Ecommerce Entrepreneur Builds a 6-Figure SaaS Business—And They Didn’t Even Know How to Code
As an entrepreneur, you’re a creator. As a creator, you probably don’t like to be limited to one product, one business, one industry… you like to explore.
When you get the itch for a new type of challenge, you’ll probably question whether it’s actually possible.
The SaaS industry is considered a distant fairytale land where only the technical elite live. But times have changed.
With the birth of no-code platforms, any entrepreneur can build their own software product and build a business behind it without any development experience. But the entrepreneur in this story didn’t take the easy route.
When running a successful ecommerce business selling technology products, they identified a niche that was underserved—finding B2B suppliers in the electronics niche is hard. So thinking like an entrepreneur, they asked themselves: “Why isn’t there a better way to buy electronic products in bulk?”
Then, they asked the second question only few entrepreneurs dare to ask: “What can I build to solve this problem?”
The answer to the second question was a SaaS platform that connects business buyers with bulk suppliers. The only problem with this answer was that the entrepreneur had no experience with coding, but that didn’t stop them.
They taught themselves how to code by watching videos, reading blogs, and taking courses. And the result?… a source of mostly-passive, recurring revenue from a successful SaaS business they’d built with their own hands and then a 6-figure cash reward after they sold the business.
This is how they did it.
Who Would Dare to Build a SaaS From Scratch With No Software Experience?
In the beginning of this entrepreneur’s journey, they sold any type of product you can think of and built multiple successful ecommerce businesses.
But after a while, success can get, well… a bit boring.
Looking to challenge themselves, they learned about design and software engineering and started building some software products.
They built and learned on the go and by the time he had identified an underserved niche in the electronics industry, they were ready to use their experience to take advantage of a niche with huge growth potential and build a platform that was one of the few of its kind.
The Nuts and Bolts of the Software
The product was a straightforward platform built on PhPFox that connected businesses and suppliers. Customers were charged a subscription to search for suppliers or advertise their manufacturing business. Subscription tiers were monthly, annual, and a featured monthly plan, and the site also offered a heavily-discounted trial price to encourage signups.
The business had 700 active customers and 98% signed up for the monthly subscription. It acquired 35 new customers each month and the average customer lifetime value (LTV) was $60 including free trials and recurring subscriptions.
The Seller Built the Business to Be Hands Off
Both buyer and seller customers were able to access all features and manage their subscription on the platform, so they didn’t need any intervention from support to use the service.
The software was well-built and didn’t require any updates for an entire year before the business owner sold it. It was monitored through AWS and alarms that notified the owner if the site faced any issues. The owner still had the contact details of a third-party development team in case anything went wrong with the software or the site, or if the owner decided to have new features developed.
All the owner did to maintain the business was answer 5-10 user support questions each day. However, this was after they had built a multi-pronged marketing system to grow the customer base.
To drive traffic to the site, they had built a system for producing user-generated content (UGC). Since half of the customer base was made up of manufacturers who shared their content—blog posts, inventory lists, industry news updates, etc.—in the platform, the entrepreneur was able to repurpose this content onto their site in the form of blog posts. They also shared this content in paid advertisement campaigns to showcase the suppliers using the platform. This was a highly-efficient and effective marketing strategy as it was easy to produce content and it built authority for the brand.
The business also had a team of freelancers who would produce 5-10 search engine optimized (SEO) articles each month to rank the site in Google.
The entrepreneur also built paid advertising channels on Google and Facebook; on Google they ran keyword-targeting campaigns and on Facebook they ran cold traffic and retargeting campaigns.
Once they had built a repeatable success with their advertising campaigns after testing audiences and content, they just needed to occasionally monitor the campaigns. On Facebook, every 10-12 weeks they would create a new campaign, but once they had found the most profitable keywords to target on Google, they didn’t need to alter those campaigns much and they could kill the campaigns targeting keywords that weren’t generating profit.
The third marketing channel for the site was organic social media.
The entrepreneur had built groups on Facebook with 15,000+ members and LinkedIn with over 1,000 members. The goal of these groups was to foster interactions with buyers and sellers who are the target customer of the business. By giving their audience a place to interact under the brand’s name, it gave them a reputation within the niche.
The seller had also grown large followings on multiple platforms:
- A Facebook page with over 5K likes
- An Instagram page with 3K+ followers
- A Pinterest page with 3.3K+ followers and 400K+ monthly viewers
- A LinkedIn page with 1K+ followers
On these pages, the seller would promote content produced by their team of freelancers, as well as the UGC.
The final marketing channel was built in the back end: a 31K-subscriber email list to which the seller drip-fed email campaigns to the list twice a week.
Having all of these marketing channels made the brand not just recognized in the niche, but defensible against competitors.
It takes considerable time and resources to build out marketing channels like this. If one of them is taken down, for example, if the Facebook ad account gets banned, the business can rely on its other marketing channels to keep generating sales.
Plus, the funnels were fully built-out. Most entrepreneurs only do paid advertising or SEO, but don’t do anything with the traffic once they get it. They’re leaving money on the table by not acquiring email addresses to do follow-up campaigns once the prospect has made contact with the brand.
Email is still the number one marketing channel as you have direct access to the customer data and it’s free from policies that make your social media accounts and website vulnerable to account bans and Google updates.
Needless to say, this entrepreneur had not just built a good software product, they’d built a good SaaS business.
Takeaways for Ecommerce Entrepreneurs Wanting to Build a SaaS
The number one key to success this seller identified was the simplicity of the workflow they had built. They invested in assets that generate revenue, but that didn’t require their time, including the team of freelancers that produced SEO content.
They had also built systems that saved them time. For example, the UGC system that simply posted content produced by the business’ customers. This type of content is really powerful and its success compounds over time the larger your following grows.
The social media groups were not just a pivotal marketing channel, they were also a valuable customer research asset. The conversations in the group informed the entrepreneur of what features and offerings the business needed to produce in order to provide a better service.
You can increase the LTV of your customers if you interact with them in your social groups and ask what they need. By continually adding services and features, you give your customers reasons to stay with you, as opposed to setting and forgetting your software product. Plus, you doing customer research in groups allows you to identify opportunities to add in profit-boosting services or features. For example, for this business the entrepreneur identified an opportunity to implement transaction fees to generate more revenue.
While it might seem counterintuitive to have social media groups where your potential customers can do business without using your services, when this brand was helping its target audience make connections organically, the audience members started to wonder whether the brand could help them more and thus became customers.
This is one of many reasons why it’s so important to give as much as you reasonably can for free in business—the more you give, the more you receive.
As for the paid advertising, the entrepreneur had built a content strategy after investing funds and testing campaigns. The traffic generated from Google Ads and Facebook Ads was split evenly at 50% each.
They found that the best returns on Facebook was from their retargeting campaigns that targeted anyone who had visited the blog or the social media channels. They would promote the site’s articles and showcase the biggest suppliers on their platform as authority content.
However, Google was the most effective marketing channel due to its very nature—it’s a search-intent channel, whereas Facebook interruption marketing channel.
On Google, consumers are actively searching for your solution. Whereas on Facebook they’re not, so it’s much harder to get their attention and convince them to take time to click through your ad and see what you’ve got to offer.
While paid advertising was the most expensive channel the entrepreneur tried, once it was established and generating a consistent ROI, it could be scaled up or down as much as they wanted.
When a buyer acquires a business that’s generating traffic through paid advertising, it’s not uncomnmon for them to shut off that channel to save money. This can be a big mistake as the business needs to be consistently getting new customers; not just for more revenue, but to improve the service.
The more businesses and suppliers this platform had, the more business transactions happened, as the more suppliers businesses could find and vice versa. By fostering more business activity on your platform, you increase the LTV of your current customers as they stay longer with the software because you’re constantly helping them with your solution.
The opportunities to take this SaaS business to the next level included building a mobile app with live chat where customers could connect with each other easily—fostering those connections was the core offering for this business, so everything was built around this.
Also offering a service to help facilitate connections and transactions on the marketplace could have been a lucrative venture. The way the business was built was for it to be hands-off, but by offering a more hands-on service more revenue could be generated.
The other big takeaway from this success story outside the anatomy of the business is the industry it was in.
The B2B industry is highly lucrative for SaaS. Businesses spend more than individual consumers because they have more capital. They also tend to stay customers for longer because they need the software to maintain the business. Plus, if the software needs to be deeply integrated into the business, such as a customer relationship management tool like Hubspot, then it’ll take a ton of work to migrate the business to a different platform.
Although this business was mostly-passive for the owner, requiring just a few hours per week of their time and it having these opportunities for growth, they decided to come to us to sell it for a big payday.
Why They Sold Their Almost-Passive SaaS Business
Being a serial entrepreneur, the entrepreneur had other businesses.
They were working with their brother on other businesses, and they didn’t have any SaaS experience, so the seller decided to sell this software business to focus on their other businesses their brother was experienced in.
From the start, the seller had built the business to eventually sell it. They had created a profitable business built on a solid platform that operated so efficiently it took almost no time from the seller to maintain—this is the gold standard for business assets.
Buyers would snap up this type of asset in a heartbeat. It offered recurring revenue in a lucrative niche offering B2B services.
The seller listed the business on our marketplace and sold it for $139,000 all cash upfront.
While this venture satisfied this seller’s curiosity of building a SaaS business, it took a lot of upfront work to get the final winning product. They learned everything from scratch and built multiple software to develop their skills before they were able to be successful with this business. They would have likely also invested a considerable amount of capital into the growth of those businesses.
They may have enjoyed that building process, but it’s not the only way to get to the end goal of owning a SaaS business that generates recurring revenue.
Skip the Building Phase and Acquire An Already-Profitable SaaS Business
If you’re considering your first transition from ecommerce entrepreneur to SaaS business owner, why not skip the building phase?
You saw how this business could be run by a buyer with no experience as the seller had contacts for quality engineers who could maintain the software for them on-call so they didn’t have to pay them a full or part-time retainer.
With just some basic development knowledge, you could acquire your first SaaS business.
If you have an ecommerce business, one way to acquire a SaaS could be to sell your ecommerce business and use that capital to acquire a SaaS business. Or you could bolt on the software to your ecommerce business and offer an extra, related service to your already existing customer base.
If you’d like to take a look at some quality SaaS businesses for sale right now, create a free Empire Flippers account and use our search filters to find the business that’s right for you. You can always schedule a free, no obligation consultation with one of our expert business advisors if you’d like some advice.
Or if you have an ecommerce business you’d like to sell for capital for your SaaS acquisition, then submit it to our team in just a couple of minutes and see what you could sell it for.