Starting A SaaS Business – How to Prepare (SaaS Guide Part 1)

„Failing to prepare is preparing to fail“ – although Benjamin Franklin might not refer directly to SaaS software in his famous quote, it is a good idea to lay the groundwork for your future SaaS business. Otherwise, your company will rest on an unsteady foundation and things will become far more difficult.

In this sense, welcome to the first part of the blog post series „How to Start a Successful SaaS Business“. As a reminder, this web resource guide is based on a 4 step process. If you want to find out what it’s all about, please check out this introductory blog post.

The first step of this process, “Mindset & Basic Decisions” is all about preparation. Unfortunately, this crucial step gets neglected by a lot of aspiring software entrepreneurs – with far-reaching consequences.

So if you are inches away from building your initial SaaS product, please take a step back.

Because, first of all, you need to make some important decisions about your software business. I’m talking about serious decisions that will accompany your business for the rest of its life.

What kind of business do you want to have? Do you want to get rich or do you want enough money to live? Do you want to go big or niche? Do you need money from investors?

If you don’t answer these kinds of questions, your business will always be a flag on the breeze. But if you make a conscious effort in making these important decisions, your SaaS journey will become much easier – and your chances of success will increase dramatically.

Quick Words Before We Start

For convenience, every web resource is labeled with 3 tags:

  1. Information element: Forum post, Blog post, Podcast, Video, Tutorial, or Tool
  2. Target group: Basic (basic entrepreneur advice) or SaaS (specific SaaS advice)
  3. Information type: Theory (i.e. methods, strategy) or Practice (i.e. examples, concrete tips)

Following this convention, a web resource tagged with „Podcast, SaaS, Practice“ describes that a web resource is a podcast, which contains practical SaaS advice.

Why Should I Start a SaaS Business?

First of all, you need to make sure that you actually want to start a SaaS business.

Because, don’t get fooled, building a profitable SaaS business is certainly no joke. You need to master aspects like development, automation, marketing, sales, support, and hiring. Besides that, there are other lucrative business ideas that are absolutely worth looking at, ranging from online-shops to selling information products.

I am not mentioning all of this to confuse or even demotivate you. I just want to make sure that you are ready to sacrifice blood, sweat, and tears for your SaaS software business, that’s all.

That being said, starting a SaaS company can work out perfectly for you since it is a lot of fun, can be very lucrative, and has a lot of advantages over other business types.

The following web resources will help you to determine whether SaaS is the right choice for you:

The Ultimate Guide to Software As A Service

  • Blog post (Reading Time: 30 minutes), SaaS, Theory
  • Summary: A basic SaaS guide covering topics like „What is SaaS?“ , „What is A SaaS Company?“, and „Types of SaaS Products”

10 reasons why SaaS-model is better

  • Blog post (Reading Time: 10 minutes), SaaS, Theory
  • Summary: A short list of reasons why SaaS is beneficial for users and companies

Is SaaS here to stay? 

  • Forum post (Reading Time: 10 Minutes), SaaS, Theory
  • Summary: A Quora-Thread discussing the question if SaaS will last. Quick Answer: YES!

When should you start a SaaS?

  • Blog post (Reading Time: 5 minutes), SaaS, Practice
  • Summary: Amy Hoy, a SaaS founder herself, helps you to find out whether you are ready to start a SaaS business. Epic Read!

5 Things I Wish Somebody Told Me Before I Founded My SaaS 

  • Blog post (Reading Time: 10 minutes), SaaS, Practice
  • Summary: This title is self-explanatory.

The Critical Lessons I Wish I Had Known About Before Starting A Software Company

  • Blog post (Reading Time: 15 minutes), SaaS, Practice
  • The title is self-explanatory, part 2.

Growing a SaaS Business is HARD

  • Video (Duration: 6 Minutes), SaaS, Practice
  • Confessions about the daily struggles of a SaaS entrepreneur

SaaS is ripe for disruption 

  • Blog post (Reading Time: 15 Minutes), SaaS, Theory
  • Summary: Justin Jackson talking about the current state of SaaS and discussing new pricing models for SaaS products

Fulltime Vs. Side project

Building a SaaS business from scratch is hard and time-consuming. This is, in particular, the case, if you have a full-time job (and even a family to feed).

Thus, you need to find out which option is better suited for you – starting a SaaS business on a part-time or full-time basis. As the following web resources already suggest, I recommend starting a SaaS business on the side:

Should you start your business part time or full time?

  • Blog post (Reading Time: 5 minutes), Basic, Practice
  • Summary: A practical checklist to find out if you should go part- or full-time.

Build a Startup Without Quitting Your Day Job

  • Blog Post (Reading Time: 10 minutes), Basic, Practice
  • Summary: Aytekin Tank, a successful SaaS founder, details his strategy on how to build a business on the side.

10 steps to start a business while working a full-time job

  • Blog post & Infographic (Reading Time: 30 minutes), Basic, Practice
  • Summary: An Epic guide by Ryan Robinson about how to start a business on the side. This is a must-read!

Do’s and Dont’s for starting a business while having a fulltime-job 

  • Blog post (Reading Time: 5 Minutes), Basic, Practice
  • Summary: How to start a side business from a legal perspective.

Bootstrapping a business with a full-time job and a family to feed 

  • Podcast (Duration: 40 minutes), SaaS, Practice
  • Summary: Two SaaS founders explain how they build a profitable SaaS business on the side while having a full-time job and a family to feed.

Niche SaaS Vs. Big SaaS

Almost every successful SaaS entrepreneur will tell you the exact same thing: the most important aspect about starting a SaaS business is choosing the right market.

In this context, you need to understand the difference between vertical and horizontal markets:

Do successful SaaS companies target a niche market or go mass market? 

  • Forum post (Reading Time: 20 minutes), SaaS, Theory
  • Summary: Quora-Thread highlighting the importance of niche-markets.

Vertical Versus Horizontal Markets

  • Blog post (Reading Time: 15 minutes), SaaS, Theory
  • Summary: Empirical guide showing the differences between vertical- and horizontal markets in SaaS.

One-person SaaS apps that are profitable? 

  • Forum-post (Reading Time: 15 Minutes), SaaS, Practice
  • Summary: examples of one-person / small team SaaS businesses who became successful.

Bootstrapping Vs. Funding

Will you finance your business from your own funds, or will you rely on external capital from investors?

Before you make your decision, you need to understand the pros and cons of both approaches:

12 pros and cons of raising money vs. bootstrapping 

  • Blog post (Reading Time: 15 minutes), Basic, Theory
  • Summary: 12 Founders break down when you should raise money and when you should not.

SaaS Startup: 5 Key Bootstrapping vs. Fundraising considerations 

  • Blog post (Reading Time: 15 minutes), Basic, Theory
  • Summary: Strategical thoughts worth considering when you seek fundraising.

10 bootstrapping principles 

  • Blog post (Reading Time: 15 minutes), Basic, Theory
  • Summary: 10 principles to adopt a bootstrap-mindset

4 Strategies for successfully bootstrapping your startup 

  • Blog post (Reading Time: 15 minutes), Basic, Theory
  • Summary: Practical advice on how to bootstrap a business.

Angel Investment – Guide 

  • Blog post (Reading Time: 60 minutes), Basic, Theory
  • Summary: Great & Extensive guide on how to find angel investors.

Bootstrapping vs. VC Funded? You’re asking the wrong question

  • Blog post (Reading Time: 15 Minutes), SaaS, Theory
  • Summary: Colin Nederkoorn is introducing the hybrid-concept of fundstrapping.

Business Fundamentals

On a basic level, a SaaS business is still a plain old business. So if you want to build a successful Saas company, you need to learn some business fundamentals.

The following resource list could be endless, but I just have selected a small set of resources to get your thinking processes going:

Tim Ferriss’s advice on starting a business

  • Video (Duration: 19 Minutes), Basic, Practice
  • Summary: Epic business advice from Tim Ferriss (including book recommendations) – this is a must-watch!

How to strategize as an entrepreneur

  • Video (Duration: 15 Minutes), Basic, Practice
  • Summary: Business strategy  101  – „4 Phases of a business“ & „How to prioritize your time”

4 Questions to start any business 

  • Video (Duration: 3 Minutes), Basic, Practice
  • Summary: Noah Kagan asks you 4 radically honest questions about your business.

The passion fallacy

  • Blog post (Reading Time: 10 Minutes), Basic, Theory
  • Summary: Why passion alone isn’t enough & on what you should focus instead.

The truth about entrepreneurship

  • Blog post (Reading Time: 5 Minutes ), Basic, Theory
  • Summary: Harsh facts about the life of an entrepreneur.

What are the life skills a startup CEO must learn to rise to the top 

  • Forum post (Reading Time: 20 Minutes), Basic, Practice
  • Summary: Quora-Thread discussing the qualities & characteristics every CEO needs.

Why entrepreneurs should start a 1000-dollars startup 

  • Blog post (Reading Time: 10 Minutes), Basic, Practice
  • Summary: The 1000-dollar mindset – don’t even think about building a billion-dollar company, instead, try to make 1000 dollars first.

5 Steps to make the transition from Wantrepreneur to Entrepreneur 

  • Podcast (Duration: 60 Minutes), Basic, Practice
  • Summary: Stop lying to yourself by avoiding the wantrepreneur-trap.

Are you done? Please check out the second part of this web resource guide.