This is a guest post from Margo Ovsiienko, you can find her website at margoleads.com. Margo is a tech enthusiast and a growth marketing strategist. She is passionate about topics related to SaaS growth, startup strategy, and IT development.
To outsource or not to outsource? The eternal tech question, and a persistent hot topic in tech communities. How do you manage your expectations against your budget and be sure you’re finding the right team for the job? This can be especially challenging for anyone lacking experience with hiring (which is not a task to take lightly).
Building an in-house team vs outsourcing those efforts can depend heavily on the kind of product you’re trying to build; how complex is the feature set? What does your roadmap look like for the next 12 months? These kinds of questions will help you to figure out whether or not your best bet would be in-house or outsourced.
For long-term, committed projects, building a trusty in-house team is almost certainly your best bet. But working with an outsourced, remote team has its place and also comes with many advantages, such as reduced set-up or training time (in the case of outsourced design and development teams) and ability to rapidly develop and tweak early stage concepts (often for a cheaper rate) when searching for the ideal product-market fit.
So, how can you build a SaaS product that gains traction fast before you run out of limited funds?
In this Process Street article, we’ll consider how to build a SaaS product that gains traction fast on a constrained budget, and kick-start your growth.
- What you need to know before you build a SaaS product
- How to validate your product idea
- Key steps of product development
- To outsource or not to outsource?
- How to build a SaaS product: Key takeaways
What you need to know before you build a SaaS product
Before jumping to the details, let’s take a look at the key terms that will help you better understand product development for tech startups.
- Limited budget;
- No need to fill full-time positions;
- No processes for managing people;
- No time and no network to find people;
- No prior experience in leading a team;
- You don’t want to rent an office;
- You can’t find anyone to meet your expectations.
There needs to be a process when building a successful product. The good news is that you can replicate it if you follow the right process and stick to the methodology of Lean Startup, introduced by Eric Ries.
Lean Startup methodology
According to Eric Ries, who coined the term, you don’t have to work hard for the success of your product. Instead, you should approach product development in a smarter way, by building something small, testing it with the market, and iterating on the user feedback.
Lean development is a lasting process that helps adjust your product to the needs of end-users better.
What is product-market fit?
Coined by Andy Rachleff, co-founder of Benchmark Capital, the concept of product-market fit lies at the core of lean product development. Product-market fit describes the degree to which the product you are attempting to create satisfies the needs of your end-users.
When building your product you have to focus on achieving product-market fit fast before going big with development.
By validating how aligned your product is with the market, you establish if people are willing to pay for it and if so, how much. 💰
To learn more about how to bring a unique product to market check out this episode of our Tech Out Loud podcast. In this episode, Bram Kanstein explains what all startups should do before they start building out their product.
Tech Out Loud is the only podcast that brings you the most impactful blog posts from the biggest names in tech, straight to your ears.
You can also listen to this podcast on other platforms. Click to see the full list! If you enjoyed this podcast, subscribe for a new episode each week.
What is a prototype in product development?
A prototype is a model built to test a product design.
By implementing a prototype you can understand the strengths and weaknesses of your idea before beginning the development process. Testing your prototype with users can help you to quickly identify any bugs or missing elements to then improve your product.
There are plenty of prototyping tools such as Axure, Balsamique, InVision, and many more that you can use to create a clickable first version of your product. The process of creating a prototype does not really require coding skills.
What is a minimum viable product (MVP)?
An MVP is the point where a prototype undergoes an evolution (you have already tested how users perceive your product functionalities). When developing an MVP you include the minimum number of features to solve a problem your users are facing.
How to validate your product idea
The last thing you want is to build software, launch it on the market, and have nobody buy it. And it doesn’t help to hear what so many people have to say to first-time founders:
“Hey, your startup can still fail just like 90 percent of companies out there.”
But all is not lost – when you consider that 75 percent of the US venture-backed startups have to close down. I know this sounds like another negative but trust me it’s not.
Because it means that funding is not a key to success.🗝
You can get your start-up off the ground in the beginning without venture capital, providing you properly validate your product idea before contacting developers to build it.
“You don’t need to write even a single line of code to validate the product that you are building.”
“I’m a great fan of selling a product that doesn’t even exist. The main thing that you should think about is how to show a client what your system will offer when not having an actual product.”
So, what are the actionable next steps you can take to validate your product without relying on coding? Winter suggests the following:
- Design some mockups that would show how your application will work. You can do it within a couple of days with a designer. It doesn’t have to be sophisticated, it has to show the value that your product will provide.
- Use HaaS instead of SaaS. You don’t need to tell the client how you are actually doing it, use humans to resolve the problems that you plan to resolve with your SaaS in the future.
*For example: If your SaaS will provide some Data Science solutions for your customers, hire a Data Scientist, and provide the service manually with a 24h delay.⏰ The goal here is to validate the idea and not to build a business that is performed by humans.
- Sell with a huge discount promising that in the future your product will deliver a certain value. It’s not about how much money you’ll earn doing that, it’s about having proof that a client is willing to pay for the product you’re selling.
- Talk to as many potential customers as possible, and don’t be afraid of change if necessary. It’s much cheaper and faster to change the product if you don’t have it yet.
Now with Winter’s points in mind, let’s take a look at the simple steps that will help you bootstrap a killer product that your target audience will love. 💙
Do your preliminary product research
- Identify your SaaS market competitors use resources such as Crunchbase, Google, and app store.
- Check if your idea has already been implemented and if the product of your competition is satisfying the user’s needs sufficiently.
- Spot issues that you could easily resolve and your competition haven’t solved yet.
If you are an industry insider use your customers as a source of information here’s a pro-tip from Denis Lunev, founder of DepositFix:
“They will ask you to resolve a challenge they can’t find a solution to.”
“I used to provide integration services for various companies, until one time when I started getting more than one request for the same integration. At first, I helped multiple clients with the same integration for HubSpot payment integration and then I packaged it into DepositFix.” Denis Lunev, Founder ofDepositFix.
Document your assumptions about your user’s needs and create your customer personas. Think about the indispensable SaaS features that will make your product sell.
Key steps of product development
Once you’ve finished documenting and thinking: Define your minimum viable product (MVP), user experience (UX) hypothesis, and your success metrics!
Fortunately for you, we at Process Street have developed checklists and written targeted blogs that will guide you with each of these. Just keep on reading!
Colin Klinkert, the founder of the marketing automation tool Platformly, claims that you should approach your SaaS idea validation with a pinch of creativity.
One option is to prevalidate an idea. To do this you’ll first want to create a landing page outlining what the product will do. Tell customers that you will give them free beta access in exchange for filling out a short survey.
When pre-validating your product you should ask questions such as:
“How much would you be willing to pay for service YXZ?”
“What ‘must-have features’ would be a make-or-break for you?”
Next, on a “thank you” page, give your users a public share link to spread the survey with their network in exchange for an extension to their beta.
Design and test the first version of your product
You don’t need fancy software to make the first version of your product – you can simply use a pen or pencil.
While you could consider working with a UX consultant or a UX freelance expert to work out your application prototype, you could also first try to simply sketch out your SaaS product interface.
You can use your sketch to define tasks that testers will have to complete. Keep in mind the information architecture, user flow, and make sure to define how application screens connect.
Check out this blog for more information on designing your product.
To give the UX design process a go yourself, follow our checklist:
UX Design Process Checklist
This UX Design Process checklist was specifically built to guide you, step-by-step, through the entire UX design process; starting from the preliminary planning stages, all the way to final delivery of your design to the client.
Create a product prototype
Prepare a mockup of your product – the prototype that doesn’t contain any of your product’s graphic elements.
The product designer would normally use a tool of his choice to prepare the mockups ready to be shown to testers. There are tools that will connect the screens of each page, such as Sigma or InVision.
In the product design process, it’s essential that there is a common space for the designer and client to work through the project together.
Let’s make a small retrospective now – you haven’t really spent much on building something you can already show to users and gather feedback!
Usability testing: Test your product with users
Once the product design process is complete, it’s time for usability testing and testing your prototype with real users.
It’s time to face the truth and gather valuable feedback from real users who will be the first audience to buy your SaaS tool. By putting your customer in the center of your product design, you also make the first step to creating a customer-driven culture.
You should have suitable people in your network, but if you don’t, use LinkedIn search, email outreach, or word-of-mouth recommendations to get users on board.
Here is a Usability Testing Template which will take you through the testing process, from start to finish:
Usability Testing Template
Once testing is done, you’ll be more easily able to draw conclusions about how well your product solves its user’s problems and iterate on your wireframes.
Only once you have done this chunk of work will you be ready to send documentation to tech teams to work on your product.
Because these are vital steps in successfully pre-validating (remember Colin Klinkert’s point) your product for the market.
So now that you know how to adopt a lean approach to product development to cut expenses on prototyping, let’s move on to the next step and develop an MVP.
Developing an MVP
An MVP is a basic product version created with a goal to design, test, and deliver the final app. The most efficient MVP is the one that includes only the most necessary features required to solve a market problem.
When defining your MVP harness the user feedback you gathered during the prototype testing phase to understand what features you have to build.
Here are a couple of useful blogs for you to check out when defining your MVP:
- How to Build an MVP App Without Writing Code
- Digital Marketing Hacks For a Successful Product Launch
Pro-tip: Process Street’sblog contains a heap of actionable checklists to take you through this MVP process.
Once you build your MVP with a tech team – either in-house or with outsourced developers – you will want to gather feedback from users as fast as possible. Ideally, you will recruit testers that will later convert into your paying customers.
Steven Van Vessum, from ContentKing, has started testing his MVP by approaching local users (marketing agencies) before taking his user tests online. This is his take on the whole process:
“We first had face-to-face meetings with local agencies, and we learned a lot from that. We developed the MVP further, and got our pitch straight. Then we started doing loads of remote MVP demos.
We built up a list of a few hundred agencies that were interested, and they became our beta users. A decent portion of them became customers later on when we commercially launched our app. To this day, many are ambassadors of ContentKing too.” Steven Van Vessum, Managing a Remote Software Development Team
To outsource or not to outsource?
In-house product development is costly
When deciding whether to outsource product development or not, it is worth carefully calculating the costs.
Because in some cases, hiring an external team can be more expensive than hiring developers in-house.
By choosing to go with a freelance marketplace (like Fiverr or Upwork), it’s a good idea to expect that you will make mistakes on your way. With such an abundance of talent out there, it takes a while to find the perfect fit for your product.
Finding trusted developers to build a product
When it comes to price you can find a developer at a cheaper hourly rate than the market average.
However, quite often you might expect that an overall project cost will exceed the estimates of more expensive developers who would be able to finish your project in less time (for example, because they could deal with more complex problems faster than less experienced developers).
Victor Purolnik, founder of Trustshoring claims that: Sometimes a more expensive option of a developer or team turns out to be a cheaper one in the long run. He continues:
“The process of finding trusted developers online is tedious. Writing requisitions for proposals and filtering dozens of applicants with non-verifiable history on crowded freelance marketplaces is often a waste of time…
Clarifying exactly what needs to be done, only inviting contractors who are a good fit up front, and doing small test projects is a reliable way to find good contractors on any platform…
To shorten the timeframe of finding a developer, one can get recommendations from friends or use a personal matchmaking service.” Victor Purolnik, Trust Shoring
Time to market in product development
The second argument for not keeping web development in-house is TTM. Developing a product in-house will take significantly more time than starting to work with a full-stack team of top-notch developers.
You should expect a long hiring process that can be tough on markets with high tech talent shortage. I have heard stories of product managers looking to hire developers in-house and giving up after half a year of searching and filling only one position.
After unsuccessful attempts of hiring on the local market, the product managers looked beyond borders to outsource the work. They searched for tech talent in Eastern Europe, China, and South America where the talent pool is considerably bigger than their local market.
Moreover, you practically lose revenue by launching your product after six months or even later. Instead of starting to generate profit or being ready to show your prototype or MVP to users and possibly investors, you are still struggling with hiring and tech interviews.
However, it doesn’t end there! Even once you’ve hired a few developers they will still be able to achieve the speed of development that bigger teams would be able to offer.
Some tech founders would choose to find development help on talent marketplaces like Toptal or Upwork. However, as I mentioned earlier, the first experience with these portals can disappoint.
Geordie Wardman claims that freelancers often have weak motivation to drive success for your startups:
“I have built SaaS with both types – with an in-house team and outsourced. Usually, the freelancers on Upwork are a complete disaster. Go with an agency and the reasons are a few. A freelancer is unlikely to be motivated in the long-term success of your project. On a platform like Upwork or Toptal, they know that once your project is done, they will be on to the next project.” Geordie Wardman, the founder of 1stop.io
An agency, however, will tend to be more interested in the long-term success of your project. Thus, they’ll help you with ideas to make your project better and use their experience in building SaaS to help you launch.
Agencies want to keep you as a long-term client because it is a lot cheaper for them to retain clients than find new ones. An agency can help you with a multitude of tasks like UI/UX, QA, project management, etc.
If you hire a freelance developer on Upwork of Toptal, they are limited to their personal skill set. An agency, on the other hand, will be set up with designers, developers, full-stack, back-end, and front-end.
Getting know-how by outsourcing development
You might still go for the option of hiring a small team of developers at the expense of launching a product a bit later when you have the time and resources for it.
The only problem is …
Your internal team would still need some external expertise and you might be forced to outsource certain parts of the project because implementing them in-house would not be possible.
In this circumstance, it is better to outsource than having your team learn how to deal with new development challenges.
Hidden costs of hiring instead of outsourcing
In the past outsourcing was considered to be a cheaper option than building an in-house team. However, outsourcing is no longer a synonym of cheap, especially if you want to get quality service.
That is why, when deciding between outsourcing and building a team in-house some tech founders decide to go all-in with hiring. But, the founders often don’t realize that there is much more than just a base salary to consider and paying for in-house developers is costly in other ways.
When making your choice on hiring or outsourcing you have to account for many more costs. Which, at the end of the day, could cause outsourcing to actually become the cheaper option.
Here are some of the hidden costs founders forget about when hiring developers in-house:
- Salary 💰
- The cost of onboarding 👩🏼🏫
- Office space 🏢
- Equipment 💻
- Social benefits including holidays 🎄
- The training time and effort required of existing team members ⏳
Let’s briefly take a closer look at one of the hidden costs of hiring – holidays and paid leave. According to Statista, in countries such as the UK or France, by law all full-time staff (your in-house developers) are entitled to holiday or leave for at least 2 weeks (and in many cases a full month) a year.
Strive for Higher Flexibility
And, last but not least, its important to be flexible in times of high volatility.
Don’t be overly optimistic about the future. Having the least possible financial responsibilities is the best option when you are getting your product off the ground.
- Don’t sign long-term contracts in the hope your SaaS product will become profitable fast.
- Choose to work remotely instead of renting an expensive office space.
How to build a SaaS product: Key takeaways 🚀
So there we have it, by now you should feel equipped to setup your SaaS fast and without outsourcing a tech team!
When building your SaaS startup remember to consider not only the money but also the time each process takes. Particularly when it comes to deciding whether to outsource or not.
Strive to achieve product-market fit as fast as possible. Use trusted pre-vetted developers if you decide to outsource development to minimize risk. Be flexible when it comes to long-term contracts and start building your next great thing!
Product development related articles
If you fancy finding out a little more about product development, read these related articles:
- The 12 Startup Procedures Every Founder Should Master
- The Only 14 Startup Tools You Need to Build a Unicorn
- Product Roadmap Template
- The Straightforward Guide to Product Strategy (With Templates)
- Product Launch Checklist
We’d love to hear about the different ways you approach your SaaS processes in the comments. Who knows? You may even get featured in an upcoming article! 👇🏼