Around the world, individuals, businesses and governments use SaaS daily. From video calls to emails, A modern, technologically driven society cannot escape it. By 2022, the market is predicted to grow from $44.4 billion (2017) to $94.9 billion. SaaS has created a world of opportunities for businesses and consumers looking for accessible software solutions. For entrepreneurs it’s the perfect business model for those looking to build a business fast. By Jack Underwood(pictured) , CEO and co-founder of Circuit
New SaaS business owners don’t need a huge amount of money to launch their first version. Or to survive a six-months sales cycle and make their first bit of capital. How do I know? In 2017 aged 23, I founded and bootstrapped a start-up to $10M in ARR and now have over 50,000 paying users across the globe.
Here are my top tips on how to bootstrap your SaaS start-up:
Experience is not everything
One of the best things about the SaaS model is that new business owners succeed in areas with limited experience, as the learning cycle is shorter than for other business models. This means you can build, learn and gauge insights needed to make the best product without having prior knowledge of it.
If your software solves an issue, is usable, and you are humble enough to learn from others and your mistakes, you have all that’s necessary to build a lucrative product. An initial lack of understanding may lead you to make wrong product decisions along the way. Ultimately, these mistakes don’t matter if you can realize the issue and learn from the process. Speaking to your users is essential to define what’s going wrong, and the process is dependent on this.
Pay-per-click advertizing is key
Together, PPC advertizing and the SaaS business model work well, especially for start-ups looking to drive early customer adoption.
PPC is very cheap at a low volume, which means you can get a fair amount of app installs for as low as $0.30 each. The next stage focuses on breaking even, not making a profit. As soon as you can raise average revenue per install (ARPI) higher than cost per acquisition (CPA), you can kickstart a growth cycle.
Increased spending will result in more installs. These installs give you more opportunities to test, learn and make product improvements. These improvements will lead to higher ARPI, and this higher ARPI allows you to pay a higher CPA. It’s a cycle that can run and run, with each turn fueling further product improvements, revenue and learnings.
The ultimate goal is to make a profit on every customer. Still, in the early days, SaaS businesses should focus on getting as many customers as possible to iterate quickly and find product-market fit.
Quality over quantity
Having masses of data is usually seen as the core of every good, early business decision – but this should not be the only driver of decision making. It could be more productive in the early stages to look at qualitative, rather than quantitative data when building your SaaS product.
In the early days, usage volume is typically so low that it’s impossible to derive significant, actionable results from user data. For example, it may take months to discern the material impact of two different layouts of the same feature. The solution? Leaning on qualitative data – which means speaking directly to your users. Their honest feedback will show if you’re on the right track, point to where you should pivot and help you build a user-friendly, intuitive product that will see subscriptions rise.
Competition should guide you, not rule you
A large number of entrepreneurs worry about creating products in a space where there’s competition. However, it’s nearly impossible to find a market with no competition. If there were one it probably wouldn’t be one worth entering.
The existence of competition indicates that a market exists. If there’s someone else solving problems for customers, there’s a good chance you can build a business in this space too.
The comparison should end here, however. If you’re trying to achieve market dominance, simply following in your competition’s footsteps won’t get you anywhere; you’ll always be behind. More importantly, you won’t be learning what works and what doesn’t. So when it does eventually come time for you to move forward with your roadmap, you’ll have to start the learning process from scratch.
To learn more about Circuit, visit www.getcircuit.com