Before investing your hard-earned money, consider the potential returns. A 10 percent return in the stock market is usually considered fantastic, but on Acquire, it’s not unheard of to acquire a SaaS, work on it, and earn up to a 1,000 percent return when you sell it.
And while other investment strategies may fluctuate with the economy, the market for small-scale online tools (especially profitable ones) tends to remain steady.
Successful SaaS businesses have one of the highest multiples (up to seven times profit) of any industry in mergers and acquisitions (M&A). Why? Because a highly automated SaaS can bring in a sizable annual salary for a founder with only a couple of hours of work a week. However, building a business to that level of autonomy takes perseverance and time.
Any SaaS business worth its revenue multiple will include the following:
- Responsive customer service
- A functional and bug-free product
- Well-researched pricing
On Acquire.com, you can find many SaaS businesses in the early stages of scaling. These products may serve a handful of customers but need better pricing, marketing, customer service, or product tweaks. A flawed startup can be very profitable for the right buyer. Once fixed, it may go for a much higher price than you paid for it.
Every year, we see buyers developing fledgling startups they find on Acquire.com and sharing their journey. Here’s how you can start building small companies on Acquire.com, turn them into something bigger, and exit for a profit.
#1 Sign Up as a Buyer and Find a SaaS
You can start browsing businesses for sale on Acquire.com right away by creating a free account. Just go to our website, sign up as a buyer, and then view the marketplace.
However, you won’t be able to message sellers or view their private details until you upgrade to Premium (for buying startups under $250,000 TTM revenue) or Platinum (access our biggest, best startups, including those we manage).
Once you’ve upgraded, create your buyer profile. You can see how this works in the video below.
How to Choose a SaaS on Acquire.com
As a first-time buyer on Acquire, consider:
- How much money you’re willing to spend.
- Your strengths and weaknesses as a founder.
You might also want to read our article, How to Choose Your First Startup Acquisition.
Deciding Your Budget
When flipping a SaaS, we advise you to start small to minimize your financial risk. Besides the acquisition, you’ll need to budget for domain fees, server fees, and the salaries of any employees or contractors that come with it.
Smaller startups may also present more opportunities to apply your expertise. If a startup already makes millions in revenue, it’s probably got most things right.
Another way to look at it: A $25,000 startup grown to $1 million is a 4,000 percent ROI. A $1 million startup flipped for $2 million is “only” a one hundred percent return.
Deciding What Type of SaaS You’ll Buy
Even if you find a promising SaaS business at a great price, only buy one that you feel qualified to improve. If you’re a marketer, look for one that needs better marketing; if you’re a coder, one that needs more features; if you’re a project manager, look for one that needs more streamlined operations.
While you can always outsource an improvement, you risk delays and a strained budget when hiring third parties to work on areas you know little about.
We make it easy for you to tell at a glance what a startup needs. When founders list their startups, we ask them to include a growth opportunities section where they list everything they think a buyer will need to do to grow their company.
#2 Work on Your New SaaS
So you’ve found a SaaS business at a reasonable price and are ready to get to work. Below are a handful of things you can do to start capturing more leads, building better ARR, and shortening the runway to your future sale:
- Create a working marketing/go-to-market strategy.
- Implement better customer service.
- Improve your pricing.
- Improve the product.
For a little more clarity on how these changes might affect the value of a SaaS, learn what valuation methodologies financial buyers commonly use. For a more in-depth approach, we’ve also written a large guide to raising revenue post-acquisition.
Create a Go-to-Market (GTM) Strategy
Today, the new way founders are streamlining their businesses is by automating and synthesizing their sales, marketing, and client tracking processes. If you are unfamiliar with modern GTM strategy, we recommend you read a couple of articles on it, including this one from the Harvard Business School.
If you don’t want to read that article, we’ll try to put it into layman’s terms. GTM strategy is:
- Breaking down all of the ways clients can possibly find, purchase, and remain clients of your product.
- For example, a client might normally:
- Find your product through a particular viral Reddit post.
- Then, read a couple of your blogs on what you do.
- Then check out the founder’s LinkedIn.
- Then receive a DM from the founder once they’ve checked out his profile.
- Then buy the cheapest plan.
- then hit their monthly use limits and buy a more expensive plan.
- Then grow their business to the point where they need to use a competitor.
- Then leave the platform.
2. Once you understand exactly how your customer interacts with your product, fixing/adding on to each part of the greater sales/marketing/customer success machine.
For example, you might:
- Create an ad campaign on LinkedIn so that more people go to your CEO’s profile.
- Start building more content on the CEO’s profile to prove expertise in their field.
- Create some basic sales automation in the DMs of your CEO’s profile so your CEO only needs to interact with qualified leads.
- Lower the monthly use limits on the cheapest plan so that you maximize the time customers spend on the more expensive plan.
- Create a referral program so that current customers can help bring more customers onto the platform.
- Copy features from your competitors so that customers don’t feel the need to leave your plan.
Once you have a GTM strategy in place, you can go and address some of the more basic parts of your product, like marketing, pricing, CS, and product, with a clearer focus.
Create a Content Pipeline
If you enjoy recording videos, writing, or designing, you have the perfect skill set for search engine optimization (SEO). By publishing helpful and interesting content online, you attract the eyes of potential customers at the top of your sales funnel and refer them back to your product.
Content marketing might include:
- Starting a YouTube channel with helpful videos and tutorials to solve customer problems.
- Creating a blog answering commonly asked questions in your field.
- Creating social media accounts for your business or building in public from a personal account.
- Posting in a forum like Reddit about your product.
More importantly (especially for later sales price), better SEO means lower customer acquisition cost (CAC). Media assets referring free leads are hard to make and take time to scale, but create a flywheel effect down the line. A four-year-old video with thousands of views could bring you exponentially more free customers than a Google ad.
Optimize Content For LLMs
Today, you’d be remiss to build a startup without a little bit of LLM optimization as well. LLMO is similar to SEO, but LLMs tend to specifically focus on:
- Posts in online forums like Reddit or Quora
- Listings in online directories of websites
- Mentions on trusted news sites
You’ll find this article from SEMrush helpful. Here’s a graphic from the article we think is nice to keep in mind as well.
Customer Service
At many early-stage SaaS startups, customer service is a barebones operation easily run by a solo founder (the ol’ CEO in their LinkedIn DMs). When you only have ten customers, most issues are solved with a quick email. Early-stage CS is also a great way to learn directly from customers how to improve your product and which problems they frequently have.
However, as your customer numbers grow, you’ll need to expand your CS teams to meet requests promptly. If customers feel ignored, they’ll leave. All good SaaS businesses also need a powerful customer arm to alert founders about bugs or other errors as they occur at scale.
There are two major channels you can improve for CS, and both are equally important.
In-person CS
In-person interaction is still important in customer service, but no solo founder can do CS indefinitely (and potential buyers likely won’t want to). At some point, you will probably want to outsource customer service to either an employee or a contractor.
Fortunately, it’s easy to find an affordable customer service contracting service. Many of them are located in regions like the Philippines, Latin America, or parts of Eastern Europe. You can also contract with agents on places like Upwork and Fiverr and hire them full-time later. While hiring your own support staff is more work up front, it will likely be cheaper and more efficient in the long run.
Automated CS
For repetitive and general CS queries, you don’t even need to hire new customer service staff. For many small businesses, the first step to grow CS might be to automate more of the process.
If you answer your customers’ frequently asked questions on your website, they won’t need to bother customer service teams. Today, more chatbot AIs are available to buy and train to answer questions about your product from the FAQs.
Today, people on Reddit are suggesting sites like:
- Intercom
- Kommunicate (WhatsApp/Messenger support)
- Tidio
Modify Pricing
Sometimes, the biggest thing holding customers back from buying is your pricing. On our partner website, Bootstrappers.com, we’ve interviewed many founders who made record profits and acquired new customers with just a new pricing plan.
- Read how Fed made $50,000 in two months by adding a lifetime subscription to his directory.
- Read how Boulama got students onboard his startup by adding day passes.
Some different types of pricing plans you could include are:
- Freemium pricing: Offer a watered-down version of your service for free and make customers pay to use more features (only suggested if you don’t have many customers yet)
- Subscription: Have customers pay per month or year.
- Day pass/one-off: Offer small runs of your service for customers who only want to use it one time.
- Pay for usage: If your service provides quantifiable actions, you could charge for the number of times customers use it. For example, a translation service that has different plans for 10,000, 50,000, and 100,000 words translated. These are great options for customers requiring exponentially higher usage rates, like enterprises.
- Lifetime access: This type of pricing maximizes monetization in the early stages of your business, though it’s not a great solution for recurring revenue. Lifetime customers are usually willing to pay substantially more and forgiving if you’re slow on updates. However, you will be hard-pressed to turn these customers into MRR later when trying to flip the business.
Remember, pricing can always change. Never be afraid to offer strategic discounts to improve sales, and don’t be afraid to change how you bill. As a rule, once customers start paying, it’s easier for them to keep paying (though you can always expect some churn with price increases).
Improve Your Product
Finally, if you like tinkering with products, you can add extra value by improving your service. And if you’re unsure what to fix, you can usually learn by scrolling through customer product reviews and complaint emails.
Easy product changes might include:
- Creating a mobile or desktop application
- Decreasing website latency
- Eliminating unnecessary features
- Fixing recurring bugs
- Adding new integrations
- AI agents
- Whitelabeled products
- Better CRM services (Switch from Hubspot to one more specified to your type of business).
Even if coding isn’t your thing, you can always contract with developers for these improvements. However, a word to the wise: Most technical founders we’ve talked to tell us someone on the founding team should understand how your product works. Otherwise, it is hard to select the right contractors for help.
Not all product improvements are strictly in the code, either. For example, every product needs an eye-catching website with clear descriptions and calls to action. Just a few design and copy tweaks can drastically decrease your bounce rates and improve signups.
#3 Create a Seller Account and Exit Your Business
When you start seeing more customers arriving and your revenue growing month over month, you’ll likely be able to flip your startup on Acquire.com for a higher price. That means it’s time to make a seller account and close your deal.
Before you begin, we have a free valuation tool to help you set a realistic asking price. You can also get more information about preparing your startup for acquisition on our blog.
To start listing your startup, you’ll need to:
- Create and register an account.
- Fill out service descriptions.
- Set your price.
- Connect your web, customer, and financial metrics.
- Upload your pitch deck.
By now, you’ve been through the buying process and should be well-acquainted with what buyers are looking for. We advise you to sell at our recommended revenue multiples to ensure a speedy exit.
Once you find a buyer who you think is the right fit and make your exit, let us know on X.com or LinkedIn. You’ve joined a small but growing club of founders who’ve validated their hard work. We hope you invest your funds into a new startup or do something to make your life more fulfilling.
For the love of startups!
The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before entering into any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.