Starting a SaaS (Software as a Service) business can be an exciting and rewarding venture. Many entrepreneurs are drawn to the idea due to its low cost of entry, scalability, and potential for success.
If you’re considering entering the SaaS space, it’s important to understand the unique challenges of running a SaaS business. It requires dedication and knowledge to develop and maintain a successful venture.
In this post, we’ll discuss seven things you should know as a SaaS business founder in the early days to help you make informed decisions and set yourself up for success.
1. Have a Clear Value Proposition
In the early days of a SaaS business, it’s important to have a clear value proposition for your product or service. This means understanding what problem your SaaS product solves and why customers should choose your product over competitors.
A clear value proposition can help you attract early adopters and build momentum for your SaaS product.
2. Build a Strong Team
Every SaaS business founder knows how important it is to have a strong team to help support their vision and make their dreams a reality.
When starting out, however, you must consider the full scope of building and nurturing a team that will work together in harmony and helps build the business for years to come.
Hiring the right people is one of the most important aspects of creating an effective team.
You should carefully consider every new hire in terms of their skillset and experience, as well as their values and attitudes towards work.
Clear job titles should be assigned with expectations set from day one to ensure successful collaboration between members. Also, encourage open communication within the team to foster camaraderie and trust amongst colleagues.
Additionally, working with a recruitment firm specializing in SaaS hiring and SaaS recruitment, like Jarvis Elliott, will help you find and vet candidates with the right skill set and experience for the SaaS job.
3. Slow Down If You Don’t Have a Co-Founder
As any experienced SaaS business founder can tell you, the early days are often the most difficult. This is especially true for those who don’t have a great co-founder.
Although it’s possible to succeed as a solo founder, many industry veterans argue that doing so is a recipe for disaster. Jason Lemkin, the founder of SaaStr, shares this belief based on personal experience.
“…it’s almost impossible to thrive without an amazing co-founder,” says Lemkin. He advises taking things slowly when you haven’t found the right co-founder yet.
4. You Lose Time and Money with a Bad VP Hire
Hiring a Vice President (VP) for your SaaS business is a make-or-break decision. A bad hire can lead to disastrous consequences, including wasting your company’s time and resources.
They will hire a terrible team, your revenue will slow, and they’ll spend a lot of money doing it.
Furthermore, a bad VP hire can lead to a decrease in productivity, as they may not have the necessary skills or experience to perform the role effectively. This can lead to missed deadlines and more lost revenue.
You’re better off without a Vice President than having a lousy one.
5. Always Raise 25% More Funding Than You Need
Having enough funds to last your startup through the early stages is essential if you want to have any chance at achieving success.
Raising 25% more money than you initially need, even in an angel round, will allow you to focus on growing your SaaS business without worrying about where the next round of funding might come from.
This could be invaluable in pursuing new opportunities, developing innovative products and services, and hiring additional staff when needed.
But don’t try to spend the extra 25%.
Jason Lemkin, the founder of SaaStr, wrote on his blog that he avoids spending his extra funding money and puts it in a different business bank account to be saved for a rainy day.
6. You Can Grow Your Total Addressable Market (TAM) Size Later
The Total Addressable Market is the estimated size of a company’s customers or users in a given market or region. Growing this figure is essential for your SaaS business as it contributes to an increase in overall revenue and brand recognition.
But don’t worry too much about your Total Addressable Market (TAM) size during the early days. It will grow as your SaaS business does.
Your resources may be limited in the early stages, and there is pressure to bring in revenue quickly. Find comfort in knowing it’s okay to start small, usually targeting a smaller segment of a large market, and gradually growing from there.
Remember, growth happens naturally with time.
As your business expands, so too can your TAM by utilizing different marketing and lead generation strategies, such as content creation or targeted advertising campaigns.
7. Don’t Be Afraid of Competition
Competition doesn’t always spell certain doom. In fact, having competition can be a good thing in the early stages of your SaaS business.
It’s not only an indication that the market is ripe and ready for your product or service but also provides you with an opportunity to learn from other SaaS business founders who may have more experience in the field.
Remind yourself that even the best competitors don’t try to win in every segment of the market. Unless they’re a monopoly, most companies can’t capture 100% market share or TAM for their SaaS product.
Running a SaaS business comes with its own set of unique challenges, but with careful consideration and planning, founders can set themselves up for success. Using these seven tips, founders can build a strong foundation for their business and ensure long-term success.
Want to take your SaaS business to the next level? Jarvis Elliott can help!
Jarvis are global leaders in SaaS jobs recruiting and SaaS recruitment services. We have successfully sourced and recruited expert SaaS professionals for businesses of all sizes, ranging from startups to big corporations. We help you find the right candidate for the job.
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Get in touch with us today, and let’s work together to make your SaaS business the success it should be.