SaaS systems fail all the time. In fact, if a SaaS is run by an owner or company with no experience in SaaS, it is overwhelmingly likely that it will crash and burn. Often due to a single, simple problem.
It’s so simple – which is why I’ve dubbed it the “easiest way to fail”.
The Number One Way To Fail Is To Fail To Validate Your SaaS
Validation is one of the key steps in the ‘idea’ stage – long before you ever start to build the system. We cover the entire process for this in my ‘How To Kick SaaS’ book, but here is the brief rundown.
Validating your SaaS business means verifying your footing, and there are several key elements to check:
That the niche you’re targeting isn’t too crowded
That you have a unique and compelling selling proposition
There is a market base for the product or service
There is a demand for the product or service you’re providing
Your research confirms that customers have a specific desire for exactly what you’re providing
That you know who your customers are
And that you know how to reach them and what to say
That the demand is ample enough that your sales will cover your expenses, with plenty of excess
SaaS Validation Questions List
In order to help break this checklist down further, I have a list of questions that I ask every customer that comes to us looking to build a SaaS (more on validating your SaaS in our free book “How To Kick SaaS” here). If you can answer these questions in detail, then you should have all of the information you need to fully validate your product. Obviously, there are a lot of questions created from this list, but this is a great start.
Why are you offering this service?
What are your goals for this offering?
What is the problem you are solving? What is the solution to the problem? Is there a need for this solution that is strong enough that people are willing to pay for it?
Can you fill in the blanks: “My company solves ____________ problem for _____________ audience”?
How well do you know this market?
What is your timeline to get to market?
Is it critical that your system gets to market by a certain time, and if so can you make that timeline?
What are your budgets? Build, operations, support, marketing, & sales
Do you understand all of your costs?
How long will it take until you are cash flow positive and do you need investment?
How will you be distributing this project? Describe your current method as well as potential other methods.
Who are your buyers? If you don’t already have quantified buyer personas,
Can you make a list of buyers to call today including their name, email, & phone numbers?
Do they want what you’re selling? How do you know?
Have you thoroughly researched your competition? Who are they? Do you have a spreadsheet of what features overlap your features?
How does your price compare to your competitor’s price?
What is your unique selling proposition?
What is your unfair advantage? If you don’t have one, what would it be?
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One of the Best Things You Can Do is to Successfully Pre-Sell Your SaaS
Sales, especially pre-sales, are where the rubber hits the road for any business, but particularly for a SaaS business. If you can convince a cross-section of your targeted base to sign up and be notified of updates or to put money down early, then you know you have a winner. Especially since you can send them surveys, ask them in for interviews, collect metrics, etc, which can help you to determine the best pricing approach and figure out exactly what features need to be included with the initial build, and what can be added later.
The mistake that a lot of SaaS businesses make, especially first-time startups, is just skipping the entire validation process, going purely with their gut, and jumping into building the thing. Even the best ideas can fail without proper validation – you end up trying to sell to the wrong demographic, at the wrong price point, or your product comes across as tone-deaf because it’s missing something vital. The validation process gives you the opportunity to effectively crowd-source a lot of vital information so that you can make informed decisions. These are likely things that you would learn later but at a much steeper cost.
Upfront, it will take a couple of days or weeks (sometimes more) to gather all of the information you need. But compare this with the tens or hundreds of thousands of dollars that you will spend building the system, and validation becomes just a drop in the bucket.
More importantly, validation is an investment. You will learn something which will improve the end-product; OR, quite possibly, you will learn that the system’s odds of becoming profitable are too slim to press forward. In that case, you just spent a few hundred or a couple of thousand dollars in order to save fifty or a hundred times that much – and that beats every Black Friday deal you’ve ever seen.
Whatever You Do, Validate Your SaaS Business Ideas UPFRONT
You have to go through a full and complete validation process if you’re going to be successful; proper validation doesn’t guarantee success, but it greatly increases your odds.
So add this in alongside all of those commonsense phrases you hear all the time:
Don’t drink and drive.
Spay/Neuter your pets.
And always, always, always validate your system.
Jason Long is the founder and CEO Of JH Media Group as well as a number of other businesses. He is always interested in new businesses, new ideas, and new ways to change the world. He has over 18 years of experience in design and development, he has served in a variety of different roles ranging from designer to CEO. Most of his time is spent working on the build and development of new ventures while traveling the world.