The evolution of technology resulted in a large number of startup models we couldn’t even imagine a decade ago. The SaaS (Software as a Service) model is definitely one of the most interesting ones.
Many people use SaaS on a regular basis even though they might not be familiar with the term. Just think about Trello, Slack, HubSpot, or HootSuite; chances are you’re probably using at least one of them. Well, they’re all successful SaaS companies.
But what exactly is SaaS?
SaaS is a software distribution model, where the program is hosted by a third-party provider. Instead of downloading the software to run on a computer/laptop, users access it over the Internet. SaaS is usually sold via a subscription model.
What are the Benefits of Using SaaS?
SaaS has generated quite a lot of buzz in the last few years as businesses are striving to reduce costs by delegating and automating minor processes and tasks.
According to a report published by Computer Economics, about 60% of all companies have already incorporated some percentage of SaaS, whereas more than 35% are aiming to increase their investment in the near future.
There are many reasons why companies choose SaaS, but here are just a few:
- Low initial cost
- Short implementation time
- Limited need for staff
- Minimal staff training required
- Technical issues like database management and release management are handled by a vendor
Sounds like SaaS is scaling rapidly. You got that right.
If you want to join the SaaS bandwagon, listen up: SaaS companies tend to grow faster than companies in other industries. Experts predict continued growth in the following years to an estimated $55 billion by 2026!
Ready to develop a kick-ass SaaS?
First, you need an awesome idea.
How to Generate SaaS App Ideas
1. Don’t Think About SaaS Ideas
The best way to get a great SaaS startup idea is – not to think about SaaS startup ideas. Instead, look for problems that need to be solved. And to find problems, you don’t need to look far; think about the problems you have.
Solving a problem that frustrates you might be the best way of finding an idea for your startup.
In fact, many successful business ideas started out as solutions to personal problems.
For instance, Joel Gascoigne got the idea to start Buffer, a platform designed to manage social accounts and scheduling posts, while using Twitter. He had started to share links to quotes and blogs he found interesting and soon realized that his followers really liked these tweets. So, he decided he wanted to share more similar content.
Joel started to share content manually and quickly figured out that it would be a lot more efficient if he could schedule his tweets. “The key pain I ran into here was that I would have to choose the exact date and time for the tweet…and so my idea was born: I wanted to make scheduling tweets ‘x times a day’ as easy as tweeting regularly.”
By December 2017, the company had $16 million in annual revenue.
Another interesting example is the list-making application Trello. The founders Michael Pryor and Joel Spolsky were looking for a way to make their lives more organized. They took the idea of sticky notes on a wall and transformed it into a collaborative platform. Their goal was to create a clear and adaptable tool which would allow users to easily manage their projects no matter where they lived or worked.
In 2017, the company had 25 million signups (which means that it increased its user base by more than 420%) and was acquired by Atlassian.
2. Ideate & Validate
Another way to generate SaaS startup ideas is to actively work on generating ideas.
The first step is to analyze the market. Your SaaS idea doesn’t have to be 100% original but it does need to fill up a void on the market. You also need to think about whether you have experience, skills, and affinity for the industry you’ve chosen.
Once you’ve selected your industry, conduct research which includes some of the biggest players in that industry (using Google or social media) to learn about the challenges they’re facing. You can even contact several local companies and conduct interviews with their representatives. In addition, look into the tools these companies are already using and think about what could be improved.
Here are some questions that will help you determine the main pain points:
- What are the most cumbersome daily tasks?
- Do you have employees that could be outsourced?
- Which employee assessment apps are you using?
- What tools are you paying for right now?
The answers to these questions should inspire you to come up with a few possible solutions to their problems.
Your next step is to create a presentation and test your idea by talking to (or emailing) potential customers. Bear in mind that even though most people might react positively, that doesn’t mean they’re ready to pay for your product. If you can get some of the potential customers to commit to buying your product even before it’s finished, then you’re on the right track. The result of this process is a validated value proposition.
3. Use a Startup Idea Generator Tool
You can also use a business idea generator which randomly combines services and products, potential customers, delivery options, and pricing models. Sometimes the result might be total nonsense, but other times you might get a great SaaS startup idea or at least a starting point for brainstorming different models and possibilities.
Once you’re confident in your SaaS startup idea, the next step is to turn that idea into an MVP – a simple but functional product. If you’re not a developer yourself, use platforms like Guru and Upwork to find someone who will build the MVP for you. This will be far from the final version of your software but it’s enough to tell you whether people are interested in using it.
Finally, don’t forget to brainstorm some cool business name ideas. Even though having a great business model is crucial, a great business name definitely can’t hurt. The name defines who you are, identifies what you sell and helps people find you, talk about you, and recommend you.