No one likes to invest significant amounts of time and money in the development of their application only to realize that no one will use it and they won’t get any economic return for their efforts.

Unfortunately, this is the fate of many digital entrepreneurs due to an error based on an approach known as “build and then validate,” which is based on the belief that once their SaaS is built, users will appear and the product will validate itself.

Our intention with this post is to dissuade you from this approach by giving you a series of practical tips that will help you determine if your idea fits before investing resources into it.

Let’s get started!

Step 1: Understand market needs

In this step you should consider to what extent your idea exploits an unmet need in the market and whether this demand is partially met by your potential competitors.

Whether there are competitors or not, to understand market needs you should talk to consumers and ask some questions:

• What are their pain points?
• What would they like to achieve?
• What would help them?

Talk to as many people as you can within the market niche where your idea fits.

If there are competitors, deeply investigate their products:

• Are most of their customers satisfied with them?
• What is their payment model?
• Is the user experience good?

These are some of the questions you should answer; if you believe you can do better with your solution, it’s a good sign.

Step 2: Create your unique value proposition (UVP)

After understanding market demands and confirming that your idea addresses a need, you should analyze your future product and ask yourself:

• What does it offer? What value does it bring?
• What makes it different from other products in the market?

Creating the unique value proposition involves analyzing the strengths and weaknesses of your product, the problem it solves, how it does it, and how it compares to other products in the market.

These two questions will not only help you create your UVP but will also focus your sales strategy by carefully analyzing the strengths and weaknesses of your app.

Step 3: Create a minimum viable product (MVP)

A minimum viable product is a simplified version of your product that does not require a large investment of time or money and has just enough features to demonstrate your UVP.

We started this post by saying that you shouldn’t build and then wait for users to appear, but you should at least build a prototype.

This will allow you to analyze the response of a select audience to how your app solves their problem and guide further development or even pivot if necessary.

Again, in this step, it is crucial to focus on people. Talk to people who might be interested in your SaaS and demonstrate it to them to get feedback.

Step 4: Private beta

With your MVP developed, a good idea is to conduct a private beta, giving access to your application to a select group of users to gather their feedback and impressions about your application.

Users will help you determine the strengths and weaknesses of your SaaS and which aspects need to be refined or improved.

To encourage users to test and evaluate your application, you can offer them a free lifetime license in exchange or other incentives you consider appropriate.

Step 5: Evaluate financial viability

Even if the previous steps give you the green light, you must consider one of the most important things: whether your SaaS is profitable.

It’s possible that:

• Your idea addresses an unmet market need not covered by anyone else or only partially covered by competitors.
• Your idea solves a problem.
• Beta users love your SaaS concept.

Yet, it may not be profitable.

Consider the following:

• What are the costs of your application?
• What will be the pricing and payment model?
• Is it sustainable in the long term?

Consider development costs and operating expenses, as well as the revenues you realistically expect.

Even if you realize that your idea is not profitable at this stage, all is not lost; consider if there’s anything you can do to reduce costs and increase revenues.

Remember that a simple change of service provider or finding a cheaper hosting alternative can turn things around unexpectedly.