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How To Sell Your Niche B2B SaaS For All The Right Reasons

CEO of Brightmoat

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You started with an idea. Maybe you knew you could do it better than anyone else, or maybe you had more robust ideas than your boss. For years you devoted your nights and weekends to building your vision in the way that only you could. Better yet, it worked. The side-project turned into your main gig and now you’re spending more hours than ever keeping things running.

In the early days, you wanted to create something amazing, unique, and meaningful. And, frankly, the added income wasn’t bad at all. On a long enough timeline, every entrepreneur comes to the question: is it time to give this up? Maybe you have created the solution for the problem you saw, or perhaps you have hit the upper limits of what you’re able to do with the resources you have at hand.  So, do you pull the plug on your business? Or is it time to sell? 

Many owners find themselves at an impasse when it comes to selling their niche B2B SaaS business. On the one hand, they would love to free up their time, get rid of the stress, and get a healthy payout in return. Then again, they could also hang on to their business and keep improving it for an even bigger payout down the road. This is the Exit FOMO – it is a very real condition.

If you sold right now, what would you be missing out on? If you didn’t sell right now, would another opportunity ever come along? 

Brightmoat is in the business of buying niche B2B SaaS companies from hard-working founders so they can enjoy their well-earned exits. We buy ownership from you, inject our team and resources, and grow the company you started. This way, your customers get what they need, and you have the added time and resources to start your next endeavor.  We’ve executed this process dozens of times, and through this experience, we’ve routinely answered the most common questions business owners ask.

Can I Sell My Niche SaaS Business? 

Ah, the inevitable question: would anyone even want to buy this? If your users gain value from your business and are willing to keep paying for your services, then it is absolutely possible to sell your business. While you may read about multi-million dollar exits, even the smallest and most niche SaaS businesses are attractive to a potential buyer. Suppose your business has a low churn rate, at least $10K MRR (monthly recurring revenue), and approximately 20–30% year-over-year revenue growth. In that case, there is a strong chance to see a decent payday as these are the exact conditions buyers are looking for. 

However, just because you can sell your niche SaaS business right now doesn’t necessarily mean you should. Yes, the buyer may see a growth opportunity with your business, and the payout to you might seem appealing. Still, these are just a few of the numerous factors to consider when approaching the negotiating table.  

Speaking of…

What Is My SaaS Business Worth?

You started your niche SaaS product with a meaningful mission, but money still matters. How much could you stand to walk away with if you sign the sales contract? Well, it’s not quite so simple. 

There are a lot of intricate details when it comes to accurately valuing a business – we’ll be sharing more information about this with our email subscribers (link). 

In general, most software companies are valued five times higher than other business verticals. According to the Digital Exits 2020 Business Valuation Report, software ranked second – beat only by e-commerce. The number one factor to SaaS companies’ higher valuation? Recurring monthly revenue. 

In fact, software company listings had an average multiple of 3.24x in 2020.

2020 Business Valuation Report Key Data
Average multiple 3.24
Average sales price $1,435,067
Median sales price $837.500

 

Multiple refers to a business’s worth. Your profit, multiplied by the multiple, brings you the approximate value of your company. While this can vary widely based on the size of your business, revenue growth year-over-year, your niche dominance, and churn rate, it serves as a good starting point.

Should I Sell My SaaS Business?

When it comes to selling, niche B2B SaaS owners often focus on the financials. It’s an exciting thought, how much money could I walk away with? Chances are, the amount of money you make from the sale could give you the kind of financial freedom that could completely change the direction of your life.

Price is an important factor, but there are two other significant things to consider when making your decision: 

Personal Actualization and Business Growth. 

Financial Freedom 

Why did you start your business in the first place?

Chances are, you wanted to earn an income that wasn’t tied to the number of hours you worked, like what you might have gotten with a freelancing gig or a full-time job. The question is, would selling your business give you the financial security you were after? 

When looking at the reasons not to sell your B2B SaaS business, one of the biggest concerns owners have is the loss of a vital income stream, especially if the business continues to grow after the sale. If you accurately forecast your earnings, it may seem like there is never a good time to sell.

On the other hand, you may have a lot of your net worth locked up in your business, which is just one asset of many you might have. If the thought of a black swan event keeps you up all night, selling could give you the liquidity to diversify your investments.

Then again, there’s a lot to be said for having a profitable business with predictable revenues. If your business is still growing at a generous pace, it may be worth your while to wait another year and see if conditions change. 

Personal Actualization

It’s not always about the money. Building something from the ground up means it is very much a part of you. Months and years of hard work and sacrifice have likely gone into your work. Selling it isn’t just a transaction – you may feel like you’re letting go of a piece of yourself. 

How happy are you right now with your business? Even if you are thrilled with how things are going, do you ever wonder what your options could be if you did sell? 

What if you aren’t happy? Would selling off your business really make you any happier? Having more money may open new opportunities for you, but it doesn’t always guarantee happiness. But if your business is keeping you from exploring what else you could do with your time (even if that means doing nothing at all for a little while), then maybe it’s time to consider selling. 

Money aside, whether or not you sell comes down to your purpose and your goals. If you started a business only to sell it, then your goal is pretty clear-cut. However, if you started your business to serve your passion or solve a problem you saw, then there might be bigger questions you need to ask yourself. 

Don’t let the money blind you. Take the time to ensure a sale aligns with you, your purpose, and your goals. 

 

Your Business Outgrows You

Eventually, you might hit a wall. While someone may offer to buy your business today, you may want to wait several months to see other ways to increase your revenue because you still enjoy working on the company and sustainable growth. Sooner or later, the question becomes resoundingly clear: do you really have the time, energy, or resources to take your business further on your own?

Are you just as excited to work at your business now as you did a few years ago? Or do you find yourself putting in more hours with less return? 

Before long, you may find that your business has reached a point of maturity. You may notice that you need different skills or resources to grow beyond the startup phase and move forward. You may have loved building your application and the infrastructure around it, but product development and coding can only go so far without marketing and sales. It may be time to sell your B2B SaaS business and move on to the next project where you can regain satisfaction from doing what you really enjoy. 

Every business has to bring on new partners or talented people to grow sustainably. Otherwise, the core team you started with might face burnout or might wander into areas of business they’re unfamiliar with. Engineers who find themselves having to sell their product soon discover they can neither sell nor engineer. If you truly love what you’ve created, you might want to sell it to someone who can give it what it needs to grow. 

Learn how to gain an unfair competitive edge, read B2B SaaS success stories, and explore new exit tactics & strategies. Subscribe to get new posts in your inbox today.

How Do I Sell My Niche B2B SaaS Business?

Depending on a myriad of factors, the approximate value of your company either leaves you feeling lacking or it has you jumping at the chance to sell. Before you start shopping for your next luxury purchase, there are quite a few hurdles to clear. 

Like, for instance, how does one sell a niche SaaS business?

This might have been more of a challenge a decade ago, but with the rise in the sheer number of niche businesses making their way to the market, selling your niche B2B SaaS business is easier than it has ever been. As with every high-demand market, many platforms, brokers, and investment firms are interested in developing the SaaS business sale process.

Routes to Selling Your Niche B2B SaaS Business

A few potential roads to selling yourB2B SaaS business:

  • Use a marketplace like MicroAcquire, Flippa, or Empire Flippers to get access to potential buyers.
  • Sell to a small investment fund, like the Calm Company Fund.
  • Sell to a technology holding company like Tiny Capital or Brightmoat that buys businesses and operates them for long-term growth.
  • Sell through a broker like FE International that handles outreach to potential buyers. Because they vet each business beforehand, they are often more selective about who they will represent.

 

You have several options because of the countless buyers, sellers, businesses, and investors out there who are each looking for something very different and unique for their business. Take the time to explore your options and get a better idea of which one is right for your business.

What Is the Sales Process for Saas Companies?

There isn’t a set-and-dry process for selling a SaaS business. Between what you, as the seller, want and what the buyer desires means there are potentially hundreds of variables at play.

Largely, the common elements of a Saas sale typically include: 

  • Find buyers using one of the strategies outlined above.
  • Provide them with the necessary details of your business.
  • They make an offer.
  • If you approve it, you both sign the contract.
  • You receive your money.

 

Simple, right?

What you might not realize: this can be a drawn-out process that could take months while each side does their diligence. Do yourself a favor and take time before you start looking for buyers to prepare yourself for what lies ahead.

Remember: choosing how to sell your B2B SaaS business is just as important as deciding if you should sell it at all.

Before The Negotiation

Just like starting your business, the process of selling it requires a commitment. Before you start to shop your business around or engage in conversations with potential buyers, there are variables to consider. Think of this as the work before the work begins – the time you take to ensure you are completely ready to sell your business. 

Most business decisions are uncertain and it is important to do what’s right for you. This might mean taking the time to look beyond the facts, beyond the business variables, and into what drives your long-term goals.  The more time you take before you get into talks to sell your business, the less uncertain you’ll be about the end decision.

Get a Second Opinion

If you go to the auto mechanic and they quote you a price, you might shop around to get a second opinion about what your car needs. The same goes for selling your business. It’s not that one person is more right than the other, but each will likely give you something else to think about as you make your decision. 

Connecting With Experienced Founders and Owners

Your partner and friends will be full of advice and opinions about what you should do with your business, but you will definitely want to find some insights from someone who has experience selling a business.

Connecting with another founder, especially someone in a similar vertical or niche, may lead to finding unbiased advice. You can find and connect with founders and owners on platforms like LinkedIn or Twitter. More than likely, they will readily provide you with the valuable information and insight you may need when it comes to selling your niche B2B SaaS business. Keep in mind: asking advice from busy people is not always easy. Always get to the point quickly and find a way to offer something in return.

Consult a Business Coach

A skilled business coach makes their living advising people like you to gain new insights and offer expert information that you might not get anywhere else. A good coach will be unbiased and will help you by providing the direction to get you to the goals you’re after. They’re also on hand to help you to navigate any challenges you encounter.

As with anything else in this process, do your homework. Every business coach has something different to offer, and you would do well to work with someone who has niche experience in the SaaS industry, like Dan Martell.

Reconnecting With Your Vision

As a leader, it’s important to have a business vision and a personal vision. The personal vision should guide you as you decide whether or not to sell your business.

Developing a personal vision means taking the time to carefully consider what you want your future to be. Three years from now, what do you want your ideal day to look like? How is your relationship with your family and friends? Are you living somewhere new? Are you founding new projects, or have you taken your skills in-house with another company?

The answers to these questions will start to shape your personal vision statement. This statement will help you make the right decision on selling your business.

For more information and guidance for creating a personal vision statement, check out this article.

Meditation

Making a list of pros and cons can be both helpful and problematic, depending on how you approach it. Laying out the facts might help you make a single decision, but the list may be limiting when it comes to making big decisions – like whether to sell your business.

Have you heard of the sunk-cost bias? This happens when we keep investing in something because we have already put a lot of time and resources toward it. The idea is that spending another month working on your business seems necessary if only to make the last 24 months worthwhile. If you have spent months or years building your business, should you keep investing? Or should you step away? 

Meditation may help clear our sunk-cost bias, according to the study “Debiasing the Mind through Meditation: Mindfulness and the Sunk-Cost Bias” published in Psychological Science.

Meditation helps you let go of the past so you can decide in the present moment with a clear mind. This way, you aren’t worried so much about what you’ve invested, but what is important to you in the here and now. As with every other variable that comes with selling a business, this should be approached with time, patience, and a clear mind. 

Step Back From the Daily Grind

Creating a product, taking it to market, and watching it become a success – starting a business venture can be exciting. But with an excessive amount of work, there is always the risk of burnout. Burnout is not a good place to sell a business from. Do you want to sell because you’re unhappy? Or is that just the burnout talking?

Escape the daily grind of your business. Take a step back from the demands of the day-to-day. Get out of our office and network, take a little vacation, or just do something different. Of all things that should factor into your decision to sell, stress shouldn’t be one of them. 

Remove Yourself From the Business

If burnout is the case, you may need to completely step back and remove yourself from your business. Build a team to take on the important tasks so you can step away from daily operations. Focus on the fun stuff for a bit – the stuff you enjoy, the reasons you started down this path to begin with.  Or, you can hire a manager to run everything for you. By adding a manager, you might discover that you want to hold onto your business. Not everyone is cut out to be a leader. Sometimes, the best work happens when you have a manager around to keep you on task.

Take a Real Vacation

Emphasis on real.

There’s no better way to take a break from your business than to go on vacation.

Build out a team who can look after things, book your flight, shut off your phone, and leave it in their capable hands for a little while.

Again, a REAL vacation. No emails, no Zoom calls, no “checking in” on anything. The only thing you should think about is when to apply your sunscreen or bait another hook. When you disconnect, see what you miss. Maybe you discover you crave day-to-day involvement or the development sessions with your business partner. Or maybe you find you’re not ready to sell your B2B SaaS business yet. 

A proper vacation gives you the space to think things over. Is your life moving in the right direction? Are you aligned with your vision? Should I sleep in tomorrow? All worthwhile questions.

Whatever Happens, Don’t Sell Your B2B SaaS Business for the Wrong Reasons.

Selling your SaaS business might be the best decision you will ever make, giving you the space to focus on your next challenge or simply enjoy your life more. But you have to analyze everything while also keeping account of your personal perspective. 

Consider everything: the financial aspects, your income, the thrill of owning a business and watching it grow. At the same time, make sure you have the space to consider all of the variables. The last thing you want is to feel like you are somehow forced into selling or selling for the wrong reasons. 

In the end, this is all about your personal vision. Only you know what it is and what is best for you. Take the time, think it over; the right opportunity will always present itself. 

 

Dmitriy Dobrov

Dmitriy Dobrov

Dmitriy is the co-founder and the moat evangelist at Brightmoat. He spends most of his day evaluating the moats of profitable niche B2B SaaS. He also helps Brightmoat’s portfolio company CEOs grow their moats. If you have enjoyed this article, want to know more, or have any questions, feel free to write to dmitriy@brightmoat.com.

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