12 ms·

If you're interested in buying and/or selling small projects, you can typically expect to pay more than $5k for something that's making any consistent amount of

by alex_g 5y ago

If you're interested in buying and/or selling small projects, you can typically expect to pay more than $5k for something that's making any consistent amount of money. You're also unlikely to find a great deal on a really special project on a marketplace. People who post on marketplaces like Flippa or MicroAcquire or SideProjectors (there're dozens of them) have either: 1. Realized the time it takes to maintain is not worth the revenues/profits 2. Realized the income is not sustainable and are trying to cash out at the end of a great run 3. Realized that some folks are willing to pay very high multiples and will list their projects at prices most (but not all) people will balk at. If you're really interested in taking over a project that's profitable, network with people, do cold emailing, and find opportunities to take over projects that the owners are simply not interested in any more. In other words, look for the elderly couple who is ready to move on from owning their profitable, outdated shop.

Scoundreller 5y ago
Or 4: realized that the real money is in being an unethical operator, and while you’re not such a person, you’re okay selling to someone that is. See: browser extensions. Or anything with traffic that is otherwise hard to monetize.
prawn 5y ago
Or don't have the time. I have/had profitable projects that don't take much time, but they'd be more profitable under someone who isn't spread as thin.
- rlayton2 5y ago
  This is why I sold a website making about $150/mo in ad revenue for $5k. I knew the site could make more, but had other things on the go and I couldn't spend the time on the site to improve it. The person that bought it from me did make those changes and did make more money, but I just didn't have the time to get there. Win-win for me
  - prawn 5y ago
    Anyone with time for SEO/content work, general outreach and so on, could definitely capitalise on these opportunities. Many people building these projects don't have the time or interest in the more social side of it.
    - zebnyc 5y ago
      I know web development and my wife has been hankering to learn SEO / web analytics on her own. I would definitely buy spend 5-10k even if it is just so she can get some real world experience learning SEO in the real world.
      - patrickk 5y ago
        There’s loads of online courses and even free YouTube resources where you can get started for free. Learning from the ground floor with something you built from scratch is far more illustrative IMO.
  - zaphirplane 5y ago
    I was about to post a question about sale prices as a multiple of revenue. Someone bought it with 2.7 years break even ? Assuming close to zero ongoing cost + labour. That’s surprisingly high I expected a .5-1.5 for micro sized revenue
    - rlayton2 5y ago
      I may not have sold at that ratio, not sure. Either way the site definitely had potential. Also this is the first and only time I have done this so please don't take my experience as representative. I do not know
iaw 5y ago
Just to echo this, I recently had a lovely conversation with a guy building a business he knew would be irrelevant in 10 years with the goal of selling in 3 years to someone who didn't realize that. I will never buy a business, real estate is a much safer bet.
- canadianfella 5y ago
  > I will never buy a business, real estate is a much safer bet. Get richer doing absolutely nothing productive. Good work.
- alex_g 5y ago
  Yeah that's messed up. Any time you're buying anything, but especially a business, you need to do your due diligence. Perhaps I'm naive, but I think your risk in buying a business goes down if the current owner under-appreciates what they have, and you have the skills to do it better than them.
  - iaw 5y ago
    > your risk in buying a business goes down if the current owner under-appreciates what they have This is completely true, my sentiment is more for the idea of a "turn-key business" acting like an annuity. I don't think every business for sale is going down but I think there's a large enough risk case that I'd rather avoid it.
- gpapilion 5y ago
  This is basically Don Fisher’s (gap founder) advice for planning a business. Assume you’ll go out of business in five years.
- abraae 5y ago
  > a guy building a business he knew would be irrelevant in 10 years To be fair, almost any software based business could be irrelevant in 10 years.
  - bombcar 5y ago
enobrev 5y ago
Any suggestions on the other end: where to sell a business that is both profitable and should continue to be? Asking for a friend who is looking to retire in the next couple years (at the normal retirement age).
- alex_g 5y ago
  No shame in my #3 above. I'm not an expert, but typically multiples range from 1-4x annual profit, but I've heard through the grapevine that some folks are paying 5-10x. So absolutely list on MicroAcquire. If it's very profitable, then they might consider talking to FEInternational (or another firm like them). They take a cut, though. But they do pay referral fees, so make sure you get that cut! Edit: Before someone says I'm crazy for saying things sell for 1x annual profit, I'm not saying that's typical for a brilliant business. It's more typical for something with heavy maintenance, or with really low profits. If you're really interested, check out the link in my bio.
  - bombcar 5y ago
    1x annual profit is common for businesses that are really just a consultantcy.
  - cestith 5y ago
    For a business that is all about monthly recurring fees, rather than an annual multiple a big part of the consideration can be the customer acquisition cost in the industry. If I have a similar company already, I'll pay you up to somewhere around what it costs me to acquire the same number of new customers some other way. If you have 10,000 subscriptions and it generally costs me $5 per customer to land new subscribers, $50,000 makes a lot of sense. Much less than that is a real bargain. Much more and maybe I just spend the money marketing to your customers instead, depending on what other assets come in the deal. This is largely independent of what your subscription fee is.
amoghs 5y ago
A part of me feels that with any acquisition ever. If it's really that good, why're you selling? I think there's some element of passion (like you said), though also just around the skill set needed to really take the business somewhere.
- tekstar 5y ago
  I have a niche iOS app that makes between $200-400 monthly. I would sell it to someone who would continue to grow it because I would rather build new things than continue to add content to the app.
  - andi999 5y ago
    So what is the valuation? 3000 per year equals for 10 years 30k? (am not going to buy though)
    - tekstar 5y ago
      In this specific case I would sell at a lower multiple to someone in the niche community. The amount of money to be made by selling someone who wants to exploit the userbase isn't worth tarnishing my reputation and subsequently shooting future projects within the same niche in the foot.
      - dshoemaker 5y ago
        I've had an interest in taking on a project for a while and your comments have sparked something for me. I'd be interested in chatting with you about your project if you'd like. I'll buy a coffee/beer/tea/beverage of choice just for the trouble of a call. Contact info in my profile if you're interested!
    - fny 5y ago
      For something like this you do discounted cash flow. It's closer to $10K. https://www.mortgagecalculator.org/calcs/business-valuation.php https://www.mortgagecalculator.org/calcs/business-valuation....
runako 5y ago
There are a lot of reasonable reasons people would list a sub-scale business on a site like those. Some examples: Take an app that makes $500 net monthly and requires 1-2 hours per week of work. Solid hourly rate, why sell? Except: - Sudden change in family responsibilities leaves founder without the small amount of time needed. - The business might net $5k in a sale, and the founder has an urgent need for cash (for ex for home purchase/repairs). The founder resigns to a fire sale because she needs money now. - Founder realizes the business will remain sub-scale until someone injects another $50k. Founder has a day job but not $50k, and has no interest in raising money. - Founder's job reviews side project and decides it's too close to "competitive" and asks founder to dispose of it. - Founder takes a new job that prohibits side gigs. - Founder gets sick and isn't able to maintain the business. - Founder gets divorced and is ordered to split the value of the business with ex-spouse. (A sale may be the founder's only option to produce the cash.) - Founder built the app using tech X 3 years ago. Founder now viscerally hates tech X and would rather have $5k than keep using that tech. - (Edit: adding this one) Founder was just learning business when they started this business, and now wants to aim bigger. This business could be a good starting point for someone else in their personal development cycle. Basically, there are a lot of reasons a founder might sell that have nothing to do with the business or its prospects. There are also reasons that have to do with the business not being a fit for the founder at that time. Due diligence is key when buying anything.
- IgorPartola 5y ago
  I am in that last category myself. I had a really nice and useful budget app that had thousands of daily users and cost all of $20/month to keep going, if that. Was making some money off it too with ads and sales of the ad-free version. Except I built it using Ionic back when it was based on Angular 1. Fast forward to now and that code simply doesn’t compile anymore against modern iOS and Android and I don’t have the time to rebuild it. With some TLC it could have been something but at this point all I’m doing is sending replies to customer emails explaining why the app isn’t available anymore. Lesson learned: JavaScript frameworks ruin lives.
  - sail0rm00n 5y ago
nodesocket 5y ago
Agree, but love this idea. Just change the maximum sale price to something like $25,000.
beambot 5y ago
Best write-up I've seen about selling a small SaaS is HN OG patio11 / Kalzumeus' sale of Bingo Card Creator: https://training.kalzumeus.com/newsletters/archive/selling_software_business https://training.kalzumeus.com/newsletters/archive/selling_s...
HeyLaughingBoy 5y ago
That last one is exactly what a friend of mine did. IIRC, he contacted a business broker and told them what he was looking for and they found the company. He bought a literal Mom & Pop outfit that made thermocouples for a specific application. The "Pop" was going blind and Mom wanted to retire. They were barely making money but my friend realized that it was mainly because they were underpriced and their marketing was nonexistent. He bought the business for a song and immediately called all the customers and told them he was raising prices to market rates. After turning things around, he sold the company about five years later for a healthy profit.

by alex_g 5y ago

Scoundreller 5y ago

Or 4: realized that the real money is in being an unethical operator, and while you’re not such a person, you’re okay selling to someone that is. See: browser extensions. Or anything with traffic that is otherwise hard to monetize.

prawn 5y ago

Or don't have the time. I have/had profitable projects that don't take much time, but they'd be more profitable under someone who isn't spread as thin.

rlayton2 5y ago
This is why I sold a website making about $150/mo in ad revenue for $5k. I knew the site could make more, but had other things on the go and I couldn't spend the time on the site to improve it. The person that bought it from me did make those changes and did make more money, but I just didn't have the time to get there. Win-win for me
- prawn 5y ago
  Anyone with time for SEO/content work, general outreach and so on, could definitely capitalise on these opportunities. Many people building these projects don't have the time or interest in the more social side of it.
  - zebnyc 5y ago
    I know web development and my wife has been hankering to learn SEO / web analytics on her own. I would definitely buy spend 5-10k even if it is just so she can get some real world experience learning SEO in the real world.
    - patrickk 5y ago
      There’s loads of online courses and even free YouTube resources where you can get started for free. Learning from the ground floor with something you built from scratch is far more illustrative IMO.
- zaphirplane 5y ago
  I was about to post a question about sale prices as a multiple of revenue. Someone bought it with 2.7 years break even ? Assuming close to zero ongoing cost + labour. That’s surprisingly high I expected a .5-1.5 for micro sized revenue
  - rlayton2 5y ago
    I may not have sold at that ratio, not sure. Either way the site definitely had potential. Also this is the first and only time I have done this so please don't take my experience as representative. I do not know

iaw 5y ago

Just to echo this, I recently had a lovely conversation with a guy building a business he knew would be irrelevant in 10 years with the goal of selling in 3 years to someone who didn't realize that. I will never buy a business, real estate is a much safer bet.

canadianfella 5y ago
> I will never buy a business, real estate is a much safer bet. Get richer doing absolutely nothing productive. Good work.
alex_g 5y ago
Yeah that's messed up. Any time you're buying anything, but especially a business, you need to do your due diligence. Perhaps I'm naive, but I think your risk in buying a business goes down if the current owner under-appreciates what they have, and you have the skills to do it better than them.
- iaw 5y ago
  > your risk in buying a business goes down if the current owner under-appreciates what they have This is completely true, my sentiment is more for the idea of a "turn-key business" acting like an annuity. I don't think every business for sale is going down but I think there's a large enough risk case that I'd rather avoid it.
gpapilion 5y ago
This is basically Don Fisher’s (gap founder) advice for planning a business. Assume you’ll go out of business in five years.
abraae 5y ago
> a guy building a business he knew would be irrelevant in 10 years To be fair, almost any software based business could be irrelevant in 10 years.
- bombcar 5y ago

enobrev 5y ago

Any suggestions on the other end: where to sell a business that is both profitable and should continue to be? Asking for a friend who is looking to retire in the next couple years (at the normal retirement age).

alex_g 5y ago
No shame in my #3 above. I'm not an expert, but typically multiples range from 1-4x annual profit, but I've heard through the grapevine that some folks are paying 5-10x. So absolutely list on MicroAcquire. If it's very profitable, then they might consider talking to FEInternational (or another firm like them). They take a cut, though. But they do pay referral fees, so make sure you get that cut! Edit: Before someone says I'm crazy for saying things sell for 1x annual profit, I'm not saying that's typical for a brilliant business. It's more typical for something with heavy maintenance, or with really low profits. If you're really interested, check out the link in my bio.
- bombcar 5y ago
  1x annual profit is common for businesses that are really just a consultantcy.
- cestith 5y ago
  For a business that is all about monthly recurring fees, rather than an annual multiple a big part of the consideration can be the customer acquisition cost in the industry. If I have a similar company already, I'll pay you up to somewhere around what it costs me to acquire the same number of new customers some other way. If you have 10,000 subscriptions and it generally costs me $5 per customer to land new subscribers, $50,000 makes a lot of sense. Much less than that is a real bargain. Much more and maybe I just spend the money marketing to your customers instead, depending on what other assets come in the deal. This is largely independent of what your subscription fee is.

amoghs 5y ago

A part of me feels that with any acquisition ever. If it's really that good, why're you selling? I think there's some element of passion (like you said), though also just around the skill set needed to really take the business somewhere.

tekstar 5y ago
I have a niche iOS app that makes between $200-400 monthly. I would sell it to someone who would continue to grow it because I would rather build new things than continue to add content to the app.
- andi999 5y ago
  So what is the valuation? 3000 per year equals for 10 years 30k? (am not going to buy though)
  - tekstar 5y ago
    In this specific case I would sell at a lower multiple to someone in the niche community. The amount of money to be made by selling someone who wants to exploit the userbase isn't worth tarnishing my reputation and subsequently shooting future projects within the same niche in the foot.
    - dshoemaker 5y ago
      I've had an interest in taking on a project for a while and your comments have sparked something for me. I'd be interested in chatting with you about your project if you'd like. I'll buy a coffee/beer/tea/beverage of choice just for the trouble of a call. Contact info in my profile if you're interested!
  - fny 5y ago
    For something like this you do discounted cash flow. It's closer to $10K. https://www.mortgagecalculator.org/calcs/business-valuation.php https://www.mortgagecalculator.org/calcs/business-valuation....

runako 5y ago

There are a lot of reasonable reasons people would list a sub-scale business on a site like those. Some examples: Take an app that makes $500 net monthly and requires 1-2 hours per week of work. Solid hourly rate, why sell? Except: - Sudden change in family responsibilities leaves founder without the small amount of time needed. - The business might net $5k in a sale, and the founder has an urgent need for cash (for ex for home purchase/repairs). The founder resigns to a fire sale because she needs money now. - Founder realizes the business will remain sub-scale until someone injects another $50k. Founder has a day job but not $50k, and has no interest in raising money. - Founder's job reviews side project and decides it's too close to "competitive" and asks founder to dispose of it. - Founder takes a new job that prohibits side gigs. - Founder gets sick and isn't able to maintain the business. - Founder gets divorced and is ordered to split the value of the business with ex-spouse. (A sale may be the founder's only option to produce the cash.) - Founder built the app using tech X 3 years ago. Founder now viscerally hates tech X and would rather have $5k than keep using that tech. - (Edit: adding this one) Founder was just learning business when they started this business, and now wants to aim bigger. This business could be a good starting point for someone else in their personal development cycle. Basically, there are a lot of reasons a founder might sell that have nothing to do with the business or its prospects. There are also reasons that have to do with the business not being a fit for the founder at that time. Due diligence is key when buying anything.

IgorPartola 5y ago
I am in that last category myself. I had a really nice and useful budget app that had thousands of daily users and cost all of $20/month to keep going, if that. Was making some money off it too with ads and sales of the ad-free version. Except I built it using Ionic back when it was based on Angular 1. Fast forward to now and that code simply doesn’t compile anymore against modern iOS and Android and I don’t have the time to rebuild it. With some TLC it could have been something but at this point all I’m doing is sending replies to customer emails explaining why the app isn’t available anymore. Lesson learned: JavaScript frameworks ruin lives.
- sail0rm00n 5y ago

nodesocket 5y ago

Agree, but love this idea. Just change the maximum sale price to something like $25,000.

beambot 5y ago

Best write-up I've seen about selling a small SaaS is HN OG patio11 / Kalzumeus' sale of Bingo Card Creator: https://training.kalzumeus.com/newsletters/archive/selling_software_business https://training.kalzumeus.com/newsletters/archive/selling_s...

HeyLaughingBoy 5y ago

That last one is exactly what a friend of mine did. IIRC, he contacted a business broker and told them what he was looking for and they found the company. He bought a literal Mom & Pop outfit that made thermocouples for a specific application. The "Pop" was going blind and Mom wanted to retire. They were barely making money but my friend realized that it was mainly because they were underpriced and their marketing was nonexistent. He bought the business for a song and immediately called all the customers and told them he was raising prices to market rates. After turning things around, he sold the company about five years later for a healthy profit.