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Why Adding SaaS is Essential to Scaling Your Service Business

Phil Alves

Phil Alves

CEO at DevSquad
Phil Alves first began his entrepreneurial journey in his teens, when he started and exited a SaaS business in the direct sales space. From there he worked in senior positions in the e-commerce industry before founding DevSquad, a software development consultancy that provides high-performance, agile teams to fast-growing startups, and big enterprises. To date, he has led the build of over 100 software products.
Phil Alves

All ascending companies will eventually face the choice of whether they should channel their efforts into growth or continued profitability, whether they like it or not. Some entrepreneurs welcome the challenge, while others find it hard to deviate resources from what they know already works. Regardless of personal reaction to the issue of growth, it is nonetheless something that must be dealt with for any business.

Service businesses are great, as the initial investment isn’t too high and the profit margin is very steep. However, scaling a service business can be incredibly complex, as it tends to be much more difficult than other industries.

The main cost of a service business are the people who are required to efficiently run your business. Once you start expanding, the overhead required can become highly variable. However, development of a SaaS (software-as-a-service) alleviates much of these woes, and helps your company take the next step in its financial journey.

Take Lemonade, for instance. A property and casualty insurance company that developed a SaaS in order to gain a leg up on their competition, it replaced superfluous people with an efficient system that allowed the business to scale in a quick and efficient manner.

When it comes to scaling your company, keep it simple: build a SaaS.


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Knowledge of the industry

As a provider of a service, you find yourself in a unique position to build a SaaS for your industry. Your inside knowledge is your unfair advantage: you know the missing tools in your industry more than any software developer, and thus, are perfectly positioned to develop a SaaS. Take advantage of this.

For example, imagine you are a service business in the medical industry. With your insight into the field, you know much more about how to approach those in the field – you know their needs and what the industry is missing. Even if your SaaS is a bit underdeveloped at first, you will be able to gain a long list of prospects who desire your service.

A great recent example of a service company that developed a SaaS to help it scale is Basecamp, previously known as 37 Signals. They began as a web design company, but when faced with the question of scaling, they decided to develop their own SaaS in order to maximize their growth.

By moving from web design consulting to web application development, Basecamp quickly filled a gap in the design industry and grew into the powerhouse company it is today.

The same can be done in nearly every service industry, from financial advisors to HR and more. In each of these cases, the industry expert (you!) has something unique to add to the particular service and finds immediate advantage upon developing a SaaS. 



Continuous improvement cycle

Another positive from successful development of a SaaS is the ability to test your product with a dedicated client base of your peers from inception. To begin with, you can test on your own company and get feedback from your own employees. You can then continue to try it out on some of your peers in the industry, beta testing your product, gaining valuable feedback, and improving the end result. This is known as the Continuous Improvement Cycle, where a product never stops developing.

A good example of this is IsoTalent, which hires C-level execs for companies. Because of his background in the recruiting industry, the company’s CEO, Austin Miller, had a large pool of clients that were willing to test out his company’s software, give him feedback and improve upon his product. By tapping into the continuous improvement cycle, IsoTalent was able to consistently plan, test and review their product, adding great features until it ran smoothly.

The faster you can validate and perfect your ideas, the better chance of success you will have to scale quickly; and there’s no better way to do so than with a SaaS.

Followup CRM is a good example of this. Since the executive team has a history in construction, they knew people in the industry who were more than willing to try out their product. Followup CRM took advantage and quickly scaled their company, forever testing out and improving the final product.


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Promoting will be second nature to you

Build it and they will come. While it may be true in the world of cinema, you’ll need to devote significant time to promoting your product after it’s completed in order to scale effectively. After you build a great product, it is essential that you take it to market as soon as possible.

Many service companies get stuck on the building aspect because the building part is fun. Who wouldn’t enjoy carefully crafting the product of their dreams? For those who are likely unaccustomed to the promotional side of things, it’s easier for them to tell themselves that they just need that one additional feature to work rather than facing the fact that they simply don’t know how to sell their product.

However, by building a SaaS for your service company, you already have most of the tools required for promotion. You will already know a lot about your target audience, you know how to position your product, and how to build the perfect client persona. Take this information, apply it in multiple campaigns, and watch as your service business grows.

Service companies can be highly profitable, but mainly in the short run. There is simply too much overhead for them to easily and effectively scale. However, developing a SaaS can be the secret weapon needed to jumpstart growth and bring service companies into the next phase.

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