How do you build a successful and profitable B2B SaaS startup? For us at Starttech, there’s no secret sauce. There are nine steps to follow, and if you get them all right then you should be on your way.
And in this short but sweet post, that’s exactly what I want to share with you. As always, these are based on learnings from our experience so far. And our “recipe” for success is a proven one, with our Venture Building Program, a central part of facilitating the 9 concrete steps I’ll talk about.
Before I get to those, you may be wondering what makes Starttech Ventures so different versus other players in the market? Well, in short it’s basically the fact that apart from early stage funding, we offer our portfolio companies essential services for their success. We call it a noise-free experience. We are, in effect, Co-founders and an internal agency. From UX/UI design, growth hacking and digital marketing, to legal, HR and accounting services, our dedicated team of experts work for all of our startups full-time. Startups get these services free as part of our agreement (shares in return).
Now that’s clear let’s get to the crux of the matter of creating a profitable B2B SaaS startup.
What makes a profitable B2B SaaS startup?
The answers to the above question are pretty straightforward for me. It’s just about being able to see them through to the best of your ability so as to put you and your business in the position to be successful.
Follow the Lean Startup methodology
Lean startup methodology helps you develop the right product for the specific market that you’re targeting and not one that is based on your assumptions. It really focuses on your business model versus your product and on capital efficiency. This way you minimize time and waste and what’s better than that?
Go for proven market. Let the big boys do the disruption
Disruptive technologies are for big companies. So focus on creating simple B2B software products that target a big market, such as e-learning or digital signage for exampe, as two of our portfolio companies in TalentLMS and yodeck have.
Go for high velocity B2B, consumerization of the enterprise
High velocity solutions— a common term in USA— or consumerization of the enterprise are the present and future. In other words, software with monthly subscriptions at low cost. One that makes it available for customers to subscribe simply by using their credit card and once they do they are ready to start using your product straightaway.
Within a range of $10 to $200 dollars you offer small and medium-sized companies the opportunity to acquire a solution at a modest price versus enterprise software solutions that can cost hundreds or thousands of dollars. The best part? Your customers get to know you without sales professionals in order to succeed.
Automate, automate and automate
Deploy automation in every possible way. You don’t need sales agents. Everything can be based on inbound marketing. You create a solution that you offer as a service and you do everything you can so that your customers will come to you automatically.
Inbound marketing engine
Content Marketing is really important for your business’ success. Invest time, energy and expertise in Search Engine Optimization (SEO), in Google AdWords (digital advertising) and/or other B2B marketing techniques so that your customers will finally come to you.
Robust technology
Some entrepreneurship experts say it’s technology that determines your products. But we’ve seen many innovative products that have failed as companies. The truth is that building state of the art products might be essential but it’s not a prerequisite. Your product should be based on robust technology. And you also need to make sure it is as functional – and flexible – as possible so that it’s really easy for customers to use. One thing is for sure: you don’t want to let your customers down. It’s very hard to get them back.
Complete feature set
You should implement those features that make it possible for your customers to use. No more, no less in the beginning. Focus on what you can’t do. Your product is basically your promises towards your customers. You don’t need to create products that are full of useless features. Your product should have functionalities that help your customers, that make their life better/easier/convenient. This is quite an art actually.
Extreme emphasis on ease-of-use
Make it simple. Your software products should be as easy as possible for the user. Don’t assume that your users are familiar with certain information systems. Or that they recognize a specific methodology that you have in mind. If your products require manual, additional help or support to get started then you need to reconsider your choices. Think intuitive, smooth flows for users to begin with and complete their tasks.
By making this your priority you increase your customers engagement since they’ll be able to incorporate them effortlessly. In this way your customers will able to use your products without any support. More often than not, a good software solution makes users understand how it works. Product design should be focused on user experience so that you make your users say: “This product is designed for me”.
Disruptive pricing
When you offer a low-cost product this automatically creates two potentials. First of all you expand market top to bottom. And democratization of a market as it is actually called creates opportunities both for companies that create products and also for those who are buying. It means that: a) the SaaS model makes the product available to companies that previously may not have been able to purchase due to a lack of the required financial resources. And b) It may also attract customers that already used other expensive products versus yours. Why? Because it gives them the opportunity to solve their problems at a much lower annual cost. And of course and they are able to reduce expenses. These companies that usually pay 10 times your product’s cost only to have some extra features that in some cases might be useless.
This way your product can actually crowd out prevailing big players, taking you one step closer to becoming a profitable B2B SaaS startup.
Epilogue
By making sure that you align your venture to the above 9 steps, your road to becoming a profitable B2B SaaS startup in a few years will look smoother. In our experience, it’s possible to develop your Minimum Viable Product (MVP) within 12-18 months. And then you need an extra 12-18 months in order to reach a cash-flow-positive point. Then, within 3 to 6 years you can improve even more your profitability and after 9 or 10 years you’ll manage to achieve significant growth.
On top of that, never forget that focus, persistence and patience are the qualities which will get you to the finish line. If you want one word let’s say dedication. Oh yes, and product development efficiency.
If all of the above truths sound like common sense, that’s good. All of them are actual learnings that come from our experiences. Right then, off you go and get on your way to becoming a profitable B2B SaaS startup!
