A Step-by-Step Guide to Starting a Successful Saas Business

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7 Steps to Start Your Own SaaS Business

How to Start an SaaS Business: A 7-Step Checklist

Learn how to start a successful SaaS business with these 7 must-follow steps.

March 16, 2021
7 minutes


Learn how to create and launch a successful SaaS business in these simple steps.

In the past ten years, the SaaS (software as a service) market has been growing steadily. In 2020, as challenging a year as it was for everyone else, SaaS businesses kept growing (Gartner report from July forecasted a 2 billion dollar growth).

So, if you’ve got an idea for a cloud-based solution, this is a great time to start building a SaaS company! Though you don’t necessarily need to have extensive technical knowledge before bringing your SaaS vision to life, there are a few things you ought to know.

How to build a successful SaaS company? Follow these steps.

how to start a saas business infographic.png

Solve a problem

So you don’t exactly need to be a coding master to be a great SaaS CEO. But, unlike small businesses that deal in products and services (e.g. hospitality), the ideation process is a lot more complex and important in this industry.

To put it simply, an idea for a SaaS business is never good, unless it solves a certain problem.

No matter how cool it sounds in theory, if your idea for a SaaS doesn’t relate directly to the actual pain points of your potential customers then it’s simply not a good idea. You might refer to your own experience at first, but in this stage, it’s very important to actually reach out to your target audience and define exactly what problem needs solving, and how they feel might be the best way to do it.

Define your target market

So you may have come up with a really good idea and got some good responses from the people you surveyed.

But for a business to stay afloat, you’ll need to keep acquiring paying customers as you go; In fact, a report from Gartner shows that 80% of revenue for SaaS companies comes from 20% of their customers. If your idea is too broad, there’s a good chance someone already has a solution for it. If you go with something very niche and obscure, there’s a possibility that your venture won’t be profitable in the long run.

Defining your target market means understanding who is going to use your product, how and why.

A great real-life company to learn from is Slack. Before launching the company, Slack’s CEO, Stewart Butterfield interviewed a whole bunch of companies about their internal communication, and when asked about what they were using for their internal communication, about 80% of them said nothing.

So, instead of just creating a new email service (which obviously all of them used), Butterfield dug deeper into the responses and figured out that what these companies lacked wasn’t an actual communication software, but a software solution that they would perceive as such.

Find funding

You may want to look into funding opportunities before or after you start the development of your SaaS product. However, creating a budget plan means deciding whether you are going to be bootstrapped, or need external funding.

So in case you need some financial support, where can you find it?

Well, since the public demand for SaaS companies seems to be steady, it’s fairly easy to attract venture capital. Here are a few key terms and options you ought to know in relation to venture capital:

  • Angel investors: they invest in your company and get equity shares in your business; typical investments range from $25,000 to $200,000. Angel investors will want to know what the market opportunities are and how you plan to manage your team, so make sure you approach them with the answers to those questions ready.
  • Incubators and accelerators: Incubators refer to a system where aside from the financial assistance you also get help in training, mentorship and planning. They’re run by big companies and organizations and are a good opportunity for SMEs with limited resources. Accelerators are usually run through private funds and are meant to help you scale up. You might work with growth mentors who will help you choose the best growth hacks for your business.

Of course, remember that external funding requires tons of work (research and application) and later on, accountability to your investors. Although it might take more time, it’s not impossible to create a successful SaaS company that’s entirely bootstrapped: Dropbox, CRM tool Canny and landing page builder Instapage have all done it!

Hire a designer

A UX/UI designer is a person who creates the look and feel of your web or mobile application. Although essentially this is a graphic designer, UX/UI designers can be hard to find. They need to have both experiences of working with similar projects, as well as specific skills in web design software such as Adobe XD, Sketch, or Figma.

Learn how design can help you crush goals in SaaS business

Download our SaaS Design Guidebook

You can always turn to platforms like Upwork and Fiverr, but don’t forget portfolio platforms like Dribbble and Behance. There you will also be able to see the work done for their personal projects which often demonstrates the full scope of a designer’s talent and ability. Approaching a designer directly can also mean saving up on additional administrative costs charged on freelancing platforms; though things like tracking work and dispute management could be harder.

The importance of good design in SaaS cannot be overstated; a product that’s designed well (and this means user-friendly, aesthetically pleasing and intuitive) can reduce churn rates and help you build brand loyalty.

Of course, remember that ManyPixels is a cost-effective and high-quality design solution, with dozens of talented UX/UI designers in our ranks. Check out our work or learn more about the service here!

Get a developer on board

If you’re a creative genius with no technical background, then the thought of writing code might sound a little scary. The good news is that if you’ve got a solid design in place, actually getting your SaaS product to work is oftentimes the easier part.

Since this is the more “manual” part of the work, web developers also charge less than web designers.

web designer vs web developer.png

Create a minimum viable product

The development of your minimum viable product or MVP is the make or break point for many SaaS companies. It sounds a bit brutal, but an MVP allows you to decide if your idea is actually viable, if it needs tweaks, or—if you need to scrap the project off altogether.

An MVP is the most rudimentary form of your product which, if successful, will be acquired by early adopters in your sales funnel. It should have the core functions, that is provide a solution to the problem you identified initially.

Find out how to build a strong and unique brand

Download our guide to learn all about branding and visual identity

Develop an effective marketing strategy

SaaS marketing is no easy feat: how exactly do you market a service that’s expected to evolve constantly or a niche service that only a handful of B2B businesses will be interested in?

And yet, despite of, or precisely because of the challenges, there are tons of highly successful SaaS marketing campaigns that made digital marketing history.

Dropbox did it with a simple referral program; Hubspot became the king of search engines with killer content marketing; Canva reached people on social media through influencer marketing; Shopify goes above and beyond to help its users’ stores become successful.

As a SaaS startup, you probably won’t have the resources to splurge on each and every marketing channel available to you. So before spending money on marketing, make sure you know what you can offer and where your audience is.

The aforementioned campaigns worked because they offered value to customers, whether it was know-how, a discount, or a way to be strategic in work.

saas companies examples.png

Free trials

Free trials or the so-called freemium model (limited features available without payment, the full service requires payment) are very popular in the SaaS industry.

According to Totango’s 2016 SaaS Metrics Report, 27% of companies claimed over a quarter of new customers came from free trials and freemium models (across the board freemium models accounted for about 10% of new business).

saas free trial stats.png Source: Totango

What happens next?

So if you’ve gone through the steps you may already have a SaaS company that’s en route to success. But don’t forget that in this industry, your work is never done. Here are a few final things to note.

  • Gather and analyze customer data: churn (how many customers you’ve lost), customer retention, acquisition; how much was your predicted growth and what was the reality.
  • Test new services/products: whether it’s new products, or improvements to existing ones, to stay afloat in this industry, you need to keep improving in order to beat the competition.
  • Build networks and partnerships: referral programs, seminars or webinars, integrations with other platforms—you’re part of an exciting business ecosystem and building relationships is the way to move forward!
  • Keep growing: 2020 showed how agile businesses thrive even in the most challenging circumstances; seize opportunities to double down, follow up on the latest trends and keep moving your business forward. If you don’t, your time will soon come to an end.

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Danica Popovic

March 16, 2021

Having lived and studied in London and Berlin, I'm back in native Serbia, working remotely and writing short stories and plays in my free time. With previous experience in the nonprofit sector, I'm currently writing about the universal language of good graphic design. I make mix CDs and my playlists are almost exclusively 1960s.