The essential guide to growing your early-stage SaaS startup

If you’ve got an early-stage SaaS startup with a fresh minimum viable product (MVP), congratulations! You’ve already achieved a lot more than many, but there’s plenty of hard work and challenges ahead.

As an early-stage SaaS startup founder or team member, you’re likely to be very excited about running and growing your business...and also lost, confused, and anxious because of the number of tasks you need to focus on to make it happen.

We put together this guide to help you break the long journey ahead of you into manageable steps. Read on for advice from seasoned startup founders, high-level information about which challenges to tackle first, and tips for further reading. 

This article includes an explanation of how to use this guide, a summary of the key insights to come, and—as a bonus—some overarching advice: 4 ingredients of successful startups that you need to know about.

Why we wrote this guide 

Books, podcasts, videos, case studies, you name it—there’s so much content out there about growing a SaaS startup that you can just go on forever. We thought it would be more useful to have one resource, in one place, to guide new teams along their growth journeys, helping them focus on the fundamentals and getting their bases covered. Something they could use and come back to, over and over. We couldn't find one, so we wrote it ourselves. 

How we wrote it

We wrote most of the content in this guide by reaching out to and documenting the experiences of people at SaaS companies like Basecamp, Receptive, Pipedrive, Price Intelligently, SaaStock, EnhanCV, and others who have ‘been there, done that’ multiple times. We also shared some of our later drafts with over 500 people in the SaaS space, who gave us open, actionable suggestions on what we needed to cover.

How you can use it

The word ‘essential’ in the title has 2 meanings: the content we share in the following chapters is crucial for growing your startup, but the focus is on the fundamentals to help you get all your bases covered. 

Think of this guide as a launchpad: if you’re hungry for more, we added a resource list at the end of each chapter with several hours of video and podcasts and hand-picked links to additional books and articles by entrepreneurs and business builders like yourself. Each chapter can be read independently, so you can jump to any topic that is relevant to you.

What you’ll learn in this guide

Every busy tech executive loves a tl;dr, so here’s a brief summary of every chapter of this guide. Use it to skip ahead to the parts that are most relevant to you right now. 

How to position and brand your product

This chapter explains how to position your product—that is, explain which problem it will solve, and for whom. It will:

• Explain the job-to-be-done framework, a way of understanding why people want to buy your product which many successful product managers swear by 

• Talk through the best practices to consider when coming up with a product name

• Discuss the importance of customer testimonials, and how to choose which kind is right for your business 

There are also links to a series of books, videos, audios, and blog posts that, taken together, constitute a boot camp product positioning. 

How to find and maintain product/market fit

This chapter deals with the essential but notoriously difficult challenge of securing product-market fit—the magic that happens when you’ve successfully identified your target customers and are selling them something they actually want.

It covers how to measure product-market fit and explains where customer interviews fit into this. Spoiler: customer interviews are the beginning, middle, and end of figuring out your product-market fit—in the early stages of your startup, you should take every opportunity to conduct them. 

How, when, and where to get funding

This chapter offers a high-level overview of your options for keeping the lights on while you grow your business to profitability. Should you bootstrap or seek funding? 

The article appraises the benefits of accepting VC funding (pros: you’ll get the money you need and be on a fast track to success, cons: unless you achieve hockey stick growth within a given timeframe, your business may be devalued and struggle to raise again). It also gives you a handful of alternative options to look into. 

How to price your product

Did you know that companies only spend an average of 8 hours on their pricing strategy? In this chapter, we discuss why you should buck this trend and dedicate some real thought to what you charge for your product. 

• Consider monetization and retention—and not just plan your strategy around initial customer acquisition costs 

• Let your (potential) customers drive your SaaS pricing strategy—by getting to know them with interviews  

• Use a Price Sensitivity Meter to uncover your optimal price bands—that is, a 4-question survey that reveals respondent’s attitudes to the cost of a product or service 

How to successfully launch your product 

This chapter simplifies the overwhelming task of launching a product, offering you 4 overarching pieces of advice for the initial phases of bringing your SaaS offering to market:

• Research your competitors—so you can promote the one thing that makes your product or service different, also known as your unique selling point (USP)

• Create value for your first 10 customers—even if that means getting down in the weeds and answering support emails yourself

• Invest time in planning your launch—with a detailed example of what a launch strategy might look like

• Be selective about which marketing channels you’ll use—instead of spreading the marketing budget for your launch across all available options, double down on a couple that suit your niche 

As in previous chapters, there’s also a handy library of references for more advice. 

How to set up your business operations

What’s the minimum you need to have in place, operationally speaking, to get your business up and running? This chapter offers an answer. It covers 

• Finance: get familiar with the fundamentals of Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR), gross margin, expenses, and cash flow yourself. Ensure your employees understand your important numbers. 

• Legal: put some effort into your Terms and Conditions (T&Cs) even before you get paying customers. If your service is simple, you may be able to emulate those of competitors. If it falls under regulatory aspects, you might need to consult legal counsel. 

• Human resources: when your company is too small to have a dedicated HR hire, duties like managing payroll, company culture, and employee policies all fall under ‘operations’ 

• Process management: you’ll need to create and document standard operating procedures (SOPs) to set your business up for growth 

• General admin: in a startup’s early days, ‘operations’ also includes the unskilled tasks that fall to no one in particular 

How to hire for your startup 

This chapter offers best practices on growing your team as a SaaS startup founder. The first piece of advice? Slow down. Hiring the right person is far better than hiring as fast as possible—and if you refine your processes, you may not need to employ anyone at all. 

You’ll also learn where to go to look for hires who are experienced and interested in the SaaS world, and get tips on how to create a positive team culture—so your new employees stick around for your startup’s journey to growth. 

4 key ingredients for startup success 

The chapters of this guide explain how to approach the main, widely acknowledged steps of building a startup. But what about the lesser-known challenges? Those that can’t be tackled in a clean and systematized way? These are 4 lesser-known ‘ingredients’ to take into account when building a successful startup. 

1. Pertinent timing

One ingredient of successful startups that’s often overlooked is timing. There should be a reason, trend, or set of conditions why your product will be a hit right now. 

For example, at the height of the recession, people were willing to do extraordinary things for additional income, including sharing their living space—and this is how Airbnb found success. Of course, Airbnb didn’t plan its business as a direct answer to the recession—the timing was in their favor as people were increasingly open to solutions like theirs to make ends meet. 

To ensure the timing is right for your business to succeed, you must be able to answer the question ‘Why now?’ question with qualitative and quantitative data points that are outside of your own personal reasons for starting the business. 

2. An ‘unfair advantage’

Founders of successful startups typically have a talent, skill, or insight that positions them above your competition—what author John Nesheim calls an ‘unfair advantage’.  

This could be your subject matter expertise, your team of A-players who all know the space well, or your network within an industry. Make a list of your unique blend of talent, experience, knowledge, and connections to identify your unfair advantage—and bear in mind that your unfair advantage should change and evolve as your company does. 

3. A validated idea

Over a third of startups fail since there’s no market need for their product or service. As a minimum starting point, you should have identified what the market needs and the problem that your product will solve.

It may seem counterintuitive, but your best bet is to start with a focused feature set that perfectly meets the needs of a small market and then scale it up to a larger market. Think of how Facebook started with Harvard students and then, when the idea was validated, expanded to other universities before going global.

4. More than passion 

Successful startup owners are passionate about the offer they’re providing—but they know that passion alone doesn’t guarantee success. Wild passion can blind you to the direction you’re taking the company in, so it’s a good idea to take some time off now and then to get another perspective. 

Remember that passion, although helpful for staying resilient in the face of challenges, just accelerates your trajectory. Only good business sense will ensure that that trajectory is upwards. 

Blog posts

• How to Choose a Target Market for Your SaaS, Marketing for Developers Blog

Video and audio

• The Single Biggest Reason Why Startups Succeed, Bill Gross

• Validating Your Business, Tim Ferriss and Noah Kagan

Books

• Behind the Cloud, Marc Benioff

• The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime!, M.J. DeMarco

• So Good They Can't Ignore You: Why Skills Trump Passion in the Quest for Work You Love, Cal Newport

• The Power of Unfair Advantage: How to Create It, Build It, and Use It to Maximum Effect, John Nesheim

• Creating Competitive Advantage: Give Customers a Reason to Choose You Over Your Competitors, Jaynie L. Smith

• Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, Alexander Osterwalder

See your startup through to profitability—and beyond 

There are thousands of small challenges to conquer to create a profitable SaaS startup, but with a great idea, a hardworking team, and sound advice, you’ll be able to tackle them all head-on.

Whilst the journey ahead of you may look daunting, there’s one overarching point that threads through most of these chapters: talk to your customers. 

Get in the pocket of your customers (or would-be customers) and stay there until you understand what needs your product will answer for them, how much they’re willing to pay for it, and where they would go to purchase it. That’s one of the keys to launching a SaaS startup that will find enthusiastic fans and achieve profitability. 

FAQs about growing your SaaS startup