This article is written by Epic Presence.
Expanding a SaaS company from a startup to a maturity is marked by challenges and milestones.
Many founders highlight how much they change professionally and personally during this growth period. They discover how to better sell their products while continuously learning about the industries and customers they serve. They also learn how to make hard decisions regarding staffing and internal operations.
You might face a set of unique challenges related to your product, but there’s a good chance that other founders have experienced similar issues. Here are a few key factors that will impact and contribute to your growing SaaS.
Work Toward a Strong Product-Market Fit
The startup field is full of good ideas, but that doesn’t mean they offer a great fit for customers. Founders continuously point to market fit as one of their key drivers of success. Without it, you risk talking to the wrong customers or try to sell the wrong products. But identifying market fit isn’t always easy.
“Product-market fit is always amorphous,” David Benigson, founder and CEO at external intelligence company Signal explains on our SaaS Revolution Show. “There’s no single metric or single sort of ‘aha’ moment in my experience at least. It was a sort of graduating and sometimes even moving target and we felt that we continuously had to go back to that definition of the ideal customer profile.”
Even if you identify a key product-market fit for your startup, you need to keep evaluating your audience and understanding how your target industry is changing.
“Determining [product-market] fit is a never-ending process, and you will continue to learn fresh information even five years after your market debut,” says Bhaskar Ahuja, founder of operations platform Originscale. “Don’t expect to receive the entire map in the first analysis and then be able to run the same facts for the following 50 years. The requirements might change every month. Staying up-to-date is the key here.”
For one metric, “Hacking Growth” author Sean Ellis follows the 40 percent rule for finding product-market fit. The test is passed when 40 percent of a software’s users (or more) would be “very disappointed” if that software were to disappear — instead of somewhat disappointed or not disappointed at all. When Slack asked a similar question in a survey, one-half of users said they would be “very disappointed” if they could no longer use the tool, easily passing the 40 percent product-market fit threshold.
Develop a Strong Business Model
Identifying product fit has a strong impact on your business model. When you understand your audience and market, you can build a product and business that caters to it. Without that understanding, business owners aren’t able to move forward successfully.
“So many companies I meet at an early stage still seem to lack clarity on what animal they’re hunting — what size deals they’re going after and what commercial go-to-market model makes the most sense for their business,” says Benigson.
Several startup founders and organizational leaders highlight the importance of a good market fit and audience. Without it, you are building a business based on assumptions and hopes.
“Knowing your prospects is one of the primary things startups need to identify from the onset,” writes John Solomon, country manager at DRaaS (disaster recovery as a service) company Infrascale. “The profile of your prospects should guide you in your marketing approach as well as product development. Building a product and then looking for an audience is usually a recipe for failure.”
One of the most common reasons for failure is a poor business model, closely followed by a bad market fit. While companies do fail because of a lack of funding or legal challenges, poor market and organizational planning will almost always doom a startup.
Focus on Your Company Culture
While there are innumerable outside factors that can impact your business, internal operations can also set your SaaS company up for success — or failure. It’s not uncommon for founders to experience growing pains as they add more employees and need to develop a culture around them.
“You’re not five, six or eight people in a garage anymore,” says Benigson. “You’re 10 or 20 or 30, and then you hit these [key] moments like 50 people where it actually becomes much harder to ensure everyone is focused and aligned on the same objectives. That’s where it becomes important to start building the right sort of processes to start defining your values and embedding them within the organization effectively.”
Benigson says the longer he is in a position of leadership, the more he values emotional intelligence over technical intelligence. Emotional intelligence ranges from understanding the motivations of others to realizing how your communication and leadership affect your team.
“While people can gain knowledge and skills with time and training, their values are something that lies deeper and cannot be changed drastically,” says Ewelina Melon, head of people and culture at customer experience tool provider Tidio. “Additionally, every new person joining the team contributes to building a recognizable culture and helps in understanding if it’s time to change specific processes.”
A new hire can enhance your culture and highlight the strengths of your team, or they can contribute to a toxic work environment and make it harder for your best employees to thrive.
“We are investing heavily in our culture and being the best working place,” says Henrik Lepasoon, cofounder and CEO at strategic planning platform Stratsys. “Culture has always been a very important part of Stratsys and will continue to be so in the future, as we believe that it’s key to be successful as a growth company.”
Have the Right Team and Leadership
One of the trickier parts of managing a healthier company culture is making sure your executive team follows the same guidelines that your new hires are expected to adhere to. A manager who was one of the first people to join your startup can develop toxic habits. It’s extremely difficult for founders to approach someone with such seniority when there is a problem.
“As a founder and a CEO who cares about my culture and cares about the people in the organization, I used to think making changes at a leadership level was somehow in conflict with me building a great corporate environment,” says Benigson. “One of the big lessons I’ve learned is actually… the sooner you [make a change] and the more forthright you are about it the more effective it is for all parties involved.”
This benefits both the individual and your team. If the manager or senior leader isn’t doing their best work and isn’t in an environment where they can grow or succeed, you may need to step in and let them know it is time to move on.
“As a CEO, I want to clarify this: you should never be afraid to terminate,” says Ali Mirza, founder and CEO at Rose Garden Consulting. “However, ensure that this individual has no other role in your organization before firing someone. If your sales leader has core value alignment, they’re a good culture fit, and they are committed to you and the goal, then maybe, you could reassign them to different duties and responsibilities.”
Leading a SaaS company means you need to have two sets of eyes. You constantly need to track the moving target of product-market fit while ensuring that your internal organization is operating at its best. If you focus externally or internally too much, one aspect of your business model could suffer. However, with the right balance, you can move your company forward and reach an operating maturity level that allows you, your employees and your business to thrive.
Our return to Dublin will bring with it many ways you can connect with likeminded people and peers in SaaS. Find out 10 ways how we’re facilitating human connections (not just meetings) at SaaStock 2022 in Dublin. Read our blog post.
Get your tickets to SaaStock 2022 in Dublin this October, to experience:
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