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Tiny Acquisitions

tinyacquisitions.com

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Re: Tiny Acquisitions

#151

Post by runako »

alex_g wrote: post #131
runako wrote: post #111

Earlier quoted context omitted.

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…

All valid reasons, but I think my point was moreso if they find themselves posting on MicroAcquire, they will likely end up in my #3, whether they intended to or not, and rightfully so.

Maybe the multiples only seem high to you, and others are anchoring on other market assumptions? (Different market assumptions being a key driver of trading in many things.)

Markets are crazy right now, and #3 could fairly describe transactions in the stock market, housing market, commodities market, etc. occurring now.

Also for sub-scale businesses, it may not be useful to value them based on revenue or profit multiples. For example, if the app is not making much money because there's been no money spent to promote it, how can one know if it's "expensive" or not? I might instead look at it and decide that I would need to spend $25k on development to build the app, so spending $5k to accelerate launch is cheap. Value really is in the eye of the buyer.

Re: Tiny Acquisitions

#152

Post by HeyLaughingBoy »

bemmu wrote: post #130
alasdair_ wrote: post #88

Assuming I wanted to buy a few of these, what's the best way to get the cash out at the end of it all? Create an LLC, have the LLC buy the sites, then just do dividends or something? I'm kind of hazy on how to fund such an LLC to buy stuff in the first place - do most people structure the initial money as a loan so it's tax free? I'd love to hear practically-speaking how to do this on a small scale.

I’m not in the US, but can’t you be a sole proprietor and add the income to your tax return?

Yes, that is by far the easiest way and it's how most businesses are structured.

https://taxfoundation.org/us-has-more-individually-owned-bus...

Re: Tiny Acquisitions

#153

Post by fny »

andi999 wrote: post #106
tekstar wrote: post #104

Earlier quoted context omitted.

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.

So what is the valuation? 3000 per year equals for 10 years 30k? (am not going to buy though)

For something like this you do discounted cash flow. It's closer to $10K.

https://www.mortgagecalculator.org/calcs/business-valuation....

Re: Tiny Acquisitions

#154

Post by jaxn »

shard wrote: post #126
iaw wrote: post #85

Earlier quoted context omitted.

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.

Real estate comes with its own set of problems. First is the large capital outlay as compared with a small web project, which means many more eggs are in that one basket. Second is the slow turnover, which means that you may be waiting for years for a good property (since if it's a good property, there are only a few situations where the owner would sell), and if you choose poorly, you will be stuck with the poor pro…

A mall across the street pretty much universally increases the value of existing retail in the area due to increased car traffic. But the mall across the street shutting down or converting to non-retail use would fit.

Re: Tiny Acquisitions

#156

Post by evrydayhustling »

runako wrote: post #111
alex_g wrote: post #68

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 no…

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…

Those are good reasons to motivate a seller. But the main problem with small transactions is that the buyer's costs/risks in making an investment can eclipse the "inherent" value of the project.

Consider that theoretical 2h -> $500 / month project:

- Would those 2h for the founder be 2h for the buyer, or much more? - How much initial training would it take for the buyer to sustain those economics? - Are those 2h sufficient to protect / grow the business in a changing market, or just an instantaneous rate? - Are the assets of the business actually secure? (unambiguous ownership / confidentiality, etc.)

Those are all pretty big unknowns, and even if the founder is confident about them the buyer would spend significant effort to verify -- very possibly more than the $5k sale price. It might even be cheaper (incorporating risk) to build a $500 / month business than to verify the purchase of one. Small projects have to sell at a VERY unfavorable discount to counter this.

The exception are buyers who make their own business out of efficient diligence and exploitation for many similar projects (like high-traffic sites for a single community). If you fit into such a category, it is probably better to find a specialized marketplace or a buyer with a reputation than attempt to sell in a broad market.

Re: Tiny Acquisitions

#158

Post by jventura »

sen wrote: post #62
Nalta wrote: post #11

I'm curious if there's a market for people who want to buy small projects like this. I imagine there's a lot of projects that are already on GitHub with a small following with owners that would like to cash out, but I'm not sure there's a market of buyers looking to pick up repos?

I’m a buyer in this range. I’ve bought various small online tools that either weren’t monetised or weren’t monetised well, then I just put a small amount of effort into tidying it up a bit. Zero goals to “go big”, each just brings in a bit of pocket money. If you compare the typical big-money SV-style startup sales to be like people building/flipping properly, this would be the equivalent of fixing up and flipping ch…

May I ask what kind of small online tools are you refering to? And how are you monetising them? I'm exploring some ideas for pocket money as well..

Re: Tiny Acquisitions

#159

Post by bombcar »

beachy wrote: post #107
iaw wrote: post #85

Earlier quoted context omitted.

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.

> 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.

And often founders underestimate how long a business can run even after it is “irrelevant”.

Re: Tiny Acquisitions

#160

Post by bombcar »

alex_g wrote: post #95
enobrev wrote: post #86

Earlier quoted context omitted.

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).

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…

1x annual profit is common for businesses that are really just a consultantcy.
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