Technology moves quickly. Everyone carries a smartphone, tablet, or lightweight laptop, sometimes using all three at the same time. With those come software and apps that we use each day to plan our weeks, share grocery lists, listen to music, watch movies, plan a budget, or even for business needs such as invoicing.
Understanding the Ins and Outs of SaaS
In short, we have the ability to find the software we need to make things easier and streamlined in our daily lives. If you’re paying for any of those apps or pieces of software through a subscription service, you’re using a SaaS business model - Software as a Service. If you’ve been working on a piece of software, or an app, that you would like to offer through a SaaS business, you probably have a lot of questions and may even be wondering if it’s possible to turn a profit. Here are the basics of starting a SaaS business so you can see what goes into it, and if it’s for you.
Why Should You Go with a SaaS business model?
SaaS isn’t just for personal users. In fact, the largest businesses are for corporations, or those in the medical field. SaaS is an attractive option regardless of who uses it because no additional hardware is needed since it’s all stored on “the cloud”. The software can be accessed from most devices with an internet connection and it’s easy to roll out updates and new features without the need to wait or purchase the newest version. Using SaaS also means there is less investment upfront, but this also means companies and individuals can switch to a new service easily. While there are certainly risks with SaaS, it seems that many users and businesses are switching to this model for it’s convenience and low startup cost, which means that successfully nudging your way into the market is entirely possible.
Building your SaaS business
Putting together a business plan using the SaaS model follows much of the advice for beginning your own startup. You’ll need an idea, it doesn’t have to be a brand new concept, but it needs to be a bit of software that is user friendly and meets the expectations of your clients. This is a technical business, and though you might have the skills necessary, you will need a team and hardware to execute your software or app correctly.
Putting together the software itself may be the easy part, but after that you’ll need to put together a business plan. Your plan should also include everyone who needs to be on your team, exclusively, without outsourcing. Since you can’t do everything on your own, your team will work hard behind the scenes on your program, or will be more client-facing and bringing in investors and customers.
Know your client and their ever-changing needs. You’ll need to see if your product is one that people actually want to use.
You’ll need to see if your product is one that people actually want to use. Medical offices need a secure system to hold their patients' information. Graphic designers want to have access to the new updates and features of their design programs. And personal users with an eye for photography want an easy way to edit, upload, and share their pictures with loved ones.
Understanding who your client is, and what they want from their software on a subscription basis is the most important step, and it doesn’t end. Knowing your client and their ever-changing needs is what will drive your software to constantly improve and keep subscribers from moving on. After you’ve tested your product with an initial group of potential customers, you’ll know where you need to make changes. The testing stage isn’t done overnight, and in fact it can take upwards of two years to get your business up and running. Technology changes quickly and you’ll end up making many changes during this time. Your end product might turn out almost nothing like you originally thought it would - which is not always a bad thing.
Building your Software as a Service business isn’t an overnight venture.
On the business side of your business, the first thing to understand is your initial startup cost, and who is going to help pay for it. This is where your business-minded team members will help immensely, so don’t just choose anyone, choose those who understand your end goal and have the same goals in mind. Create a pitch deck, market to customers who would be interested in your product, and in general create a little buzz about what you’re creating.
How to Choose Which SaaS Market is Right for You
There are a huge number of SaaS businesses out there right now, so choosing a market that is relatively untapped can be challenging. Instead, focus on what type of software you would want to use. Think of your current job, or jobs you held in the past, and come up with ideas on what would have made it easier. You don’t need to come up with an idea for each and every scenario in your life, but you do need to narrow down what your software hopes to accomplish and why.
Customers don’t want to know what you’re building, they want to know why you’re building it.
Customers don’t want to know what you’re building, they want to know why you’re building it. If you can’t give a genuine answer to this question, you may need to rethink this project. No one can answer which market is best for you. Only through trial and error, and a lot of thought, can you decide on which path to take. If you do need some inspiration, there are constantly changing online lists of the most popular SaaS companies.
Building your Software as a Service business isn’t an overnight venture like opening an eCommerce website that sells movie memorabilia or electronics, it’s something that takes time and immense amounts of effort. While there is more legwork involved, having a service that helps people each day, even in a small way, can bring you quite a bit of satisfaction at the end of the work week. By assembling a team, understanding your customer and their needs, and focusing on what makes your product important, you can make your software a success.