One of the cool things about SaaS businesses are they come in all shapes and sizes. There’s this growing trend of micro SaaS businesses.
What is Micro SaaS?
These are ones that are run by 1 to 5 people. They are highly profitable. They won’t IPO one day but they don’t need to.
They’re like condos you own and rent out. They keep appreciating in value and you keep reaping the profits.
SO… Here’s the big question.
What makes for a great Micro SaaS business?
We’ve been digging deep into this here at Unstoppable and today, I’m going to give you the 3 principles you need to know to pick the right Micro SaaS idea. When you incorporate these 3 principles, you’ll know exactly how to buy or build your own Micro SaaS business and reap the profits.
When I started out, 37 Signals known as Basecamp mentioned how they were bootstrap, profitable, and proud.
Typically when you’re in the venture bubble, you’re either growing a venture-backed business that’s highly scalable, or you’re doing a lifestyle business.
But the 37 Signals guys were the first ones to say, “No. We don’t want the venture capital. We’re bootstrapped, profitable, and proud”. That ethos is what really makes a micro SaaS business.
The reason you don’t hear that much about it, is because if a founder making 3 million from a micro business, they are just going to stay quiet. Tech Crunch articles about it. Stealth wealth.
Fundamental #1. Solve a Problem for Individual Contributors
Micro SaaS companies should solve for the user and the user’s are the ones buying. When you start selling to decision makers chances are you will require sales people, there are multiple people to convince – it becomes harder to sell. Micro is nearly automated and self-service. You just need to convince one person
What’s the quick hack? Look for individual contributors (IC) in specific jobs that need products solved through SaaS.
How do you make sure this is going to actually work?
Fundamental #2 Follow the Jobs to Be Done Framework
A jobs to be done framework is essentially a framework that looks at a IC and thinking about the jobs they need to get done efficiently. You literally map out what their day looks like, tools they use, and what they need to accomplish.
What is the urgent problem in their workflow? That is what your SaaS product needs to solve.
For any SaaS company, you need to make sure you’re solving an urgent and important problem. If you’re not you will spend a lot of time convincing them it’s important and they might not have any money leftover to turn a profit on that user. But if you map out their jobs to be done, look at what they are being compensated for, what are the results they need, and where in the workflow it’s broken for your SaaS business to plug-in and solve that’s when the magic happens.
There is a bonus caveat to this principle . . .
You want to make sure your SaaS product clearly integrates into their workflow. One of the toughest things with SaaS period is churn. Getting customers to come back. So if you let them know how your Micro SaaS (i.e. Chrome extension, core integration, email notifications) integrates, you are more likely to activate, retain, and convert them.
Fundamental #3: Price to Show 10x ROI
How do you know how to price your product? What is the best pricing strategy for your product? If you price any higher than $99 you get into the possibility of them wanting to talk to sales.
You want to justify and express 10x ROI meaning if you’re charging $100 you need to show how they are getting $1,000 back.
You want to target people with disposable income and/or high earners.
Chances are these IC do not have access to a corporate credit card so they use their personal cc. As they see value they will start to expense it and eventually tell management.
If you want to dig into these principles more, watch my latest Unstoppable episode from my Youtube channel on scaling SaaS businesses where I walk you through each of these and illustrate each of the points
So those are the 3 principles to follow to make sure you’re picking the right micro SaaS ideas to build incredible business so you’re bootstrap, profitable and proud. This is what makes for a really awesome Micro SaaS business.
If you start to crack one of these fundamentals, you can start to scale it over time and use the common services from your existing one to build other micro SaaS businesses.
If you’re in the early-stage of building out your SaaS business and trying to craft your idea then check out my 10-point SaaS Business Checklist. It helps you evaluate where you are currently, and work through the critical components of starting a SaaS business.