Most services entrepreneurs struggle to create valuable product businesses.
Here are five ways to improve your odds of winning the SaaS game when you start it inside a services business.
1) Realize that the services business model and SaaS product models are very different. They are almost the opposite DNAs, especially if you start with high-touch services and want to create a no-touch product business.
This doesn’t mean it’s impossible. It means most “old rules don’t apply” and you need to come with an open mind.
Treat it as a completely different sport with different rules, scores, training, and gear. Don’t try to play your old sport in your new startup.
2) Services businesses that built a product to improve their own businesses have drastically better odds when they try to sell that product to similar services businesses.
They can say, “I know what problems you have, and this really worked for us already. Let me show you.” That’s a much easier problem to solve than making a product for a new customer who isn’t like you.
3) Start to productize and systemize your services business before you venture into the product startup game.
Most professional services businesses are very custom in how they sell and deliver value. The more you make your services business a repeatable factory that doesn’t rely on the owner, the closer you are to a product factory.
Tech-enabled services companies (repeatable recurring services with tech automation) are pretty similar to SaaS businesses with high touch sales and some onboarding services. They are SaaS-like, with people delivering value. It’s a smaller jump to product-first.
4) Be schizophrenic as an entrepreneur – be of two minds. Be bilingual with your services and software business concepts. Treat your services and product businesses as two different things.
Create a wall between them. Switch modes. Assume everything is different. Create a different network for support for each. Hire different people. Only let “bilingual” team members play in the new game.
Some founders love this “be of two minds at once” challenge, but most don’t.
5) Be patient. Software product businesses take longer to figure out and cash flow than services businesses.
They take more experiments that don’t work to find what works in product value, leadgen, sales, and keeping customers happy. You don’t have to experiment (and fail) as much in services businesses because you have 1-1 human-to-human conversations that make up for your gaps.
Product businesses are far less forgiving–and take longer to get the flywheel going.
Creating a product business out of a services business is how at least 25% of bootstrapped software companies are built. But most product experiments never make it that far.
