Building a SaaS Startup: How to Find the Right Market and Business Model

SaaS software, or software as a service, is one of the most popular business models today. It allows for very low overhead costs, meaning it can be profitable with relatively few users. Startups like Salesforce and Dropbox made their start using this model, and many more are following suit now. But finding the right market and the right business model in which to sell your SaaS software isn’t always easy. To help you out, here are some tips on how to build a SaaS startup from scratch with confidence in your market and your business model.

What is your market like?

Building a software startup doesn’t happen in isolation. While some people might hope that they can use their pure idea-power to conjure up enough users, not every entrepreneur has what it takes—or more importantly, time—to grow by themselves. This is where developers come in. Your success as an entrepreneur depends on understanding your market as well as your customers, which means you need developers who are constantly working to refine their offering or service so that they can properly respond to your needs and continue moving forward with your business model. A great place for you to start is by finding out how much it costs at a top SaaS development company near you… that way, you know what kind of budget you’re working with when planning your startup.

What are your competitors doing?

A few months ago I asked Alex (CEO at Bidsketch) how they were building their business. He told me that he didn’t know much about his competitors. We check out what they’re doing every once in a while, but we don’t really study them in detail. We don’t want to get wrapped up in what everyone else is doing; it will only distract us from making our own product as great as possible, without worrying about what anyone else is doing he said. This approach makes sense for many startups, especially when you have a relatively new market or technology where standards haven’t been set yet.

What are you capable of doing?

Finding your customers is easier said than done. Don’t be discouraged if you can’t attract clients right away. You might have to try out different markets until you find one that likes what you have to offer, so don’t be afraid of starting small. Take it one step at a time and don’t give up—you never know where your next customer will come from!

Who will be your customers?

While you may have an idea for a product, it might not appeal to your market. Think about who your customers are; what their needs are; what value they will get from your product. When you know how people in your target market think, act, and spend money, it’s much easier to craft a messaging strategy that appeals directly to them. This is also important because no matter how useful your product is, if you can’t sell it effectively, then you won’t make any money—and neither will anyone else.

Get feedback from users

If you’re building a product for users—and not just for yourself—don’t start building until you know who your customers are. That can be scary, but there are plenty of ways to get input without spending any money. Sites like Facebook, Twitter, Reddit, Hacker News, Product Hunt, Quora and Inbound will give you loads of opportunities to connect with potential users online. Use SurveyMonkey or Google Forms if you want their feedback in an offline format.

Come up with MVP (minimum viable product)

A minimum viable product, or MVP, is your first release of a new product. It’s stripped down in every way possible—you might not even have all your features finished! The idea is that you’re focusing on only what you need to build initially to learn from real customers as quickly as possible. An MVP helps businesses validate their business model; figure out how many people will pay for it; and get valuable feedback on their value proposition. So how do you come up with an MVP?

Avoid cutting corners

There are several ways to build your software, but if you want to build a business, don’t skimp on your product. If you’re not willing to spend enough time or money on development that it could create value for your customers, then don’t build at all. It may seem tempting when things get busy or you need money right away; however, every dollar spent on building something that will save your company $10 in cost-of-sales is an investment that will pay off down the road. Plus, entrepreneurs who rush their products into the market rarely end up seeing success—something they would have achieved had they built it right in the first place.


With dozens of cloud software development companies available, how do you choose one? It depends on your particular needs. If you’re just getting started with no funding and need basic software that doesn’t require much customization, then a general software company may be able to help. But if you are hoping for enterprise-level service or want custom-built applications that will scale over time as your company grows, an application development company specializing in SaaS is likely your best bet. You also need to decide whether building it yourself or outsourcing development will work best for your startup—or if some combination of both makes sense.


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