Creating A Minimum Value Product
Written by Josh Hines • August 28, 2024 • 5 Minute Read
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Starting a new SaaS business and launching a successful platform is exciting stuff. Congratulations, first and foremost, for daring to step outside your comfort zone and discovering if you got what it takes to launch a successful business.
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Where Do You Even Start
Regardless if you're starting out or you have a specific problem that you want to solve, the first step in the SaaS journey is creating a minimum-value product that allows you to test the market and see if what you have to offer, people want, and find out what people are willing to pay for it.
Most, when they first start out, regardless of the product or service, always think they need a lot of money before they begin.
The reality is you don't.
With technological advances and other software platforms, it honestly only costs a few thousand dollars to launch a new SaaS business.
Start Right Where You Are
You might be surprised, but starting a business in 2023 costs close to nothing. In the next couple of paragraphs, I'll share all the points you'll need to address when launching so that you can gain your first customers, validate your product, and then scale your business.
Legal & Taxes
From a legal standpoint, all you need is an LLC (limited liability company) which you can get from LegalZoom for free. Once you have your LLC you can get your EIN (Employer Identification Number) at your local government office for free. Afterward, you go to your local bank and set up a business account with your EIN for free.
There are no costs to legally setting up your business. From a taxes standpoint, you can purchase QuickBooks for $15 a month to manage all your profits, expenses, and taxes.
Marketing Systems
From a marketing and sales perspective, you can get a website, email service provider, and customer relationship management tools, all for free.
With all these marketing platforms, the only cost is your time and understanding of the best practices for setting them up.
Marketing Promotion
The real costs of launching a company depend on how fast you want to grow.
If you had time and weren't pressed for revenue, you could do your marketing for absolutely free using guerilla tactics, joining conversations on social media, search engine optimization, or going old school with sales and engaging with people 1-1.
This is why consultants and business leaders say don't quit your day job. Keeping your job allows you to grow your side businesses with hardly any costs outside of time and understand each step of the process without the additional stress of how you will pay your bills.
Digital Advertising
But if you do wanna grow fast or test a larger market segment, digital advertising is the way to go.
Done properly, this method is extremely inexpensive.
A few thousand dollars can gain you an incredible reach once you know your ideal customer and target that audience specifically with the right messaging to get their attention and allow them to understand what you have to offer.
Sales & Business Development
When building out a sales organization to sell your platform, a good salesperson understands that a majority of their salary will come from commission.
Ideally, during this stage in the journey, as the developer or founder of the company, you're going to be the lead salesperson of the organization.
This allows you to hear first-hand what prospects are saying to understand how to position in the market, rebuttal objections, or add additional functionality that's needed to gain customers and compete in the market.
Payment Processing
The last point is collecting payment.
You could go old school and accept cash or check, but for convenience and considering you're a SaaS platform and are going to have recurring payments; Stripe, Recurly, or Paddle are three great platforms to process payments online.
Best thing about these platforms, just like your sales team, you only get charged when you make money.
The True Costs Of Launching A SaaS Business
The true costs of launching a SaaS business in 2023 are more about the time it takes to develop the software and where you host it.
At the beginning of your SaaS journey, it's not about building a fully functional platform.
What you really want to focus on is building a platform that does the bare minimum but solves a problem for your potential buyer where they're willing to pay for it.
This allows you to collect revenue and validate your idea and see if the market even wants what you have before going out and scaling out your entire platform and wasting a lot of time and resources.
Get The Paycheck First, Then Scale
Most people want to have everything perfect before they go to market. The truth is unless you have a VC backer, you're not going to have the cash to hire a full staff of engineers to build out your vision, and going at this with a small team, you're going to run out of cash reserves quickly if you don't get a payday.
Focusing on a minimum value product, launching, and getting paid, allows you to have additional cash reserves to either buy you more time to continue building out the functionality of the platform or better yet, hire additional software engineers to work with you.
This goes for all the line items above as well.
You start with free solutions, but as your company scales, you scale them as well, unlocking additional capabilities that were limited in the free version. This is the power of the freemium model a lot of software companies use. Their hope is to scale with the companies they are working with.
Next Steps
This outline is just a high-level perspective of the steps you need to take. And while I am not a lawyer, accountant, or product developer, I do understand marketing and sales.
In the next steps, I'll specifically share what I'd do if I were to launch a SaaS platform in 2023 from a marketing and sales perspective.
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What Problems Are You Solving
This is the million-dollar question that separates great brands from the ones that fail within a year. You are never selling what you think you are selling. And selling based on the product alone won't allow you to increase your margins.
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