Vladimir Pilipchatin

Roadmap from SaaS Idea to Profit

7
min. reading
Jun 17, 2021

Launching a scalable SaaS business is a great investment to build a new revenue stream.

But do you know the process it takes to get from an idea to a profitable SaaS business?

When you don’t, you can’t properly judge whether it worth building a SaaS product in the first place.

You are risking to stuck in the middle and run out of resources. Or give up on the idea because you’re overwhelmed and have no idea where to start.

Let’s take a look at how looks like the roadmap from SaaS Idea to Profitable SaaS Business. I hope it can help you make an informed decision and know where to start.

Disclaimer

There is no one-size-fits-all roadmap from idea to profit.

For sure some startups followed the exact process and failed. And some start-ups haven’t followed any of them and succeeded.

Below is a common roadmap that I derived from my observations of start-ups & the learnings I got when building products for my clients.

To make the process easier to understand I simplified a lot of things. The goal of the roadmap is to give you a better mental model to rely on when you are planning your SaaS Business.

Bird-eye overview

The SaaS business journey starts with an Idea and advances toward Profit.

Here are 4 stages that a SaaS startup goes through:

  • 1️⃣ You have an idea but no product
  • 2️⃣ You have a product but no paid users
  • 3️⃣ You have paid users but no profit
  • 🏁Your SaaS Business is Profitable

Usually skipping any of the steps leads to frustration and results into:

  • Getting overwhelmed and not even starting
  • Running out of money & energy before you ever get on the market
  • Building thing that nobody needs for too long

In the first 2 stages, you are conserving money. After 3d one, you actively invest money into the product.

During the first 2 stages, you don’t know yet if anybody would pay for your product. To reduce the stakes, aim to reach the 3d point with the least time & money invested.

After 3d stage, you have a product people ready to pay for. So no you can invest more money to rump up your speed of getting profitable.

Let’s get in-depth about what you need to do at each stage.

1️⃣ You have an idea but no product

It is the very beginning of the journey to a profitable SaaS business. You have some idea & vision for your SaaS Product but no product that is ready for users.

Goals of the stage

The goal is to get from the idea to the tangible product that you can give to the user as soon as possible.

There is no point in aiming to get revenue from the first version. The first version shouldn’t necessarily be able to handle even 100 users.

MVP should be the very least you can give to your first user to get feedback.

What to do

Here are 3 stages you’ll need to get through to launch an MVP:

  • Defining & validating problem
  • Desiniging & validating solution
  • Building solution (MVP)

Chances are the first version of the Product will be shiny no matter how much time you spend on it. The product will get better only after you iterate it based on the user feedback.

Since you don’t have yet anything to get feedback on, there is no much sense in iterating before release. The goal is to ship MVP to the market as soon as possible.

Let’s get into details

Define & validate a problem

The first step in building an MVP is picking the right problem to solve.

The goal is to understand whether the problem you are trying to solve is worth pursuing.

At the end of the step you should be able to answer questions like:

  • What problem we are trying to solve
  • Who has that problem
  • Does anyone give a crap about it
  • Is it burning enough that people are ready to pay for it
  • Are there any existing solutions that solve the problem good enough
  • Is it a daily/weekly or yearly problem

At this step you need to:

  • Talk to users
  • Research the problem & market
  • Document your findings

Design & validate solution

Once the problem is clear you need to design a solution for it.

The goal is to design a solution and make sure that it solves the problem. You should validate your assumptions before you invest money into building a solution.

At this step you need to:

  • Define user flows
  • Create wireframes
  • Create prototypes
  • Test prototypes with your target audience
  • Validate technical feasibility of the product

Building solution (MVP)

The goal is to build the solution you designed and get it to the market.

At this step you need to:

  • Do user interface design for the product
  • Develop your product

2️⃣ You have a product but no paid users

After you launch the MVP your situation looks as following:

  • You have an MVP
  • You have no users ever using it
  • The product is far from perfect

Goals of the stage

  • Get someone to use your product
  • Iitterate product to being valuable enough for users to pay for it

You don’t need to aim for profitability & scale yet. There is no much sense in it till you figure out how to make it valuable enough for 1 user to pay for it.

What to do

Your quest for the first paid user comes down to the following cycle:

  • Getting users
  • Measuring the results
  • Learning from data
  • Building based on learnings

By the end of each iteration, you ship a product increment that should get you closer to getting a paid user.

Get users

The goal is to get a person from your target audience to use your product.

At this step you need to:

  • Reach out & organize 1-on-1 demos
  • Experiment with marketing & drive traffic

You don’t need to spend lots of money on building marketing funnels yet. You need only a few people to pinpoint problems in the product.

Reach out to your network to get the first users. If you don’t know anyone with the problem you are solving, probably that’s not the right problem for you to solve.

Once you made a few iterations you can move to paid ads or other marketing channels to drive more traffic and accelerate learnings.

Mesure

The goal is to get data about how your product performs and whether you are moving closer to getting a paid user.

What you need to do:

  • User Interviews
  • User Testing
  • Set up & track conversion metrics within your app

You need to get data about how users use your product. So you could answer questions like:

  • Does the product solve the problem?
  • Where is the bottleneck in our user flow?
  • Does the user think it is valuable?
  • How many of the users willing to pay for the product?

With first 1-on-1 demos the most valuable you can do are:

  • See how people use the product
  • Talk with them about their experience

As the result, you need to get recordings of these demos so you could analyze them.

Once you get more traffic & sign ups you should set up tracking in the app to understand how people use it. You can use services likes HotJar, Mixpanel, Google Analytics. They’ll give you data like

  • User sessoin recording
  • Funnels & user flows
  • Conversion rates

Learn

The goal here is to generate ideas about what you can improve to move the metrics up based on the data you got.

What you do:

  • Analyze user interviews & user testing
  • Analyze data from services like HotJar & Mixpanel
  • My educated guess what you can improve

Build

The goal is to get your idea into and implement them into your product.

What you do:

  • Define the requiments
  • Design
  • Build

Repeat

Repeat the above steps till you get a paid user. Aim to keep the cycle short and release early & often. This way you mitigate the risk of building the wrong things for too long.

3️⃣ You have paid users but no profit

At this stage you already go through the desert and have got:

  • The product that’s valuable enough for people to pay for
  • Few of the paid users
  • A direction where to go to scale & grow

Goals of the stage

  • Find profitable marketing channel
  • Attract enough paid users to become profitable
  • Improve the product to maximize the value for users & increase LTV

What to do

The process of product iteration is the same as in the previous stage.

The difference is that you already figured out a foundation of what works for you. So now you need to double down on what works and do less of what doesn’t.

You need to invest more into marketing to get users & revenue.

Along the way keep experimenting with the following to find what gives you the best ROI:

  • Marketing channels
  • Business models
  • Product positioning

🏁Your SaaS Business is Profitable

4th stage is a pretty damn good place to be in:

  • You have a product people ready to pay for
  • You have a decent amount of users
  • You have a decent idea of what marketing channels work for you
  • Your SaaS Product is now self-sustainable

Of course, that’s only one milestone in the journey. But is a significant one getting here is very difficult, it takes a lot of time, money & patience.

Not to say that the next will be easier, but you’ll have more resources for growth at your disposal.

Goals of the stage

  • Find a balance between profitability & growth
  • Have fun & enjoy the journey

Process

The process is the same as in the previous steps.

Continue doing things that work and experiment to identify new opportunities.

Stuck up cash or reinvest it into growth.

Wrap up

  • Have an idea but no product → validate problem & build a product
  • Have a product but no paid users → iterate + experiment
  • Have paid users but no profit → double down on marketing + iterate + experiment
  • Have profit → same as previous + have fun

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Thank you for reading!

I hope you enjoyed the article and it will help you get a more clear picture of what it takes to get from an idea to a profitable SaaS business.

And if you’d like more posts like this please do join the email list.

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