How to Start a Successful SaaS Company in 10 Simple Steps in 2024

Start a Successful SaaS Company - Featured image

It’s challenging to start a SaaS company. 

You’ll find it difficult to acquire customers and generate sustainable revenue.

Without a good strategy in place, your SaaS company is probably unlikely to reach the levels of success that you desire.  

CB Insights discovered that 90% of SaaS startups fail. While this emanates from different failure factors, the most common denominators are poor strategies and research.

It’s therefore important that you know how to start a SaaS company so that you can increase your chances of becoming profitable and successful. 

With the right strategy, you can create a high-potential product with a unique value proposition that can help you to stand out from the competition. It may also enable you to attract and retain long-term subscribers. 

In this article, we’ll discuss how to start a successful SaaS company in 10 simple steps in 2024 to help you establish a profitable and sustainable business. 

Let’s get started. 

1. Identify a significant problem

A poorly crafted solution can put off your clientele.

If you create a solution for a problem that doesn’t meet the actual needs of your market, then chances are high that your customers won’t take to it very well. 

Therefore, you may experience very poor product adoption rates if your product doesn’t directly match and meet the pain points of your market. 

It is the case today that 70% of software implementation failures are because of poor user adoption, according to Forrester Research. This was largely because these solutions didn’t adequately address a significant problem. 

So it’s critical that you identify a problem that’s worth solving, and solve it exhaustively, when you’re starting a SaaS company and want to cultivate long-term success. 

Start a Successful SaaS Company - Identify a significant problem

One way to gather insights is by seeking answers directly through interviews and customer surveys that can help you understand the problems of your target audience. 

It’s also important that you ensure that the problem is actually significant enough or occurs frequently enough to justify a solution. 

Moreover, I advise that you should consider creating a solution in a field where you have industry experience because you’re more likely to have a first-hand understanding that can help you craft a necessary solution. 

Alin Dobra, who is the founder of Bunneyshell, initially realized that maintaining software stacks had so many repetitive and manual tasks. 

He has created a SaaS startup that generates $12,000 per month by providing automated cloud solutions for developers. Ultimately, he used his industry experience to identify and solve a significant problem. 

2. Come up with a business plan

A business plan is instrumental to your company’s success.

If you don’t have one or if it is poorly drafted, you may get unrealistic projections that can shackle your growth and prevent you from achieving your true potential.  

Without a great business plan, it can be hard for you to determine the viability of your SaaS idea, and this can increase your risk of failure. 

A Wiley study discovered that 65% of businesses that succeed have an elaborate business plan in place. This is a huge wake-up call that proves how a business plan can make a big difference. 

So when starting a SaaS company, you want to create a business plan that can help you determine chances of success so that you don’t waste resources.

Start a Successful SaaS Company - Come up with a business plan

Crucially, I recommend that you choose a format that works best for your goals. You can create a lean startup plan that is concise and helps you get started quickly or create a detailed traditional plan that can help you secure loans & attract investors.

When writing your business plan, you should describe what your company does and aims to achieve while providing an elaborate market analysis that substantiates your understanding of your target audience.

Revolt Technologies was keen on starting a Fintech company that specializes in AI-driven solutions but it had trouble with commercialization. 

However, they secured $3,000,000 in funding and were able to test the viability of their product early because they used a third-party service to create a strong business plan.

3. Reevaluate your SaaS business idea 

Now it’s time to validate your SaaS ideas to see if they hold up.

When you were writing a business plan, it’s likely that you made certain assumptions that may not necessarily be true and this can lead to false expectations.

Therefore, you should reevaluate your SaaS ideas so that you can adjust your plan accordingly and avoid rushing into a product that may not be profitable. 

LendingTree determined that only 2 in 5 SaaS startups become profitable, and this proves that not all business ideas can make you money, so it’s critical to test an idea before you invest time and money into it. 

Start a Successful SaaS Company - Reevaluate your SaaS business idea

There are a number of ways you can test out your idea, but I find that the most accurate strategy is to seek the opinions of your potential customers. For instance, you can perform opinion polls on focus groups to validate market interest. 

Once you’ve formulated your product and want to increase brand exposure and build awareness, Boterns can help you get your concept out there through our data-driven content marketing strategies. 

Click here to schedule a call with us for a quick brainstorming session on how we can use content marketing to catapult your company to success.

Rich Blyth is an experienced software developer who quit his job to start a company where he would build and sell bootstrapped MircoSaaS apps.

To date, he has generated over $500,000 in subscription income, thanks significantly to astute market research. He validated his SaaS app ideas by conducting interviews on his focus groups. 

4. Think about your pricing strategies

 It’s a very delicate balance to find the right pricing strategy. 

If you look to undercut the competition and go too low, you can incur losses. On the other hand, if you price too high, you can also scare off potential customers. 

Ultimately, the lack of pricing intelligence may make you choose prices poorly for your SaaS company, and this can lead to lost sales and revenue.

Paddle has discovered that up to 94% of SaaS companies regularly update pricing throughout the year, which has been caused by unprofitable pricing strategies and inflation as well. 

It is for this reason that I think choosing the right pricing strategy is a very important part of this guide on how to start a SaaS company that’s built for success. 

Start a Successful SaaS Company - Think about your pricing strategies

So you can choose to go with a subscription-based pricing model, which can help you generate recurring income. You may also offer lifetime licenses, which are ideal if you want to generate cash fast on a time-limited SaaS product.

Overall, I recommend that you consider the demand for the product, the costs of maintaining it, and what your competitors are offering. This information can help you create the right pricing strategy. 

Hulu is a B2C SaaS company that was founded when there were already established streamlining competitors that controlled the market.

The company adopted a competitor-based pricing strategy that helped them to find an excellent pricing point for their product. This has contributed to Hulu reeling in revenue of over $10.7 billion in 2022 alone. 

5. Set up a robust brand foundation 

You’ll probably face stiff competition no matter your niche. 

Without a strong business identity, your SaaS company may become easily forgettable or hard to discover and it’s easy for your product to go unnoticed even if you have a high-quality product to offer. 

If you make serious branding mistakes, your company and its products can be received negatively and this can lead to poor business outcomes. 

In fact, Microsoft recently established that 59% of SaaS companies lose customers due to bad branding. This entailed a myriad of branding mistakes as well as poor customer experiences. 

If you’d like to build a powerful SaaS brand, I find that it helps that you embrace unique traits, values, and vision that set you apart from your alternatives. 

Start a Successful SaaS Company - Set up a robust brand foundation

Then, you want to communicate this message in a way that succinctly captures what value your software provides to your users. You should also choose consistent typography, colors and logos that can communicate your brand’s character at a glance

Most SaaS developers may not have experience with marketing and branding, which is why I recommend that you work with a SaaS marketing agency that can lend you their expertise. 

When Slack was founded in 2009, they wanted to create a communications hub for gamers that would feel personal and encourage loyalty. 

They embraced unconventional branding strategies that helped them grow quickly, with a notable tactic involving strategic video marketing campaigns that helped them appeal to the innate interests of gaming communities. 

6. Devise a SaaS security strategy

Your company will likely handle personal information. 

It’s your responsibility to ensure that your applications and infrastructure at large are highly secure to help you protect this data and avoid regulatory penalties that can cripple your workflow before it even gets going. 

Notably, the lack of a comprehensive SaaS security strategy can make your SaaS company susceptible to digital threats, which can taint your reputation. 

Adaptive Shield revealed that 55% of security executives struggle with SaaS security incidents, which resulted in hefty fines, lawsuits, and customer walkouts for their companies. Therefore, you should take SaaS security matters very seriously. 

So when starting a SaaS company, I find that it’s important to follow a few best practices that can help you reduce SaaS data security risks. 

Start a Successful SaaS Company - Devise a SaaS security strategy

First, you should determine the specific security, legal, and compliance requirements that will govern your workflow based on your specific industry and locality. 

You should also examine your potential partners to further help you minimize your risk. For instance, if you’re going to be partnering with cloud providers, they need to have strong security features that can help you protect your data. 

Additionally, I also recommend that you perform comprehensive penetration testing to help you eliminate vulnerabilities before going to market. 

Rebrandly, a link management platform, had huge GDPR and SOC2 risks that stemmed from the massive amount of customer data it handled.

With a third-party pen testing service, they unearthed 37 vulnerabilities across their infrastructure. This data helped them to create more secure applications and easily pass SOC2 audits. 

7. Explore your financing options

You may need a lot of capital to start a SaaS company. 

That’s because it may take time for you to gain traction with your market, so you may have to foot your initial running costs from your own pocket. 

Without adequate funding and financing, your SaaS company can run into cash flow problems that can eventually lead to bankruptcy. 

Unfortunately, a ResearchGate study revealed that 50% of tech startups run out of cash. This consequently makes it one of the single most important things that you need to address right off the bat if you’d like to avoid failure. 

So in this article on how to start a SaaS company successfully, I recommend that you pay extra attention to assessing your funding and finance options. 

Start a Successful SaaS Company - Explore your financing options

The good news is that there are multiple ways you can raise capital, one of which is by approaching angel investors and venture capitalists who can give you the funds you need to get started.

Alternatively, you can also try crowdfunding, where you request the general public to make financial contributions in turn for an equity stake. You may also choose to seek out grants and subsidies that can help you cover your research & development costs.

Virtual reality provider Oculus Rift needed a massive amount of capital to meet the costly expenses of purchasing and developing its proprietary technology.

They were able to raise more than $2.4 million in funding through highly successful crowdfunding campaigns, which involved giving supporters early access to its software for a lower price. 

8. Start developing your product

It’s now time to start building your product. 

However, it’s crucial that you go about your initial software development process very economically, otherwise, you risk sinking all your resources into just one facet of starting a SaaS company. 

When you spend too much time and money on initial product development, other aspects like marketing can suffer, and this can lower your likelihood of success. 

As a matter of fact, 45% of software projects overrun their budgets, according to a Flexera report. Among the key contributors to these were unforeseen increases in the utilization of resources. 

So before you take development to a large scale, I recommend that you start small.

Start a Successful SaaS Company - Start developing your product

For instance, you should embrace the minimalist approach when building your application for the first time. This requires that you only build vital features and then test those out and incorporate feedback to add more features as you go along. 

With such a strategy in place, you’ll find that you won’t waste funds on extravagant features that your users may end up not needing. 

This may also mean that you’ll have more money left over to handle marketing and branding to help you create market awareness for your product. 

Duolingo, which is a popular language learning application, started out with a very basic user interface and accommodated only six languages at the time of launch. 

Eventually, they expanded their features and offerings to now include 45 languages. They used user feedback to help them personalize learning experiences with intuitive software updates. 

9. Create a go-to-market strategy

You can market your SaaS product in several ways.

However, the wrong combination of marketing strategies can burn a hole in your bank account while it may also fail to give you the exposure that you’re after. It can negate all the hard work that you put into development. 

Without a comprehensive go-to-market strategy in place, your SaaS company can incur huge financial losses and delayed time-to-market for your products. 

OpenView discovered that 73% of businesses struggle to get their go-to-market strategies right. This has made many of them delay product lines indefinitely, causing huge losses in terms of development costs and other associated expenses. 

In light of this, I think figuring out your go-to-market strategy is also a key part of helping you crack how to start a SaaS company that will hit the ground running. 

Start a Successful SaaS Company - Create a go-to-market strategy

If you need a SaaS marketing partner that can help you sharpen your competitive edge, Boterns is here for you. With calculated link building and content marketing, we can help you to achieve a very successful launch. 

Click to reserve a call with us so that we can help you create a solid marketing strategy that can increase your new customer sign ups.

Bunq, a FinTech company, had trouble generating and finding high-quality leads using traditional marketing strategies after launching its products and services. 

They were able to improve lead generation by 40% when they turned to a proven lead generation tool to help them reinforce their go-to-market strategy. This has helped them to accelerate revenue growth. 

10. Proactively address customer churn 

You may realize that acquiring customers is only half the battle.

The biggest challenge you’ll face is ensuring that your existing users keep renewing their subscriptions. 

With it likely to cost your SaaS company more money to acquire a new customer than to retain one, a high churn rate can prevent you from growing. 

It’s very alarming to note that 65% of SaaS companies have reported a churn rate of over 10%, going by a For Entrepreneurs survey. While it may sound small, it’s a very consequential figure because it may mean losing your entire user base in under a year.

Consequently, you should set performance metrics that can help you identify and mitigate churn when you’re starting a SaaS company from scratch. 

Start a Successful SaaS Company - Proactively address customer churn

Beyond outright cancellations and failed renewals, you also want to pay close attention to downgrades because they may hint at impending churn.

With disgruntled users likely to spread negativity, I also advise that you regularly monitor factors around customer satisfaction and engagement via user surveys so that you can gauge and improve contentment levels.

You should also have regular review meetings with your team to help you address upcoming issues and get a general perspective of your company’s direction.

Groove, a sales engagement platform, had a churn rate that made their operations unsustainable and this threatened to take them out of business.

That being said, they eventually reduced churn by 71% by leveraging a data-driven approach to get to the bottom of why their users were churning and this helped them to improve their bottom line. 

Conclusion 

It’s easy to create a SaaS product that fails.

You may find it hard to sell SaaS products if you’ve created solutions that there’s no actual market need for.

So without sound research, your SaaS company may waste its hard-earned money and time on an idea that’s potentially dead on arrival. 

McKinsey determined that 50% of SaaS startups failed, partly because there wasn’t a need for their product. Consequently, you should reevaluate and validate your SaaS company idea beforehand.

With this guide on how to start a SaaS company, you can now formulate an excellent SaaS strategy. 

Click here to book your call with us to learn how we can help you build a SaaS brand that generates sustainable revenue. 

At Boterns, we can help you come up with profitable SaaS content marketing ideas by pinpointing gaps in the competitive landscape so that you can get a unique strategy that’s likely to sell. 

About the Author

David Kostya

David Kostya is a seasoned growth hacker specializing in SaaS SEO at Boterns. With a proven track record of elevating online presence and driving significant user growth for software startups, David's innovative strategies and insights make him an invaluable asset to SaaS SEO marketing. Join him on a journey to unlock the full potential of your SaaS platform.

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