The right time to sell your business (and how)

I've seen a lot of indie hackers selling their businesses lately. And these days, it's pretty easy to do — what, with all the marketplaces out there.

I recently helped a client sell a few of his apps. And last week, I posted about why it can be a good idea to buy a business instead of building one. Only makes sense that I talk about selling one now. And from what I've seen, it can be a great idea, but only in certain situations.

Here's what I've learned.

When and why to sell

According to a Gary Vaynerchuk video I stumbled upon while researching, there's never a good time to sell. The only reasons to sell are: A. If you don't like it anymore, or B. If you need the cash now.

Not sure I entirely agree with that. And as I dug through articles and accounts of indie hackers who did it, I found quite a few other reasons:

• Not enjoying the project anymore: Per above. You've really gotta love what you do to keep going as an indie hacker.
• Need cash in a hurry: Per above. Sometimes, you just need the cash, whether it's for a bill or an investment. But use it wisely — maybe put a plan/budget into place for how the funds will be allocated.
• Opportunity cost is too great: When a great opportunity presents itself, do a cost-benefit analysis. I'm also a believer in going with your gut.
• Imminent threat in the market: Maybe a large or innovative competitor enters your niche. I've closed a project because of this (I wasn't at a place where I could sell it yet). But be careful with this! Your buyer will know about the threat too, and they'll pay you accordingly. You could just accept the challenge and be more nimble than the threat. This is what indie hackers do best.
• KPIs in rough shape: If your business is already in trouble, as signaled by an extended decrease in KPIs, you might sell. But as I said above, be careful. You'll get a reduced price for something that could just bounce back in a few months.
• Growth has plateaued: If you're plateaued, and you have been for a while, and the revenue isn't high enough to make it worthwhile, then that might be a good reason too.
• You've reached the limit of your expertise/abilities: You've topped out. Some folks are great at building, but early growth is hard for them. Others are great at early growth, but they don't have the experience to bring it to the next level. No shame in it, we all have our strengths. You can use this hurdle as a learning opportunity, or you can move on.
• Mental health: This is a big one. Maybe you love the product, but you just don't have the capacity for it. I've seen this a fair amount. Entrepreneurship is hard, and it may not be worth prolonged stress, anxiety, etc.
• Physical health: I've talked to a number of indie hackers who have had huge medical emergencies (e.g. heart attacks, puking blood, etc.) due to the stress. And of course, a health problem doesn't need to be caused by stress for it to be a good idea to take a step back.
• Serial builders: Shiny object syndrome doesn't have to be a bad thing. Maybe you just love to build and move on. Lots of indie hackers do that.
• Change in life circumstances: Maybe you've got more responsibilities (kiddo on the way, etc.) and you've suddenly become more risk-averse.
• An offer you can't refuse: Sometimes folks just come out of the woodwork with a really good offer. Though, before accepting this, I'd do a little digging into why they're willing to pay so much. Is there a new opportunity you haven't seen?

I'm sure the list goes on, but those are the main ones I saw. I wish I could say "here's the equation that will tell you if you should sell," but that just isn't how it works.

Before we move on, here's a bad reason to sell:

• Market is ripe: If you're surfing a wave and in a market that is booming, it's probably not a good time to sell. It's a good time to keep surfing and growing the thing. Unless, of course, it's combined with any of the reasons above, in which case, this might be a perfect time.

Selling businesses as a business model

Quick aside here. Some people build and sell like crazy, almost like it's a business model in itself. Selling small products probably won't make you rich, but they can certainly help. And if you're someone who loves to build, why not?

I recently came across @mtaimoorhas's story and it blew me away. He built 6 businesses in 6 months and sold 4 of them, making roughly $20k.

Not F-U money by any means, but pretty cool, if you ask me.

How to sell (and how to price it)

These days, it's pretty simple:

1. Check in: Make sure you actually want to sell.
2. Decide on a price: This is probably the biggest question mark for some, so I'll make it simple. SaaS products usually sell for around 2.7x MRR. Higher if you've got solid retention. There are valuation calculators out there that can help. Decide how much it's worth, how much you want, and a minimum that you'll accept. Side note: Some sites let you choose between setting a price and doing an auction.
3. List it: List your product on a marketplace (see some solid options below). Each marketplace will differ a bit, but the process should be pretty straightforward. The more you fill out, the better. Describe the business and why you're selling it. If the marketplace supports this, connect whatever services you use — Stripe-verified payments, analytics, accounting software, etc. can go a long way. And if there's a way to verify your identity (which there usually is), definitely do that.
4. Generate interest: Consider driving traffic to your listing by talking about it on social media, your company's email list, your blog, and just about anywhere else. But be careful — this may not be a good idea for some, as it may scare customers (and potential customers), and impact your revenue, retention, etc. Another option is that some marketplaces allow you to pay to boost your listing.
5. Field inquiries: Respond to any inquiries by giving access to whatever data you didn't make public. You'll probably need to know things like LTV, CAC, churn, etc. etc.
6. Be transparent: This is not about revealing the good stuff and hiding the not-so-good stuff. The more the buyer knows, the better. And that includes context — if growth took a dip last month because you were on vacation, explain that.
7. Due diligence: They'll be vetting your company, but it's important to vet them too, assuming you want to see the company you started become a wild success. Can this person take the ball and run with it? Will they do so in a way that feels in alignment with why you started it in the first place? And are they good for the money?
8. Come to an agreement: Negotiations may continue through all of that, and now you'll wrap them up. If you're both happy, you'll move forward.
9. Letter of intent: Usually, a letter of intent is sent once the basics of the deal have been agreed to. It depends a bit on the marketplace, but some include this in the buying/selling process. I believe that's the case with MicroAcquire, for example, while Flippa doesn't seem to have LOIs — they just focus on the official offer.
10. Sign: Again, the flow here will depend on your marketplace, but the point is to make it official. Signatures on the dotted line and transaction in progress.
11. Get paid: If your marketplace doesn't support the transfer (and holding) of funds, use something like escrow.com. They'll hold onto the money while you deliver the assets. Much safer.

I'll say this… after going through the flows of multiple marketplaces, they really do make it pretty easy to sell businesses. What a cool time to be an indie hacker.

Common mistake to avoid

When selling, don't make these mistakes:

• Misrepresenting the business.
• Not doing due diligence.
• Not discussing how the transition will take place (how available you need to be to them, etc.)
• Getting into a position where you need the money now, meaning that you'll probably accept less than your product is worth.
• Underselling the opportunity to sellers.
• Over- or underpricing the product.
• Not doing escrow. It's super risky, but I will say that I have seen a couple of indie hackers do that successfully with each other.
• Selling during a temporary slump.

Best business marketplaces for indie hackers

And to wrap up, here's a list of the best marketplaces for indie hackers to sell their products:

• Microacquire by Andrew Gazdecki (@MicroAcquire)
• Flippa
• SideProjectors
• Tiny Acquisitions by Stephen Campbell (@stepocampbell)
• GetAcquired
• Motion Invest
• IndieMaker (formerly 1kprojects) by Othmane (@EO)

What did I miss?

For more tips, how-tos, and case studies. 👇

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