Why Saas Startups fail

The SaaS industry has exploded with a plethora of new startups and products that have been successful and relevant to consumers. However, despite the industry’s boom, most of these startups fail in a short period, regardless of the resources available.

After conducting extensive research and observing SaaS startups that have failed in the past, this article will shed light on some causes of SaaS startup failures

No Proper Market Research

Market research is an integral part of the birth and growth of any business. If proper market research is not conducted, it can cause any startup to flop before it even takes off.

Market research informs you of your customer’s needs, whether there is a market for your product, and if the proposed prices will be worth the product to the consumers. Most importantly, market research shows you if the proposed problem needs solving, which is what a SaaS startup is all about.

These are some of the issues that arise from poor market research:

• Identifying a proposed problem and creating a product exactly like the competitor without being unique, thereby causing many consumers to drop the software shortly after getting it as it is "just like the rest" and has no extra features useful to them.
• Creating a good product that does not have enough demand or need in the market.
• Wrong pricing for the proposed product.

A tool that allows local authorities to relate to its local residents sounds like a good product idea, right? Well, a guy named Stepa Mitaki built a product like this and named it Mycity. They realized after a while that despite it being a good idea, there was no need for it in the market, and it shut down later.

Poor Hiring Process

Your management team can make or break your business. The team plays an important role in the well-being and growth of your startup. Your team is responsible for recruiting new staff, market research, growth techniques and implementation, marketing strategies, and many other functions.

Aside from being experts in their fields, the individuals that make up your management team ought to be on good terms and be able to work well together.

Hiring the right people at the right time is a critical part of growing your startup. It’s important to hire only for necessary roles so you are not cash-strapped. The importance of hiring the right people cannot be over-emphasized.

Your marketing strategist can miss certain details that can cost you money without having a substantial return on investment, the wrong developer can create a product and leave certain little details out, and customer support can leave customers frustrated. While it is necessary to look for people with impeccable skills during the hiring phase, you should also look out for individuals who are passionate about the startup to make it thrive.

No funding/poor money management

In the early stages of building a startup, a substantial amount of cash is required to get things started.

When it comes to funding, you need a clear roadmap for spending. This will help you avoid spending on not-so-important factors and over or underspending on the important stuff. The first thing to do is clearly define the amount of money needed to finance the project.

To avoid running out of funds for your startup, follow these steps:

• Set aside extra funds for the product.
• Do not overestimate revenue.
• Resist the temptation to sink money into unnecessary things like branding or staff hire when the product has barely made progress in the market.

Inadequate Marketing

When you decide to build a startup around a SaaS product, it means that you have done your surveys and identified a gap in the market to make a product that caters to the specific needs of your customers.

There are several factors that make a SaaS startup thrive, and having a good product is one of them. After doing your research and building your product, you are then tasked with the duty of making sure your prospective customers know and learn about your product and use the service/product, and that is where marketing comes in.

There are various forms of marketing that exist, including free and paid options. Dealing with the marketing aspect is just as tedious as creating the product itself. Things to consider in the marketing phase:
How little or big the budget should be. This can be quite confusing, especially if it’s the first time you’re doing any form of marketing campaign for the product. Here, doing in-depth research on the kind of customers you want to sell to is very important. Where can you find them online? What forms of content do they consume (video or audio)? And so many other factors.

No supervision

You have to put measures in place to track the progress of these campaigns. That way, you’ll find out what’s working and what isn’t. This way, you repeat whatever seems to work.
If a startup fails to market its benefits, it will struggle to attract and retain customers despite the quality of the product. Habitual is an example of a promising startup with a habit tracking app idea that folded up due to a bad marketing plan.

Team Problems

There’s a lot of issues that can arise within a SaaS startup team that can cause its failure in the long run. Lack of expertise, poor collaboration, and even leadership issues can impact a startup’s growth and success.
The importance of building a good team in your startup cannot be overemphasized. When you start hiring individuals for your startup, there are certain things to consider.

• Passion — When you start considering applicants, the most important quality to look out for is not skill or expertise. This is not to say that an expert in the field cannot do the job right. You must hire the right candidate and not the right expert.
• Team player — Asides from hiring an employee that is passionate about the product you’re building and your vision, it is also important to look for a team player and someone that can collaborate with others on a team to produce efficient work and progress.

Conclusion
These are a few reasons why most SaaS startups fail. It is quite tricky to get just about every aspect right in the building process, but there are SaaS startups that are successful and thriving.