If you’re planning to start your own business, but you’re not sure which type of company to set up, consider SAAS (Software as a Service). SAAS businesses provide their products online, usually through an app or website, which means that customers can access your business from any location at any time, even from their phones or tablets. Here are some pros and cons of starting a SAAS business so you can decide if it’s the right choice for you.
Revenue stream is monthly instead of weekly
The biggest con of all is that you don’t get paid on a weekly basis. With an SaaS company, you only make money when your customers use your product. Your revenue doesn’t come in until they either upgrade or (even better) renew their subscriptions at the end of each year or month. You need to be prepared for some months with little to no revenue coming in if your business has slow months or bad press.
Less clients means less working hours
In most businesses, you have to sell your product or service for a certain price in order to make a profit. With SaaS though, you charge as much as your clients are willing to pay (within reason). That means that if you have fewer clients, but each one is paying more money, then your gross revenue will be lower, but your net profit per client will be higher.
No product creation process
When starting a business, one of your first questions should be: What are my customers going to pay me for? If you can answer that question, then you know what your product is. Everything else that follows should have clear lines back to how it helps deliver value to customers. Your team must focus on meeting customer needs before solving internal process problems or building cool technology.
No sales or marketing at all
If you’re not selling anything online, then you don’t have to worry about marketing or sales. It’s as simple as that. On top of that, it also gives you a chance to work on your product for free for a few months or even years before ever having to convince someone to buy it. Not too shabby if you can afford it.
Not applicable to everyone
Before you start, it’s important to consider whether or not owning your own business is right for you. That’s why some experts advise you to launch on your own—even if that means signing up for your company as an independent contractor—before taking any steps toward becoming self-employed full time. Doing so gives you an opportunity to test out what it’s like to run your own show.
