I just sold my 4th bootstrapped SaaS business for 7 figures as a solopreneur. Obviously I learned a ton (like I always do with each startup).
Here are 10 important lessons I learned the hard way:
(Maybe you already know all of these. The list is far from exhaustive)
Lesson 1
Wearing all the hats is risky business
In the early days of SEOJet, signing up was by invite only. An automated email would get sent out after 20 minutes of a potential customer requesting an invite.
Because I was so busy with all the tasks of running and growing the business I didn’t realize for 6 months that all of the automated emails telling people their invitation had been approved were going straight to spam.
Obviously this meant a huge slow down in sign ups. I just assumed no one liked my software anymore.
During those 6 months 6000 people requested an invite to sign up for SEOJet and none of them ever saw a reply from us.
When I figured this out, first I cried inside, then I was happy to know that the reason the business wasn’t growing was because of a dumb glitch.
But that glitch probably cost me $250k.
Lesson 2
Don’t fall in love with just one customer acquisition channel, no matter how well it is working
I have a long history as an SEO expert. I started back in 2002 and have made a very good living ever since using SEO almost exclusively as the main driver of traffic.
Because SEOJet was a platform built for businesses doing SEO I knew I needed to rank well in the search engines to prove the software was legit.
This strategy worked well for a while but growth became inconsistent.
It wasn’t until I paid a well known SaaS founder to teach me how to crush FB ads that I experienced crazy predictable growth. (Hint: we doubled in size in 6 months)
Lesson 3
Don’t be afraid to raise your prices, even with current customers
This was another lesson I learned from a mentor. I was petrified to raise prices on my customers but he insisted and begged me to do it.
I finally doubled my prices and only lost about 20% of my customers.
It was a huge increase in MRR for me by simply sending an email saying prices were going up.
Lesson 4
You need predictable growth to become more acquirable
I always knew I wanted to sell SEOJet, but I wanted to get at least 1 million for it.
The 17 other small internet businesses I had sold before that all relied on SEO traffic for their revenue I knew that potential acquisition partners would look down on that because of the risk involved.
This was the main reason I turned to the other SaaS founder to mentor me with FB ads. If investors can see a way to put more money in and get even more money out, this really increases the value of the business.
Lesson 5
You don’t need employees to be a successful company
My goal from the beginning with SEOJet was to be a solopreneur and sell the business for a million dollars.
I accomplished that goal and then some.
But I did have a few contract workers that I paid to help me with tasks I didn’t want to or couldn’t do.
Frankly I couldn’t have done it on my own.
Lesson 6
SEO is not free
There is a big fallacy in the SEO world that SEO is free.
This is why almost all bootstrapped founders choose this as their main customer acquisition channel.
Sure, once you’re ranked high you can get free traffic.
But there is no way to rank for any key phrases worth ranking for without having to spend money on amazing content and a lot of backlinks.
During the 4 years that I ran SEOJet I spent at least $50k on backlinks for my own business. I did that because ranking well was critical for my credibility.
The sad truth about SEO that no one is willing to admit is that those companies that can spend the most are going to win.
On my new startup SquidVision (not in the SEO space), most of the marketing budget (at least until we are self sustaining) will go towards FB and Google ads.
Lesson 7
Don’t be afraid to shift your business model
I figured out an awesome way to generate more revenue from my subscribers by offering to sell guest posts on the backend of the software.
It integrated beautifully with the software and was a financial hit right from the beginning. It quickly became a bigger source of revenue than subscriptions.
But again, it was unpredictable how many guest posts my users were going to buy each month.
I knew that for resell value I needed to shift the business model so that the majority of the revenue was on the subscription side.
I did this by changing our plans so that the more money a user paid in their subscription, the bigger discounts they received on guest posts.
This strategy worked like magic and also reduced churn because our users came to depend on those discounts.
Lesson 8
Create an audience before your launch
I realize that this isn’t always possible, but before I launched SEOJet I had built another smaller SaaS product called Guest Post Tracker.
It was a really simple tool that I charged $37 for lifetime access.
But the audience was exactly the same audience that would want to use SEOJet. So Guest Post Tracker essentially became the tripwire offer for SEOJet.
When I was ready to launch I reached out to GPT users and asked if they wanted to be beta users. Over 100 of them said yes. (There was no free beta)
Lesson 9
Talk to your customers in the beginning
One of the smartest things I did in the beginning was I forced everyone that wanted to sign up for SEOJet to first get on a demo call with me so I could walk them through the software.
This was super valuable for me to hear from my target audience the parts of the software they were really resonating with and were excited to use.
I could then take that info and tweak all of my marketing copy to really focus on the features and benefits I knew my audience would care the most about.
The close rate from these demos was probably about 60% and many of them were still customers when I finally sold the company.
Lesson 10
Always be testing – AB Test everything
I love running AB tests. Increasing conversion rates is super fun for me.
It was critical for the growth of SEOJet when I needed to squeeze more revenue out of the business without increasing traffic.
For bootstrappers, it’s free and frankly there is very little downside to it.
You should absolutely AB test the crap out of your homepage, and paid advertising landing pages and probably your pricing and sign up pages.
If you’re curious about what I’m working on now, I built SquidVision.com to help SaaS business owners grow their revenue by showing them a visual overlay of exactly how much revenue every single button and link generates on each page of their website.
It’s really useful to track how effective your content marketing campaigns are and how well your landing pages are performing.
When you can see exactly how much revenue has been generated by each CTA on every blog post and landing page it becomes really clear which posts to focus on promoting.
It might be the most addictive (non-social media) app out there, IMHO.
We’re going live in just a few weeks. Join the waitlist here: https://squidvision.com/
Thanks for reading!
Obviously there are many more things I could have included. What critical tips did I leave out?
Need some help with your SaaS growth?
I have been building internet businesses for over 20 years and have built and sold 4 SaaS companies.
I take on one or two SaaS clients at a time. Reach out to me. Let’s see if it’s a good fit.
