How To Start A Software Company (SaaS) Step By Step
Software by far is my favorite type of business. There is something about designing and solving problems through software that is fascinating to me. Today I own two softwares; BookingKoala, which is my main focus and SalesHangry, a quick project we launched to help us make more sales and increase engagement.
If you know my story, you may know how BookingKoala got launched. If you don't, at 19 I started King of Maids a cleaning service. We built a software to scale King of Maids quickly and efficiently. Later, when others found out about the software they wanted to buy it, tweak it and use it for their own personal reasons. Instead of selling the software, I saw an opportunity to turn it into a separate company. Although we launched the company in 2017, the process started several years prior to the launch.
Later in 2019, we designed SalesHangry as a marketing strategy to get more sales for all of our businesses. Somewhere along that time, I fell in love with designing and building software. If you share the same passion, I will show you how to start a software business at a low cost.
Even though we spent a lot of our own money building out the software (1M+ up to date), there is an alternative way of validating and starting a software company at a low cost. Lets quickly take a look at some of the pros and cons of starting a SaaS (software as a service) business:
Pros of starting a SaaS business
Low start-up costs (under a $1,000) when crowdfunding
Easy to scale once you reach product-market fit
Unlimited income potential
You can have a client the very same day you launch
Can all be done remotely
Larger profit margins
Cons of starting a SaaS business
High costs when not crowdfunding
Can take a long time to reach product-market fit
Can also take a long time to build
If you decided that this is the business for you, let's gets started.
Your goal has to be to change an industry. If that is not your goal, you will not survive in this business. The competition you will face is on a different level, and they want to change the industry as much as you do (at least some do). The work will be long, it will be tough, and to win, you have to stay extremely focused. If this didn't scare you, then this business will be fun. It will be challenging, and if you pick up traction, it will be rewarding. Through this business, I learned a lot about myself, much more than I did from any of my other businesses.
It's time to validate your idea through crowdfunding. I did not do this part because my concept was already validated. BookingKoala was built for my own company based on the problems I was facing. I always knew that others were facing the same issues as we did when scaling King of Maids. I also had a lot of money saved up, so we started to re-design the software immediately.
Even though we did not validate the idea, we still started a pre-launch to attract as many potential customers as possible while the re-design was in progress. Those people would become our first set of customers when we launched.
Since most people are not as fortunate as I was when they start, you will need to validate your idea first by collecting money before you begin to assemble a team (crowdfunding). If people give you money to build a prototype for the first version of your software, then you can continue with the project.
Find a short, memorable, and easy to pronounce name for your company. Also, make sure that the name you go with is available when buying a domain. For example, when you look at all the companies, I'm part of; Sassy Egg, King of Maids, BookingKoala, Saleshangry, 1PRCNT, they all had those domains open:
Having the same domain as your name will make your company look more professional. When buying your domain or seeing if your name is open, you can use:
Also, when picking your name make sure that it fits your vision. If your software revolves around sales like mine, you may go with a name such as 'SalesHangry.' However, this becomes a problem if you decide to expand your services outside of sales.
Due to the name, everyone will automatically assume you only service the sales sector and changing your name later is a big deal. Many of those who remember your name may no longer recognize you. It's important to set everything to align with your vision.
You'll need to find a good logo for your business. Make it look professional and relevant to whatever it is that you are selling. Good logos are memorable and simple. If you need help making a logo, you can visit Fiverr.
There will be two ways that you can get your idea validated. By validated, I mean 'funded' which does not technically mean that your idea will succeed when it goes live. However, this will tell you that someone or a few people believe in your idea and are willing to help you get it launched.
The first way is to raise capital through a private investor or a firm. Going this route will force you to give a huge percentage of your company in exchange for capital (not recommended).
The second is to get it through crowdfunding (what we will focus on).
In both cases, you will need to prepare a plan that includes details of the software, how long it will take to get the first version launched, and the amount it will take to build. To find all this out, you will need to do a lot of research (more on that below).
You don't necessarily need a team operating out of silicon valley. You can have a remote team from anywhere in the world, as long as you trust them and they are credible. Do the research and interview many different organizations to get an idea of pricing and their approach to building a software (this is going to be the hardest step).
Figure out if you're the sole owner or if you're going to give away the percentage of the company to someone from the organization that is helping you build the project. Be well protected in both cases and make sure you negotiate fairly for both parties. You don't want issues to arise later. For help with that, you can use Rocket Lawyer.
Once you have all the details, prepare an entire strategy along with the time and cost to build the software.
Landing page or crowdfunding sites
To raise money successfully through crowdfunding, you can do it in two ways:
Landing page (recommended):
You will need to create a simple landing page to gather details from interested investors. This is the preferred method because it's not hard and you don't have to give a percentage to the company or site who helped you raise the capital.
Once you've purchased a domain name (mentioned earlier), connect it to your landing page that you've created using LeadPages.
When building out your landing page, you will have to focus on the details of your idea, the funding goal and the time it will take to get the software launched.
The purpose of the landing page is to build interest and to capture personal details. Gather a name, email, and a phone number. Then, you will contact the interested party with more information. If they are interested in the offer, they will give you money.
Usually, the deal goes something like this: 100 people pay $1,000 to get a lifetime membership. If you get 100 people, this should be enough to get your idea launched, but it also depends on the concept. If the idea fails, that is the risk the people are taking. If it succeeds, they will be happy with the investment. Protect yourself and all the parties with a good contract. For help with that, you can use Rocket Lawyer.
The idea of using a crowdfunding site is the same. Instead of driving traffic to your landing page made via Leadpages, you will drive traffic to the crowdfunding site. On that site, you will have the same details, and if someone is interested, they can give you money right away. A crowdfunding site will publicly show your goal as well as how much people pledged towards your goal. Here are some of the popular sites you can use:
Even though these sites do take a considerable chunk of the money raised, they can be of benefit. They will promote your campaign in front of their followers, who are very engaged, and if they love your idea, they will help you raise additional funds.
When you start, make sure to register your business online.
LegalZoom is a service that will help you register your business online. Provide them with some information, and they will file in the necessary paperwork on your behalf. Once the process is complete, they will send you legal paperwork stating that you are an official business.
On top of that, LegalZoom also offers other services you may use in the future. I used them a few times when I started because they provide legal advice for a very affordable price.
Make sure that you are prepared with a desktop or a laptop. If your budget is tight, invest in a keyboard for your tablet if you have one. This doesn't have to be an expensive purchase. See what offers you can find on Amazon - click here to view offers.
Working on a larger screen is much more comfortable. I can't imagine starting out on a phone or a tablet. On top of that, a lot of the services that you will be using are not mobile compatible. Be well prepared.
Focus on establishing a brand the moment you start your SaaS business. People trust brands and building trust in the first few years should be your primary focus. Focus on your online image and get more reviews, more testimonials, more publicity for your company. Your profits will eventually follow. Even during your crowdfunding stages, address all potential customers.
Marketing is where things usually go wrong. If you have little to no money, don't go starting with paid ads, nor should you go out and hire a marketing company that offers services for $250 a month. It will end bad nine out of ten times.
Reach bloggers and talk to people. Connect with them and tell them about your goals. This is a numbers game, and some people will help you out at no cost. Figure out how can you both benefit; if the blogger can use your software give them free lifetime access.
When you gain enough people to say yes, tell them the day you start your crowdfunding campaign. Whether it's driving traffic to a site like Kickstarter or a landing page using Leadpages, have people post about it the same day or week it goes live.
Throughout the campaign, be engaged with potential users. If people have questions, address them quickly, and if your campaign succeeds, you will have funds to launch your software. If it doesn't, learn from your mistakes and try again.
When you raise your funds, don't wait around until the software is finished. Start a pre-launch and gather more prospects that will wait for the release of your software. It will be a massive benefit if you start with a ton of people paying for your software regularly. Remember those who already paid for a lifetime membership will not give you more money so you will need to find paying customers when you launch your business.
I'd also recommend checking out a blog post I wrote on how to sell more stuff - click here.
If you ever are thinking about hiring a marketing company, I'd also encourage you to read this post - click here.