SaaS (Software as a Service) has become immensely popular among small and medium businesses in recent years. Also known as web-based or cloud-based solutions, this new business model allows businesses that usually don’t have the financial capacity to hire many employees to perform in-house functions relating to finance, management, and human resources via third-party software.
As such, the chances of success and profit margins in the SaaS market are high, provided you have a good understanding of customer needs and the service your software provides. If you’re planning to launch a SaaS startup, there are a couple of things you need to know.
1. Invest in Lead Generation
To generate revenue for your SaaS business, you need clients. To acquire clients, you need leads. Fortunately, there are many different ways to nurture leads, such as enhanced email marketing, segmented marketing, guerilla marketing, and showcasing customer testimonials and glowing reviews on your site.
Given the limited client pool you have to contend over with competitors, closing quality leads can mean the difference between success and failure. Whichever methods you choose, you’ll want to make sure you’re being as cost-effective as possible so that you can remain profitable.
2. Tighten up Security
Since your company serves as a third-party vendor, privacy policies and data security measures will be a crucial part of your business’s success. You should always prioritize customer data safety and back up information adequately and securely in your servers and database. Invest in the latest cybersecurity technology to ensure there are no cracks in your system.
Depending on your service, you might be privy to a lot of different sensitive internal data. If leaks and hacks occur at your end, they damage both you and your client in terms of reputation, revenue, and trust. An incident like this can mean the end of your company. Solid cyber-security should be one of your top priorities when developing your business’s back end.
3. API and Multi-app Integration
Integrating different platforms through open and shared API is standard practice in the current age of smartphones and apps. Make sure you make it easy for customers to integrate your app with other commercial applications they may already be using.
Even if your service is sound, unique, and provides value, potential customers may be wary of inaccessibility. What’s more, creating an inaccessible service automatically eliminates customers you otherwise might have worked with. Opening your API will encourage app developers to ensure integration options are available, drawing a large portion of the market to consider your services.
4. Solve a Problem
The objective of all SaaS products boils down to successfully identifying and finding solutions to problems. The SaaS industry thrives on providing niche answers to niche issues, with each SaaS product providing its unique approach to industry challenges. If you can’t provide a unique selling proposition for your product, proving that the customer needs your product above all others, chances are you’ll fail.
While you can profit by providing unique solutions to common problems, you can establish yourself as a significant leader by identifying issues for which solutions don’t yet exist in the market at all. Selling a new product or service that solves problems most businesses are not yet aware of can be difficult. Still, this more innovative SaaS model helps establish your brand’s thought leadership.
5. Write a Solid Business Plan
To run a successful business, you need to be thinking ahead. This means creating a sound business plan before jumping into action. Note that while a solid 40-page business plan might be useful when pitching to investors, repeatedly pouring over such a large document can be a headache. As long as all critical factors are accounted for, a shorter document can be better for enterprise outlining.
Start by answering the four W’s: who, what, why, and when (and throw an H in there for how). Answering these questions will allow you to identify your client base and their problems. Then answer how your proposed solution can help your target client market. This exercise will help you define your USP. While you’re at it, don’t forget to research notable competitors in your industry.
6. Get Legal
Once you’re finished brainstorming and planning, you need to ensure legal formalities are performed. You want to make sure you are fully compliant with all industry regulations.
The first thing you need to do when focusing on your business’s legal aspects is choosing a name and registering it. Once you have chosen your business name, you need to establish the structure of your business—some of the options include S-Corp, Limited Liability Company, or partnership.
Each structure has its advantages and disadvantages, so choosing the right one depends on the people and circumstances involved in the development process. LLCs are typically advantageous because they allow the proprietor’s financial liabilities to be separated from the business itself. Corporations, on the other hand, have an easier time securing funding.
7. Secure funding
SaaS startups are costly to set up. Add in marketing and overhead costs such as cybersecurity and assembling an office space after product development, and costs can quickly turn astronomical. For this reason, SaaS startups need cash injections at the onset to run effectively.
Though you can finance certain things yourself, acquiring capital investments will help you save money and form relationships. You can pitch your business plan/model to a venture capitalist to secure funding, ask friends or family to consider loaning you funds, try crowd-funding, and apply for public grants.
8. Track Key Metrics
Every business relies on numbers. From market research to performance improvement and optimization, numbers will tell you everything you need to know. You should establish the baseline for success metrics and monitor them consistently to inform necessary strategy changes.
Tracking metrics can help you and your business in many ways. Monitoring helps you track your current and future performance, identify problems before they occur, and receive feedback from employees and clients. This information allows you to make better and well-informed decisions.
9. Automate and Outsource
Finally, make sure to automate and outsource different business tasks whenever possible. Part of the struggle of getting a new business up and running is that you and the few people in your team have to multitask a lot, which can get overwhelming pretty quickly.
Outsourcing various aspects of your business like marketing, branding, or cybersecurity can relieve pressure. Outsourcing IT support is an excellent strategy to let you focus your attention on business areas you’repassionate about, such as client interfacing and sales objectives.
A Stitch In Time Saves Nine
Launching a new business can be a fun but chaotic process, especially if it involves digital technology. By following the tips and tricks mentioned above, you can significantly improve your success rate when launching a SaaS. Preemptively addressing these factors will free up your time to develop and market your service with full focus.