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We’re halfway done with 2024, and the software as a service industry still keeps growing. Data shows that within the next two years, this is an industry that’s set to be valued at over $307 billion. When you consider that SaaS startups keep popping up every single day, this isn’t all too surprising.
However, while things appear to be going great for many, it’s not sunshine and rainbows for everyone. Dig a little deeper and you’ll realize that out of the many startups, only a small percentage find the success they are looking for. Why is that? Let’s find out.
1. They Focus On ‘The Product’ a Little Too Much
When you’re selling software, it’s natural to start believing that everything else comes second in priority. Your product needs to work well and do exactly what it’s supposed to do. The problem with this mindset is that an extremely important dimension gets ignored.
Any guesses about what that could be?
The answer is distribution.
It’s a mistake that a lot of first-time founders make. They fail to focus on customer acquisition strategies and this oversight often ends up killing the whole startup. This is why with any SaaS startup, even simple steps like building an email list and a customer base alongside product development are critical.
With SaaS, you have to remember that distribution is just as important as the product itself. If you haven’t invested in a good sales and marketing team, it’s very likely that even a great product will go unnoticed.
This is an easily avoidable mistake especially when you can simply hire services that do this for you. Have you ever wondered why services like PayPro Global have become so common among SaaS startups? It’s because they help you out with lead management and growth.
There’s simply no reason to allow a lack of focus on distribution and marketing to shoot down your startup.
2. Not Actually Solving a Problem of Value
The second mistake is far more serious and has to do with the core SaaS startup decision-making process. There’s an understanding that a successful SaaS solves a problem and that starts founders on a brainstorming trip. They come up with some problems and find a way to solve them.
Is that all it takes to make a SaaS successful?
Obviously not.
The mistake being made is that you really need to solve a problem of value. With startups that fail, it’s likely that the solution you create doesn’t provide the kind of real-world value that you think it does.
One reason for this oversight is the tendency for new startups to simply rush or even skip the market research phase. They don’t speak to consultants, industry experts, or even their target audience. Avoid making this mistake. If you are thinking of starting a SaaS company, remember to think about the pain point of your target audience.
The inconvenience they are facing needs to be so great that they are willing to pay you for a solution. If your product or service fails to deliver or only provides marginal improvement to their operations, then go back to the drawing board.
3. Forgetting that Competition Exists
The third and somewhat obvious reason that SaaS startups fail is that founders have to defend themselves against intense competition. However, this problem exists in every industry. So what’s going wrong? Well, SaaS founders seem to forget one important step that can make a big difference.
This step refers to your ability to differentiate your product from everyone else.
Forbes magazine has a piece on this very topic so be sure to give it a read if you want to learn more. Another thing to consider about dealing with competition is that you really need to be on your toes.
You have to ensure your customers aren’t being tempted away based on multiple weak points in your business model. This means you need to know how to form strategic partnerships, work on competitive pricing, marketing, customer service, product quality, and so much more.
At the end of the day, the current market will force you to be hypervigilant if you want to succeed. An oversight in just one area can easily take you out, especially if you are still trying to establish yourself.
Remember, you don’t have to go at it alone. Partnering up and building a team with members qualified to deal with every challenge is the way you win.
