Are you thinking of selling your SaaS Business? Many business owners dream of being able to exit their company one day, whether it is for the purpose of making money, taking a break, moving on to a new venture, or retiring for good. Best practices for how to sell SaaS business assets effectively can be hard to come by, which is why we have put together 4 tips that will help make this complex process a bit easier. Each tip contains important details, and taken as a whole, they form a practical roadmap that will help you succeed.
1. Prepare for the Sale
Try to prepare for the sale as early as possible, ideally 1-2 years before you actually put your company up for sale. This will give you enough time to improve your business structure, expand your client base, and get your financial records in order to boost your profitability. These improvements will also make the purchase process faster and ensure that the company will keep functioning smoothly after the purchase is completed.
Start by creating documented procedures and processes for your business. An overview of how the company is run and an up-to-date operating manual should also be included in your information package. The easier your documents and checklists are to understand and follow, the better.
Make sure that the organization is well-presented. Any worn-out or damaged equipment and components should be replaced or repaired before the sale. You should also review your tax returns and financial records from the last 3-4 years with an accountant.
2. Optimize Your Customer Service
Besides having a great product, customer support is one element that can make or break your SaaS business. According to Hubspot, 90% of Americans use customer support as a factor in deciding whether to do business with a company or not, and nearly 50% of consumers have stopped doing business with a company because of poor experience with the customer service department.
If a large number of complex customer queries are clogging your email, ticketing system, or help desk, potential buyers will likely lose interest. So, before you put your SaaS business up for sale, be sure to review and assess your customer support. What’s your average response time? What customer service software are you using? What’s your resolution rate? Are your clients satisfied?
Generally speaking, the shorter it takes to provide answers to customer queries, the better. If there’s a great number of complex questions that require a long time to answer, your customer service functionality isn’t sufficiently optimized. Creating content like FAQs and videos can also help you reduce the volume of questions and make your human agents more efficient.
3. Find a Buyer
Selling a business can take from 6 months to 2 years, according to the nonprofit association for entrepreneurs SCORE. Finding the right buyer can be quite a challenge. Consider investing in advertising to attract more buyers. Once you have a few interested individuals, be sure to find out if they are pre-qualified for financing. Consider also consulting a legal expert to help with the specifics so that you can easily reach an agreement with the buyer.
When it comes to agreeing on the price, while it is okay to be open to negotiation, you should still ask for a price that reflects your business’s growth.
4. Should You Work With a Broker?
Selling your SaaS business yourself rather than paying a broker’s commission will definitely save you money. For businesses under one million dollars, a broker will typically cost 10%. However, while this sum might seem high, the broker might also manage to negotiate a much better contract.
Moreover, a broker can help you save time and allow you to keep focusing on your business so that you can obtain the best price. Some of the websites listed above also offer guidance from experts. Discuss your expectations with the broker and see how they can help keep things moving in the right direction.
Whether your SaaS business is big or small, selling it can be a complex process. However, with the right steps, you can sell your business successfully. If you decide to sell your SaaS company, start considering the 4 tips listed above so that you can increase the value of your business.