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How To Find Out If Your Budget Is Right For Your SaaS Business

By Fairhead Creative — Get free updates on new posts here

If you’re dreaming of a new product, or you’re a part of an early-stage startup, then you’re probably aware of the mountain that stands before you.

You’re equipped with the dream, the drive and the dollars to get things started. Your dream is solid. The drive feels like it’s going to be endless right now. But the dollars?

How many of them do you need?

Without them, your dream may not happen, and your drive could be for nought.

Let’s figure out how many dollars you need for your dream.

Calling Switzerland

I talk to entrepreneurs about entrepreneurialism as much as I do about effective design. I like to think that’s one of the reasons this agency is different from most — we act more like CCOs and CTOs than an agency.

This morning I had the pleasure of being connected with a lovely chap in Switzerland. Let’s call him Dave (I know, real swiss sounding.)

Dave’s a man with a vision for a huge new product. It’s a vision that’s going to change the landscape of his market. In his mind.

Dave made the brave decision to move to a location that would allow him to beat down the doors of prospective clients, and was ready to do so. He’d even created a PowerPoint slide deck of exactly how his product was going to work, so that he could start selling it right away.

I like Dave. I like people like Dave - people who have the plums to dream, and then act on it.

Dave’s my kind of people.

Counting the Dollars (or Swiss Francs)

To expect defeat is nine-tenths of defeat itself.

Henry Mencken

What Dave didn’t have, though, was the budget for his dream.

Realistically, his dream would need (at my estimate) about $400-500k to complete in its entirety.

Unfortunately, his budget was about 30x too small.

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Add to that the fact that startups were far more successful before the financial crisis: Q1 2007 had about as many births as deaths in the startup world. Q1 2009 had 1.5x as many deaths as births.

At first, I wasn’t looking forward to being the one to have to tell him this. The thing about dreams, is that they can be fragile.

Really fragile.

I know from experience that a dream can be snuffed out by negativity, even when coupled with drive. Negativity can knock the wind out of your sails (and your sales).

I didn’t want to knock anything out of anything.

What Dave needed was a plan.

David Dave and Goliath

Despite the sterling work Eric Ries did with his book, “Lean Startup”, the premise of an MVP (minimum viable product) is sometimes completely misunderstood.

A minimum viable product supposed to be a product that lets teams collect the maximum amount of validated learning about its customers with the least effort.

It suggests that you learn (and fail) early, pivot quickly, and ultimately avoid building stuff people won’t buy from you.

In the mind’s eye, it’s easy to imagine an MVP SaaS product as a kind of RoR scaffold site, complete with the default white background, black text, default font, all of that. You can also imagine the site being packed full of pages with no elaborations, broken workflows, links that don’t work, the works. Or perhaps, the almost-works.

MVP stereotypes should really be called QCP (quickest crappy product).

The MVP of a car shouldn’t be a fender. It should be a skateboard.

Breaking it down

Dave’s vision has lots of moving parts, lots of features, lots of value. It’s essentially a one-stop shop for his industry. He’s got mobile apps in there, he’s got product integrations in there, he’s got the full works.

Dave and I got to discuss what his MVP might look like.

Knowing your target audience is super-helpful for this process. By having formed some relationships early on, Dave knows what his audience is looking for. It’s perhaps because of that that he’s built his laundry-list of functionality he believes they’ll benefit from.

By choosing one piece of his overall puzzle - a piece that is valuable on its own - Dave can begin creating value for the people he’s driven the serve.

This one - one - piece that’s uniquely valuable for his audience, could be his minimum viable product.

The Challenge

Disney started with one animation. They didn’t need Disneyland to release “Steamboat Willie”.

Apple started with pre-sold wooden boxs with keyboards on them. They didn’t need to produce $10,000 gold Apple Watches to start Apple computer.

Virgin started with a vinyl record mail-order service. They didn’t need an Airbus fleet to start that empire.

Dave needs to start with one way to add value to his audience. The empire can come in a little while.

Dave’s equipped to go back and talk to his potential customers and discover what his ‘skateboard’ should be.

His ‘skateboard’ has only two goals:

  1. Be something his target audience will value and purchase
  2. Be affordable with his 30x-reduced budget

In reality, that task may not always be possible. But it may also be entirely possible.

That’s Dave’s next challenge. Now, he doesn’t have to build a $400-500k product and sell it. He needs to build a $20-30k product and sell it.

Action Steps

Success is the ability to go from failure to failure without losing your enthusiasm.

Winston Churchill

His heart is in helping his market. He’ll be able to do that in either case.

So, let’s get back to that question at the very beginning. How do you find out if your budget is right for your SaaS idea?

You do it by finding the skateboard that fits your budget.

By launching a skateboard, he gets to avoid these nasty things:

Rushing an untested product

The Robin Reliant was a decent enough car sold in the UK, popular among northerners. It had three wheels (one at the front). It rolled over. It was fiercely underpowered.

If Dave had made a skateboard with three wheels, before a car, he’d have discovered how many bloody noses his product would cause. Perhaps then he would be able to pivot to four wheels much faster, and more cheaply.

Building it cheaply and badly

I do actually wonder if his entire $400-500k product could be ‘built’ in $20-30k if he used the absolute cheapest, scrappiest, most offshore development team possible. We’re talking sweatshop web development, here.

Perhaps it could be, actually. It’s the last thing in the world I’d suggest Dave do, though. Can you imagine how that thing will hold up in six month’s time? Heck, even on day one?

Throwing money down the toilet

They say hindsight is 20-20.

A car that wants to take your life. A web product that doesn’t actually work. Neither of these things are destined to make you much money.

Instead, we should:

Build your skateboard

Start with offering value on a path of least resistance for your target audience. Build them something they like today, so that you can discover how to make them love it.

Test your skateboard

Test that thing like crazy. Bugs don’t give value the same way reliability does. Ugliness doesn’t give value the same way beauty does. Make it a skateboard, but make it the best skateboard in your market.

Sell your skateboard

Get your creation in front of your target audience and see what makes them part with their money (and what prevents it).

Upgrade it to a scooter

So you’ve made a skateboard that works, and sells. Feedback tells you your audience would prefer to steer with handles instead of leaning left and right. Enter, the scooter.

If you’re dreaming of a new product, or you’re a part of an early-stage startup, then you’re probably aware of the mountain that stands before you. What’s your skateboard?

Email me and let me know! Perhaps some case-studies are in order that can help your fellow readers. (Besides, who doesn’t like free coverage?)

Next steps

There’s a lot of stuff to do to make your web presence work.

A lot of it may be entirely new to you.

You can’t just wing this stuff. Well, you can, but you’ll discover very quickly how ineffective that is.

But - if you have all this spelled out for you, step-by-step, you can see exactly how to make this work.

We’ve created that step-by-step guide for you.

It’s yours already. No charge. All you need to do is download it.

If you’re not sure it’ll be worth it, or if you think it’ll just be one long pitch, that’s understandable.

There’s a lot of that in our industry.

The good news is, it’s not a pitch. It’s a guide.

If you didn’t know already, we’re here to help difference makers make a difference. That’s it.

So download it now, while it’s still available, and let us know if you have any questions. We’re here to help you succeed.

Download your guide

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