Should New Entrepreneurs Start a SaaS Business?
- Filip Boksa
- Mar 15
- 3 min read
Starting a business today often leads people to the same conclusion: build a SaaS company.
Software businesses are frequently promoted as the ultimate goal for entrepreneurs. They promise scalability, recurring revenue, and the possibility of building something extremely valuable.
While SaaS can be an incredible business model, it is not always the best first business for new entrepreneurs.
In many cases, starting a service business can be a more practical and lower-risk path that still teaches the same core entrepreneurial skills.
After building a SaaS company worth over $30 million and a service business that has generated more than $15 million in revenue, the differences between these two paths become very clear.
You can watch the full explanation in the video below.
Why SaaS Businesses Are Attractive
SaaS businesses are appealing for several reasons.
First, they offer the potential for highly scalable revenue. Once software is built, additional customers can often be added without increasing operational costs at the same rate as traditional businesses.
Second, SaaS companies frequently generate recurring subscription revenue. Monthly or annual subscriptions can create predictable income streams that investors and founders value highly.
Third, the technology industry tends to reward successful software companies with high valuations. A profitable SaaS company can sometimes sell for significantly higher multiples compared to many traditional businesses.
These advantages are real, and they explain why so many entrepreneurs are drawn to the SaaS model.
The Reality of Starting a SaaS Company
Despite the appeal, building a successful SaaS business is often far more difficult than people expect.
Software development alone can take months or years before a product reaches a stable version. During this time, founders often invest significant money and effort without guaranteed results.
Even after a product is built, the challenges continue. SaaS founders must solve problems related to product-market fit, user acquisition, customer retention, and ongoing technical development.
Competition can also be intense. Many SaaS markets are already crowded, which means new products must offer clear advantages to attract customers.
For entrepreneurs who are not fully committed to solving these challenges long term, SaaS can become frustrating and financially risky.
Why Service Businesses Are Often a Better First Company
Service businesses provide a very different starting point.
Instead of spending long periods building software before earning revenue, service businesses can begin generating income quickly. A cleaning company, landscaping business, or mobile detailing service can often start acquiring customers same day.
Service businesses also provide immediate feedback from the market. Entrepreneurs learn how to sell, market, manage operations, and deliver value to customers from the very beginning.
These experiences build practical business skills that apply to nearly any industry.
While service businesses may not initially scale as quickly as software, they can still grow into highly profitable companies when structured correctly.
Many entrepreneurs use service businesses as a foundation for learning how to run a company before eventually expanding into other ventures.
When SaaS Can Be the Right Choice
SaaS can still be an excellent path for certain founders.
If someone is deeply interested in software development, technology products, and long-term product building, SaaS may be worth pursuing from the start.
However, the founders who succeed most often in SaaS typically share a specific mindset: they are willing to persist through long development cycles, technical challenges, and uncertain early stages.
SaaS rewards founders who are prepared for a long-term commitment and who are comfortable operating in highly competitive environments.
For these entrepreneurs, the potential upside of software businesses can be extraordinary.
Building Experience Before Transitioning to SaaS
Another practical path for entrepreneurs is starting with a service business and later transitioning into software.
Running a service business teaches core business fundamentals such as customer acquisition, operations, hiring, pricing, and systems.
These lessons can become extremely valuable when building software products later. Founders who understand real customer problems often create stronger SaaS products because they are solving issues they have experienced directly.
This path allows entrepreneurs to gain experience, generate revenue, and develop confidence before tackling the complexities of building software.
Final Thoughts
Both SaaS businesses and service businesses can lead to significant success.
The key difference lies in the level of risk, complexity, and time required before meaningful results appear.
For entrepreneurs who are fully committed to building technology products and prepared for a long journey, SaaS can be an incredible opportunity.
For those who want faster feedback, lower startup risk, and the chance to develop practical business skills, service businesses often provide a better starting point.
Choosing the right business model depends less on trends and more on the founder’s personality, risk tolerance, and long-term goals.
For many new entrepreneurs, starting simple and building experience first can be one of the smartest decisions they make.
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