It can be tough to tell whether a SaaS idea is actually viable. You might be convinced that your SaaS product is the next big thing… but is it really? Before you start spending money and time on developing a SaaS product that nobody wants, it’s important to validate your idea. Here are four key metrics you can use to check the viability of your Business-to-Business Software-as-a-Service model idea.
1. The Problem Metric
One of the biggest advantages of the B2B SaaS model is that it is relatively resilient to economic downturns. During an economic recession, businesses may reduce their spending on discretionary items such as marketing and advertising. However, they are less likely to cut back on spending on software that helps them run their businesses more efficiently. As a result, Business-to-Business Software-as-a-Service companies tend to weather economic recessions better than other types of startups.
2. The Solution Metric
Another advantage of the Business-to-Business Software-as-a-Service model is that the market is less competitive than the consumer market. There are fewer startups competing for attention in the B2B space. Which makes it easier to stand out from the crowd. Additionally, because businesses are more risk-averse than consumers, they are more likely to choose established vendors with a proven track record. This provides an opportunity for new startups to gain a foothold in the market by offering innovative products or services that solve real problems for businesses.
3. The Revenue Metric
One of the challenges of the B2B SaaS model is that the sales cycle is usually longer than the sales cycle for other types of products or services. However, this longer sales cycle also provides some advantages. Because businesses take longer to make purchasing decisions, they have more time to do research and evaluate their options. As a result, they are more likely to purchase your product or service if they believe it will deliver value. Additionally, because businesses tend to be repeat customers, your revenue stream can become more predictable over time.
4. The Competitive Metric
One of the challenges of the Business-to-Business Software-as-a-Service model model is that the sales cycle is usually longer than the sales cycle for other types of products or services. However, this longer sales cycle also provides some advantages. Because businesses take longer to make purchasing decisions, they have more time to do research and evaluate their options. As a result, they are more likely to purchase your product or service if they believe it will deliver value. Additionally, because businesses tend to be repeat customers, your revenue stream can become more predictable over time.
Conclusion:
The global Business-to-Business Software-as-a-Service market is predicted to reach $85.1 billion by 2021, representing a compound annual growth rate of 12%. With such a large and growing market, Business-to-Business Software-as-a-Service startups are attracting a lot of attention from investors. The advantages of the Business-to-Business Software-as-a-Service model include its resilience to economic downturns, less competitive landscape, and longer but more predictable sales cycle. If you’re considering starting a Business-to-Business Software-as-a-Service company, now is an ideal time to do so.