Attorney at Law

How to Start a SaaS Company

Lia Kopin-Green
February 9, 2023
Last reviewed by
Josef Rappaport
February 29, 2024

A SaaS company, or “software as a service,” is a company that offers software to customers on a subscription basis. The software, which is generally accessible via an application, is hosted by the SaaS company’s server while users are able to access it remotely. With technology moving at lightning speed, SaaS companies are becoming more and more popular. In fact, according to Statista, the global SaaS market is estimated to reach $195 billion in 2023, and it is projected to reach $227 billion by 2025. So, if you’re ready to dive into the world of tech and start your own SaaS company, take a look at this brief guide below on how to get started.

1. Identify the Problem

The first step in starting a SaaS company is developing your niche. In order to do so, start by identifying a problem you are passionate about solving. Although this may seem like a small step, some of the most successful SaaS companies in the country started with just one unsolved problem. Once you've pinpointed a problem, you'll be in a great position to find a tailored solution for it. As said by entrepreneur Gabriel Kuperman, “If you can fix a problem for someone and do it better, quicker, and/or cheaper than your competitor, you’re off to a good start.” 

2. Develop a Solution 

Having identified the issue to tackle, you have arrived at one of the most important steps of the process: formulating a resolution. Begin by creating a minimum viable product, or MVP, which will serve as the earliest version of your product. Keep in mind that the MVP does not have to be fully developed. Instead, this rough-draft of the product will serve as a tool to help you get initial feedback from customers and refine your product before investing more time and resources into its development. You can work on the fine-tuning of your product later in the process. If you do not have the technical expertise to build it on your own, you may want to consider hiring a team of experienced software developers. 

3. Protect Your Intellectual Property (IP)

Intellectual property laws can be used to protect a number of aspects of your SaaS company, including your software design, company name and more. Your source code, which is often considered the heart and soul of your SaaS company, should be guarded with either copyright or trade secret protection. Additionally, to keep confidential information within the company secure, it is recommended to have Non-Disclosure Agreements (NDAs) signed by employees, contractors, and partners.

4. Decide on Your Pricing Strategy

It is now time to evaluate and set the appropriate fee for the valuable contributions you can provide to your customers. With the valuable assets at your disposal, determining an appropriate exchange for your services will play a crucial role in the success of your business. Most SaaS companies are offered on a subscription basis, requiring either a monthly or yearly payment. The pricing of your offerings should align with both your target audience and the goals of your organization. Setting a high price may not be the best option if your goal is to attract a large number of customers who may not be able to afford your services. On the other hand, if you aim to deliver premium value to a select group of high-value users, it might make sense to increase your price. 

5. Choose Your Legal Business Structure

SaaS companies come in a variety of different legal structures, such as Limited Liability Companies (LLCs), partnerships, sole proprietorships or corporations. The choice of business formation structure is a crucial factor that greatly affects the chances of success. It can make a significant difference in the outcome of the business venture. While most well-known SaaS companies are corporations, it is important to consult with a business lawyer to figure out which legal structure best suits your business’s circumstances and goals.

6. Launch Your Company

Before officially launching your business, it is important to complete all the legal procedures necessary to start your business, including registering it with the appropriate government entities and securing the necessary licenses and permits. Once these steps have been completed, it will be time to officially commence operations. As soon as your product becomes available to the general public, you may want to generate interest by offering free trials or demos. This provides potential customers with the opportunity to try out your software without any financial obligation. Although it may seem counter-productive, it is actually a strong starting point for setting up your company and can help spread the word about what your business has to offer.

7. Continue Developing and Improving Your Software

Even after your SaaS company is built, it is essential that you continue to prioritize the optimization of your product. Having a skilled group of software developers on your team is crucial for maintaining the long-term stability of your business. Stay up to date with the latest technology and gather feedback from customers. This will give you a competitive advantage and keep you ahead of similar companies in the industry.

Seeking Legal Support

In summary, launching a SaaS company presents its own set of difficulties and obstacles. To effectively handle these legal matters, it is strongly recommended to seek the assistance of an experienced business attorney. Our team of specialized lawyers would be thrilled to support you in your next business endeavor.

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