Running A Micro-SaaS Startup: Expectations vs Reality

My personal photo.
Ilya Novohatskyi
August 19, 2022

“Eureka! Eureka!” These were the famed words of Archimedes as he dashed out of his bathroom after discovering the law of buoyancy (also called the Archimedes Principle).

We aren’t discussing Physics today. But virtually every first-time founder (or even a veteran in the startup game) has this light bulb moment when they get that big idea that will ‘change everything’. I know this feeling as a startup founder, myself.

Even before we commit to building the project, we've got lofty dreams of the massive success our startup idea will attain.  But as we set the ball rolling, we soon find out that things aren’t the way we thought.

Today, we’ll talk about the misconceptions and false expectations, and harsh reality of running micro-SaaS companies as startup founders.

Without further ado, let’s dive in.

The Expectations and Realities of Running A Micro-SaaS Startup

Expectation 1: Having a unique idea is the key to building a profitable micro-SaaS startup

Most times, a founder thinks he’s got a unique idea that will crush the competition and change the world. Thoughts like this cause the startup founder to fail to do adequate research to know why the other products are selling.

Reality: Your unique idea may not be a market fit

The truth is having a great idea doesn’t mean users will be willing to pay for your product or migrate from the existing products on the market to yours. An idea doesn’t make a great product: a market fit does. And the best way to know your micro-SaaS product is a market fit is by doing careful research.

Study your top competitors, their strengths and weaknesses, and the market situation. Also, analyze feedback/reviews from customers using your competitors' products. This discovery phase is very important as it’ll help you compare your 'unique startup idea' with other software products on the market and know if there’s another product already offering your solution and if yours is worth paying for. More importantly, it’ll save you investing a ton of time, money, and resources into the wrong idea.

And if you decide to embark on the project after the discovery phase, you’ll be clear on your goals, know more about user needs, and manage your time and resources.

Expectation 2: This micro-SaaS product will make me rich quickly

We all want to get rich ASAP. And as a solopreneur or indie maker, making profits should be one of your top objectives from day 1. But not all business ideas are profitable.

Reality: It takes 2 – 3 years to become profitable

According to the Houston Chronicle, it’ll take 2 to 3 years, on average, for a business to become profitable. But your micro-SaaS startup isn’t just another business like VC-funded startups. It’s an online business where you don’t have to hire lots of talents or worry about inventory, logistics, and whatnot.

With this reduced cost, it’s easy to think you’ll easily get rich. But first, remember that your product is in a sub-niche (micro-SaaS) under a larger niche (SaaS). So there may not be enough users. Secondly, you may be up against stiff opposition, and it takes effort to attract new users to your limited niche.

While you may have paying customers early on in the company, it will take a long while to make you rich despite the reduced spending. You’ll need to reduce churn (increase customer retention) and get lots of customers, especially if your primary selling point is cost efficiency.

Expectation 3: Making huge sacrifices is a great way to push for startup glory

Many times, people feel that having grit, taking risks, and quitting their jobs to run a startup is a recipe for success. While it’s common knowledge that startup founders are risk takers, there’s a lot that goes into building and running a successful micro-SaaS startup. And quitting your job and investing all your money into your software company idea isn’t the wisest thing to do when you’re a rookie.

Reality: You need a cushion to ensure a safe landing

You’ve probably heard of ‘shiny object syndrome’ when someone becomes too invested in something that they both lose sight of the bigger picture and let other things they’re working on suffer.

You could get a few customers, and then, they churn. When you keep that in mind, you’ll take a more cautious approach to launch your micro-SaaS startup idea. When building your first micro-SaaS startup, have in mind that it can fail, regardless of having customers. This is because, most times, the first product developed by a startup won’t meet the market needs.

So is it worth risking losing everything for?

First, you need to draw up a strategy and set both long and short-term goals. This should be before writing a single line of code. A clear plan helps you stay focused and track your tech company’s growth.

Then test your MVP (minimum viable product) very fast, so you can reject unproductive ideas faster. Sometimes, your idea may be ahead of its time. If you find yourself struggling to get paying customers, you may want to move on. Tyler Tringas calls this ‘The Meat Grinder’.

Expectation 4: My software is the best: my first customers will refer it to other businesses

Many small tech startups launch without a marketing plan. They think they’ve finally got the one elixir that will save the world. So once a few first users try it, they’ll recommend it to other customers … and voila, they’ve become a sensation. This strategy is a recipe for failure. Yes, word-of-mouth marketing is powerful, and it’s worked for some founders. But should you rely on others marketing your SaaS as your go-to strategy?

Reality: Every business needs a marketing strategy

Very few businesses grow through the virality of word-of-mouth marketing. And having a great product may not set your product up for this virality.

First, you need a marketing plan to get your first 3, 5, 10, or 50 customers. And after reaching your 100-customer goal, you need another plan to double your customers to around 250 customers as your previous strategy may not be scalable. Then you need a strategy to get people talking about your product. Will you offer a better product and price it 2x less than the competition? Make your vitality a conscious effort.

Expectation 5: Running a micro-SaaS company will give me freedom

There are many founders on social media that encourage you to do what you love. And in doing so, you’ll find the freedom to travel, spend time with your loved ones, and do what you like. In reality, it’s not so true, especially at the beginning stage.

Reality: Running a successful startup doesn’t come with freedom

Running a micro-SaaS could probably be the most challenging enterprise you’ll ever attempt. You’re not just running a project, you’re running a business. And as with all businesses, you're competing with others, so you need to put in the work to gain traction to ramen profitability. And you can travel as you'd like with your family. But one thing that we're unsure of is how long you'll have to work hard.

When you’re starting out, you’re the only salesperson, marketer, and customer service the company has. Handling just one of these tasks is a real handful, let alone combining all three. On most days, you’ll be up early and late to bed. Also, calls can come in at night from customers in different time zones.

You may struggle to find the work-life balance you always dreamed of. However, you should prioritize your health. There are free tools you can use to stay productive and organized.

So rarely does running a micro-SaaS give you the freedom you’d like, especially at the beginning. You need a certain level of profitability (which could take quite a long time to achieve).

Expectation 6: I can run the small company on my own

It’s easy to assume that you know the SaaS trade after speaking with a few successful startup founders. Plus running the company solo will save you a ton of money.

While it’s important you cut down on spending, you may need a team as you grow.

Reality: Delegating = working smarter

You may have heard of solopreneurs crushing it with tools. But business models differ. You can run an ecommerce store, coaching, consulting, or course creator business alone. But when it comes to software, it’s a different ballgame.

You can only get by with only tools for a while after getting your first few customers. Then you’ll need a team of fresh minds to scale and boost sales. You may need a VA to keep you organized, a marketing strategist to get you more organic or paid traffic, a technical co-founder if you're non-techy, etc. Delegating tasks to people skilled in other business areas is a great way to work smarter. Else, you'll likely experience burnout and not make headway from running the micro-SaaS company solo.

Another way to make your work easier is by acquiring a startup on a startup marketplace like Microns. On Microns, there are lots of vetted and profitable micro-SaaS startups on sale for as low as $400. The sellers will freely support you in running the project for a month. And you could reach an agreement for extended support. 

Expectation 7: We want everything to be perfect before we ship the product

Many startup founders think the best decision is to launch only when the product is perfect. In reality, you can hardly ever develop a perfect product without getting feedback from users.

Reality: You can waste your time building the perfect product

The best approach is to build your MVP (with minimal features, and a well-designed UI, but should be able to deliver your core offering very well) and test it in the market. If there's interest, you can learn more about the users' needs from their feedback and continue to build your product to perfection. Creating the perfect product first before launch is the wrong approach.

Having the perfect product with the best features doesn’t guarantee your startup’s success. For what it’s worth, you can be investing your time, energy, and resources into the wrong project. Always validate your project with the number of users or revenue. Then keep track of their activities and learn from their feedback to build the right product for the right audience.

Expectation 8: Identifying customer needs is the only product-market-fit battle

Gathering data and information about your prospects’ needs is only one piece of the puzzle when building a market-fit product. That's false. There's a lot of moving parts to building a market-fit product.

Reality: There are several blockers to adoption

Now you’ve launched your micro-SaaS product and have finally acquired your first 100 customers: Mission accomplished! This is every first-time founder’s dream.

But after a while, you observe that your user base starts declining. They’ve probably encountered some form of friction that makes it difficult to continue using your product.

This will be the perfect time to talk with your customers to discover what’s going on. There’s a likelihood they’re having difficulty migrating their data to your platform. Sometimes, the tool may be too clumsy and less intuitive because it’s packed with too many features. So you'll continue to encounter battles even after a successful launch.

Conclusion

The harsh reality is that running a micro-SaaS startup isn't all glitz and glamor as there's a lot of work ahead of you. Your brilliant idea may not have a market for it or it could be too early for the market.

To avoid burning your resources, develop both short- and long-term goals. Then quickly test your ideas in the market. 

Speaking of quick testing, you can leverage the foundation of other founders and buy their profitable startups on our Microns marketplace. Some of these products already have users or revenue. Plus you can get help from the seller in running the project.

Not sure of the product to buy? Sign up for our Premium and we'll handpick the best and send them to you.

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