The first step to create passive income building software is to find a customer. Yes, a paying customer. How do you go about finding this first customer? You need to know which target market you want this first customer. In the software arena, there are three market segments considered as good targets for a small start-up.
1. Person-to-person (common man) market
2. Business-to-business (niche small business) market
3. Enterprise solutions market
Let’s define each of these markets and how each of these target markets differ from each other for building a SaaS product for passive income in each of these target markets.
Software products such as Facebook, WhatsApp, Intuit, Google and Microsoft Office cater to the common man. All such products resolve a variety of problems for the public. It can be either a web-based product (website), desktop product (software installed on PC or Mac) or a mobile based product (iOS or Android). Finding a customer is easy in this market segment. You can approach any of your friends, family members and colleagues; ask if they have any problems that you could solve for them. The idea here is to find out one or two common problems from the people you are surveying. More number of people you survey, more the chances of finding one common problem. Typically, this is a tough market to start for passive income for a few reasons. Your friends, family members and your peers are all in different stages of their lives. They may be facing different challenges. Each one of them will most likely have a problem which may or may not intersect with others.
The niche small business market is comprised of people who own their own business such as doctors, veterinarians, lawyers, contractors, realtors, daycare agencies, beauty salons, photographers, cleaning services etc. Any software product that assists them to run their business is an ideal way to start for passive income. Examples include Intuit accounting, Pharmacy inventory system, Doctor appointment reservation systems. Your software product can only solve two main problems for small businesses:
- Increases productivity – Small business owners have limited time on their hands, especially doctors and lawyers. Any tool which can reduce their pain of maintaining their business on a day-to-day basis will provide value.
- Increases sales – Every small business owner is looking to increase their sales and expand their business. If your product can acquire more customer for small business owners, you have a valuable business.
Enterprise solutions market
Software which caters to big enterprises for maintaining their business would fall under the enterprise solutions market. Applications such as Box, Dropbox, GitHub are all examples of enterprise solutions. Marketing to big corporations is challenging and competitive. Starting an enterprise product when you are venturing into passive income is doable but not practical, in my opinion.
Your first software product should not have many technical challenges and very less friction in marketing it. The goal here is to ensure you are able to get through to your first potential customer with minimal barriers.Â The easiest soft target for your first software venture for passive income among all three markets is the small business sector. Small businesses have sales issues, scalability issues, productivity problems and they have very limited time. Doctors and lawyers, especially, have a good source of revenue to spare provided your product can save them time. You, as a software engineer, can pitch in to see how you can improve their business. My blog is entirely focused on finding customers for the niche small business sector and providing value to them with a software product.
Agree or Disagree? Please comment below.
Happy SaaSive Income!