growth and compliance. Accounting software can help you keep things in order so that you can focus on other aspects of your business.
• Project Management Software: From planning and scheduling to resource allocation and deadline communication, project management software has got you covered. It’s an excellent method to guarantee that your projects are finished on schedule.
• Accounting Software: Organizing finances and ensuring proper tracking is crucial for business growth and compliance. Accounting software can help you keep things in order so that you can focus on other aspects of your business.
• Project Management Software: From planning and scheduling to resource allocation and deadline communication, project management software has got you covered. It’s an excellent method to guarantee that your projects are finished on schedule.
• Email Marketing Software: Engaging with customers via email is a powerful way to improve customer engagement and sales. Email marketing software optimizes message delivery and automates marketing emails so that you can focus on other aspects of your business.

Other types of SaaS applications include billing and invoicing, collaboration, web hosting, human resources software, email services, entertainment, media and lots more. With so many SaaS products available in the market, you can evaluate the ones that fall within your niche, examine the product’s modules, features and services properly and identify what you can add to what is to make your own product more accepted over what is currently. Otherwise, create a complete new product that is not in the market. Make sure the product has problems it will solve.

Example Of SAAS Application

• Google Workspace (formerly G Suite)
• Microsoft 365
• Amazon AWS
• Salesforce
• HubSpot
• Asana
• Trello
• Slack
• Zoom
• Adobe
• Shopify
• Atlassian
• Netflix
• Bitrix24
• And lots more.

Key Characteristics Of SAAS:

• Subscription-Based: Users typically pay a recurring fee called Subscription Fee, often monthly or annually, which covers access to the software, updates, upgrades, maintenance and customer support.
• Accessibility: SaaS applications can be accessed from any device with an internet connection, providing flexibility and mobility for users.
• Maintenance and Updates: The service provider handles all maintenance, including upgrades, updates and security patches, ensuring users always have access to the latest version of the software.
• Scalability: SaaS solutions are scalable, allowing businesses to easily adjust their usage and subscription levels as their needs change.
• Multi-Tenancy: Many SaaS applications are built on a multi-tenant architecture, meaning multiple customers share the same infrastructure and application instance, with their data securely partitioned.

SAAS Architecture

The basic idea behind SaaS architecture is to have a single version of the application that all customers can use. This version is installed on one or multiple machines to ensure that it can handle high traffic and usage, also known as horizontal scaling.

Sometimes, a second or demo or beta version of the application provides select customers access to pre-release versions for testing purposes. Each version of the application usually depends on a unique code.

Now, here’s an interesting fact: not all SaaS solutions use multitenancy to manage a large number of customers cost-effectively. Multitenancy means multiple customers can use the same application instance, keeping their data separate.

Vertical VS. Horizontal SAAS

To really understand the fundamentals behind SaaS, you need to grasp the Vertical SaaS vs. Horizontal SaaS differences. How is vertical SaaS vs. horizontal SaaS constructed? What makes them different from each other? Do they follow a different business model? These are some of the most important questions behind the SaaS philosophy. Lets look at a quick overview:

Horizontal SaaS

Horizontal SaaS is a type of cloud software solution that is targeted to a wide audience of business users, regardless of their industry. Between vertical and horizontal SaaS solutions, the latter is the more mature model in terms of market share; the model has been around for well over a decade. Because of its scope and business model, horizontal software focuses on satisfying virtually business needs irrespective of the type rather than specific individual consumer businesses. In general, horizontal SaaS focuses on a specific software category, such as marketing, accounting, CRM, sales, developer tools, HR, etc that is applicable across various industries.

Vertical SaaS

In contrast to the horizontal software model, vertical SaaS solutions include software that is targeted to a particular niche or industry-specific standards. This is a more recent trend in the development of the SaaS market, so it is not as mature as the horizontal model. In fact, there are several commentators who feel that there may be more opportunity for new vertical SaaS providers today due to them being a more recent phenomenon. Some examples of vertical SaaS include healthcare, agriculture, real estate, finance, insurance and many other.

SAAS Delivery Models

Public Cloud SaaS Delivery

Public cloud SaaS is like renting a house – you don’t own it, but you have access to everything you need while you’re there.

In this model, the software and data reside in a cloud environment (possibly owned by a third party company) but accessible to anyone with an internet connection. The Public Cloud is highly scalable and flexible, but it comes with some security risks and less control over data. Common Example: Hosting your application in a shared hosting or cloud space with multiple users.

Private Cloud SaaS Delivery

Private cloud SaaS is more like owning a house – it’s yours, and you have complete control over who has access to it.

With private cloud delivery, the software and data get hosted in a dedicated environment that’s only accessible to a specific organization or user. This model offers greater control and security, but it can require more resources and be less flexible than public cloud SaaS.

Common Example: Hosting your application in a dedicated or virtual hosting or cloud space with you as the sole user.

Hybrid Cloud SaaS Delivery

If you want the best of both worlds, then hybrid cloud SaaS delivery might be the way to go. It enables businesses to profit from the advantages of both public and private cloud settings.

Sensitive data and applications can be stored in a private cloud or on-premises environment. At the same time, you can use public cloud resources for other applications to take advantage of their scalability and flexibility.

With a hybrid cloud, data and apps can move between the two environments, which is excellent for businesses with fluctuating resource needs. Many organizations choose a hybrid cloud approach to meet regulatory and data sovereignty requirements or simply for greater flexibility and cost savings.

Advantages Of SAAS

The SaaS business model provides enormous opportunities, as well as some disadvantages. Understanding the pros and cons of SaaS will help you determine whether or not the SaaS business model is right for you.

Some of the core benefits that SaaS business model provide include:

• Recurring revenue
•  High Customer Lifetime Value (CLV)
• Distributed work teams
• Ability to iterate and make updates
• Flexibility with licensing
• Scalability
• Business value.

Recurring Revenue

Every business owner loves recurring revenue! When you can predictably generate consistent revenue, it removes many of the challenges you might otherwise face.

There are several reasons why subscription revenue is important for business owners. In fact, recurring revenue is the foundation for several of the other key ‘pros’ of the SaaS business model.

With SaaS revenue, it’s much easier to predict what your finances are going to look like several months from now. As long as you know what your customer churn rate is, it’s not difficult to forecast your future revenue with a high degree of accuracy. In turn, this allows you to make informed investment decisions to fuel the growth of your company.

Additionally, recurring revenue reduces risk. Instead of relying entirely on your sales channels to sustain your revenue, you’re able to enjoy consistent income from your existing customers. Of course, sales are always going to be important, but it’s certainly nice when a substantial portion of your revenue is the result of recurrent billing.

High Customer Lifetime Value (CLV)

There’s one very predictable outcome of subscription revenue: A high CLV. If your SaaS business earns subscription revenue, it only makes sense that your revenue from each customer will add up over time. In turn, your business will have a high average CLV.“With a high average CLV, it makes it possible for you to invest heavily in customer acquisition efforts.”With a high average CLV, it makes it possible for you to invest heavily in customer acquisition efforts. If you know that your average customer sticks around for three years, you can accept a much higher

Distributed Work Teams

Since SaaS companies operate via the cloud, they often don’t require a centralized work location. Instead, they can leverage technology to manage distributed work teams.

Having a remote workforce has several advantages. =

For starters, you can save enormous sums of money by not purchasing or renting a physical office space. This is especially true if you’re based in a major U.S. city where property prices are sky-high.

Additionally, when you’re hiring a remote team you’re not limited to the geographical location in which you’re based. Instead, you can hire the best talent from just about anywhere in the world.

Ability to Iterate and Make Updates

SaaS companies must constantly gather and integrate feedback into their development process. By paying close attention to what is and isn’t working, it’s possible to move ever closer to ‘perfect.’When improvements are made, SaaS companies can easily deploy updates to their licensed users. This allows them to offer new features and resolve old issues that their SaaS app encountered.Compare this to businesses that offer physical products. If a physical product brand rolls out production for a product that has a major design flaw, they could be in serious trouble. In some cases, an ecommerce business may end up with unsellable inventory. In extreme cases, they may need to announce a recall. This is not the case with a SaaS application.

Flexibility with Licensing

As a SaaS provider, you have a lot of flexibility when it comes to licensing your software. This allows you to create multiple licensing tiers on one SaaS platform. Having tiered pricing that corresponds with access to various features allows you to tap into different market segments. Some customers might be seeking a relatively basic SaaS solution, while others have more involved requirements. For some SaaS businesses, usage based pricing is an effective option. As a SaaS Startup, you’re able to quickly adapt to the market and provide a variety of licensing options to satisfy your customers and maximize revenue.

The SaaS Business Model is Highly Scalable

Once you’ve built your systems and infrastructure, the SaaS business model has enormous growth potential. During the early stages of SaaS startups, it may feel like a grind. However, once you’ve refined your processes and optimized your SaaS metrics, the world is your oyster. Since each new customer can represent a multi-year revenue stream, you’re able to continually add predictable income to your business.Also, thanks to the power of cloud computing, you’re able to sell SaaS licenses to customers all over the world. Of course, additional steps are often necessary to sell in new markets, but the possibilities are there for you.

SaaS Business Valuation

All of the benefits mentioned above lead to one natural outcome: SaaS businesses can be extremely valuable.It’s no surprise that investors seek businesses that are stable and have high growth potential. Above, we mentioned how SaaS businesses can check both of these boxes. With the SaaS revenue model, investors can often feel confident that a business is going to continue doing well. Of course, the degree to which recurring SaaS revenue instills confidence is still based on several factors. For example, older SaaS businesses (mature SaaS) are going to be more valuable than those that are younger. If a SaaS business has consistently maintained a high customer retention rate for an extended period of time, investors will be impressed. The growth potential of SaaS businesses is another key element of value. Depending on the market and SaaS model, a business may enjoy promising opportunities for growth.There are two additional elements that determine the value of a SaaS business. If a SaaS business can easily be transferred to a new owner, it will be more valuable. Fortunately, as long as a SaaS business is well structured and doesn’t require unique skills or knowledge of the owner, transferability isn’t an issue. Similarly, documentation plays a key element in the valuation process. If your SaaS business has well-organized financials and clear Standard Operating Procedures in place, it will be worth more.

Disadvantages Of SAAS

Although there are several attractive ‘pros’ of the SaaS business model, there are also some ‘cons.’ For some entrepreneurs, these challenges may not feel too threatening. Other owners may choose to avoid the SaaS business model due to these potential issues. Some of the ‘cons’ of the SaaS business model include:

• Long sales funnel
• Security issues
• Complex data
• Competition
• Capital requirements

Long Sales Funnel

From a customer perspective, subscribing to a new SaaS service can be a big decision. This is especially true for expensive B2B SaaS solutions that can affect a company’s entire operational systems. Because adopting a new SaaS service can be a substantial decision for customers, many SaaS businesses have a long sales funnel. Often, a SaaS business is required to invest significant time and attention into creating a winning customer journey. This can include a lengthy sales process involving sales reps, live product demos, team orientations, and more. These requirements can incur significant costs for SaaS companies.

Security Concerns

SaaS businesses rely heavily on cloud computing, which means that they’re exposed to various security threats. As a software vendor, it’s important to have effective measures in place to protect the data of yourself and your customers. In unfortunate circumstances, a breach of security can result in costly losses of data.

Complex Data

Software companies often receive enormous amounts of data that need to be comprehensible.. From SaaS marketing to sales, to product development, SaaS businesses are constantly gathering and processing important information.The enormity of data that SaaS businesses gather requires them to have effective data management systems in place. Without the right skill set, individuals and teams can encounter challenges.As a SaaS founder, it’s essential that you’re well-equipped to manage large quantities of data. If you don’t possess the technical skills yourself, you may want to consider hiring someone who does.

Competition

SaaS is competitive. Since SaaS services can be easy to copy, you should count on other companies seeking to emulate your success.As a SaaS vendor, it’s not enough to simply create a great product. That may help you get started, but it’s important to continually improve to maintain your competitive advantage. If your marketing strategy or product development falls behind, there’s a good chance you’ll start losing market share to your competitors.

Capital Requirements

You might be able to quickly design a SaaS product prototype in your living room, but scaling a SaaS business is a different story.

We’ve already mentioned that there are a lot of elements involved in building a successful SaaS company. Product development, data analytics, customer support, and a long sales funnel all incur significant costs. As such, many SaaS founders are required to seek outside investment to get their business off the ground.

Some owners may welcome the process of finding and working with investors. Others may balk at the idea of expanding the leadership team or giving up equity.

How To Determine If SAAS Business Makes Sense For You

Understanding the SaaS business model is one thing, but determining whether or not it’s right for you is another.To decide if the SaaS business model makes sense for you, it will be helpful to ask yourself a few key questions:

1. Do I Have the Skills Required to Build a SaaS Business?

In general, it’s a good idea to think about what you’re good at when making decisions about your work life.

Building a successful SaaS business requires advanced skills in several key areas. While you don’t need to be an expert at everything, it’s very helpful to have a solid foundation (unfair advantage) in the areas that matter most.

Not surprisingly, many SaaS founders have a strong technical background. Additionally, the leadership team should also have expertise in sales and marketing. Because SaaS businesses inevitably build teams, management and HR is another key area to be skilled in.

2. Am I Willing to Have a Longer Sales Cycle?

For some entrepreneurs, it’s important to leverage a business model that allows them to be profitable relatively quickly. If that sounds like you, it might be best to pursue a different model such as drop shipping or Amazon FBA.

On the other hand, if you’re willing to build a long and complex sales funnel, SaaS might be a good fit. In the long term, the recurring revenue model of SaaS can be worth the extra effort.

3. Do I Have an Effective Financing Strategy in Place?

Since scaling a SaaS business can be capital intensive, it’s wise to have a financing strategy in place. If you have deep pockets or access to investment funding, SaaS may be a good option for you.

On the other hand, if you’re on a tight budget and want to avoid working with investors, it may be best to find a different business model to pursue.

4. What Am I Passionate About?

Like any business decision, it’s smart to consider where your passions lie. More than likely, you’re going to spend a lot of time building your next business. Therefore, it only makes sense to choose work that you’re passionate about.

If you enjoy developing a strong value proposition, designing new customer journeys, and looking at SaaS metric reports, then SaaS business model may be a good choice. If all this sounds boring, you may want to try something else.

Wherever you are in your entrepreneurial journey, you’ll be better off choosing a business model that is congruent with your interests, skills, and passions.

By exploring different opportunities such as SaaS, you’ll be in a solid position to make your next venture a great success.

5. Do I Have or Know a Problem That my SaaS Solution Will Solve?

Every business has a need it must meet or solve. So while thinking and planning on the SaaS business to startup, priority must be placed on ensuring that the SaaS business idea must meet a need.  It’s certainly possible that your SaaS business idea may have already been implemented out there by another company but that shouldn’t stop you from starting yours. Your niche, delivery model, additional features, subscription fee, support approach, your application’s easy to use features, your application’s low learning curve and availability of enough easy to understand documentation materials may be your catching points that will turn customers to your direction and keep them glued to your application. As you plan your startup, ensure to also plan for customer retainership strategies.

Steps To Start A Software As A Service (SAAS) Company

Starting a SaaS company can be a difficult task, but it can be made simple by following these step-by-step instructions.

1. Develop a Solution for a Problem

Before diving into pricing, branding, or building a team, it’s important to make sure you have a clear problem to address and a solution that alleviates it. After all, if you’re not solving a problem, you don’t have a business. There are different ways to go about finding a problem worth solving. Here’s what others have to say: 

Fix a problem better than anyone else

“If you can fix a problem for someone and do it better, quicker, and/or cheaper than your competitor, you’re off to a good start.” — Gabriel Kuperman, founder, and CEO of CuePIN 

Solve a problem you can relate to

“The number one rule for any SaaS business should be to solve your own, real problems and not someone else’s problems. Only by solving a problem, you have struggled with yourself will you fully appreciate how to solve the problem in the best possible way.” — Uwe Dreissigacker, founder and CEO of  InvoiceBerry. 

Use your knowledge of an industry to solve a problem

“I had industry experience and knew that there was a big void to be filled for small and medium-sized businesses that could not afford to pay for local servers and an IT team. We created UpKeep to fill this void—a cloud-based solution that was affordable for any size business.” — Ryan Chan, founder of  UpKeep.

2. Write Up a Lean Plan

There’s no way to get around it, you’ll need a business plan. But instead of sitting down to write a 40-page plan, start with a one-page pitch.It’s the fastest way to get your idea onto paper, and it’s the very first step in the lean planning process, which is much easier and more iterative than traditional planning methods. It’s also more suitable for SaaS businesses that are constantly testing new ideas.After all, your idea hasn’t been proven viable at this point. This business plan should be a broad outline that will serve as a foundation for future efforts.Your SaaS business plan should answer the following questions:

• What is your unique value proposition of my SaaS company?
• What market segment (niche) are you trying to reach?
• Who is your competition of your SaaS company?
• Who are your key team members?
• What are your strong and weak suites, opportunities, and threats?
• Do you have all the necessary resources, and knowledge to move forward?
• When do you plan to launch your SaaS company?
• How much will it cost to build an MVP and later transform it into the complete product?
• What future expansion prospects are possible?

As you prepare to write your lean business plan, I suggest you visit https://www.bplans.com/downloads/ they have an easy business plan to use free of charge

3. Validate your SaaS Idea

After you have spent some time creating your lean plan, which is essentially a list of assumptions, the next step will be to validate your ideas. You’re going to find out whether those assumptions are true or false. And then adjust your plan so that it addresses what you’ve learned. You’ll do this by attempting to answer the following question — Can my idea make money?Instead of rushing headlong into your first and favorite idea, this step acts as a check. It will help you determine whether or not you have a good idea that can be turned into a viable business.

-Talk to your Potential Customers 

Since you are in the planning phase with no customers yet, the best way to do this is to get out and talk to peole around you and assume them to be your potential customers. One of the biggest mistakes most startups make is doing mostly secondary market research, instead of primary research (getting out of the building to talk to people face-to-face). But here’s the thing, you can also do this digitally and get similar feedback. It can be as easy as launching a coming soon website, running search ads or even launching a kickstarter to see if you gain any traction. The important thing is that you are getting real-world feedback and setting parameters for success to determine if your idea has merit.

-Talk to Your Potential Customers

Gene Caballero, co-founder of GreenPal, validated his idea by getting out and speaking with random people. “We went door to door and even rented a kiosk in the mall to get feedback to see if people would use a product like ours. It was a very humbling process.” Through talking to people in real life, you want to learn the following:

• Have I identified a problem they actually have?
• Do I have a solution that solves their problem, whatever it is?
• What is the best way to sell to them, and what’s the worst way to sell to them?
• What would they pay for, my product or service? Have I priced it too low or too high?
• What products do they currently use to solve their problem?

-Talk to Your Potential Customers 

Based on what you learn, you may find you need to go back to your lean plan and revise it or refine it. You may even need to consider another idea if you find there’s no real market for your initial idea.

-Conduct a Competitive Analysis 

Beyond knowing your customers really well, it’s also important to know your competitors. The presence of competitors in your market is actually a good thing. It means a problem has in fact been identified. The trick then is figuring out what part of your competitors’ solution is inadequate. What do customers want that they don’t currently get? 

-Conduct a competitive analysis

Noah Parsons, COO of Palo Alto Software, says, “LivePlan’s competition is often Word and Excel. We know that Word and Excel are time-consuming, error-prone, and offer no help and resources. Our solution, an automated business planning tool, helps eliminate those pains for customers.”Keep in mind that your competitors may not be immediately obvious. The industry your entering may simply have very disparate companies currently providing services. Be sure that you take the time to explore and understand how customers and competitors solve the problem you’re addressing and look for a way in from there.

-Create your Minimum Viable Product (MVP) 

Another great, and somewhat necessary testing method in the SaaS space, is creating a minimum viable product. This is the simplest version of your product.It’s a particularly popular strategy in the world of product development and is used to quickly and quantitatively test a product or a product feature. Eric Ries, a Silicon Valley entrepreneur and author of The Lean Startup, popularized this strategy for web applications.Eric says, “The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” 

-Create your minimum viable product 

If you can get an early prototype built, all the better. If you don’t yet have the resources to do so, you can still create an MVP. Noah Parsons says, “Start with cheap mockups, wireframes, or even sketches on paper to make sure that your customers are going to want what you build.” Besides software prototypes, MVPs come in many flavors, including:

• Explainer videos
• Wireframes
• Mockups
• Landing pages

An MVP is a great way to save time and money before you go ahead and build anything, so take the time to make one and run it by your potential customers.

4. Explore Pricing Models and Initial Customer Acquisition

SaaS products often use a subscription-based pricing model. So instead of paying once for a lifetime of use, your customer pays on an ongoing basis,  usually monthly or annually.  It’s a popular model because of the increased potential lifetime value of each customer. Instead of a flat lifetime value — like $120 for the single sale opportunity you have with each customer or user, you might charge $10 a month per user for as long as your customer uses your service. The longer they stick around, the higher their lifetime value. You likely spent some time modeling different subscription fees during the creation of your lean plan. That hopefully gave you a rough idea of how reducing churn (the number of canceled subscribers) and other variables can affect your path to profitability. But now it’s time to officially establish a pricing model.

-Test to Find the Right Price

Growing SaaS companies are always testing their pricing models. You need to be willing to shift your pricing to fit what your customers are willing to pay. And in a crowded industry, you’ll likely need to charge an affordable fee when starting out to gain your customers acceptance. If you’re not sure where to start with your pricing, start with your competitors pricing.  Your pricing model should be something you’re considering and testing during the validation phase, but you may need to treat that element of testing separately. A separate strategy, separate customer acquisition funnel, and separate goals you’re hoping to accomplish. Now there are a lot of different ways to get customers in the door to kick the tires, from offering free trials, to freemium services with upgrade options.

5. Establish your Brand

If you’re looking to stand out in an already-crowded marketplace or simply be a memorable company, figuring out how to brand and differentiate yourself is key. You may want to pull from the competitor research you did above to help position yourself. This isn’t a process you have to outsource to a brand agency — it’s one that can begin in-house. You can leverage tools like Canva to workshop designs, brand colors, and logos with little to no design knowledge.  But before you start putting together mockups, here are a few branding elements you’ll need to consider.

-Brand to Stand Out

According to UpKeep founder Ryan Chan, spending some time on the branding process helped set his company apart from the competition. He said “There are a lot of competitors in this space, many with much more money than us. However, we have been able to differentiate [ourselves] and also excel by making enterprise software fun and enjoyable. Our biggest differentiator has really been our design, from the ease of use to our playful tone.”

-Brand to Clarify your Vision

Branding isn’t only a design-oriented initiative. In fact, it can be used to get everyone on board and ensure messaging is consistent. GreenPal co-founder Gene Caballero says it’s a great way to get buy-in from partners, “In our case, we had to make sure that our vendors knew our vision and that we had a plan to execute.”If you’re working closely with partners who are helping you distribute your product, it’s especially important to make sure they understand who you are, how you speak, and who you serve. If you don’t have a brand guide, it may be worth putting one together. This will make mixed messaging much less likely, and make it much easier for your partners to help you spread your message.

6. Financing and Funding

How do you get the funds to start your business? There are multiple solutions to this problem. You could bootstrap your startup and do most of the tough legwork on your own. You could also go for a larger sum of capital right from the start by pitching an angel investor or a venture capitalist for funding. And, if all else fails, what about asking friends and family to help out?On the one hand, bootstrapping your business gives you much more control over it. You get to call all the shots, including how you want to operate the business and who you want to be involved with. On the other hand, it’s a slow process. On the flip side, getting the right investors on board from the beginning can expedite both your learning and your go-to-market strategy. You might also get immediate access to channels that might have otherwise taken years to break into. But, you’ll give up some control of your company the moment you bring on outside investors.

7. Build your Product

In this section, we’re briefly going to cover some of the things that are worth keeping in mind as you build your product.

–Start as Soon as Possible

Noah Parsons says, “Start collecting contact information for interested, prospective customers. Develop a landing page, do some lightweight advertising, and generally reach out to as many potential customers as you can.”

–Start Small

Gabriel Kuperman, CEO of CuePin, also stresses the importance of starting small. “When starting our SaaS company, we set out to create and develop the most important features for our launch. As we went through development, we began to accumulate many other ideas for features—both internally and through users who were testing our app.

–Use a Development Methodology

Noah says, “Agile is what most software companies use. Estimate what it’s going to take to get to a working alpha or MVP.”

–Keep Core Development In-House

According to Dharmesh Shah, outsourcing core product development is something most startups shouldn’t try doing as there are many risks involved. And Buffer’s CEO Joel Gascoigne believes much the same thing; according to him, a freelancer’s goals are entirely different to your own. They’re not interested in the product like you are, or perhaps like someone with a stake in the business might be. Plus, they’ll be more likely to think about limiting the scope of the project to the allotted time or budget.

–Keep Core Development In-House

However, if you have the option of working and hiring remotely (not necessarily freelancing or outsourcing), do it. Noah Parsons says, “Skip the expense of an office if you can, but invest in great collaboration tools. For example, Buffer, a successful social media company, just closed their only office. There are benefits to in-person collaboration, but unless you can get space very inexpensively, focus on developing your product first. Offices can be very expensive and add little value.”  

-Develop your Go-To-Market Strategy

There are many ways to market a SaaS product — from paid advertising and affiliate partnerships, through active outreach to media outlets, and content marketing. Experimenting with a combination of these methods is a good idea. Pay attention to what works and be aware that it may change over time.

-Do Your Own PR

Whether or not you’ve got the budget, doing your own PR to start with is a good idea. After all, who knows your business better than you? Talk to as many persons as you can and if you have the fund, get into radio and have a talk show about your product.

-Participate in Online Communities

 You can also spend some time participating in relevant online communities. Noah Parsons says, “Become an expert. Start participating in relevant discussion groups, comment on relevant blog posts, and start your own blog if possible. Figure out where your prospective customers hang out online and work to get coverage in those locations.”Konstantinos Bratanis, co-founder of Goodvidio, offers much the same advice. He says, “When you start your SaaS business, you’re hit with a cold hard truth that you’re just a spec of dust in the universe of fast-paced tech and innovative ideas. Nobody knows your company’s name or what you do, especially if you’re providing a solution that is very new for your market. So, your first task is to get your name out there.”Konstantinos says, “Since our market is online retailers, we approached our local eCommerce association and started interacting with the community. We asked for feedback about our software and our growth ideas and took part in the conversation. Taking part in the daily life of the community and learning how the ecosystem worked paid off because we started getting referrals, word-of-mouth, and endorsement from community leaders. That’s a good approach to meet early adopters and people who will be willing to work with you. This helped us get traction in the first year of business.”

-Go the Content Route

Today, it’s particularly important for SaaS companies to do content marketing, and it’s even relatively affordable. Content marketing, as defined by the Content Marketing Institute, is “the marketing and business process for creating and distributing relevant and valuable content to attract, acquire, and engage a clearly defined and understood target audience — with the objective of driving profitable customer action.” It’s a marketing strategy that has seen immense growth over the past decade.Noah says, “Find your prospects and work to help solve their problems. Use content marketing to share your knowledge on a topic and attract prospects that way.”It’s relatively easy to get started doing content marketing by simply maintaining a company blog your target audience will find useful and interesting. CEO Uwe Dreissigacker says, “SaaS companies should definitely operate their own blog. It is also useful to get listed on all the big SaaS directories early on in order to get websites linking to your product and to receive initial product feedback. Producthunt.com is a great resource for viral marketing for the product launch as well as community feedback.” Be sure to check it out.

-Do a Bit of Everything

How will you know what works for you, unless you try it? Online, there are so many different ways to do your marketing and it’s simply not feasible, especially when you’re just getting started, to do them all. You have to try them, see how they go, and then pick the best performing of the lot.“In terms of marketing, you should try to stretch your budget to a few different advertising channels. Putting all your eggs in one basket is not ideal,” says Gabriel Kuperman, CEO at CuePin. “This way, you can see which marketing channel gives you the most value. Make sure you’re tracking ‘conversions’ so you can see which marketing channel has the best conversion rate. A good online campaign should include paid search engine advertising, social media advertising, email marketing, and a PR campaign.”

-Start With Beta Testing 

Yet another great way to get started doing marketing is to launch a beta product. It’s also a good way to learn before the real thing is out there.Gabriel says, “Create a beta version of your app or software and get it released when it’s fully-functioning and bug-free. I’ve seen too many SaaS companies delay their launch because they continuously add features that they ‘want’ before they can release the first version. My advice is to get it to market when it’s in a usable and respectable form and let your beta users give you feedback and help shape the future of the software.”

9. Establish Metrics for Success

Whether or not you consider yourself a fan of numbers, if you run a business, you’re going to have to get used to looking at them. For many people, tracking metrics (inflows and outflows) can seem scary, boring, or time-consuming. But the truth is, these numbers are going to become your best friends. They’re going to help you make informed decisions, which will in turn take a lot of the weight of guesswork off your shoulders. Tracking your key metrics will also help you figure out how to grow, and whether or not it’s a good time to do so.

-The Benefits of Tracking Key Metrics

In order to monitor your business’s health, it’s essential to understand what these metrics can tell you about your business. It’s also imperative that you monitor how these metrics are performing on a regular basis so that you can make better decisions and plan proactively for the future.

-A few of the benefits of tracking your metrics include:

• Improving your current performance
• Improving future performance
• Catching things before they become problems
• Getting real feedback related to your goals and milestones
• Making decisions with more confidence

For those business owners who don’t keep an eye on the numbers, the statistics are not pretty. According to the SBA, 28 percent of businesses fail due to problems with the financial structure of their company, including keeping poor accounting records. If you don’t keep these records, or have a system in place that allows you to monitor them, you could run into problems.

10. Measure and Optimize

Building a SaaS company is an iterative process. What does that mean? You cannot stay in one place. You need to constantly monitor how users perceive your product, look for opportunities for growth, and tweak your business to get the best results. Integrate with the most popular analytics tools, such as Google Analytics and Google Search Console, and see how If you stay in one place, sooner or later your product will be overtaken by the competition. Just look at what is happening now with the implementation of AI technology in various SaaS products. Most business leaders see how big a revolution artificial technology can be and are looking for ways to incorporate AI-enabled features into their products.

Things To Avoid While Starting A SAAS Company

Like any business, there are some things to avoid while starting a SaaS company. These things may have a negative impact on your business and make it more challenging to succeed. Some of them include:

1. Don’t Try to Solve Every Problem

When starting a SaaS company, it’s essential to focus on solving a specific problem. Solving too many issues can make your software too complex and challenging. It can also make it more difficult to market and sell your solution.In general, it’s easier to solve a single problem very well than it is to solve multiple issues. Focus on solving one specific problem exceptionally well when starting a SaaS company.

2. Don’t Build a Solution That Nobody Wants

Another blunder that some SaaS startups make is creating a solution that no one wants. If you create a SaaS solution without first validating it with potential customers, you may end up with no one interested in purchasing your software solution.Before you start building your software application, make sure that there is a demand for it. This can be done by conducting market research and talking to potential customers. Once you’ve validated your solution’s need, you can build it.

3. Don’t Skimp (economize) on Marketing

When starting a SaaS company, some SaaS startup founders make the mistake of skimping on marketing. Marketing is important for any business, but it’s especially important for SaaS businesses. This is because SaaS companies must constantly acquire new customers in order to stay relevant and grow. If you don’t have a strong marketing strategy, it will be challenging to reach new customers and grow your business. Make sure to invest in marketing from the start and continuously invest in it.

4. Don’t Forget About Customer Support

Another mistake that founders make is forgetting about customer support. Customer support is essential for any business, but it’s especially vital for SaaS businesses. SaaS companies need to ensure that their customers are happy and using the software.If you don’t provide excellent customer support, you’ll likely lose customers and damage your reputation. Be sure to invest in customer support and make it a priority for your business.

5. Don’t Forget About Cash Flow

Finally, another mistake that too many SaaS startups make is forgetting about cash flow. This is a mistake because SaaS businesses typically have a subscription-based pricing model, which means they need to continually bring in revenue to cover their costs. This can be a challenge, especially in the early stages when expenses are high, and payments are low.To avoid these mistakes, it’s essential to focus on solving a specific problem, keeping your solution simple, and creating a solid sales and marketing strategy. It’s also necessary to carefully provide good customer support and manage your cash flow.

6. Conduct Proper Market Analysis

Remember earlier we talked about conducting a thorough market analysis? What would have happened if this step had been neglected?You could easily be lured into making false assumptions about untapped market demand for certain services. In reality, users may expect something different, or their needs may already be met by products backed by well-established companies with years of experience.Then you’ll continue to waste valuable resources, time, and energy developing a SaaS product that won’t yield much in the way of commercial success. As your user base stagnates, you may quickly lose your commitment to developing a SaaS application as a whole, even though the results of your efforts could have been completely different with slightly different initial assumptions.

7. Give Attention to Market Changes

The SaaS world is incredibly dynamic and unpredictable, with competitors emerging and technologies evolving frequently. In addition, regulatory and policy changes, as well as emerging technology trends, can severely impact your market position.To succeed in this ever-changing environment, it is critical to be adaptable and constantly reinvent your products and messaging to maintain and grow market share. Starting with a minimum viable product, you can incrementally improve it by incorporating customer feedback and data-driven insights into your SaaS product. Choose a software development approach that allows for modularity and scalability as the application grows. What’s more, you should always be on the lookout for new ways to improve your product to keep pace with the competition. 

How To Get Ideas For Your SAAS Bussiness?

Identifying a problem that software can solve is the best way to generate ideas for your SaaS business. To begin, consider the issues that you, your co-founder, or other entrepreneurs have encountered in your industry.After identifying a problem, you can brainstorm potential solutions that will be delivered as a software application.Looking at existing solutions in your industry and identifying areas that could be improved is another way to generate ideas for your SaaS business. This could include developing a new feature or redesigning an existing one to make it more user-friendly or efficient.Once you’ve identified an opportunity, you can investigate whether there is a market for this solution and whether there are any existing competitors.After you’ve generated some ideas, you must validate them by speaking with potential customers. This will assist you in determining whether there is a genuine need for your proposed solution and whether people are willing to pay for it.Market research, surveys, and interviews with people in your target market can help you validate your ideas.

Is It Possible To Start A SAAS Company Without Technical Expertise?

Starting a SaaS company can be a daunting task. But can you really pull it off if you lack technical expertise? Well, that depends on how tech-savvy you are. If you have trouble setting up simple Excel spreadsheets or LinkedIn profiles, starting your own SaaS company may not be for you. If you know your way around social media marketing and modern digital services, then you can try to pursue your own SaaS vision with the help of a few digital tools. Let’s take a quick look at the most popular and proven strategies for starting a SaaS company without technical expertise.

1. No-code and Low-Code Platforms

Low-code and no-code platforms are the answer to one of the biggest problems in the modern SaaS market – high barriers to entry and lengthy development processes. No-code tools have significantly lowered the barriers to entry in the SaaS market. These platforms provide entrepreneurs with the tools they need to build their simple but efficient SaaS products without writing a single line of code.Low-code platforms on the other hand are designed to help users build applications using pre-built blocks of code. These blocks can be assembled like building blocks, allowing entrepreneurs to create complex SaaS applications with relative ease. On the other hand, no-code platforms use solely visual interfaces and drag-and-drop tools to let users build applications without coding or any programming knowledge.While these platforms may seem like a godsend for non-technical entrepreneurs, it’s important to note that technical expertise can still be beneficial, and only experienced software developers can unlock their full potential.

2. Hiring a Technical CTO

While you may not need to have technical expertise yourself, you will need to have a solid understanding of the technology and how it can be used to solve your target customers’ problems.That’s why some SaaS company owners seek the help of technical CTOs in their organizations.Their technical expertise and knowledge can help entrepreneurs better communicate with their development team. It will also significantly help business owners in optimizing their product’s performance, developing innovative features, and troubleshooting any issues that may arise. An experienced CTO will be able to provide them with a checklist of aspects of the SaaS application needing the most attention, as well as guide the development process toward a desirable direction.

3. Outsourcing Software Development

A third, and probably most convenient for non-technical business executives, option is outsourcing software development to an external custom software development company. A software company can provide you with a tailored approach with your SaaS product vision as a top priority. They will be responsible for choosing the right tools, tech stack, and technologies for your project and assigning developers with the necessary knowledge and experience, basically eliminating the need for any technical expertise on the part of business owners.You might assume that this solution will be the priciest one, but in reality, it’s quite the opposite. Thanks to having dedicated teams of programmers and a hands-on approach, a software development company can start working on your idea almost immediately after agreeing on the project’s budget, without having to worry about lengthy recruitment processes and team management.

Key Statistics On SAAS Market In 2024

As of 2024, the landscape of SaaS companies and their offerings continues to evolve rapidly.

• Growth of SaaS Companies: The Software as a Service market has been experiencing robust growth. By 2024, nearly 99% of businesses are expected to use at least one SaaS software, demonstrating the pervasive influence of SaaS solutions in the corporate world. This growth is driven by the flexibility and scalability that SaaS companies offer, making their services attractive to a broad range of industries.

• Software as a Service Adoption: In recent years, Software as a Service has become a critical component in the business operations of both large and small companies. The average yearly churn rate for SaaS companies falls within 5-7%, suggesting strong retention and satisfaction among their customer base.

• SaaS Software Providers’ Innovation: SaaS software providers continue to innovate, particularly in integrating AI and machine learning technologies into their products. This has led to more sophisticated and efficient SaaS solutions, contributing to the overall growth and adoption of these services.

• Revenue and Market Trends: SaaS solutions have become the largest expenditure for businesses’ cloud services, indicating their significant role in the modern IT landscape. The SaaS market, valued at $186.6 billion in 2022, shows an annual growth rate of 18%, reflecting the sector’s robust health and promising future.

• Challenges for SaaS Companies: Despite the growth, SaaS companies face challenges, including security concerns. With 42% of companies reporting difficulties in securing SaaS apps, providers are continually seeking ways to enhance the security of their solutions.

• Customer Preferences and SaaS Solutions: The trend towards self-service models in SaaS solutions has been gaining momentum. Customers, especially in the B2B sector, show a preference for self-educating about products rather than interacting with salespersons, which SaaS companies are adapting to in their service offerings.

• Global Reach of SaaS Companies: SaaS companies have a significant presence in North America, which is the most advanced market for these services. The European SaaS market is also seeing substantial growth, with predictions of continued expansion until at least 2025.

In 2024, the SaaS industry demonstrates its resilience and capacity for innovation, driven by the diverse needs of its global customer base and the evolving technological landscape. SaaS companies are not only growing but are also adapting to new challenges and opportunities, making Software as a Service an integral part of the modern business toolkit.

Closing Thoughts On How To Start Your Own SAAS

Building a successful SaaS company requires not only a brilliant idea but also quite a lot of prior knowledge. And it’s not only programming skills and technical expertise that come into play. You have to know your way around the competitive, vibrant, and sometimes vicious environment of startups and venture capitals. Even though in this presentation we’ve focused mostly on the technical aspects of building a brand new SaaS company, your journey shouldn’t stop here.  I highly recommend you check out the lecture series from Paul Graham, Sam Altman, and the early YC founders dedicated solely to the ins and outs of starting a new startup company. Here is the YouTube link https://www.youtube.com/watch?v=CBYhVcO4WgI Another must-watch for aspiring online entrepreneurs are the lectures of David Heinemeier Hansson, the creator of the Ruby on Rails framework and Partner at 37Signals. Here is the YouTube link https://www.youtube.com/watch?v=0CDXJ6bMkMY  In them he gave extremely valuable insider insights into creating a startup company, but perhaps more importantly on how to make it profitable. For everyone who is thinking about starting their own SaaS startup, this 30-minute watch will be invaluable. By following the steps outlined in this article, you can increase your chances of success and build a sustainable business that meets the needs of your target audience. Remember to focus on product-market fit, create a solid marketing plan, and continually adapt to changes in the competitive landscape. With dedication and hard work, your SaaS company can thrive in this ever-evolving digital marketplace. 

OTHER RECOMMENDED VIDEOS 

How to Build SaaS from Scratch in 8 Simplified Steps

How To Create An MVP (Minimum Viable Product) – STEP BY STEP

If I Had To Start Over, Here’s 3 Steps I’d Take to $1M+ Revenue

How to Build An MVP | Startup School

CREDITS

• Arkadiusz Krysik (https://stratoflow.com/)
• Candice Landau (https://www.bplans.com/)
• Matt Verlaque  (https://www.saasacademy.com/)
• Chisel Glossary (https://chisellabs.com/)
• Ian Drogin (https://quietlight.com/)
• Robert Kazmi  (https://www.koombea.com/)