Chapter 3: Finding Micro-SaaS Business Ideas

<< Back to Chapter 2: What Makes a Good Micro-SaaS Idea?

As I mentioned before, the most important part of ending up with a good Micro-SaaS idea is throwing out a lot of them. But there are a few good ways to prime the pump and look for new ideas. Here are a few methodologies that I’ve developed or generalized from other Micro-SaaS entrepreneurs.

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Scratch your own itch

Eat your own dog food as they say. This is the classic example of how to build a product company and it does work. The most commonly cited example is of course 37signals, a design firm that built a project management tool, Basecamp, for their own internal needs. They realized other firms might need a similar tool and started selling it as SaaS. The software business quickly eclipsed the design business and now they can hardly be called “Micro” with millions of customers. Here is the origin story.

Another great example is Josh Pigford, the founder of Baremetrics. Josh was running another Micro-SaaS business and was struggling to get some basic financial metrics like Monthly Recurring Revenue out of his payment processor.he hacked together a minimal product that anybody, but first and foremost his own business, could use to instantly get SaaS metrics from their payment processor. Realizing lots of other business owners would have a similar problem, he opened it up as a product and shot up to $8,000/month in six months.

This is a well tested strategy but it has two big problems at this point in time. First the idea of scratching your own itch has been around and popular for a while and second the type of people who build software businesses tend to be somewhat similar in their needs. There are only so many itches to scratch for a software entrepreneur and at this point a lot of them have been sufficiently scratched. Slightly paradoxically, this is in fact part of the reason why now is such a good time to build a Micro-SaaS business. Scratch your own itch has been around so long, that for almost everything someone trying to build a software business needs, there are 15 other software businesses selling pretty great solutions for it. Once you hit on an original idea, you can often use those other itch-scratchers’ off the shelf solutions rather than having to build your own internal tools.

Pieter Levels, the creator of Nomad List, has a good solution to the over-saturation of scratch your own itch. In his book MAKE he suggests that if you live an interesting or unique life, you will generate new and unique itches to scratch. In his case he was living a digital nomad lifestyle, traveling around the world in a backpack while building a new startup every month. He needed to figure out the next best place to live each month comparing data like cost of living and internet speed for cities all over the world. So he scratched his own itch, crowd-sourcing a basic dataset and built a site to help other digital nomads connect and solve the problem.

If something about your life is really unique, then you can use scratch your own itch in that area. If you are a freelance graphic designer in San Francisco who likes yoga and green juice, you’re going to need a different strategy.

Niche versions of existing SaaS

A lot of big funded SaaS startups have built generalized software that many different types of businesses are using for their own specific needs. These SaaS businesses have to target a wide audience because of the shear volume of sales their company size and valuations require. Looking at generalized products like Salesforce, Quickbooks, Basecamp, Freshbooks, Shopify and WordPress can be a good source of ideas for niche SaaS products.

A great example is Mindbody, which is custom SaaS for yoga studios. Everything about the app is customized specifically for this niche: online class schedules, tracking teachers, accepting payments and subscriptions. A yoga studio could probably cobble together all of those features from a few existing big SaaS products but when there is a single product that works for them out of the box it easily clears the 5x better hurdle. And I think you would be surprised at how low the bar is here. Even something as simple a building a simple CRM with data fields and workflows pre-built for a particular industry could be enough of a UX improvement to sell well.

Haven’t seen any great examples yet for this, but I think there is a big opportunity in just building a simple CRM for specific industries. Even if it’s less powerful that Salesforce, a simple contact and pipeline tool with workflows and a data model (even just having the right words and terminology built in) could sell well enough to be a healthy Micro-SaaS. Salesforce for wedding photographers. Freshbooks for dentists. Play around with combinations until something passes the Meat Grinder.

Repeatable freelance and consulting work

SaaS, and software more generally, has been stealing work from freelancers since the beginning. Nobody wants to be in the business of reinventing wheels, so if you see a specific type of job that businesses are paying contractors to do over and over again from scratch, there may be an opportunity to build a SaaS solution. This was the method that generated the idea for Storemapper. There was no good plug-and-play solution for a store locator app on the market and several of my own clients asked me to build them one. I could have made something from scratch and sent them a bill for $1,000 – $2,000 each but it was a broad enough need to warrant investigation as a Micro-SaaS. Another thing to look for is a big change in complexity. I did some research into other store locators and found that companies with a store locator would have a relatively simple site, something easily built without a developer on Squarespace, WordPress or Shopify, but the store locator would be a big step change in complexity. So I reasoned that you might have a lot of customers who could launch their entire site without a developer, except for the store locator. Great opportunity.

The best way to sniff out these kinds of opportunities is to actually become a consultant in a particular field and really learn what customers need.

Automate manual tasks

Sometimes you can use the sections from Chapter 2 on what makes a great Micro-SaaS idea, to generate new ideas. One of the best attributes of a Micro-SaaS business is automation. So you can start from there and look around for things that could be automated, and then test to see if they would be good overall businesses.

A great example is Stunning  which is an app that handles dunning, an odd term for the painful process of following up with customers whose credit card on file has expired and getting them to update it. Without Stunning you are forced manually check this each customer, setup an alert if their regular monthly payment fails, and hound them until they update their payment info. With Storemapper I did this by hand for the first year. It was awful and I was not very good at keeping up with it until one day I realized fully 20% of my “paying” customers were not actually paying me due to some kind of billing issue. Stunning plugs directly into Stripe and automatically starts sending follow-up emails and in-app messages to customers until they update their account. It’s a great business model.

Build upon growing platforms

Like automating manual tasks, this source of ideas works hand in hand with what makes a good business model. A majority of the successful Micro-SaaS businesses I have encountered are plugged in to or enhance a rapidly growing platform. Baremetrics and Stunning built on Stripe a massively popular new payment processor. Mailparser, a Micro-SaaS for parsing data out of emails, got many of its early clients through Zapier a growing business automation tool.

We’ll discuss this platform strategy in more detail in a following chapter on acquiring customers but again you can work backwards for a source of ideas. Keep a look out for rapidly growing platforms, check their forums and Twitter mentions to see if there is one big feature or use case that many users are clamoring for but the company doesn’t seem likely to build themselves.

The best version of this is a platform bolt-on that can use that integration as a beachhead, but isn’t too tightly interwoven with that one platform. If you can also add value as a standalone product and integrate with other competing platforms, you have an even better idea.

Next Chapter 4: From Idea to Minimum Viable Product >>