How to Validate a SaaS Startup Idea Before Building It (A Step by Step Guide)

Hey guys, welcome back to another episode of SaaS District. Today we're gonna talk about a specific topic that if you're looking to start your own SaaS company or launch your new startup, I'm gonna walk you through step by step how to validate the idea before going out to market. So in this video, I'm going to talk about 4 things to work on before actually going out and building your SaaS company. Because if you go out there and build your, your company and before validating your idea, you're going to spend literally thousands, if not hundreds and thousands of dollars before even making sure that there's demand for your product. So number one, the first thing you want to do before building your actual product is contacting your potential customers. All right? So what you want to do is make a list of people who you think are going to be your ideal customer profile, which we call the ICP. Who are the people who you think are going to actually pay for your product? Who are your end users that are going to be using your product on a day-to-day basis? So build a list of people. All right? So whether it's 100, if not 1,000 people, I recommend at least 1,000 people, okay, make a full list, spend a whole week doing it if you have to. It's going to save you a lot of time and effort down the road. And reach out to these people, okay? You want to get a big enough data set, enough feedback so that before you go out and build it, you have people who are ready to possibly pay and buy your product, right? So contact those potential customers, reach out to them, schedule a call, schedule a meeting, meet them in person, buy them coffee if you have to, Or just message them on maybe social media and ask them if you can ask them a couple of questions. So once you make that list, the second thing you want to do is separate out the people who are really interested in buying, who have real buying intent versus just lukewarm interest, man. They're just window shopping, trying to waste time or get information. Okay? When you're starting a company, when you're an entrepreneur just starting out, a lot of people you're going to talk to, maybe your friends, Maybe your family, they're going to give you a lot of encouragement. They're going to support your idea. They're going to think your idea is great just because they want to encourage you and they want you to succeed. But that doesn't necessarily mean that that's what the market wants. And what you want is real, honest feedback from paying customers. So that's the big difference between somebody saying they're going to buy your product and pay actual money, take out their credit card and pay you, versus just saying, yes, I love your product, and verbally saying it. And the way you separate that out, here's a question you can ask the potential person you're talking to. So after you ask them some questions, ask them about your idea, see if they're interested in— is what are all the steps I can take that I have to take for you to become my customer and actually pay for me? Okay, so ask them that question. What are the steps that I have to take for you to become my customer? That's what we call a virtual close. Okay, you're basically closing the deal virtually without actually having to get them to make a decision right there. You're getting them to pre kind of decide and make that decision early on before the actual product is built. And when that's happening, guys, when you're, when you ask them that question, just, you know, go silent and listen very carefully. Watch out what they're saying. Watch out what from some red flag and keywords and make sure you get very, very specific answers to get as clear answers as possible. And once you reach that point where, you know, that virtual close has come to, now you actually wanna test the closing. Okay, so that's a preemptive before actually closing the deal is trying to feel them out where they're actually ready to pay for your product or your idea that you're about to launch. So once you get that feedback, guys, now you wanna move and ask them a couple of questions to make sure they're actually gonna be interested. And just like in any sales is get that agreement, get that actual yes and next step. That means that's actually gonna lead to some business for your product. So here's some questions you can ask. Look, hey, we're gonna actually start this product in 4 weeks. Does that work for you to actually start using the product? Okay, so that's one question you ask. You can say, we're building the beta program right now, and only during this phase it's heavily discounted. Say we're giving you 50% off or 70% off. If you sign up right now, we'll give it to you for, let's say, half price for the rest of the life. And then some other questions you can ask is, What's the decision-making process to make this deal happen with your company? How quickly can we make that decision today? Okay? And then the final thing, ask them for the money. That's where you're going to get the real answer. Okay? Can I take your credit card information today and then process that payment? So I'm going to give you 50% off for the entire life, but if you're happy with that, I'll just take your credit card and I'll charge you as soon as it's ready. So you want to collect that. If they give you their credit card, you know they're interested and they're ready to move forward. And you know, one thing you might hear is, well, why would I give you a credit card? I haven't seen anything. You haven't built anything. You know what? Say, make it as risk-free as possible for them. Say, look, that their payment is 100% refundable. If they're not happy with the product, okay, they can get their money back at any point. So you're saying it's going to be launched in 4 weeks. This is beta. You're going to get the best price today if you pay today. In 4 weeks, If you don't like the product, no worries, I'll give you a full refund back. That is the best way to go about it. Now, obviously not everybody's willing to give you the money, but at least you can get some of the people who say they want their product and the ones who are actually going to pay you in advance in order to get that discount and maybe move up the timeline up a bit for them. So obviously not everybody's willing to give you the money upfront, right? They're not going to give you the money if they're not sure about the product, but at least you can get some feedback and some people from that group who are willing to give you money upfront so you can have some cash to work with and build your product and go out and build there. Or you can actually move the timeline upfront. So let's say 4 weeks is what you tell them it's going to be ready. You take that money, now it's going to maybe by having more customers, you can now actually build it in 2 weeks. Okay? So that's something that helps you when you're negotiating with these customers upfront. Number 3, the third thing you want to do is analyze your competition. Who's already out there in this space and competing in your market? You want to gain as clear of an understanding of who your competitors are, what's the product they're building, and what's going to set your product idea apart from the other people out there. In the case where people say, oh, there's already too many competition in the place, or there's nobody out there, people think that their idea has to be unique. And that there has to be no other competition out there. The truth is, if there isn't already, you know, say 3 to 5 other competitors in the space, your idea is probably not ready to be out there in the market. Many people think that, you know, your idea has to be unique and different than everywhere out what's out there, and that you shouldn't have competition. The truth is, having competition is a good thing. You want to have at least, you know, I'll say 3 to 5 other competitors out there who are already playing in this space so that you can come in and you know there's already demand for that. Okay? So if there's nobody out there doing what you're doing, the truth is that you're most likely— your idea is not the right time to come out to market. Okay? That's the reality of it. You want to analyze your competition, see what they're doing, and try to figure out how to be better than them. Now, you may not always find your competitor on a website like G2 Crowd. Okay? Because it's not another SaaS, but maybe just another alternative. Okay? So that's maybe not the best place you want to look at. I'll give you 3 examples of, uh, you know, SaaS companies that come to mind that, you know, who may not be actually accurate of who you think competition was. Um, so if you, if you heard of the company HeadReach, uh, many, many people think that HeadReach was a lead generation tool, but it wasn't. It was VAs from Upwork who are actual, their actual competition. So if you went to G2 Crowd, you would have looked for lead generation, but the truth is it was all those VAs who are going on Upwork who are their actual competition. If you think about project management tool, okay, one example is Todoist. So if you guys are using Todoist as your project management tool in your company or on your website, you probably think of another project management tool. Okay, so you'll go to G2 Crowd, look at all the competition out there, see who's building project management. You probably search that. But the truth is people who are using Todoist are comparing it to Excel. Okay? So your product is actually Excel. Microsoft Excel is what they're using previously to how they manage their time, and now they're moving to your product. And one other competition that comes to mind for another startup, I'll give you one more example, is a company called Real Thread. Okay? They're, uh, they, they're a print shop that sells e-commerce t-shirts, uh, custom t-shirts on demand. So when people think of that, they're going to think of other e-commerce websites who are doing custom print shops. But the truth is, again, it's the local print shops without websites. Okay, so those people are typically going into their local print shop asking them to print something, whereas now they're giving them a solution online as a competition to make their lives easier. So when you're looking at your competition, look at the audience on their websites. Typically they'll have a section on there, a subsection with, you know, headlines, case studies, testimonials, and subpages which really highlights who their customers are, who their target market audience is, and who their industries they're targeting. So one example if you guys want to check out is Groove. So that's a SaaS company, GrooveHQ. They have a customers page. So you can see exactly who their customers are, and that'll give you an idea if that's the same market of who you're trying to target. And then finally, you want to go through your competition and see what are the features Okay, look at the features of what your competition is building, and then that'll help you kind of decide and see where you're going to get some ideas on how to be different from your competitors and see where the gap is in the market, right? So by understanding, from speaking to your customers, looking at competition, seeing what they offer, you might actually reveal a gap that all these people are missing, something that was so clear of what you're— of what the people you spoke to have said and what they want. Okay, so you want to find that gap and that's where you're going to find your true competitive advantage. All right, perfect. So you've, you've spoken to your customers, you've asked them for payment, you've done a bit of research on your competition. Now it's time to do some work, which is building a landing page. Okay, so that's the final step in validating your idea. You've got all the research, you've got the data, you're ready to build your product. Don't go out there and build an entire infrastructure and hire a bunch of developers. Build a nice, simple, clean landing page that will highlight your MVP from all angles. Make sure you cover it really well. And what this landing page should tell you is the compelling story of what makes all these elements work together. So once you create the landing page, people think they have to tell the whole story, give them everything about you, about the story, about the product, all your pricing. The truth is you don't want them calling you, emailing you, doing a bunch of things because people get confused. Too many decisions, too many options, people do nothing. Okay? So make it clear that you only want one call to action. You want people to take one action on your website. Okay? So if you're pre-selling your product, maybe you just want to, you create like a waiting list and you want to capture their emails. Okay? So make sure throughout it you have a clear, sections that ask for people to enter the email. Okay? Maybe it's just the pricing page and you get people to sign up and actually pay for it. Maybe it's getting them to download a guide or ebook to inform them about your product. And just make sure that the wording on the button is very clear and put it throughout the landing page, throughout it, to get basically people to commit. So essentially, with that call to action, you want people to either buy something right there or you want to get their information. That's it. So you're going to drive traffic to this page, get them to take an action. And don't, don't say things like, welcome to this website. Be very clear on your clear value proposition. What makes you different? And remember, we talked about that gap. Talk all about that gap of what you're, you're trying to solve in this market and how you're better than the competition. So that's it. Build a landing page, highlight the problem, What is the solution you're going to solve for them, how you've built that gap for them, and what's the next steps, all right? Get them to take action. So build that landing page, then you start driving traffic to that page. Once you start seeing that feedback, you start building the product on the backend, then you have a good SaaS product. So just to summarize everything I talked about, guys, number 1, talk to your customers first. Don't build anything yet. See what they say, build that list, talk to as many people as possible. 1,000 if possible. Get their feedback, get them to commit. If they're really interested, if your idea is good, you're going to get a small section of people who are going to put out their credit cards and pay you to build that product today, even with some discounts. And then once you have that payment, next steps, build that landing page and start building your product to get people to see what you're offering. All right guys, hope you enjoyed this video. If you like this video and you're thinking of building your own SaaS product, you're validating your idea, Comment below. What's your idea? I'd love to hear your guys' idea, what you're thinking of bringing to the market, and I'm happy to give you guys feedback as well. All right, see you guys on the next episode of SaaS District. Hope you guys enjoyed this.