Tips and tricks from experienced founders and service providers to help you launch the next big thing in SaaS
A successful SaaS (Software-as-a-Service) business can be extremely profitable as it generally has high margins, recurring revenue, and can be run with a lean and remote team. Plus, a longstanding love affair between VC investors and SaaS continues to attract investment and acquisitions.
E-Residency can be a great match for SaaS companies, particularly those of the micro kind, due to location-independence, low bureaucracy and remote management solutions.
So why not consider a SaaS venture yourself?
SaaS is a business model that involves creating and running software to help people solve a particular problem or provide a useful add-on to an established product. The goal is to get people to value the software highly enough so that they subscribe and pay a monthly fee to access it.
Companies like SalesForce, ClickUp, Pipedrive, and countless others, are all SaaS businesses. They offer software that can be used against recurring payments.
There are a growing number of ‘micro-SaaS’ companies now as well building very simple plugins on top of market leading products, such as Gmail and Slack. A micro-SaaS is generally run by one person or a very small team at low costs with a narrow focus and a small but dedicated user base.
SaaS certainly offers a lot of opportunities, and the micro models are particularly attractive to solopreneurs due to their low running costs, recurring revenue, and remote management opportunities.
A micro-Saas can be run by one person or a very small team, meaning wages and other overheads such as rent for office space are kept low. As a result, many such ventures are bootstrapped in their startup phase so there is no need to distribute dividends to investors or pool massive amounts of money to get the software up and running.
The subscription business model provides a recurring stream of revenue, which allows you to focus on supporting and retaining your customers and not one-off sales.
As SaaS is a digital product and service, it can be created and provided totally online, making it a flexible enterprise for people working location-independently. Essentially, SaaS is a match made in heaven for digital nomads and remote workers!
Italian e-resident and SaaS entrepreneur Mike Rubini loves SaaS for three key reasons:
“1. It’s a very honest business model. Can you deliver and help people? Fantastic, you get traction. Do you drop the ball? People cancel, usually with just a click.
2. The subscription model provides predictability and certainty because you are not relying on one-time purchases. With recurring payments, you can plan ahead, forecast, and focus on retention of customers.
3. Finally, investors are very interested in acquiring SaaS businesses for their high-profit margins and predictable revenue.”
The first thing to do is to come up with an idea, build a prototype, and test its product-market fit and value. This involves validating that the product is valuable to enough customers who want to use it and who will pay a recurring fee for access. Customers will be happy to make such investments if it improves their overall experience or addresses a niggling frustration.
Mikk Maal, a partner from e-Residency Marketplace member Comistar, advises those interested to “validate your idea before setting up the company. At Comistar, we’ve encountered many starting entrepreneurs who’ve had an idea, and set up a company before they have surveyed potential clients. Making sure your idea has value is really the hardest part.”
Once you have validated the product, it’s time to make your business plan.
Writing a business plan forces you to review everything about your business at once, from value propositions and risks to team and financial plans, to keep you focused on reality rather than dreams.
As Maal notes, it is prudent to make a business plan “even if your idea has been validated, as many good products never fly if they are too expensive (to compete) or too complicated to find their right audience.” A business plan could help reveal these challenges before too much time and money is spent launching a product that will not sell.
As this point, you can also analyse the best locations to register your business by looking at all relevant factors, including where your targeted clients are, where you might want to get investment, taxation considerations, and access to banking.
Read our tips to write a solid business plan on our Knowledge Base:
Rubini’s advice on how to get started in SaaS is based on several years of experience trying different approaches. He says that there’s “no right answer here, so explore different models. Maybe you will start with investors or prefer to bootstrap; do you build a team or work solo; will you build the code yourself or do you prefer no-code solutions.” Based on his own experience, he suggests a solo approach at least at the start:
“Personally, I think the best way to start is to start alone and to test the market before actually making the product. This allows you to acquire skills (such as programming, marketing, doing support, doing sales) that will make you t-shaped. Even if your SaaS project goes wrong, you can still go back to the job market and you will be more valuable because you would now have useful skills that you acquired by trying to build a SaaS product.”
Rubini counsels that you don’t have to reinvent the wheel either — there are many useful SaaS products out there that are only slightly different to others on the market but still prove useful and competitive. But, he cautions, “you have to do your homework and identify a gap in the market.”
Read more about Rubini’s SaaS experience in this blog post, in which he also recounts his e-Residency journey:
So you have an existing idea for a SaaS business, a validated prototype, and a plan. But how can you put it into action? And where is a good place to register a company for your SaaS product?
Have you thought of Estonia as an option?
There are several benefits of why Estonia is a great place to launch and sell SaaS. Estonia has already produced world-renowned unicorn SaaS businesses like Pipedri
ve and Xolo. Maal — a proud Estonian — says that seeing such success stories up close “motivates the young entrepreneur community here. There’s also plenty of investor money around to fuel the SaaS business once you get traction.”
The Estonian startup ecosystem is indeed flourishing thanks to the country’s digitalised governance structures, entrepreneurial attitudes, and smart and tech-savvy labour force. It’s no surprise therefore that the global trend to build SaaS businesses is as strong in Estonia as it is anywhere else.
In addition, e-Residency makes it easy for people outside of the country to start and run a company here without ever needing to visit. The programme provides foreigners with digital access to Estonia’s advanced e-services. This allows entrepreneurs to be truly location independent, easily register a company in the EU, and manage it fully online and remotely. Estonia’s secure digital infrastructure and transparent business environment translates in everyday business terms to minimal bureaucracy, low compliance costs and hassle-free, paperless administration.
Rubini adds that a further benefit brought by e-Residency “is the large and supportive network of people from whom to get help whenever you are stuck.” In addition, he enthuses that “if you are in a non-European country, or a country where payment vendors are still 1.0 — then you can get access to great payment vendors such as Stripe.”
This last point of Rubini’s is especially important when considering the recurring nature of payments for SaaS products— e-Residency makes it possible to use payment service providers like Stripe, Payoneer or Paysera to collect payments from your customers on behalf of your Estonian company.
To get started, first visit the e-Residency website and apply:
Once you have picked up your digital identity card, you can easily register a company in Estonia with the help of expert service providers from the e-Residency Marketplace, such as Comistar.
Comistar holds a special focus and attention to SaaS businesses, as, according to Maal, “it’s probably our favourite type of business model for online entrepreneurs.”
Comistar onboards SaaS businesses to their Zero To Scale company management platform, where they can easily run and manage their business (and track their financials by connecting their company’s LHV or TransferWise business banking accounts). Meanwhile, Comistar will take care of the accounting and taxes. In-house lawyers can also help draft legal documents like terms of use and privacy policies for your company’s website.
To consult with Comistar, reach out to estonia@comistar.com or visit www.e-resident.me.
So what are you waiting for?
With the low running costs and recurring revenue features of SaaS and the remote management opportunities of e-Residency, they are a match made in heaven.
Take the plunge and get started. If everything clicks, SaaS can be magical.
