I’m not going to say that I have been in this industry for a long time. I don’t want to give the impression that I am some SaaS expert.
But I have built a Saas Product in Edtech, Cudy LMS, which has gone on to become a Top 10 LMS product and has been featured in the media.
So I have a good idea of what it takes to build a Saas product from scratch.
I have seen many first-timers make the mistakes below, so I thought I’d share them with you.
1. Not building a product that people want
This is the most serious mistake that first-timers make. It is undoubtedly the single most important element of your success as an entrepreneur, yet it is often overlooked.
It is so easy to get caught up in the excitement of starting your first business and to spend all your time on building a product, thinking of features, creating wireframes, and testing concepts.
But this is exactly what you shouldn’t be doing! Because if you build a product that nobody wants — it doesn’t matter how good your product is — it will die a slow death.
And that will be the end of your startup journey before it even begins!
For example, I recently read a story about a startup building an uber-like app for the cleaning industry. It was a very cool idea. They had raised $3.5 million in funding and had 50,000 users in their first month. But apparently, the company has just shut down!
There is so much to say about this topic, and I will cover it in more detail in an upcoming article.
In short, you must validate your idea with potential customers before you start building your product.
Yes, it’s hard to get people to give you honest feedback regarding services they haven’t even used yet! But this is something that needs to be done — so don’t ignore it!
2. Having no clear target market
This is closely related to not validating your ideas before building a product, but I feel it deserves its own section because of its importance.
This mistake has to do with knowing who your customer really is — and this is something that most startups fail at miserably!
Three characteristics should define your target market: demographics (age, gender, etc.), psychographics (personality type), and behaviors (what do they do online, what kind of content do they like, what kind of products do they buy, etc.).
If you don’t know who your customer is, you risk building a product no one wants.
For example, I recently discussed with someone who was looking to start an e-commerce SaaS business.
They had an idea for a revolutionary solution for the e-commerce industry and wanted me to invest in it. But when I asked them about their target market, they said “everyone”!
And when I pressed them further, it turned out that they were inflating their numbers by targeting everyone.
I am sure some of you are thinking — why does it matter if my target market is everyone? The answer is simple — because no one is going to buy your product if you are not actually solving their problems!
For example, I personally don’t care about eCommerce’s current state and how businesses can be more efficient at selling online — but many people do!
And if you build a product that solves these problems for these people, it will be easy to sell your product and succeed as an entrepreneur.
3. Not doing enough research before starting
This is very closely related to the previous topic, but it is so important that I felt a separate section was needed.
When you start your business, you must put in the work to research and plan. It would help if you spent time researching the market, your competition, and how they are doing things.
You need to create a business plan and follow the right steps before starting your SaaS startup.
Don’t just jump into creating wireframes or building a product — these things should not be done until you have conducted enough research!
It is easy to get caught up in the excitement of starting your own company, but remember that entrepreneurs are business people first and foremost! And business requires discipline!
4. Not understanding how SaaS works
Many first-timers make this mistake because they don’t really understand what SaaS is all about or what it takes to build a successful startup in this space.
If you are not aware of how SaaS works, you will spend money on things that are not important and fail as an entrepreneur.
You must educate yourself on what it takes to build a successful Saas product if you want to succeed as an entrepreneur in this space.
5. Not knowing the difference between “growth” and “growth hacking.”
Understandably, entrepreneurs want to grow their products as quickly as possible.
It is exciting to see your product grow and become bigger and bigger every day.
But there is a huge difference between growth and growth hacking! And if you don’t know the difference, then you will make mistakes that can harm your company in the long run.
Growth has to do with acquiring, retaining, and sustainably monetizing customers — this is critical for long-term success.
On the other hand, growth hacking is about temporary success through short-term tactics that result in unsustainable growth without a plan for the future development of the company or product — this is dangerous.
Many startups fall into this trap early on because it’s easy to get caught up in the excitement of growth, but it can only end badly.
If you are looking for an example of how this can go wrong, then look no further than Snapchat — they grew by over 100 million users in just 1 year — but now their growth has stagnated.
And they have no plan for how to monetize all those users, so they are in big trouble!
6. Not asking for advice from others who have done it before
This is a mistake that many first-timers make because they have a stubborn attitude and don’t want to take advice from others.
But the fact is that many people have already been through what you are going through and can help you avoid making mistakes.
Most successful entrepreneurs will be happy to share their knowledge with fellow entrepreneurs — so don’t be afraid to ask!
This is one of the best ways to avoid mistakes as an entrepreneur.
7. Not putting enough time and effort into marketing
Many first-timers think that they can build a product, launch it, and people will care about it enough to buy it or use it.
But this isn’t how things work in the real world — customers must be marketed to before they care about your product — they won’t find out about it otherwise.
This mistake has contributed to many startups’ failure because marketing is not a priority for them when they should be focusing on building their product instead.
If you want your startup to succeed, then time must be set aside for marketing.
8. Not knowing the product is not ready
This mistake has to do with having a sense of urgency and feeling that your product must be finished and launched as soon as possible.
This is a mistake that many first-timers make because they don’t realize that their product won’t be perfect out of the gate.
It is easy to get caught up in the excitement of starting your own company, but remember that entrepreneurs are business people first and foremost! And business requires discipline.
If you don’t have discipline, then you will waste time and money trying to fix things that should have been left alone.
Instead, you should take your time building a great product — even if this means launching it later than you would like.
This is one of the most important lessons I learned from launching Cudy LMS — by taking my time, I built an amazing product with no technical issues or bugs, which helped propel our growth.
9. Not putting enough time into building a great team
Many first-timers make this mistake because they think they can do everything themselves.
But the fact is that if you want your startup to succeed, you need good employees who can help run your company.
This mistake is closely related to not realizing that you will need time for marketing and building a product — because your employees are very much part of your marketing strategy.
For example, you need great content creators — people who can create interesting and engaging content that will help drive traffic to your website.
It would be best if you also had people who are good at SEO to get your website to the top of search engines, and you need designers who can create a great website that will attract potential customers.
10. Not understanding how the sales process works
Many first-timers make this mistake because they are used to working in large companies where salespeople are responsible for getting new customers.
But if you want to succeed as an entrepreneur, you must understand how the sales process works!
You must know how to reach out to potential customers, what it takes to close a sale, etc.… The best way to learn this is by reading books or taking courses on the topic.
I hope these mistakes and other important lessons that helped me succeed in SaaS are helpful to you.
About the Author
I am the Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students learn better. I am also a mentor and angel investor in other Startups of my other interests (Proptech, Fintech, HRtech, Ride-hailing, C2C marketplaces, and SaaS). You can also find me on Cudy for early-stage Startup Founder mentorship and advice.
You can connect with me on Linkedin (https://www.linkedin.com/in/alexanderlhk) and let me know that you are a reader of my Medium posts in your invitation message.