Building a SaaS (Software as a Service) - it’s a business model many people have heard of, yet something that rarely people do. Not because of a lack of desire but rather a lack of knowing how to do it.
This is something I've been doing for quite a while and I want to share with you what I've learned, as well as highlight important steps to understand and what to do before even starting to build the SaaS.
So no distractions, close all your other tabs and just pay attention.
One big problem is people don't really go through the caveats of business models. I want to explain why you should and shouldn't do it so that you understand the drawbacks; because every business model has drawbacks. There're always pros and there're always cons and I want to explain both sides of starting a software as a service.
First off, what you're going to learn here and what you're not. I'll cover a brief outline here:
- Market selection: How to pick a market and then how to find a product to fit that market.
- Pre-marketing: What you do before you actually even build anything.
- Building: Actually building the damn thing.
- Launching/Scaling: The best way to grow your SaaS (it’s also pretty cheap)
- Exiting: How/When/Where to sell your SaaS.
Everything that you need to know to start from nothing and build a successful SaaS - all the way up to actually exiting it and selling your business.
On the flip end of this, what you're not going to learn in this blog is actually how to code. So if you came here wanting to learn how to code, I'm not going to teach you how to code. Because this blog is about building a software as a service, which is more about building a business then actually coding it.
You don't actually have to learn how to code to build a SaaS and I'm going to get into how exactly to do that. But what you need to know is that coding is just a very small part of the entire process and that's not something I am going to be getting into, but I will explain to you how you can build a SaaS without knowing how to code at all.
So why SaaS in particular? There are dozens if not hundreds of business models nowadays that you can use to make money on the internet. So why should you choose SaaS over something like e-Commerce or something like info products or affiliate marketing? Well the thing that's really cool about SaaS is that the margins are incredibly high. Just astronomically high and, in fact, if you do a SaaS correctly you can actually run the software for free.
Essentially any revenue you make is profit - your margin becomes a hundred percent.
For example in eCommerce your average margin may be 30 percent. I've seen businesses that have 50 percent margins. I've also seen plenty of eCommerce businesses that have 5 percent margins. With software it's going to be a lot higher than that, which is something that's a big draw for a lot of people.
Another one that draws a lot of people is the subscription model. Now making your SaaS a subscription is not totally necessary. You certainly can sell your software as a one-time package, but most softwares (the vast majority) are paid monthly as then you get recurring revenue.
With a typical product, let's say we use eCom for example again, most eCommerce products are not recurring. Now there are exceptions - supplements and sometimes topicals and essential goods people come back and repurchase.
However, most products that are physical you sell one time and then you never see that customer again.
With software you sell one time and then that same customer pays you every single month, as long as they're continuing to use your product. Which is incredible, can you imagine going to the store and buying a chair and every time you sit in the chair you send a check to the person that made the chair? That's crazy to think about. But that's how software-as-a-service works, as long as the users are continuing to use your platform they're going to continue to pay you every single month.
That is a massive draw when it comes to why you should start SaaS.
Those are the two pretty big reasons right there, there are a few other ones that I won't get into, but now I want to talk about why you shouldn't start a SaaS.
Why Not SaaS?
There's a lot of people on the interwebs that talk about a lot of different business models (including myself), and not everybody talks about the bad things about the business model. There's drawbacks to every business model and SaaS is no exception. It's not some silver bullet that is magical and great in every way, because there are drawbacks.
One of the big reasons is there's not a lot of good resources on how to do it.
This reminds me of when I started selling on Amazon - three to four years ago - there weren't as many resources as there are today, not even close. If you want to start an eCom business today the world is at your fingertips, as far as information goes, there's so much out there. With building a software company there's really hardly anything at all.
So again that's one of the reasons I'm writing this, which is to give some information for people that might want to start a SaaS due to there being limited amount of information out there. Starting a SaaS I'm not going to say it's more difficult than starting an eCommerce business but rather different, it's a different kind of difficulty. eCom is challenging in its own ways and so is software.
There are pros and cons to both again, but I would say the biggest drawback right now for SaaS is there's not a lot of information about how to do it. As well it can be pretty meticulous, meaning there's certain things you have to do in a certain way otherwise it's not really going to work.
It's challenging, but it's not impossible and I wouldn't necessarily say that it's harder than eCommerce or more difficult than any other business model. It's just different and there's not a lot of documentation that explains how to do it.
The most important topic, not typically given the importance it deserves, is market selection.
Market selection is something that most people don't spend a lot of time on. They kind of just see something or they have an idea and then they just roll with it. The reality is this step is probably the most important step or at least really close to being the most important step. If done right, everything else kind of falls into place correctly. So you want to make sure from the get-go, right out the gate, that you're doing this the right way.
First off, building a SaaS is not about a product - it’s building a business. It's not about building a product, it's about finding a market and then serving that market in particular.
Now I get that this may be kind of vague, so I'm going to give some good examples about softwares that have done just that.
What better first example then my own SaaS I created, which is Atlas.
The market for Atlas is Amazon FBA and other people that are selling on Amazon. They need all sorts of different tools and softwares to run their businesses. I singled out one particular thing that I liked (and also doing myself), which is how I found the market. I didn't make the product first and then go try to find the market. I found the market because I was already in it and then I was able to find the product or build a product around that market to serve the people in that market.
A great example as well is Shopify. People make all sorts of Shopify plugins and they charge monthly for them. These are technically softwares as services.
Another great one is Flexport, a logistics company that brought software into the world of importing and exporting goods. It's something that's really cool and something I found a long time ago. I'll give you a little more detail later in this blog on what they did and how they were able to become successful.
Another market is the finance and budgeting market, something that I know a lot about. Something that I'm very involved in and I actually have some ideas for a SaaS that I might want to build in the near future. I'll share this with you and if you happen to beat me to it then good for you! If not, then I'll probably build it.
The last example is actually in the health and wellness niche, it’s an app for the phone that's called MyFitnessPal.
The creator of MyFitnessPal actually sold his app to Under Armour just a few years ago for quite a sum of money. That's an example of someone taking a SaaS and going all the way through, all the way to exiting.
Once you've found a market that either you know about or at least you're interested in, you need to dive really deep into that market. You need to be doing a lot of research.
You are going to need to be joining groups, joining forums, joining facebook groups. By extension, you need to be reaching out to people, as well as following people that are the leaders in that group or market. Just really getting a solid understanding of how everything works, because in order to make a software that serves that market you have to understand the pain points of the market.
There's a lot of different ways that you can sell products but, I would argue the easiest way to sell anything, is to sell it based on the pain point. You just need to find a pain point in a market and then create a product, a SaaS, that heals that pain.
Following up on the examples I gave earlier, a big pain point in Amazon FBA was not being able to find enough products to sell. As well as not being able to find enough profitable products that you could actually make money selling on Amazon. That was a big pain point, finding products.
The pain point in Shopify was a lack of customization. Shopify gives you a template and they're like “here you go” and your store looks the same as everybody else's. So a lot of people started making plugins that allows you to customize your site and that alleviated the pain point of your site looking like everybody else's. These different plugins added all sorts of different functionality that you didn't get with Shopify out of the box.
Now with Flexport the pain point in logistics and importing exporting was… it's incredibly complicated. They were able to take a relatively complex system and make it really easy to use. I use Flexport for importing and exporting any goods because it's just so simple. You just sign up and then you fill out a page worth of information and then you're good to go.They brought software into a market that was experiencing a lot of pain due to complexity and they actually resolved that by making it less complicated.
For the finance and budgeting niche there're a lot of different pain points but, one that I kind of think of is pretty bad is not having a software that will automatically rebalance your portfolio. So if you know of any software that does that please let me know! I've been looking for something that I can just put in percentages of whatever I want to invest in and it automatically rebalances that every month or even every week.
It’s an idea that I've been thinking about building myself because I think that would actually help a lot of people out as far as wanting to have their portfolios diversified into certain sections.
And obviously the pain point in healthy living and wellness is when it comes to tracking your calories. It's a lot of hard work if you don't have an app where you just scan the food and it tells you exactly what calories are in it. MyFitnessPal does exactly that, you just scan food and then it counts the calories for you. That's something that normally would be very monotonous and annoying to have to do manually.
They were able to take something that's annoying or obnoxious or painful and resolve that. They were able to heal that pain and in doing so were able to sell to Under Armour for a substantial sum of money after they built their app.
Another pain point that you might overlook, and a lot of people overlook, is you might look into a market and see ‘oh there's a lot of tools that already exist in this market so I probably shouldn't make any more tools.’ Well the reality is maybe you should, because odds are those tools have a lot of things that are unneeded in their tool suite.
For example you have massive tools like HubSpot that have just a ton of stuff, but most people don't need all of those different things.
They just need one aspect of that whole software. ‘Why would I pay for the whole suite when I just need one thing?’. What you can do is you can look at software that already exists and say: ‘What are the pain points of this software?’ Then tackle those pain points.
You can actually go and find a larger software and you can just strip out pieces that people don't really need. And then you can charge a lower price for it and that will obviously attract a lot more customers to your software. It becomes exactly what they need and nothing more. Because why would you pay more money to have more stuff that you don't actually need?
So that's solving a pain point in itself.
So the last part of market selection is probably the most important part of market selection, as I referenced back in the beginning of this section. So this last part is the most important part of the most important step and that is to verify the market!
Just because you have a problem in the market - just because you know a few people that might have a similar problem - doesn't mean that it's a scalable and sustainable business. It just means that you and a few people have a problem with something. Well, sorry to break it to you, but that's not what makes a business.
You need to find a good majority of people that are experiencing a very similar problem. You shouldn't just go with it, you shouldn't just say: “Okay I've got this idea, there’s a problem in the market here, alright I got the product to solve it.”
You need to reach out to people in the market, in a non-annoying and non-spammy way. Ask in groups, if you're part of Facebook groups, or are on forums, or on reddit, or whatever. Just ask people, that are participating in that market, if this software would actually be beneficial.
For example, what I did with Atlas is I asked in facebook groups, ‘Hey, I’m thinking about building a software like this. Would this be beneficial to anybody?’. And I got a resounding yes, a lot of people said that they wanted it. As such I would recommend shooting for asking ~a hundred people or more.
Try to get a lot of people to respond saying something along the lines of: ‘Yes, that would be awesome and I would totally pay for it!’
Now at this point you're not selling your product so don't make it salesy (or spammy) just genuinely be curious. Because you are genuinely curious of the market and if this product is going to be a good idea. So you just want to verify it - you just want to ask people. Just very relaxed and genuinely asking people if they think that this particular product that you're thinking about making would be a good fit.
Then once you've verified the market, we can roll into our next step which is pre-marketing.
Pre-marketing is an essential step before even making the product. There is no point in making a good product if there is nobody wanting the product or haven’t even heard of the product.
We need to make sure that our product is going to be good and able to be sold. This is why we have to pre-market the product.
Now you're probably thinking, ‘We haven't even made a product yet, why would we do any sort of marketing?’ Sure, we haven't built anything yet, but at this point we have verified the market, we've verified that our idea is good and we want to move forward with it.
That is the reason for pre-marketing, it's not too complicated - it's actually relatively simple to do. It is a crucial step, especially if you want to have a successful launch. So on your launch day, when you show your software to the world, you want to have customers jumping on immediately. Pre-marketing helps you get there; it helps you get traction the day that your product opens.
It's a crucial step, not as important as the last step, but it is pretty important if you want to have a successful launch day.
The thing with pre-marketing is you can go really really hard on this or you can kind of take it more relaxed. At the very minimum what you're going to want to do is set up a simple opt-in page and a lead magnet. You can set up a simple opt-in page with ClickFunnels or LeadPages. Either way - you need an opt-in page.
You can build it yourself or hire a freelancer whichever you feel is most comfortable/efficient. The main goal is that you want to have a simple web page that has an opt-in form that someone can give you their email. So that they'll get notified whenever the software is available.
You want to start getting as many people as you can, getting as many emails as you possibly can into that opt-in form so that you can have a decent size amount of people. So that when you launch, you can actually have a group of people that will want to come and buy your software on day one.
Now like I said you can include a lead magnet, which is something that you give the person for free, this helps draw attention to your product by giving them what they need for free.
For example Atlas,the SaaS I created for Amazon sellers, is a software that helps people find products to sell on amazon. Our lead magnet that we give away for free is a guide on how to use a very specific tool called “Keepa”. It’s a guide that ensures that your products are going to sell, and we give it away for free in exchange for people's emails.
You could create a guide or something similar to this using a program like Canva.
Canva is something that I make a lot of guides in, because it's a really easy to use program and also makes really nice looking guides, worksheets, posters, thumbnails or whatever you might want to make. What you can do is use Canva to make a lead magnet filled with a lot of ideas and a lot of helpful information. You can give this away for free to get people interested in your software.
Obviously the lead magnet should coincide with the same market that your software is going to serve. I don’t think it would make sense to make a lead magnet on how to knit with a bunch of knitting patterns, if you're going to build a SaaS in the real estate industry.
Now if you want to take it up a notch you can actually start a blog.
It’s something that I think is a really good idea, because with Atlas we focused a lot on SEO - search engine optimization. It sadly takes several months to actually get any sort of traction when you're getting free traffic. However if you start early with the blog (before you even start building the software), then by the time your software comes out you've already got potential customers coming to your blog.
You already have free traffic, you already have people that are interested in your software, and maybe you talk about it in some of your blog posts, indicating that your software is coming soon. In short it's a really good idea to start a blog early, because the earlier you can start it, the easier it becomes to push those people to the software, as long as the software fits their needs.
I want to give you one big contemporary example of a company that spent a lot of money on pre-marketing, and that is Quibi.
Quibi is relatively new right now and it's a competitor to Netflix and Youtube. What they are doing is giving out little bite-sized entertainment, but at really really high production quality with big name actors and directors.
The reason I bring this up is they raised 1.75 billion dollars... It's one of the most well-funded companies that I have ever seen. What's more shocking is this all happened before they had a single customer. They had zero customers. They hadn't even finished the product yet and they already raised 1.75 billion dollars.
It's a little excessive if you ask me, but they did a really good job of pre-marketing. They had a simple opt-in page with an email form, you put in your email and it said you'll get notified the day Quibi comes out.
They progressed with building the software and set a launch date sometime in April. When they launched, they just sent out a massive email to everybody.
Tons of people came and got their app, now we will see if Quibi ends up being massively successful or not. It’s not just launching and marketing that makes a good SaaS - it’s all the steps combined together.
But either way what Quibi did was a great example of how to do pre-marketing right.
Now obviously you're not going to raise 1.75 billion dollars; you might not have any money at all when you're building this. What's why I think it's a really good idea to focus on free traffic. Content marketing. Making a blog. You can even start a youtube channel - all of which I used when starting Atlas. All of these free traffic forms will help drastically so that you will not have to use paid traffic.
You want to start building these free traffic sources out way before you actually start building the product, because once the product's done you should have already gotten customers that want your software. It's a good idea to start any kind of SEO, or any type of content marketing - even a podcast. Just start pre-marketing and getting the idea of your software into the minds of the people that are in the market.
Build The Software
First off, I want to say that, NO CODING IS REQUIRED.. In fact a lot of SaaS owners that I know don't know how to code at all. That's probably some thumbs up for some people and maybe some frowny faces for others.
The thing is just because you know how to code doesn't mean that you can build a successful SaaS, in fact it usually doesn't. If you don't know how to run a business, because a SaaS is most certainly a business, then knowing how to code and the technical side of things doesn't benefit you that much.
Maybe you can build an amazing piece of software, but if no one wants to buy it, and you built it for a market that doesn't exist, and you don't know how to do marketing, and you don't know how to do sales, and you don't know how to do anything besides code….. then it's effectively useless.
A SaaS is not a build it and they will come kind of thing, it's a build it and then you need to go find the people and make them come buy your software. So no coding is required to effectively get this objective done, although I will say I personally did learn how to code so I can build my SaaS, but again it's not something you have to do.
Odds are some of you reading know how to code and want to build it from scratch, while others reading don't know how to code, this is good news for both parties. Whether you're going to code it yourself or not you still need to answer some questions, and there's still a lot that you need to do when it comes to actually building out the SaaS.
Building the SaaS itself and answering a lot of different kinds of questions requires you to know your exact needs. And there're a lot of different needs that your software is going to have to fill, even though it may serve one singular purpose.
Some answers to questions that you will need are: Is it going to be a full-blown app on the phone? Is it going to need a login? Are you going to have to process payments? What kind of functionality are you going to use? Is it going to be a freemium model? What kind of pricing are you going to do?
These are all things that you need to be thinking about when you're building the app and when you're even preparing to build the app.
You need to be able to answer a lot of these kinds of questions, if not all of them. Almost every SaaS will require some sort of login and will require some sort of payment processor. The payment processor I use, and is really easy to use, is Stripe.
Stripe is a super easy to use, super friendly payment processor, and once you implement Stripe then maybe you can look at implementing PayPal as well. But honestly Stripe is the way to go. I use Stripe for literally everything and it's just so simple to use and their fees are very fair.
Now as far as the pricing goes I am quite a big fan of the freemium model. If you don't know what the freemium model is, it’s essentially a free plan, not a free trial, but a free plan as in a user can come on start using your software for free.
They can use it for free forever, however they have limited functions in the “free forever” plan. As compared to the pro version which offers the full content.
The pro version will cost money every month, but the reason that a freemium version or the freemium model works so well is because it gets people using your software.
That's really what you want, you want people to continually use your software. Because the more they use it the more likely they are to want to upgrade to the pro version and once they are in the pro version that’s when you get the continuous monthly income. On top of the upgrade, the more people you are able to draw into the free version the more good reviews you get. More reviews = more customers = more $$$.
This is what you want, which is to get people using it in any way that you can, and the freemium model is a great way to do that!
There's a lot of different markets out there for SaaS and some markets fit better with the freemium model than others. A perfect sample of the freemium model, where it works, is with Google's products.
You can use all sorts of Google's products for free: Google's Docs, Google Sheets, Google Slides. But they have a pro version for these products, while Google Drive is free - you have limited space. Once you upgrade you get extra space which costs you a certain amount per month.
This is the implementation of the freemium model. You've got a lot of free parts to your software but then you have the upgraded professional versions.
These upgraded versions are for people that need more and would pay for the services upgrade. Now you certainly don't need to give away as much for free as Google does because Google makes most of their money on ads. It's not actually through their software that they make the majority of their money.
B2C (business to consumer) are markets where you can have both a free and a pro version, but it actually is easier to sell a freemium model with B2B (business to business) market. Most B2B products that I've seen recently have free versions. They have freemium models, and there's a ton of them out there. You only pay if you use a certain amount or you only pay if you want to upgrade and have more features.
Now if you are going to code this yourself or you're going to find a co-founder, which I will explain later, one thing that will really help is not building the entire thing from scratch, as in with absolutely nothing. There's plenty of open-source templates and open-source boilerplates that you can find in all sorts of different repositories on Github.
If you go to Github and you search for “SaaS template”, “SaaS boilerplate”, “SaaS with Stripe integration”, or something similar, you're going to be able to find a lot of different infrastructures.
These have already been built by other people that have open sourced them, as in you can use it for whatever you want as long as it has a certain license such as the MIT license, which allows you to use it for commercial purposes. This means that you can take that code and you can do whatever you want with it. You can customize it, make it your own, as well as build on top of it.
This is kind of the world of coding as we know, building on top of what other people have built before us. Every language is built on top of what someone else built which then goes underneath it, all the way down to just binary zeros and ones. So if you are going to code and even if you're not and you want to know how to help your co-founder, look on Github and see if you can find any boilerplates or templates that people have made that you can build on top of.
The last thing I want to cover here is finding a co-founder, because like I said you don't need to know how to code. Now if you don't want to code then you can either build a SaaS using “codeless software”, which there are some out there, but honestly they're not very good… or find a co-founder. I would go the co-founder route; you can find somebody that does know how to code and you give them a percentage of the company
Now I know you're thinking, ‘Oh no! I don't want to give up any percentage of my company blah blah blah.’ Well then you are either about to pay a lot of money to hire a developer, pay a lot of money to hire a freelancer, pay a lot of money to hire an agency, or you're about to learn how to code yourself. Those are your options right there, so personally I like the co-founder route.
This then allows you to focus on building the business, because again this entire series is about building a SaaS business it's not about learning how to code.
Learning how to code is a lot, and I'm not going to lie, it takes a while. So learning how to code on top of learning how to run a business is going to take you a long time. If you find somebody that already knows how to code and you know how to build a business, then you combine those two skills together and it becomes possible to build a very successful SaaS.
I would at the very least consider finding a co-founder.
A great place to find co-founders is a site called Indie Hackers. You can, as well, find co-founders all over the web from places like Reddit to Facebook and everything in between. However I would recommend Indie Hackers as they have an entire section of the website that's made specifically for finding co-founders. The whole purpose of the section is for people looking for ‘technical co-founders’, which are the people that know how to code.
While on the flip side there's tons of people that know how to code looking for ‘non-technical co-founders’ - people that run the business side of SaaS. There're always people looking for each other in this group so again Indie Hackers is where, if I was looking for a co-founder right now, would go.
All I would do is post my idea and I would say this is the market that I want to get into, this is the product, this is what I need it to do, and I need someone to build it. That's exactly what I would do if I was looking for a co-founder.
Now one thing I want to point out when it comes to co-founders is that you should try to keep the majority ownership, in fact you really need to keep majority ownership. You don't want to do something like a 50/50 split.
With a technical co-founder, they will understand this. This is because whoever's idea it is and whoever's done the up front work like verifying the market (which as I said was one of the most important steps that you shouldn't skip) should have the majority ownership.
Now If you're reading this as a technical co-founder and you know how to code and you want to go find a non-technical co-founder to run the business side - don’t try to take majority ownership. If you see someone posting their ideas you should not split it evenly, whoever got the ball rolling first should maintain majority ownership of the company.
Now again the reason you don't wanna do 50/50 is because you can reach impasses. Essentially if you were to get to a point in the business where you both disagree on the direction to go and both have half ownership then the business can't go anywhere. This will lead to the death of the company right there, it'll just die right there at the crossroads. So as you are on the metaphorical road to success and you want to go this way and your partner wants to go this way then you have to agree. You must agree in a 50/50 split and there is no way around it.
You need to make sure that you are split appropriately with your co-founder, so maybe 70/30, 60/40, or even 51/49 but as long as you, the original founder, maintain the majority ownership, then you will have final say on the decisions as the business moves forward.
Once you've found a co-founder, if you're going to go that route, once you've found a boilerplate or a template you want to build on top of, and once you've determined all of your needs and everything that the software is going to do... then can we finally talk about actually launching the software.
Launch & Scaling
At this point you have done the research in the market, you have done some pre-marketing, and you've built the application.
The primary reason for this step is so that growing will be as easy as possible. You do not want to be spending excess expenses later down the line due to not being able to get customers early. One thing that I really want to emphasize on is something that I did a poor job when I launched my first SaaS, which was beta testing.
Beta testing is something that you should do with any product that you launch. You want to test the product with a small group of people; it's not enough to just have your developer test. Even if you built it or your co-founder did, it is not enough to just have one or two people testing the software. You should have a group of people, a dozen or so.
This is enough people to test, but you need those people to come in before you launch. It’s part of the launch section because you're launching it in a closed beta state and you want to make sure it works.
When I launched my first SaaS, I sent out an email to a bunch of people on launch day that I knew wanted to buy software.
However, I was a total noob and a massive problem arised... the website wasn't working.
People couldn't access the site that the SaaS was on. This would have been something that I would have found out if I had had some beta testers. Learn from this and make sure to have a really small group of people that you know and trust to come in and test the software.
If you do not have a dozen or so people that are in the market or that would not even know what your software is about, then what you need to do is just reach out to people that are in that market, the same market group you have been studying during the pre-marketing step, and ask them if they want to participate in a closed beta. Most people will say yes, but a way to incentivize this would be to make the beta free instead of paid.
This is up to you, but going with the free routes is probably your best shot on your first SaaS. It then allows your beta testers to fully test the software and get a solid understanding of the platform.
Once the beta test is over you can either let them continue using it by having them pay for it or not. Either way, running a beta test, either paid or free, is going to benefit you significantly on launch day.
Now what you do on launch day is fairly easy, it's the things you do leading up to launch day that will determine the difficulty of this step; going all the way back to pre-marketing. The goal is to get people excited for the launch of your software.
This can be done using pre-marketing techniques you started in the very beginning, whether that be a blog or if you started doing some sort of advertising or some sort of content marketing. You’ll have hopefully gotten some opt-ins and emails of potential users. Start sending emails a week or two maybe even a month prior to the official launch date notifying them of the great news: It’s nearly here!.
Say something like: ‘Hey! the software is about to come out. It's going to have all these features and it's going to be awesome. It's going to be the best! Be sure you're ready on this date!’ The goal here is to really hammer home the date that you want to launch it on so that it gets people thinking about it consistently.
Early on you can certainly email every other day or every couple days, but not everyday as it could drive away people from wanting to be a part of it. However, a week prior to launch you do actually want to email people every day maybe even twice a day. Definitely the day before and the day of because you want to make sure as many people see your software on the day it's launched as you possibly can.
This is obvious because you want to have an initial group of users come on and immediately start using the software. Once you have a solid group of intro users then it becomes a lot easier to continue to grow your software. This way you can get testimonials from people and you can get reviews that can improve your software and make it even better.
It's pretty important that you get some users on launch day, but you don't have to get hundreds of users on day 1. That would be a really successful launch, but just a dozen or a couple dozen users on the day that you launch would be fantastic.
This goes back to the importance of pre-marketing: if done right it makes this step very easy and much less stressful.
When it comes to scaling there's a lot of options, and I'm not going to get into every single one of them. What I will say though is that I really do like organic methods more than paid methods.
With Atlas, we grew it using SEO with a blog as well as using Google Ads. Those ads would show up if you searched our chosen keywords on Google. We thought about using YouTube ads and we toyed around with it, but mostly we just focused on SEO and Google ads.
SEO is something you probably should employ during the pre-marketing phase, andif you're building a blog or you're building out a YouTube channel or some source of content collection you want to frame it around the idea of the software.
Essentially pick topics that your ideal user would be interested in. What are they interested in reading? What are they interested in consuming content-wise? Then make content for that idea.
A great SEO strategy is to build what's called a cornerstone piece. It is a massive blog article made up of thousands and thousands of words, between 7,000 words to 10,000 words. It’s a beast to write.
What this does is summarizes the entire market. For Atlas we have a massive blog post that contains a bunch of stuff about online arbitrage. This is because that's our market is online arbitrage and that is what all of our content and services revolve around. All our other blog posts are linked to that cornerstone piece and anytime there's a guest post on someone else's blog they all link back to that main blog post.
This then makes that particular cornerstone post rank really high in Google. Just having a lot of backlinks and making the content really good makes people come to and stay on the page reading it. Google favors this kind of thing and will force your site up the ranking ladder.
Now maybe you prefer to go the paid route using Google Ads or any other kind of ads like YouTube ads, LinkedIn ads, Snapchat ads, TikTok ads, there are ads all over the place you can use. Just know you can pay for ads essentially anywhere. Again, at Atlas we used Google ads and those were pretty successful for us.
How you would set up a Google ad campaign is you target your main keyword and buy as many ads on the use of the keyword. For example, with Atlas it was ‘online arbitrage.’ That was our bread and butter, that's where we got most of our sales. By simply just targeting that singular keyword we got most of our results.
Now there were a lot of other keywords that we went after as well, but that particular keyword resulted in most of the sales that we got (80/20 law, anyone?). For Google ads you go after a particular keyword and you can bid relatively high on it. The content for the ad is just explaining what pain point your software solves; it's quite simple as you wont need to employ a bunch of copywriting extreme salesy nonsense.
You can really just say, “This is what our software does and if you're experiencing this problem then here's the solution.’ That's honestly, in my opinion, the best way to sell anything, simply say ‘You have this problem? Well, guess what - here's the solution! Go ahead and take it.’
This is the strategy you want to employ in any kind of marketing as well as any kind of scaling and growing - simply have a product that solves a pain point. This goes all the way back to pre-marketing and market selection, which is making sure that your product is solving a pain point! If you're solving a pain point, it's relatively easy to sell the product.
Going back to some free methods, you could start a YouTube channel. It's pretty straightforward: you just create content for the market that your product is serving. This is similar to my channel in which I talk about a myriad of different topics in the same market.
Then I built a SaaS around this market that has been really successful for me. This is a living, breathing, real life example of the fact that this works. You can start in any realm you want to, and for scaling your business there's hundreds if not thousands of ways to go about doing it. The ones I'm talking about here are ones that I've done, and have had had success with.
This does not mean that they're going to be the best fit for you, so look for creative ways to scale your business, but these are the ones that I like and are sustainable long term. Sustainable meaning it's organic and it's free traffic - something that's going to last a long time. The last point I want to hit on here is pretty important, and that is to sell your SaaS to the people that already want it.
You know the term called low-hanging fruit, essentially if you can't get the people that are in your target audience to buy then you built the wrong software for your market. If you can't get those people to use your software, then you are in hot water because those are the people that want it. Those are the people that need it and if you can't get them to use it (even for free) then you have a problem.
Now there are ways to solve this but you must try and tinker with each of them. There might be an issue just with pricing, maybe it's too expensive you just need to lower the price a little bit. Maybe it's too cheap which sounds weird, but if a software is too cheap people think that's not going to work in which case you may need to actually raise the price.
There are all sorts of different tests - try split testing with pricing and with the way that the product is pitched on the sales page or on the marketing page. You might have to play around with that for a little while before you find what works the best. This is something you should always do moving forward: be split testing your different pages making sure that you're trying different variations of the title, the images, the colors, even the fonts!
THat last one may be pushing it too much, but you get the idea. You should be split testing different ideas that you think might convert better and that might get you more sales.
But at the end of the day if you can't get people to buy it that you know should want it and you know solves their problem, then you're going to have rough times ahead. This again shows how imperative it is that you spend a lot of time in the marketing, pre-marketing, the market evaluation and verification segment.
This way you know the product that you're building is right for the market, that your market actually exists, and that it wants what you're building.
Final step, which is something almost every business needs to think about, is exiting. Actually knowing how to sell your business, this is something that I'm in the middle of doing. I’m currently in the process of selling my software business right now. I'm experiencing a lot of this very recently, so this is very fresh in my mind.
Exiting is something most people don't think they're going to do. Most never want to exit their business, I am no exception to this. I sure didn't when I built Atlas - I never thought that I would ever sell it. I thought “I'm going to just build this thing and I'll keep it forever and it's going to be great!”
Sadly, the reality is, you change your mind sometimes in your life and you don't want to continue doing what you thought you would be doing forever. Which is why you need to build your business to sell, even if you think you're not going to sell it, for two reasons.
One - you might actually end up selling it, obviously. Second - if you build it from the perspective that you're going to sell it then it makes it a lot easier to run.
This sounds weird, but it is true because you are excluding yourself from the business.
Normally when you sell a business you usually don't go with the business. Occasionally this does happen - like with Ring, which is a company that Amazon recently bought not too long ago. The owner and founder of Ring actually went with the company and continued to operate it.
However most of the time you're not going to go with the business when you sell it. You're the founder, the owner, but when you sell it there's a new owner and so you want to really exclude yourself from the business. You want the software, the SaaS, to run itself. What I mean by this is, of course, is you have to hire some employees, or do something so that you can operate the business without having to do anything yourself.
You actually take yourself out of the business altogether and it should run smoothly without your intervention. That's where you want to get it, even if you’re not selling it. Following up on that - you want to make sure it's as simple as possible because the more complex your business is, the less likely a new owner is going to want it.
A buyer doesn't want to have to figure out all the complexity of the company. Even if you were to keep it, it becomes less likely that you're going to want to keep it. If it's so complicated and convoluted then you're going to get to a point where all you think is ‘this is a pain to run.’
However, if you keep it simple with simple operations day to day and very simple integrations with other software, then it will entice you to keep it longer.
Whatever your software is going to do, as long as you're keeping it simple then you can sell it and it's a lot easier for you to run, if you wish to keep it.
Now something you're probably wondering is, how much you could sell your business for? There are different ways to value a software company and different companies in general. What I have seen and what I sold Atlas on is a monthly profit scale, where companies sell 24 to 36 maybe even 40 times the monthly profit.
This means if your software is doing about $2,000 a month in profit (remember from the very beginning of the blog that SaaS has a really high profit margin) then you could potentially sell your SaaS for $50,000 to even $80,000.
Now that's pretty substantial when we're talking about only making $2,000 a month, I mean $2,000 a month is barely enough for a single person to live on. But you could sell that business for potentially 80 grand and that's a lot more than $2,000 a month.
This is typically how these things are evaluated, between 24-25 to 35 even 40x multiple. For most businesses they will sell at maybe a 30x or high 20s something within that range. Atlas was valued at 30x multiplier; this is a very typical valuation that you would normally get.
Now, what changes those intervals? What makes a company more valuable?
Well there are a myriad of reasons as to why it’s lower or higher than these multiples. One, that I already mentioned, is simplicity and if the owner is involved in the day-to-day operations. The first thing that anybody that wants to buy the business is going to ask you is: ‘What do you do on a daily basis?’ This is because they don't want to have a bunch of daily basic activity to do. Odds are someone that's buying the business from you is going to want to grow it.
This is pretty much why anybody buys business, so that they can grow it. They don't want to spend a ton of time doing a bunch of daily tasks, they want to make sure that you're not doing anything every day to work on this business. If you were to say ‘oh I basically don't do anything, I only work like a couple hours a day or maybe a couple hours a week on this particular software.’ That's going to be a great thumbs up for a new owner and they're going to be more willing to pay even more for the business.
Another great one is not having a ton of overhead. If you've got a bunch of random expenses and you have all these other subscriptions that run the software, then it will devalue your company, which is why the first point I put here is to exclude yourself from the business and try to keep it simple.
These are two very important aspects when calculating the value of your company.
Another very big one is how long your company has been operating. A company that's only been operating for a few months is going to sell for a lot less than if it had been operating for two or three years.
Let's say you can build a business relatively quickly. If it's making real profits in its first six months, you could sell it right then and there. But just know that if you were to hold on to it for another six months you could probably sell it for a lot more.
These are the major differences between companies having 20x multipliers and 30x or even 40x multipliers.
Now if you're like me and you don't really know that many people that want to buy a business, then the best place that I found to sell a business is on Empire Flippers. Consequently, it’s also a great place to buy businesses.
E.F. is probably the best place to sell a business in the lower range (as in under $3 million).For example Atlas sold for multi six figures. It didn’t sell for millions of dollars, but it did sell for several hundreds of thousands of dollars which is pretty sweet if you ask me.
However there are a lot of businesses on there that sell for $20,000, $50,000, and $80,000. Some of these businesses are only making a thousand dollars in profit a month and they're selling for $30,000 dollars. That's pretty decent money, which is why I like Empire Flippers, because it's not insanely high like in the millions of dollars or tens of millions dollars.
Plus it's relatively easy to sell a business that's a little smaller, and the process with Empire Flippers is super easy. Essentially, all I had to do was have a call with someone that works there where they asked me about the financials of the business. I granted them viewer access to my Stripe account so they could verify everything.
After which they just had me list out my expenses and then they listed it on their marketplace. We actually found a buyer within 24 hours, which is pretty rare. On top of that they bought it at full list price. They told me that it takes close to two months on average to sell a business that's been listed on their marketplace. So keep that in mind, it's going to take some time - possibly a couple months - to actually find a buyer that wants to buy it.
I could just say that ‘I got lucky’, but the reality is I built a good business. And when you build a good business a buyer will see this and they’re going to want to buy it ASAP. They will want to lock it down quickly before anyone else can jump on it and that's exactly what happened. The better you build the business, the quicker you're going to be able to sell it.
A cool thing about Empire Flippers is that they sell somewhere in the 90 percentile of the businesses that are listed there. This means that if you get listed on Empire Flippers it’s pretty likely that you're going to be able to sell your business for at least somewhat close to the list price that you're asking for.
There's a lot of advanced stuff when it comes to exiting such as earn out and escrow and processing all of that. I won't get too much into it since this is a “brief” guide and is focused on how to get rolling with SaaS.
So exiting is probably the last thing on your mind right now, but it is something that you should pay attention to when you're starting. Because if you build it with respect to the idea that YOU MIGHT sell, then you can exit big. Keep this in mind as you're starting out.
You'll usually want to start with the end in mind, even if you don't think you're going to exit. Even if you don't think you're ever going to sell, you still want to build the business with that in mind. This makes it a lot easier to run and operate even if you don’t ever sell.
I wanted to write this post to give some perspective and advice for starting a SaaS from the business point of view rather than coding point of view. As there is not much information out there covering the business aspect and I know every piece of knowledge can go a long way!
Thank you for reading and hope this will help you in your business venture(s).