The Idea Stage

The idea stage is the beginning of your startup journey. It’s where you define the problem you’re trying to solve for customers and how you plan to solve it.

Overview

Every SaaS business starts with an idea. Even though most likely throughout the lifecycle of a SaaS startup, the idea will change and evolve, you still need to start with an idea.

Often people come up with ideas as they work in their area of expertise. They discover a problem people are facing, come up with a solution that could potentially solve that problem, and believe people might pay for that solution.

Many startups cannot define the problem or solution well, which causes many problems as they progress.

Prerequisites

Extensive experience in the industry space your idea lives in.

An understanding of why people would pay for the solution. Would it save them time, money, reduce risk, etc.

A good sense of whether people would pay for a solution if it existed in the market

An understanding whether it would be more economical for someone to pay for your solution, rather than to fix it themselves, or continue doing it the way they do now.

The solution should satisfy an ongoing need of your target audience, significantly enough for them to be happy to pay for it on a long-term basis.

A basic understanding of your target audience profile in a relatively narrow niche.

Milestones

Once you can clearly and concisely answer what problem you are planning to solve and value you will bring (save money, save time, reduce risk, etc), then this milestone is achieved.

Here you should define ‘how’ you will solve the problem and define the solution that solves the problem.

Here you need to define the initial understanding of the target audience that will care enough to pay for it.

You should have an understanding of why it’s more economical for you to build this solution and the customer to pay a monthly fee than for the customer to solve it and build it themselves.

Warnings

Don’t over-invest too much time or money into the idea at this point

Otherwise, you risk exhausting your limited resources and focusing on things people don’t want.

Unless you have sufficient savings, don’t make big financial decisions yet

For example, quitting your job or taking out loans.

Don’t try to find investors yet

Searching for investors and preparing investor presentations (pitch decks) is extremely time-consuming, and it is very unlikely you will be able to interest investors with the idea unless you have a successful track record of prior business successes. You will also give up far too much equity at this point. Develop your idea more first.

Don’t jump into product development yet

It’s very tempting to start working on the solution, however it almost certainly will result in a waste of money since your assumptions about what people want and need may not be accurate until you validate the idea more. Market validation and customer development will help solve this problem. We will discuss this more in upcoming stages. 

Required Expertise

  • Possess subject matter expertise in the area you are trying to solve
  • Be able to clearly communicate the problem and solution

How do I know I can move to the next stage?

  • You have some level of confidence that your idea is going to bring value to some group of people and you believe it is feasible to get implemented.
  • You can clearly communicate the problem and solution in a concise, easy-to-understand way.

Timeline

We recommend you don’t rush this step. This is foundation to everything else that follows.

However, we don’t recommend spending more than one month of of effort on this because as you move to the next steps and validate the idea, you will very likely find yourself adjusting the idea based upon market feedback.

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