Aidi — Building a SaaS Startup? Here are 8 Things You Need to Know

Software-as-a-Service (SaaS) is one of the most profitable business models in tech today, and for good reason. It is scalable, capital-efficient, and often has recurring revenue if things are done right. From Zoom to Slack to Figma to Netflix, and so on, the SaaS model has produced some of the most valuable tech companies we have in the world today.

Building a SaaS company or product is much more than just writing code or building features; It is a combination of having a great product idea, a good business strategy, customer empathy, and prioritizing properly to have a successful startup or product. There are a lot of things you need to know if you want to build a successful SaaS startup. So, if you’re a first time founder building a SaaS product or you intend to someday, this article is for you.

In this article, I will walk you through some things you need to know to build a SaaS startup that stands a real chance in today’s competitive market.

1. Start With a Real Problem, Not Just a ‘Cool’ Idea- It’s very easy to assume you can build a great product as long as you have a great idea in mind and can write code. But if that was all that was required to build a successful SaaS product, then we would have very few failed SaaS startups. While knowing how to write code or having a cool product idea is great, how you know your product is a step in the right direction is when you can answer the questions “What pain am I solving?” and “Who feels it the most?” Too many SaaS founders build solutions looking for a problem, and it rarely ends well. Instead, the best SaaS products are born out of lived experience or deep insight into a niche industry problem. So, talk to real people, interview your target users, validate the problem, then validate your proposed solution.
2. Focus on a Niche Before You Try to Scale- A common SaaS trap is trying to serve everyone from day one. Like I mentioned earlier, it’s best to identify a niche industry problem first, and validate it before you start trying to scale. It is easier if you pick a small, specific audience and solve one painful problem for them very well. Then, you can grow in that niche, learn faster, and eventually expand when you’ve hit your product-market fit. A tip is to look for people who you can solve their problems extremely well that big companies have been ignoring.
3. Prioritize User Experience and Onboarding- Most SaaS users don’t have the patience to figure things out, especially if there are 10 other alternatives. If your users get lost or confused trying to use your product, you’ve lost them. It’s better to build a clean, intuitive interface and a smooth onboarding experience that keeps them returning to your product. This, can in fact be the difference between growth and churn. You can also make provision for live support for your customers in the early days and always pay attention to where users drop off.
4. Don’t Wait Too Long to Charge- One of the easiest ways to get users quickly is to offer your product for free. While this is okay, it can also be injurious to your startup as you can easily get tempted to let the free trial run for too long to get more users, while you ignore what really matters: Getting paid for the value you’re offering. Usage is not the same as value. SaaS businesses are judged by Monthly Recurring Revenue (MRR), not vanity metrics. Learn to charge users early, even if it’s a small fee at first. This helps you understand whether people really value what you’re building. Don’t shy away from pricing. The sooner you start learning what people are willing to pay for, the better.
5. Understand the Metrics That Matter- Like I mentioned earlier, SaaS businesses are judged by Monthly Recurring Revenue (MRR) but that’s not all. There are other valuable metrics that can help you determine what’s working and what’s not and if your startup is doing well or not. Once you go live, your business will be driven by numbers. Some of the most important SaaS metrics to track are: MRR/ARR (Monthly/Annual Recurring Revenue), Churn rate (How many users cancel their subscription), CAC (Customer Acquisition Cost), LTV (Customer Lifetime Value), Activation rate (How many signups actually start using the product), Net Promoter Score (NPS) (How likely are users to recommend you).
   
6. Your Growth Will Depend on Sales and Marketing- Many founders underestimate how hard it is to sell a SaaS product. It’s not “build it and they will come.” SaaS success often comes down to marketing and distribution. How will people find you? Why should they trust you? What makes you different? It’s advisable to experiment with multiple channels like content marketing, cold outreach, LinkedIn, SEO, paid ads, webinars, product-led growth, or whatever fits your product and audience best.
7. You’ll Need a Long-Term View- Building a SaaS company is a marathon, not a sprint. Unlike e-commerce or one-time product sales, SaaS growth compounds slowly over time. It can take 12–24 months (or more) to reach strong revenue numbers, especially if you’re bootstrapped. However, if you stay consistent and keep focusing on growth, every new customer will build on the previous and before you know it, you’re growing like wildfire.
8. Choose Funding Options Wisely- Not every SaaS company needs VC funding early. There are many great ones that are bootstrapped like Basecamp and Mailchimp. However, if you’re going after a big market fast, you may need external capital. Before raising external capital, think it through to be sure it’s what your company needs at the moment and also consider your long-term goals. Some of the funding options you can consider are: Angel investors, Venture capital, Accelerators, etc.

Building a SaaS startup, and like every other startup, is demanding but can be rewarding if done rightly. It's not about building the most features, It's about solving real problems, making users happy, and building a business that lasts.