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Validate these 8 points while looking for a SaaS idea

From my research and experience, here are 8 points one needs to consider while looking for their next venture.

Finding a SaaS idea to build is not just randomly picking any profitable or popular product in the market; it’s also not building things that you think are good and can help users.

There are strict norms of validation one needs to perform while looking for their next venture, or maybe the first.

This is very important as the wrong path can waste your time and money, which will result in self-doubt and even depression at some point.

Thus, let’s look into these 8 points, what they are, and why they are important while validating the SaaS idea.

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#1 Revenue Potential

This is one of the most important areas; here, you need to understand how much you are spending per user and how much more you can add to generate healthy potential.

Normally, I’ve seen people adding 70% — 80% revenue growth margins for the best part, but if you are between 50% — 70%, that is also okay!

#2 Ease to Market

Another very important point to work on, here you need to understand how hard it is to actually reach buyers and sell the product to them.

Here, you need to account for the factors, like GTM Strategy, how many sales calls it takes, and how much you are getting from 1 client if you spend 2 months chasing them.

If you are putting in a lot of effort but your revenue is below 50%, then you are not earning anything here, and it’s not a suitable SaaS idea to work on.

#3 Ease to Build

This determines how hard the product is for the engineer and the ship. The maths is simple here,

If ease of building is higher, it means it’s easy to build.

If ease of building is lower, it means it’s more technically demanding and has challenges or technical dependencies.

#4 Path to Profitability

In starting obviously, you might not be profitable, but you need to have a clear understanding of the route for making money.

Now, this is not just revenue; I am talking about actual profit margins.

#5 Exit

This is something that we all like to do; after some point, we like to sell our product/business to someone and move on.

So, how easy would it be to sell the company to an acquirer? Here, everyone likes to have more attractive acquisition targets.

#6 Moat

This means defensibility to AI. How well the business is protected from being copied or commoditized by AI tools.

If it’s easy to copy or, in the future, AI can take over your work, then it’s not a good idea to create that product.

#7 SEO

SEO, one of the beautiful things if done right, can increase the growth of the company without much effort into marketing.

Understand the effectiveness of organic traffic and how easy it is to get users from search engines, whether you reach out to them.

#8 Cold Outreach

If organic traffic does not work for you, then you need to understand how much money and effort you need to put into cold outreach, like Cold Calls or Cold Emails, to get your customers.

And is it scalable, as this side will require a good budget, so if your revenue is not good, you won’t be able to fund this.

These were the 8 points that one should check and validate before actually starting a SaaS company or product.

Let me know if you have any questions, or feel free to reach out to me for SaaS Consultations.

I have also compiled a book, Useful Websites & Resources for SaaS Businesses, where you can find such cool AI tools based on different categories that will help you save time and money in your SaaS project.

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