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Ask HN: Should I sell my SaaS (400k rev)?

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Re: Ask HN: Should I sell my SaaS (400k rev)?

#21

Post by just_to_ask_sam »

cylinder wrote: post #7

If you went completely passive (let your top employee just be CEO) today, how long will it take to lose all your customers and wind down to $0 revenue? I would just map out how long you think that would take, and forecast all future cash flows by that hypothetical method, and then make your sale price $1 above that amount (discounted). Very simply if this year you net $240k, next year $200k, then $150k, then $50k, th…

OP here. I've considered this "passive income" approach, and perhaps am in this right now – I haven't been doing much work on the business, just collecting checks.

I often wonder what the value/problem of the upfront cash would be. I feel like I could do big things – but I just can't get over the fact that I wouldn't know what to do with $600-750k in cash, to produce more cash.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#22

Post by just_to_ask_sam »

simon_kerstein wrote: post #17

I have created this account for responding to this answer. Move product development to 3rd world country, by spending 6-7K$/month you can gain 3-4 fresh bloods, who will continue working on your project. You will go to passive CEO position, where you control project development and oversea new features. may sound weird, but you dont need to think about giving shares to new employees, taxes for salaries or giving them…

Thanks for the idea. I'm already doing this – my burn rate is $6k for my team of 3 (support, sales, dev).

Re: Ask HN: Should I sell my SaaS (400k rev)?

#23

Post by just_to_ask_sam »

wnm wrote: post #14
gigatexal wrote: post #11

Earlier quoted context omitted.

400k a year means the selling price would be about 4 million? How're your savings? I think that would be enough cushion to either seed your next thing or help you have the time to study and get up to speed for a 9 to 5.

I don't think you can get 4 million. Looking through some listings on a broker like FEInternational ( https://feinternational.com/buy-a-website/ ), most SAAS businesses are valued at 3-4x anual profit. He said profit margins were 60%, so $400000 x 0,6 x 4 = $960000. And thats for a healthy business. This one is not growing, so you get probably less then that. After the seller's fee, and taxes you might end up with so…

Indeed, it would be around $600k after paying back investors and such.

Even if I did net the $600k (3x my current annual salary), I wonder if I could use it to recreate something I have right now (a biz that produces $200k/year for me w/ little effort)

Re: Ask HN: Should I sell my SaaS (400k rev)?

#24

Post by just_to_ask_sam »

19eightyfour wrote: post #8

Have you talked to your customers to understand what they need now and why they are churning?

Of course, but the feedback has always been completely different, depending on the size of the business/customer. It'd range from "price is too high" (value) to "you don't do X" (x being a all-in-one suite, as our market often bundles products together) to "not what we were looking for"

Re: Ask HN: Should I sell my SaaS (400k rev)?

#25

Post by mod »

just_to_ask_sam wrote: post #21
cylinder wrote: post #7

If you went completely passive (let your top employee just be CEO) today, how long will it take to lose all your customers and wind down to $0 revenue? I would just map out how long you think that would take, and forecast all future cash flows by that hypothetical method, and then make your sale price $1 above that amount (discounted). Very simply if this year you net $240k, next year $200k, then $150k, then $50k, th…

OP here. I've considered this "passive income" approach, and perhaps am in this right now – I haven't been doing much work on the business, just collecting checks. I often wonder what the value/problem of the upfront cash would be. I feel like I could do big things – but I just can't get over the fact that I wouldn't know what to do with $600-750k in cash, to produce more cash.

Some people buy businesses that passively generate income for them, so that's a thought.

Wait...

Re: Ask HN: Should I sell my SaaS (400k rev)?

#26

Post by esw »

just_to_ask_sam wrote: post #20
AngeloAnolin wrote: post #18

Two things that stood out for me when reading your question: 1. I'm quite bothered by the fact that I can't fix churn Maybe you have already done, but I would suggest that you can be more transparent with your employees, who may have some ideas on how to resuscitate the business and make good returns again. This statement seems to imply that you are solely trying to fix whatever is broken with your current business m…

Hi, OP here. Thank you for your comment. I'm baffled by how many wonderful people have shared their POV & experience. I don't believe my employees would know what to do. I've spoken to them before, and gotten very little value from it. They don't have much of a business acumen. It goes without saying that the broker is doing what's in his interest. But I've found this particular broker to be very truthful, upfront. H…

Can I ask how you found your broker?

Re: Ask HN: Should I sell my SaaS (400k rev)?

#27

Post by PerfectElement »

Since you are not spending much time on it anyway, why not leverage the customers that you already acquired and spend time fixing the problem? Even if it requires rebuilding your product. The hardest part of every business endeavor is customer acquisition, don't underestimate all the hard work that went into building something people will pay to use.

Try to interview every user that churns (offer them a Starbucks card for their feedback) and figure out why they are leaving. For some reason, their expectations are not being met. Fixing that is probably easier than starting a new business.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#29

Post by softwarefounder »

davismwfl wrote: post #6

Having sold a couple of companies now I will put it to you this way. If you were to sell right now you are selling from a position of weakness, not strength. If I was in your position and if you are just tired and want to do something else you need to get the business growing consistently again month to month. Maybe that means finding some fresh blood to bring in. Another option is instead of selling, look into hirin…

This sounds like great advice. Agreed on the "selling from a position of ...strength".

Being able to point to a continually increasing MRR is huge. If I, as a potential buyer, see a decline in MRR [and customers], I'm going to try to get the company for a steal.

Re: Ask HN: Should I sell my SaaS (400k rev)?

#30

Post by sidhantgandhi »

If you're thinking of selling, definitely sell. There's a million things to do, and getting a decent exit on anything means you can now do the next fun thing on your list!

On the other hand, 3 things could happen if you stay with the business: 1. It keeps declining. You'll have to fire employees and down-size. :( 2. It stays stagnant. You'll end up feeling like you're wasting your life. :\ 3. It grows. You'll likely have to hire outside management, growing pains, etc. That's the "not-fun" part of entrepreneurship. :|

Sell it and move on! :)

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