The SaaS (Software as a Service) market offers incredible opportunities, and if you’ve decided to venture into this area of business, you can be sure that you have made the right decision. According to statistics, the global SaaS workload grew to 206 million in 2018 and it’s predicted to reach 380 million by the year 2021.
But it can be hard to build a SaaS business from the ground up, especially if you’re new to this field. A large number of businesses make mistakes in the early stages, mistakes that could easily be avoided.
If you want to escape this fate, keep reading to get some great tips on how to build a SaaS business from the ground up.
Choose your domain name
A good domain name is necessary for any website that strives to be successful. A domain name is what you type in the URL section of your browser to get to a specific website. To put it simply, your domain name is your website’s address on the internet.
Here are some things you need to take into consideration when you’re choosing your domain name:
- The extension. A domain name extension is represented by the three letters at the end of your URL. The best and most popular choice is the .com extension. According to research, 42.48% of all domains end with .com. Other popular and acceptable extensions are .net and .org.
- Length. Stay clear of long domain names. Ideally, your domain name should be between 6 and 14 characters long. The most common length is 14 characters.
- Keywords. When you have a website, SEO should always be your top priority. This is why you need to include keywords that are related to your niche into your domain name. Not only will it boost SEO, but people will know the purpose of your website as soon as they look at your URL.
- Price. Some people believe a good domain name will cost them a fortune, but that doesn’t have to be the case. You can find the cheapest domain names that will fulfill all of the necessary requirements.
Build a product that will solve a problem
Before you start developing software, ask yourself two questions:
- Will it solve a problem for entrepreneurs, business owners, or employees in certain roles?
- Are people asking for a product that will solve that problem?
If the answer to both of these questions is yes, you can be sure that you are on the right track with your product. It might not be as successful as you hoped, especially in the early stages, but at least it won’t fail. The most successful SaaS companies provide products that either solve problems or make people’s lives easier.
While you’re developing your product, you will probably think of dozens of new features you can add to it. Even if you think they could be useful, don’t add them unless beta users, customers, and prospects have specifically asked for those features.
If you’re just working on an assumption your customers will like those features, you will most likely just invest a lot of time and effort in a product that won’t be able to make a profit. Just to be on the safe side, stick to what you know is needed and in demand.
Build a mobile app for your SaaS business
People don’t only use SaaS products on their desktop and laptop computers, but also on their mobile devices. If you want to have as many customers as possible, you need to build a mobile app for your SaaS business.
Just keep in mind that there is a difference between mobile apps and mobile websites.
In some cases, a SaaS app only adds value to the already-existing service. However, if it’s well-built, the app could stand alone and become an independent app. Some features of a stand-alone SaaS app include:
- Easy download. An app doesn’t need to be downloaded from a desktop. Users can download it directly from the app store, which saves time.
- Based on cloud technologies. If you want to share information through a stand-alone app, you need to export your files to a service such as Dropbox or email.
- Different monetization model. A typical SaaS app is paid through a monthly fee that is based on various features. With stand-alone apps, the cost is paid only once and is determined per person.
Whether you want to use a SaaS app that is connected to the service or is a stand-alone app is up to you. But if you want to keep up with your competition, a mobile app is a necessity.
Introduce live chat
There are various SaaS companies out there, and some of them are your competitors. When users are trying to choose which company they want to purchase a product from, it can be overwhelming. Most companies offer look-alike software with similar features, and it can be hard to compare them.
Users want to know if a product will be able to solve their specific problem and fit their needs. That is why you need to introduce live chat and be able to answer your prospects’ questions 24/7.
According to live chat statistics, live chat has the highest satisfaction level for any customer service channel, recording the figures from 73% to 81%. Additionally, more than one-third of consumers expect to see a live chat feature on a company’s website.
Introducing live chat also puts you one step ahead of your competition, as only 9% of companies use live chat.
Valuate your business
Let’s start by saying that SaaS valuation isn’t an exact science. It’s not enough to compare your company to competitors on the market, as a lot of factors can influence SaaS valuation. When a competitor sells their business, you don’t know how large-scaled it was and why the sale was made in the first place.
However, you always need to know how much your business is worth in case you want to sell it.
There are two ways to evaluate a SaaS business, and the tactic you use depends on the size of your business.
- The SDE method. Also known as seller discretionary cash flow, this method is used by businesses that are valued under $5,000,000. It is calculated by subtracting all of the costs and expenses from the company’s gross income.
- The EBITDA method. This stands for earnings before interest, taxes, depreciation, and amortization, and it is used by larger companies. The first method may work while you’re still a small startup, but you will need to switch to EBITDA if your business grows.
There are a lot of other factors that apply here, but these two methods are the basics of SaaS evaluation. However, it would still be useful to do more research on this topic.
It could be a great risk to build your own SaaS business. The competition is fierce and it requires a lot of hard work.
However, as long as you follow the tips you’ve just read about, you will grow from a small start-up to a successful business maybe sooner than you expect.