SaaS Startup: Ultimate 20-point Checklist Pre-Launch
It is often said that the key to success for any is to find a need and fill it. That’s precisely what you are doing when starting your own SaaS company, whether it’s B2C or B2B.
This ultimate guide provides 20 things you need to know and consider before starting your software company. It covers topics like how much money will be needed, what type of legal entity should be used, how employees can be hired, and more.
1. How much money do I need to start my SaaS company?
This is one of the first and most important questions you will need to answer since many expenses are involved in starting a business. Of course, the amount of money you need to get started will depend on the size of your company. If you plan to start a two-person dev shop, your costs can be much lower than for a team of 20 people.
The initial money needed depends on many factors. But it’s important to remember that you will need enough money to cover your salary until the business is profitable. You will also need to have enough cash on hand so that you are not faced with having to borrow money from your friends and family.
At the very least, you will want to have enough money on hand so that you can cover a year’s worth of expenses. If you are looking for bank loans, most banks will look at how much capital is needed for 12 months.
A good rule of thumb is to assume that you won’t make any money for at least a year. That means you need enough capital to cover your expenses for 12 months and allow you to make payroll throughout that entire time.
2. Should I start my SaaS company as a sole proprietorship, LLC, or corporation?
The next step is to decide what type of legal entity you want for your SaaS startup. This is an important decision that can have lasting repercussions. The type of entity you choose may directly impact the amount of taxes paid each year and the amount of liability you face.
If you decide to run your SaaS business as a sole proprietorship, then any debts or liabilities will be taken on by you personally. A major benefit of this is that your business finances are not separate from your personal finances.
On the other hand, running your business as an LLC means the debts cannot be attached to you, but you need to file formal paperwork with your state to set up your company. There are also tax implications associated with this choice, which you will want to discuss with your CPA.
Once you choose an entity type, you will need to register it with the appropriate government agency, such as your state’s Secretary of State office. The fees for registering your business entity can vary, so it’s essential to research your state and local laws before you make a decision.
3. How many potential customers do I need to get my SaaS company off the ground?
Even if you have a great SaaS product to sell, it’s not going to matter unless potential users actually want and can afford to buy it. You need to determine exactly how many customers you realistically need for your business to be successful.
If you are selling a SaaS product, start by researching how much money is available in the market for your product and where your target audience can be found. If you are selling a SaaS with a subscription model, explore how many potential customers there are and whether they can afford your services on a monthly or yearly basis.
4. How can I find my first customers?
Unless word of mouth starts to spread about your product, you will need to do some work to find your initial customers. And even if your SaaS is amazing, it’s not going to matter unless you actually get it in front of people who need it.
To find your first customers or early adopters, make a list of the places where your customers can be found. This might include attending networking events or professional conferences, reaching out to potential clients through trade publications, putting up flyers and signs, etc.
You can also find them online. There are many online SaaS communities out there such as Ken Moo’s SaaS Lifetime Deals group which are made up of many SaaS LTD enthusiasts. There are likely Discord groups and subreddits where you can chat or post about your SaaS product to promote it to potential customers as well.
If you can, be relentless with your digital marketing efforts for your SaaS product. For example, take advantage of paid advertising to reach out specifically to your target audience who are more likely to become leads and convert into customers. However, before doing so, make sure that you have a marketing plan laid out.
5. Do I need a Co-founder for my SaaS Startup?
It’s important to keep in mind that co-founders are often the most valuable resource that SaaS startups can have. Having a co-founder allows you to divide up the work needed to get your business off the ground. It also allows you to have someone to brainstorm ideas with.
If you can’t find a co-founder, don’t worry. It’s possible to go at it alone; just be prepared for the difficulties that may arise.
6. Should I try to patent my idea?
Even if you don’t file for a patent, it is worthwhile to do some research to determine whether your idea is patentable. If you decide to file for a patent, you will not be able to tell anyone about your idea, so it’s essential to do this step before talking to anyone outside of your company.
Even if you don’t want to go through the work of getting a patent, you should still do some research to determine how difficult it would be for others to copy your idea. This will help you determine how much time and money to spend on locking down your idea from potential competitors.
7. How much revenue do I need to bring in to make this SaaS business worthwhile?
Having a revenue goal is helpful because it allows you to determine how much money will need to come in each month for your business to succeed.
If you need $10,000 per month in revenue to be sustainable, then you would need $120,000 to make the business worthwhile. This doesn’t mean you should quit your job, but it can help set some initial revenue goals.
8. What are my SaaS startup costs?
It’s essential to determine how much money you will need to get your business off the ground. This should include all types of expenses such as everyday expenses and subscription services you will need to pay for.
It should also include larger upfront costs, including how much money you will need to spend on product development, employee salaries, cost of needed equipment, cost of space if you’re renting an office, the cost of filing your incorporation paperwork and setting up a bank account, etc.
9. What benefits will I offer my employees?
Even if your SaaS Startup only has a handful of employees, it’s still a good idea to offer some benefits to the people who work for you. You can do this even if you are tight on cash, but it will require creativity.
Sometimes the best option is to provide your employees some sort of equity in the company, even if it’s just 1% or 5%. Other benefits you can offer include health insurance (if you can afford it) and free lunch.
10. Will my SaaS Startup require an office?
Whether or not your SaaS business requires an office space depends on the type of business you are running.
If you plan to meet with clients in person, it might be necessary to have an office. Even if your business is online-based, it’s a good idea for most companies to have at least one physical location.
11. What type of accounting software should I use?
Once your SaaS business starts bringing in revenue, you must keep accurate financial records of your expenses and income. This will be vital for taxes and planning your business strategy.
There are many types of accounting software available, but even the simplest bookkeeping software can be helpful to track your expenses and income. You may also want to consider hiring an accountant to help you with these things.
12. How will I handle my taxes?
Before you launch your SaaS business, you should set up a separate bank account that you will use for your business expenses and revenue. You should already have an accounting system in place to keep track of all your income and expenses.
Once you bring in revenue, you will need to determine how much money is coming from your business (taxable income) and how much is coming from other sources (non-taxable income).
13. What happens if I fail?
It’s important to have a plan in place for if your SaaS business fails, especially if you are quitting your job to pursue it. If you didn’t spend enough time researching the market or building up a client base, then it will probably be easier to try again with a different idea.
However, if you spent plenty of time researching and building a good foundation, you will want to determine what caused the business to fail.
If it was because of a bad product, then you will want to start a different company. But if you just didn’t have enough customers or you were reported for a bad customer experience, then you can try again and improve what might be the reason for your startup’s failure.
14. Do I need to get a business license?
Depending on where you live and what type of business you are running, you might be required to get a business license. This will vary from one state to the next, and each city has its own licensing requirements as well. If you are operating a business in your home, then you probably won’t need to get a business license.
15. Do I need any permits or certifications for my SaaS startup?
Again, this will depend on where you live and what type of business model you have. Some businesses require a certification or permit from the government to operate, but this is usually only the case for businesses that are physically producing or selling a product.
For instance, if you are operating an ecommerce site, then you might need a sales tax ID number. If you sell food items over the Internet to customers in your state, you will probably need a food service permit.
16. What type of insurance do I need?
If your SaaS business operates like most others, you will probably need insurance to protect yourself from any potential lawsuits. General liability, professional liability, and even excess liability are options you can look into if you need coverage. Depending on the type of business you are operating, you might also want to look into health insurance options or even life insurance.
17. What is my exit strategy?
To start a successful business, you need to have an idea of when you would want to sell your company and what you would expect to receive for it. If you have a day job and just want to start a company as a side project, then your exit strategy might be a little different than if you quit your job to start a business.
18. What will I do with my SaaS startup business?
You should have a plan in place for what you want to do with your SaaS business. Do you want to leave it as a legacy that will last for decades? Is it something you hope to sell in the next few years? Or do you want to pass it along to your children when you retire? Whatever you want to happen to your business when you are done with it, you should have a plan for what you will do in the future.
19. What is my SaaS product launch plan?
Even if you don’t start your business with the goal of immediately releasing a product, it’s important to have some sort of plan for getting your product out there soon. However, most SaaS businesses will want to take advantage of having a product as soon as possible to help them begin building a customer base. The latter is the wiser decision here.
As an example, you may release a beta version of your product for free and encourage users to upgrade to paid plans as they become more reliant on your product.
We have an article about SaaS product launch strategies which explains in detail what you can do to create buzz around your product at the time of its launch.
20. What will be my SaaS marketing strategies?
A huge part of starting a SaaS business is marketing it, and there are many different SaaS startup marketing strategies you can use. Some companies choose to rely on social media and SEO (search engine optimization) as their primary ways of bringing in customers, while others focus heavily on paid advertising like Google AdWords or Facebook ads.
There are also businesses that take advantage of various other ways to get their brand out there, such as attending conferences and networking events. These are great activities to conduct a product demo.
Requirements For a Successful SaaS Startup
There are several things you will need to think about before starting your SaaS startup. If you want to make sure your SaaS startup succeeds, then you will want to do enough research to ensure that it has a good chance of succeeding.
Make sure you have the time, money, and patience it takes to start and run a successful business before quitting your job and taking the plunge. If you wait until you are financially stable to start, then you will be in much better shape.
Make sure you have enough money to support yourself when starting your business. It’s not necessary for you to get a business loan, but you will probably need some sort of financial backup plan. When you are just starting out, you won’t have a client base, so you will want to ensure that you have enough money set aside for food and other expenses.
Once you are ready to start your SaaS startup, it’s important to understand the tax implications. Start collecting your receipts and other necessary documentation when you go out and start spending money on your business. As you start getting clients, be sure to keep track of any income you receive and begin paying quarterly taxes if necessary.
If you are starting a home-based business, then it is even more important to keep records of all the money you spend on your business. This includes the cost of utilities, food, and anything else you buy to run your business.
A successful SaaS startup requires a lot of hard work, but that is what it takes to be a successful entrepreneur. If you are willing to put in the effort, then starting a SaaS startup of your own might end up being the best decision you ever made. If you want to learn more about what to do when planning to put up a SaaS startup company, visit our SaaS marketing blog here.