If you’re an entrepreneur, you know that starting a SaaS company is a great way to impact the world. A Saas company is a software as a service company, and it’s one of the most popular types of businesses today.
Here are the ten steps you can take to build a SaaS business.
Ten Steps to Launching a New SaaS Business
1. Choose Your Type of SaaS Business
The first step in launching a SaaS business is to identify the type of SaaS business you want to launch. You might choose from the following types, among others:
- Application-based: This type of SaaS business provides a software application to be used by customers.
- Platform-based: This type of SaaS business provides a platform that can be used by other businesses to develop their own applications.
- Data and analytics: This type of SaaS business focuses on collecting and analyzing data to provide insights to customers.
2. Name Your SaaS Business
Give your SaaS business an identity so people will consider it a well-known and respected brand. You can take the name of your SaaS business from your industry, focus on a geographical location, or use your own name among other options.
The main goal for naming your SaaS business is to make it sound appealing and trustworthy so customers will want to use your services.
3. Determine Your SaaS Business Model
There are several possible types of business models for a SaaS business, including:
- Pay per use: Customers pay for each time they use your software or service.
- Subscription: Customers pay a recurring fee to access your software or service.
- Freemium: You offer a basic version of your software or service for free and charge for premium features.
No matter which model you choose, ensure that it aligns with your business goals and the products and services you offer.
Read more about choosing the right business model for your SaaS business.
4. Choose a Legal Form for Your Business
By incorporating your SaaS business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your SaaS business will determine the amount of taxes you pay and which state or federal tax forms you need to file.
Read our article comparing the most common SaaS business structures.
5. Write a SaaS Business Plan
All SaaS business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team.
When developing your SaaS business plan and strategy, you should think about the following questions your customers might have:
- What is a SaaS business?
- What are the different types of SaaS businesses?
- How do I know if a SaaS company is reputable?
- What should I look for when choosing a SaaS company?
- How much will it cost me to use a SaaS company’s services?
- What are the benefits of using a SaaS company’s services?
- How will using a SaaS company’s services save me time and money?
- What are some of the risks associated with using a SaaS company’s services?
Read our article about how to write a SaaS business plan.
6. Apply for the Necessary Permits and Licenses
There may be required licenses and permits you need to obtain before launching your SaaS business.
For example, if you will be collecting payments from customers, you will need to obtain a merchant account and payment gateway.
You must also register your SaaS business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website, if you plan to hire employees.
7. Determine Your Budget & Apply for Funding as Needed
In developing your SaaS business plan, you will figure out how much funding you need to start and grow your business.
If you have funds to invest in your SaaS business, you may consider taking advantage of that. In addition to your funds, other forms of potential funding for your SaaS business include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.
Read our article about the costs associated with starting a SaaS business to help you determine if funding is needed.
8. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your SaaS business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues.
You may also want to invest in customer relationship management (CRM) software to help you manage your customer data. And project management software can be beneficial in keeping track of tasks and deadlines.
When it comes to technology, one size does not fit all when it comes to SaaS businesses. The type of technology and software you need will depend on the size and structure of your business.
Read our article about the technology and software you need to run a SaaS business.
9. Market Your SaaS Business to Potential Clients
Before you start selling your products and services, you have to let the world know you exist. The first step is to create a website so people can learn more about your products and services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn and Twitter. Also consider networking with other people in the SaaS industry through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. SaaS businesses should consider the following promotional strategies for which you should start getting prepared:
- Develop a strong value proposition: This is why someone should use your products or services.
- Generate positive customer reviews and testimonials: These can be displayed on your website and social media channels and used in your marketing materials.
- Participate in tradeshows and conferences: Attend trade shows and conferences related to your industry to network with potential customers and partners.
- Develop partnerships: Form relationships with other businesses in complementary industries that can help promote your products and services to their customers.
Read our article about how to market your SaaS business for more tips.
10. Get New Clients & Grow Your Business
When you promote your products and services, you’ll start to get interest from potential clients.
Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your SaaS business.
Read our article about how to effectively grow your SaaS business to learn more.
Starting a SaaS Business FAQs
Why Start a SaaS Business?
SaaS businesses offer many benefits, including the following:
- Recurring revenue stream: SaaS businesses typically have a recurring revenue stream, which means they can predict and budget for future income.
- Scalability: SaaS businesses can be easily scaled up or down to meet changing market demands.
- Flexibility: SaaS businesses can be quickly adapted to meet the changing needs of their customers.
- Lower overhead: SaaS businesses have lower overhead costs than traditional businesses because they don’t need to invest in expensive infrastructure.
What is Needed to Start a Successful SaaS Business?
To start a successful SaaS business, you need the following:
- A great idea for a software product or service that meets a market need.
- The right technology and tools to develop and deliver your product or service.
- A marketing strategy to promote your products and services to potential customers.
- A sales strategy to sell your products and services to customers.
- The right people to help you execute your business plans.
How Can I Start a SaaS Business From Home?
Starting a SaaS business from home is a great way to get your business off the ground without incurring many overhead costs. When starting a SaaS business from home, you’ll need to make sure you have the following:
- A dedicated workspace: You’ll need a quiet place to work where you can focus on your business.
- The right technology: You’ll need a computer and the software you need to develop and deliver your product or service.
- A marketing plan: You’ll need to promote your products and services to potential customers.
- A sales plan: You’ll need to sell your products and services to customers.
- The right people: You’ll need to find and train the right people to help you execute your business plans.
How Can I Start a SaaS Business Online?
Starting a SaaS business online is a great way to reach a global market. You'll need to make sure you have the following:
- A great idea for a software product or service that meets a market need.
- The right technology and tools to develop and deliver your product or service.
- A marketing strategy to promote your products and services to potential customers online.
- A sales strategy to sell your products and services to customers online.
- The right people to help you execute your business plans.
What are Some Tips for Starting a SaaS Business?
Here are a few tips for starting a successful SaaS business:
- Find and fill a need: Develop a software product or service that meets a market need.
- Keep it simple: Don’t try to do too much. Focus on developing one great product or service.
- Get the word out: Promote your products and services to potential customers.
- Sell, sell, sell: Use a sales strategy to close deals with customers.
- Build a great team: Find and train the right people to help you execute your business plans.
- Never stop growing: Constantly strive to improve your products and services.
Where Can I Find a Simple Checklist for Starting a SaaS Business?
A simple checklist to use when starting a SaaS business is as follows:
- Choose Your Type of SaaS Firm: This should be based on what you are best at and how much experience you have. Remember to always keep your interests, skills, and experience in mind.
- Name Your SaaS Business: This should be done carefully, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Determine Your SaaS Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a SaaS Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations you will be required to apply for a business license and/or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your SaaS Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the products and services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your products and services.
Start a Successful SaaS Company
Starting a SaaS company can be a successful venture if you have a great idea and the right team. Use these tips to get started on the right foot and watch your business grow.