My background is the digital marketing services industry. When you launch a digital services business, even as a solo consultant, it’s a pretty easy start if you have decent skills. I have many friends who have built multi-million dollar agencies after just an initial $5k investment to get a website up and do some basic marketing and traveling to conferences to speak.
SaaS is completely different. When I launched my company Credo as a SaaS product, I already had a bit of traction as I was running it as a leads business before – sell a lead, make money. Pivoting from a commission business to a SaaS business over the last few months has been quite the education, and today I want to share some of my learnings with you.
Solo Founding Is Hard
People give to pieces of advice to new entrepreneurs – don’t found a company alone and don’t start a marketplace. Not being one to really listen to the advice of others, I did both.
Solo founding is hard for many reasons. A brand new company has so much that needs to be done. In the words of Paul Graham, just don’t let your company die. His point is that if you can keep your company alive long enough, you will often be able to iterate your way into something that works and is successful.
This is much less likely as a solo founder because you come up against your own limitations all the time. With SaaS, if you are able to build and market a product and get people to pay you for access to it, you are much more likely to reach the point in a successful business. SaaS actually enables solo founders to have a higher chance of success.
One of my personal limitations is knowing that I am able to learn almost anything if I put my mind to it, but I also know that I do not have infinite time to learn all the things I could that are necessary to build and run a business. While SaaS enables me to do more, it also requires a scale that I cannot reach myself. Yet, I don’t want to hire people on fulltime at this point.
What to do?
Scale Beyond Yourself
Unless you are a rockstar magical unicorn developer marketer designer, you’re not going to be able to build a lasting beautiful valuable and automated product completely on your own. I always thought that this might be possible, but when you have customers there are many tasks to do all the time and you quite simply cannot get to all of them if you are going to move fast enough to corner your market.
This doesn’t mean that you have to hire full time, though. If you have the revenue to support it and that’s the kind of company you want to build, then hiring full time is absolutely an option. I want to build a sustainable and profitable yet low overhead business, so hiring full time doesn’t make sense for me.
The best way to get around hiring full time, especially if you have revenue which SaaS businesses should, is hiring contract. I’ve worked with multiple contract WordPress developers and designers on different parts of my current product because a skill level was required that I realistically could not attain in a reasonable amount of time. The money spent was well worth it.
I found my WordPress contractor through random chance on Twitter. When other people ask me the best way to find a good WordPress developer, I always send them to Codeable.io.
Launch Early and Often
In the very early days of a new company, you won’t have an audience. When you first launch, you likely won’t get mentioned on TechCrunch or even get a lot of love on social media. Your friends and family will be proud, but they likely won’t be your paying customers.
So what do you do? Launch again. Build your product, work on your market positioning, learn what your customers need, and launch again. Build up your email list while creating best-in-class content and finding your first 10 customers.
In the last 10 months, I’ve launched three times:
- On Product Hunt when I launched a big update to my old business model
- In January when I rebranded following a cease-and-desist for a trademark violation
- In May when I launched the Pro version of my company, the official move to SaaS
I’m a big fan of launching as often as possible. This does not mean giving up your focus in going after your market segment and ideal customers, but aiming for a launch of something significant every few months will help you:
- Get in front of new customers
- Perfect your launch strategy so each launch is bigger
- Refine your messaging over time as you reach new people
No one said you have to launch just once.
Listen to your customers
This is where many businesses fall down. When I launched Credo Pro with its three levels I got the first two levels correct with market segmenting and pricing, as evidenced by signups and people not balking at the price.
However, I completely botched the bottom level. I originally priced it at $100 a month plus a $200 activation fee, but I did not communicate why that was the case. The reality was that I priced it that way so that I’d feel ok taking time to review those applications because I thought there would be a lot more than there were.
So I made a change and rolled back that pricing based on feedback from people a) asking me why that fee was there and b) telling me that they would sign up if I removed that fee. I tested it for 2 weeks and saw that people would sign up and there would not be a lot of low quality submissions, so I kept the activation fee gone.
The only way I was able to find this out was by talking to my customers. Since then, I make time to get on the phone with at least one customer or potential customer a week. They help me to hone my priority list of tasks to do so that the highest value tasks are prioritized.
When speaking with them, I ask as many questions as possible. The goal is discovery, not helping them learn how to use the product better or correctly. As they give your their feedback, write down everything. Right now you are concerned with cataloguing everything for later prioritization.
One final tip – if you can, talk with potential customers who have not yet bought. In your early stages, you have plenty of these if you are selling a high-value product. Learn from them why they are not signing up yet. Eventually you will hear the real reasons coming to the top, so you can prioritize those features to expedite your growth.
MRR is fantastic
One of the best parts of running a SaaS business is consistent revenue. When Credo was a commission basis, I never knew month to month how much revenue I had to work with. Because of this, I had no idea what I could afford to spend in order to grow faster.
Once you have recurring revenue, you can decide where to invest. Because it compounds and compounds quickly as you scale, your expenses do not necessarily rise in lockstep. They can, as some companies show, but they do not have to and even if they do, you can often recover your profit margins within a number of months. Buffer did it recently too.
As you can see, by moving to a SaaS model I effectively doubled my revenue each month, and two thirds has been recurring.
The SaaS model now allows me to get more time from my developers so that I can automate and scale the company faster.
Everything Takes Longer Than You Think
This is the final reality of running any business, and especially a large-ticket SaaS business. Remember this quote from Dilbert creator Scott Adams:
Losers have goals and winners have systems.
I do believe that businesses should have milestones set so that you can celebrate progress. Seeing progress monthly (or more often if that’s the kind of business you run) can be incredibly motivating, and having milestones that you are trying to hit can also alert you to issues within your company when you fail to hit them.
This is why successful entrepreneurs build companies full of processes that work whether you are in the office, at the beach, or sleeping. If you set up your processes early, such as email marketing or content creation/editing/publishing/promotion, you are then free to do other things that will grow your business.
I was talking recently to a friend who is building his own agency. His way of building processes is hiring people to fill roles that he has been filling, but is not the best at. He hires someone to do sales for him and instantly 30-40% of his time is freed up to work on something new. That’s a process, not a job.
In SaaS, we often do this with software. In my own business I have been doing a number of tasks manually in the vein of doing things that don’t scale for a few months now to know exactly where the inefficiencies are. The tasks that take the most time or require someone to be at their desk at a certain time are the first to be automated.
Through this process of systematically automating many of my business and operational processes, I more and more free up time to focus on other tasks that cannot be as easily automated but are necessary to growing the business.
SaaS businesses are great businesses to run if you can make them work. Whether you want to take it big via venture funding or bootstrap your way to profitability and good income that affords a comfortable lifestyle, you can find a way to do that with a SaaS business.
Hopefully you can learn from some of my mistakes and lessons and build your own SaaS empire. Let me know about it via email – john at getcredo dot com – and I’ll cheer you on!
John Doherty is the founder of Credo, where you can find the best digital marketers to help you grow your business. He’s an SEO and digital/growth marketer by trade. In his spare time, he lives in San Francisco with his wife Courtney where they rock climb, cycle, ski, and explore the country and world often with their very large black labrador named Butterbean by their side.