Why SaaS Is A Solo Founder’s Dream
The dream is 100 customers paying you $100 per month. That’s the software-as-a-service (SaaS) solopreneur’s mecca.
A hundred customers paying $100 per month adds up to $120,000 per year of revenue. Since we’re building software, you’ll have about 85% gross margins, so your gross profit is at least $100,000. Your operating expenses are business-related assets and advertising activities, some of which will neatly cross over into your personal life (tax write-off for your home office, for example). Let’s say those expenses cost another $30,000 per year, so your “in-the-bank” net profit is $70,000.
That’s it. That’s the big picture. That’s what you’re shooting for.
It’s a business that makes enough income for you to pay rent, even if you live in San Francisco or New York. If your home base is anywhere else, then you’re living like self-made royalty.
You may still need your spouse or partner’s income to save for a house and take nice vacations, but what you’ve done with your $120K business is bought yourself time and flexibility. You might even keep your day job. Or you’ll start building a second $120K business because your first one pretty much runs itself.
That’s what it means to be a parallel entrepreneur. You don’t wait until your plate is empty in before you start another business. You just spin another one up and see if it grows as nicely as your first one.
It’s “and” — not “or” — when you’re clearing $10K month with a SaaS business that runs itself. You can pretty much do anything you want.
Here are a few points about how to make this work:
- Sell to businesses: Businesses don’t mind spending $100 per month. For most of them you’ll fly right under the radar during those inevitable months when they barely log into your product. Businesses these days are conditioned to accept monthly software fees. Take advantage of it!
- Pick a problem that’s never really solved: The beautiful thing about sales leads is you never stop needing them. That’s why Toofr is a great little business. When it works (it finds good emails and generates good leads) it makes the users (sales reps and recruiters) want more. So the monthly nature of the billing actually makes sense!
- Automate as much as humanly possible: If you’re going to actually enjoy running a small business yourself or keep your team lean enough so you’re able to keep a ratio of $100K in profit per employee, then you need to automate. A lot. Often that means signing up for other people’s software products.
It will take some time to get there on a bootstrapped shoestring budget, but you’ll get those 100 customers eventually. Just stick to the gameplan and stay tuned into your market.