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Guide to starting a SaaS company
Harikrishna Kundariya11/8/22 5:15 AM7 min read

A 10-Step Guide to Starting a SaaS Company

Over the last decade, software-as-a-service companies are conquering the business world like an avalanche. The primary reason behind this growth is: SaaS enterprises have a lower entry barrier than traditional businesses. Entrepreneurs believe that their love for SaaS products influenced them to rethink their business ideas. These types of businesses are proved to be profitable, and they are generally more agile and creative than their counterparts.

Moreover, the SaaS marketplace is growing at rocket speed. According to a recent study, the global SaaS industry is worth $152 billion as of 2023 and is predicted to surpass $227 billion by 2025. If you’re planning to start a SaaS business in 2023, there are some aspects to start thinking of such as customer acquisition, lifetime value, metrics, minimum viable products, etc. These elements are also associated with SaaS enterprises.

What is a SaaS Company?

Source: Freepik

In simple terms, SaaS businesses use software to offer a service to clients. These companies are in charge of the complete SaaS product development or lifecycle right from conceptualization to completion, including hosting and maintenance. The client can access or use the software remotely, via the internet.

Often, a SaaS company has a subscription-based pricing model, with clients paying a monthly or annual fee to use the software. Several SaaS providers also offer a free-trial period during which customers can use the software for some time before deciding whether to opt for a subscription.

How to Come Up With an Idea for Your SaaS Business?

Source: Freepik

Determining an issue that software can resolve is the perfect way to come up with an idea for your SaaS company. To start, think of issues that you or your co-founder, or other business owners have encountered in your niche.

Once you have determined a problem, you can brainstorm and analyze potential solutions that can be delivered as software. Observing the existing solutions in your respected industry and identifying areas that can be enhanced is another way to come up with an idea for your SaaS company.

This can also include building a brand new feature or redesigning the existing one in order to make it more efficient and user-friendly. After identifying the opportunity, you can analyze whether there is a scope for this solution and whether there is any enterprise providing a similar solution.

Once you have come up with an idea, entrepreneurs should validate them by interacting with potential customers. This will help them in identifying whether there is a genuine requirement for their proposed solution and whether people are ready to pay for it. Market surveys, research, and interviews with people in your target niche can assist entrepreneurs to validate their ideas.

How to Establish a Successful SaaS Company as a First-time Business Owner?

                                                                        Source: Freepik

1. Determining a problem and building a solution

As discussed above, come up with an idea or identify the problem that most business owners fail to fix when starting a SaaS company. If there are any competitors in your respected niche, research them comprehensively and come up with how you can enhance them and approach customers to use your service instead of your competitor’s.

2. Outline a business plan

After identifying a problem or generating a business idea, the next thing you must do is outline a business plan. The primary reason to do this is that a business plan offers you a clear picture of how to take it forward. SaaS is a severely competitive industry; without a perfect business plan, you cannot conquer it in the long term.

A standard business plan contains all necessary details such as your product USPs, market analysis, pricing, business model, financial projections, and a lot more. Before starting a business, it is advisable to outline a plan in an accessible format.

3. Validate your SaaS idea

Once the business plan is drafted, you must validate your business idea. This will help you understand if it works or not. Research everything you require to know about your business.

You can ask for help from industry experts, successful entrepreneurs and professionals to understand their takeaway on your idea. You can also generate surveys to evoke responses from your prospecting customers. In this way, you can understand if your product solves clients’ pain areas.

One of the largest wins in business is understanding your clients better. The more you know them, the better your company will be. You can directly interact with prospecting clients to know their needs about your SaaS product.

Note their feedback in order to enhance your product for the future. Also, analyze what your competitors are up to. You must understand what they are offering, their pricing, and their USPs clearly. You should be well-versed in all these elements to get a head start.

Pro Tip:

Hire a remote developer in order to develop your SaaS product and help you jumpstart your business. The primary benefit of hiring remote developers is that while they handle all the product developing, testing, and deploying operations, you can focus on establishing and marketing your SaaS company.

4. Build a Minimum Viable Product

Build a minimum viable product (MVP) with few features to be updated in the later period. This allows you to know the market response. Once you have launched the MVP, you can get it tested among your early customers and update your product in line with their suggestions.

5. Strategize a pricing test

Pricing is an important aspect of your SaaS product’s success. Collect the pricing details of your competitors and analyze the effort and solution you have given. Pricing must be on the basis of the spending capacity of your target niche. Draft a reasonable pricing strategy to engage customers from various walks of life quickly. While drafting a pricing strategy, you can consider below revenue generation models for your product:

  • Monthly Subscription
  • Free trial + subscription
  • Tiered pricing
  • One-Time flat payment
  • Advertising revenue.

6. Describe your company and its vision

How will your customers or users know your brand? What would be the title of your company? Without a title, it will be like an engine without an ignition switch. It is time to determine your SaaS company name, logo, and design. Design aptly, keeping in mind the other players in your marketplace.

The logo and brand name mustn’t distract the customers. It should be unique and demonstrate the purpose accurately. The logo and the design must offer a constant idea of the SaaS product you have developed.

7. Finish all the legal operations

When you are starting a SaaS company, you must cater to all the legal needs for hassle-free business operations, including the crucial step to form an LLC. You can onboard a legal consultant specializing in startups to help clear all your legal obstacles to run your enterprise without any hurdles. Here are some of the legal regulations that your SaaS company needs to be complied with if you are based in the United States:

Financial compliance:

  • ASC 606
  • GAAP
  • IFRS.

Security compliance:

  • SOC 2 certification
  • PCI DSS certification
  • ISO 27001 certification.

Data security compliance

  • GDPR
  • CCPA.

8. Be mindful of investment

You need sum to launch your SaaS company in the market and get things rolling. Outline a well-defined investment plan for your SaaS enterprise matching the big picture of your business. Either you can reboot your startup or rope in investors from your friends or family. 

9. Opt for a beta-testing approach

Beta testing is similar to a test launch, offering actionable customer feedback to improve the final product. This approach will assist you to avoid possible failures and also allows you to know the authentic user expectation.

10. Product release & marketing

At this stage, your company launches the first version of your SaaS product to the market and obtains feedback from day one. Post-launch, you will get an understanding of product reception from early users. In addition, you must set up a complete suggestion loop in this stage in order to enhance your product constantly.

Launching your SaaS product is the completion of half the battle. The actual game starts when you design strategies to get your product to the right set of audience. You should have a powerful marketing plan for your product to onboard more customers. For instance, you can create interest in your product via social media, videos, blogs, email, or landing pages.


In the end, if you are planning to start a SaaS company, ensure you have read and considered the above guideline as a starting point. It will offer you a strong foundation on which to establish our enterprise, and your SaaS company might be the next big thing in the world.

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Harikrishna Kundariya

Harikrishna Kundariya, a marketer, developer, IoT, ChatBot & Blockchain savvy, designer, co-founder, Director of eSparkBiz Technologies @Software Development Company. His 10+ experience enables him to provide digital solutions to new start-ups based on IoT and ChatBot.