In recent years, big technology companies have been working to increase cloud adoption and create more software as a service (SaaS) offerings. And they are not expected to slow down anytime soon. As more businesses move towards adopting cloud solutions, it is important to know the pros and cons of running a SaaS startup.
What is a SaaS Startup?
Let’s clarify what exactly SaaS is. SaaS (software as a service) is one of the most popular forms of cloud computing. Users subscribe to an application rather than purchasing it once and installing it. They can log into and use a SaaS application from any compatible device over the Internet. The main idea is an approach to software delivery and maintenance wherein developers don’t sell their programs with a long-term license or wait until next year’s version to release feature updates.
Adobe’s Creative Cloud application suite is a good example. In 2012, Adobe shifted their licensing model drastically: no more opportunity to buy different versions of Photoshop. Instead, you can now buy a subscription to Adobe Photoshop CC, and in exchange for your monthly fee you get support and all future updates for free. Customers get the opportunity to turn their subscriptions on and off as necessary, while still ensuring that they always get the latest version of Photoshop.
Software as a service applications are also known as Web-based software, on-demand software and hosted software.There are SaaS applications for fundamental business processes, such as email exchange, customer relationship management (CRM), sales management, human resource management (HRM), financial management, billing and collaboration.
Among the leading SaaS providers are Oracle, SAP, Salesforce and Microsoft. Let’s focus on the last.
Productivity applications such as Word, Excel and PowerPoint are longtime staples of the workplace, but cloud-based Microsoft Office 365 dramatically expands the Office suite’s parameters. Users can create, edit and share content from any PC, Mac, iOS, Android or Windows device in real-time, connect with customers and colleagues using tools from messages to video conferencing and leverage a range of collaborative technologies supporting secure interactions both inside and outside of the organization.
Software as a service is also well suited for small businesses. Instead of investing in software licenses and additional in-house server capacity, companies simply can adjust their subscription on a monthly basis, correcting consumption requirements up and down based on project demands and other variables.
What do you have to know before starting a Software as a Service company? All startup founders need strong data before deciding what kind of business to build, so we’re going to list a few things to be aware of. It’s important to study every aspect involved in transforming your idea into a tangible product. Let’s jump right in how to create a SaaS startup:
The first step for a startup founder should be market research. You need to consider pros and cons and make sure that it is worth investing in your project idea. What should market research consist of? We recommend focusing on such important aspects as an industry overview, target audience research and competition analysis. Let’s take a closer look at each of these points.
People use overviews in research when they are making decisions about investments, entering industries, and other activities. At this step, you should expand your industry knowledge and define the size of your market segment.
Learn about groundbreaking SaaS trends and try to follow them. How can you find out about the latest trends? Watch webinars to keep track of events, attend relevant trade shows and summits. All these insights might help you stay ahead of the game.
Target audience researching. Trying to please everyone with your SaaS products might be a big mistake, because it’s a time-consuming and a resource wasting deal. Your next step is to find out who your potential customers are and how to approach them. Try to get as much information about your target audience as possible. Learn about their age, education, gender, geographic location, and occupation – these findings can help you target these consumers better. In the end, this information may be crucial to answering the question of how to build a successful software as a service startup.
Competitive analysis. Define what cloud computing model is adopted by your rivals. Take a look at products released by your market competitors. What features do they have and how often are they updated? After that, study their financial information. Analyze their pricing models, revenue, and annual reports. Look at the promotion strategies they adopt. If you know the strengths and weaknesses of your competitors, you will gain the upper hand.
2. Start with lean planning
There’s no way to get around it, you’ll need a business plan. Start with a one-page pitch instead of sitting down to write a 40-page plan.
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.
Your pitch is going to consider your strategy and tactic (what you’re going to do and how), your business model (how you will earn money), and your action plan (who is doing what and when).
A minimum viable product (MVP) is a version of an application that only has features sufficient to satisfy its early users. Designing a full version of the application with a complete set of features is better after receiving and analyzing feedback from the product’s initial users. What is your MVP? Define your problem as clearly and specifically as you can, only then will you be able to find the right solution to the problem. Consider and write it out with focusing on the basic hypothesis you are creating. Here you can read about essential steps of building SaaS minimum viable product.
4. Build the brand for your startup and choose the pricing model
The right revenue model is the key to the success of any kind of business, be it a pricing model for SaaS startup, or a monetization strategy for a successful online marketplace. It will define how your venture will generate profit.
After choosing the monetization strategy wisely, a SaaS startup will bring you a stable income. Try to mix several revenue models to mitigate financial risks.
As said before, the SaaS market is very competitive these days. So the question arises: how to launch a SaaS product that will differ from the competition? The structured vision for your SaaS startup leads you to success. Make the vision for your SaaS startup clear so that each member of your team can understand what direction you are following. Besides, it should explain what your software company strives to achieve in the future. Focus on the quality of your software as a service all the time. Definitely, “service” is the most important word there.
The name that you pick when building a SaaS company can greatly influence its future. Therefore, choose it wisely. Some simple tips on how to find the perfect name for your SaaS startup:
Choose a name that is easy to remember, write and read.
Make sure your competitors don’t get the name you want.
Translate it to other languages – make sure it doesn’t sound offensive.
Early-stage SaaS startups generally have few resources in place, so start with the channels you think will work best instead of trying everything and spreading yourself too thin.
5. Develop a convenient product and be responsive
Don’t make anyone wait hours or days for a proper response, especially if they’re trying to work with your products right now. Customers will leave if the SaaS startup product is not helping to solve their problem quickly and efficiently. Remember about communication. It’s important, because you may also be inspired by new ideas, discover some interesting ways to change and grow your product.
“When I talk to customers, I want to start conversations with the right customers at the right time, so I can get quality customer feedback.” Intercom
Every employee should be responsible for customer satisfaction using the product. This will help sustain the SaaS company’s consumer sales.
The SaaS startup industry has grown a lot over the past few years and is expected to continue to develop over the foreseeable future. There was an estimated $26 billion spent on SaaS products in 2019 and that number is expected to grow $55 billion by 2026. Actually, there is no better time to start a SaaS company than right now. Launching a product requires patience. It’s a key for success, because it takes time for customers to. pick your product.
You will realize that SaaS product development works together with your customers. Try to build your app to the stage where people can benefit from it. If your solution already solves the issue people are struggling with, you’re on your way.
If you are going to offer your SaaS product to major companies, you’ll need to do some investing with both time and money. As long as you have a working plan, metrics to track success, your business is more likely to survive and withstand the competition.
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