How to Prepare & Sell Your Bootstrapped Online Business
When dancing with potential buyers, bootstrappers have one distinct advantage over those treading the hot coals of the venture-backed game — because you’re a solo, full-stacked maker, you built it, so you know every inch like the back of your hand.
Laugh off the broker, and buyers can look forward to dealing with the person who chose the materials and laid down every brick. Getting it from the horse’s mouth builds trust and generally moves things along faster — you don’t have to get permission from the board, for starters.
On IndieMaker, sales have closed in just 48 hours with a fast track due dil, though this can only happen if you’re able to tell a consistent story that whets buyers’ appetite.
A Year in the Making: Getting Your Micro-Business Sale Ready
Steering your micro business toward a sale changes your priorities.
The bad news — getting sale-ready might turn into a twelve-month samba all of its own that might mean you can’t focus on single-minded growth as you might otherwise have that year.
The good news — if you pull the right shapes and keep in-time with the rhythm, you’ll quickstep your way into bed with someone who’s more serious about committing.
To decide what housekeeping needs doing, stick your buyer hat on and ask yourself the questions that reflect the buyer’s concerns.
- What are your biggest challenges?
- If you started over, what would you do differently?
- What debt do you have, and what value does it represent?
- How did you calculate your valuation?
- What’s your procedures documentation like?
- How much does the business depend on key customers?
- What will happen with employees or outsourced talent after the sale?
- What will be required to maintain and accelerate growth?
Don’t let the inquisition rattle you — these are buying signals from buyers that want a little hand stroking. Just make damn sure you have full-eye-contact answers ready and use your year runup to do what you need to do so that you can tickle buyers in the right places.
Level up on the following and your answers should fall right out of your prep time. Whether it’s the twelve-month samba or the quickstep will partly depend on how together you had your shit was to begin with.
Have Rock Solid Financials
After business type, numbers are usually the first thing buyers look at. Keep paperwork up to date, document everything and make sure you keep separate, clean books, for the product you’re selling that doesn’t have other stuff mixed in. Also, keep a clean bill of tax health to ensure your buyer doesn’t inherit any compliance issues.
The golden rule here is to have great documentation since this plays a huge role in how your project is perceived.
Have Rock Solid Code Integrity
If you read our content, you’ll know we advocate building it ‘like you’re going to live in it’. That way, you’ll have nothing to hide when buyers lift the hood and give the tyres a firm kick.
Any damp or rot in your code could bring a promising negotiation to a grinding halt, so be ruthless in reviewing your code integrity with a fine-tooth comb. If you built it right, the pre-sale proofread should be little more than a formality.
Source: Developer Memes
Have a Rock Solid Valuation
Valuation is more than the net sum of your micro business’ assets. It’s also more than just a finger-in-the-air exercise. Learn the typical valuation ranges for your industry or category, plus the methods for valuation. In some categories it’s multiples of profit, in others it’s revenue-based or related to cash flow.
Make your valuation arbitrary, bloated or unjustified and your micro business will sit on the shelf collecting dust. Particularly given that buyers will actively evaluate whether or not it might be more cost-effective to build from scratch what they might otherwise have bought from you.
If you’re selling via IndieMaker and want to get your valuation in the right ballpark, we’ll play the role of pseudo-broker to help you get it right.
Day Zero: Going to Market
If you’ve waxed, buffed right to build saleability, you should have great smelling business buyers will actually want to buy. Now you’ve just got to get in front of the right buyer.
Many websites vouch for broker expertise in finding buyers and hosting the sale, though there’s no reason why you can’t play that hand yourself, without the circus of broker-related expenses.
To bag the perks of broker expertise without the fees and without being shielded from the buyer, online marketplaces are a viable alternative. Some offer more perks than others.
For example, some online marketplaces may only offer the listing space, though selling isn’t as simple as knocking up a listing and waiting for that mailbox icon to light up with buyer interest.
We actually mediate sales and actively connect sellers with buyers to speed things up, while helping you get the little things right that will make a huge difference. We’ll even stay by your side right down to helping with the IP handover if you need us to.
All we ask is that you list projects that don’t waste buyers’ time. If our community is able to maintain quality, more and more quality buyers will gather around us. Do that, and you should find some big wins here.