New Micro Startups For Sale 🚀 - Building SaaS out of Freelance Job
This week I sat down with one of our Premium members who have succeeded in building micro-startups a lot.
We talked about one of his projects which he started as a freelance job and then turned into profitable SaaS.
Besides this, one of the latest newsletter issues inspired my friend to finish and launch his abandoned project.
And what do you think? His project became the #2 product of the day on Product Hunt.
Microns inspire 🙌
P.S. Thank you all so much for your support. I appreciate it.
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🎯 Interview of the week
This week, I chatted with one of our premium members, who started a micro-SaaS business out of a freelance job.
Colin is the founder of StatusGator, an awesome guy, shared insights about building, marketing, and finally selling his micro-SaaS startup.
You'll learn how to convince a freelance customer to use his project as your SaaS, marketing pitfalls, and selling details you'd never find.
The number of insights can't count. Let's get started.
I'm a New York-based software engineer and entrepreneur. I've been building web applications for close to 25 years.
Mostly I have done consulting through several companies I have founded. In addition, I've had a real "day job" a few times but didn't enjoy it — I prefer working for myself and ultimately building my products.
Today, I still make most of my income consulting for other people but have had some success with ventures of my own as well.
One product I built and sold (for a nominal amount) was called Clear Check. It is an administrative tool for youth sports teams.
How did you come up with the idea?
The idea came from a consulting client. The customer had a child who was a local youth football team member.
Due to new state laws, the team was suddenly required to collect a lot of paperwork from each volunteer adult who worked with kids.
The law was meant to protect kids from abuse, but it put a lot of burden on small non-profit organizations. They were required to collect photo IDs and several background checks from each adult and keep detailed records.
My client was looking for a way to manage all this paperwork.
How did you convince your client to use the product as a SaaS?
My client came to me with the idea to build a solution for this paperwork management problem that could scale beyond their small organization.
He felt that many other teams would need this product and, since their budget was tiny, asked if I would be willing to build it at a reduced rate in exchange for the ability to sell it to other teams.
Usually, I would not entertain these arrangements. Still, this project had one advantage: I thought it could be built pretty quickly and at low risk to myself.
How long did it take you to build the app?
My client had a minimal budget by my standards at the time. I allocated just 25 hours of work to the project.
I agreed to build it for that cost, and I was pretty confident I could get something basic out the door in that amount of time. I use Rails which made quick work of it.
Ultimately, I did build something basic within that time frame, and he did pay me for the job. But making the product more "market-ready" probably took another 50 hours, which I did on my own time.
What marketing activities did you make to grow the project?
After launching the service, we attempted to sell it to other local teams simply by the word of mouth.
My client mentioned to other local groups how they were managing the paperwork. We ended up getting a few customers this way. Each was paying between $500 and $700 per year for the service.
Over time, I probably spent another 50 hours adding more features and making the service more useful to those other customers.
Annual revenue grew to about $2,500 per year. But I had no idea how to market the product, having no connection to kids sports teams myself, or any skill with marketing in that vertical.
How did you end up selling it?
Several years passed, the same original customers were still using the product.
There was no growth, and I had no time to dedicate to marketing. I had ideas about making it more useful to other markets, such as other groups besides sports teams but no time to do so.
By this point, I had taken on a business partner. The two of us worked together on other products — some that had more traction and were more successful.
We constantly debated whether we should just shut it down or sell it.
Finally, we decided to try and sell it, not for the money but to make sure the existing customers could still use the product.
Can you share any selling details?
We posted the project on Flippa and on SideProjectors. I was very skeptical of Flippa. It seems like it's primarily boilerplate projects there — a lot of garbage.
We listed it 2x the annual revenue. We felt this was the low end of the range most SaaS products sell for. Someone saw our listing on SideProjectors and reached out to us.
He was an independent developer like us but was looking to cut his teeth on a revenue-generating product. We had several calls about the product wherein he asked about the technology, and we talked about ideas for growth.
Eventually, he decided to meet our asking price, around $5,000. We agreed to accept half of that up front and the other half when all the existing customers rolled over and renewed.
This was only a few months away, but it meant that he would only be paying about $2,500 for the product. The rest would come from the money the existing customers paid to us.
We accepted the deal with a straightforward one-page contract and facilitated the transfer of assets and code.
Advice to our readers from you
Having built several products, my best advice is to talk to your customers.
Beg them for feedback at every interaction — you have to go overboard asking for their advice to get enough of it.
As for selling a project, don't be afraid to try and sell something even if it doesn't have much revenue.
If it has *no* income, it might be challenging. Still, even a small amount of recurring revenue, incredibly stable customers, can benefit you.
It's effortless to get spread too thin across many projects, so I suggest selling off products that are languishing.
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