Ask HN: Who here has been successful buying a small business or tiny project?

https://news.ycombinator.com/item?id=27211167

by awb • 5 years ago

55 30 5 years ago

news.ycombinator.com

With https://tinyprojects.dev reaching the front page, I was wondering about the other side of the acquisition equation.

Who here has bought a tiny project or small business and been successful in growing or scaling the company?

Not interested in companies acquiring other companies, but solo entrepreneurs or small teams acquiring a pre-built product or service business.

codegeek6• 5 years ago

I bought a side project back in 2014 (3-4 month old then with about $2000 MRR) and grew it to a bootstrapped SAAS company of 20 employees as of today with revenue in 100K MRR range. Happy to answer any questions.

jodiak• 5 years ago

How validated was the side project when you bought it? Were there already paying customers? What kind of due diligence did you do in order to find out if the project was worth buying?

codegeek6• 5 years ago

Yes it was validated and had like 7-8 paying customers. The guy who sold the project was an excellent content marketer which really helped early on as I had no clue how to market :).

ezekg• 5 years ago

What was the MRR when you acquired it, and how much effort did it take on your end to shape it into a workable product? Was code quality good enough?

codegeek6• 5 years ago

MRR when acquired was give or take $2000 but it was only 3-4 months old so there was huge risk. Code quality was garbage and mostly built with WP plugins duck taped together. I along with my CTO rewrote the whole thing after 12 months.

awb3• 5 years ago

How long did it take to recover your investment?

And if you had to do it over again would you buy the business again or did it change dramatically enough that you'd try to create it from scratch next time?

codegeek6• 5 years ago

I recovered the investment within 12 months. I would not create from scratch if I could find similar deals. I love the idea of buying businesses :)

dred_prte_rbrts• 5 years ago

How did you find it? I'd love to buy a few of these a year but the information I can find seems to be for either brick-and-mortar or angel/vc investments.

awb3• 5 years ago

Not OC but flippa.com and bizbuysell.com are the marketplaces I’ve heard of

rootusrootus• 5 years ago

20 employees as of today with revenue in 100K MRR

That's an interesting pair of statistics. Part time employees? Outside the US? A business that is heavy on inexpensive support personnel and light on engineering?

savorypiano• 5 years ago

Why did the original creator sell? Was the growth not possible for him?

codegeek6• 5 years ago

he was more of a flipper :). He didn't want to run any operations. Just build, market and sell. After selling to me, he built and sold other projects as well. The guy is a marketing genius!!

bobthe3• 5 years ago

could you provide a link. very intrigued.

mod4• 5 years ago

Not sure if it's what you're looking for, but I have a non-tech story:

I bought a small B&M business--a bar--in 2010. I had 2 partners, which quickly became just one partner.

The existing business was using a small bar area, but the building had a much larger back room with a separate bar which we planned to move into after we got it ready. (The building was previously a VFW). The existing business was also poorly ran, dirty, and the customers frequenting it were not very--desirable? Lots of silly practices were occurring--for instance, if you did the math on the pitcher, it was more per ounce than the mug.

Over time we did move into the back, and after a few years of sticking it out, having good food, good service, and a good atmosphere, we had a nice steady business. It's doing quite well now, and I've mostly eliminated my own role there, whether via trustworthy staff, or automation (I'm a developer as well).

For numbers, I think our sales have scaled roughly 20x from the time of acquisition. Possibly a bit more, I am working off memory for the original sales. We also scaled from working it entirely ourselves, to having about 10 staff members--6 bartenders, 2 cooks, and 2 door people.

awb3• 5 years ago

Congrats and thanks for sharing! What made you want to invest in an existing business versus setting up your own bar in a new space?

mod4• 5 years ago

We thought it made sense given our limited budget, the price the guy was asking, and the ready-to-go equipment and clientele.

It was a minimal investment, but I was simultaneously all-in. We had to be profitable to start, and frankly that undesirable clientele kept our heads above water.

It was also easy to see how we could improve on an already-profitable business

tomcam3• 5 years ago

Every dude’s dream. Mad props.

mod4• 5 years ago

Thanks. I don't think it should be every dude's dream, though.

When we bought the bar, I had never had a drink in my life! I was an active pool player, though, and pool league was important in our growth.

The bar scene definitely is still not for me most days, and I'm actively finding ways to stay out of there. It sucks you in and the people you spend the most time with are the 6- nights-per-week regulars.

It can be depressing, but I'm finally at age 37 starting to manage that pretty well.

cosmodisk2• 5 years ago

What you've written here is a common sense that apparently isn't that common in many establishments. I have a feeling it did help a lot that you weren't from the industry,so you could see through a lot of bs.

mod4• 5 years ago

That's likely. We had one partner who had worked in bars for a long time, so he had those ideas about good service etc.

I brought "all things computer" and a willingness to bust my ass. I also am the most logical and money-conscious, so I shot down a lot of ideas like spending 12k/ month or something in radio ads, as an early example. I also handled all the legal stuff, LLC, licensing etc.

I think what made it stick was just knuckling down, working our own bar, and caring about the customer experience above our own.

tomcam3• 5 years ago

I bought an eBay-related business on eBay for $40,000 in 2000 and have made many, many times that figure back on it since, 4 Hour Work Week style. All real estate is paid for, no debts, have helped tons of relatives, have funded trust for handicapped kids for after I die, have funded some amazing service projects.

bananamansion• 5 years ago

do you dropship? how hard is it to find something like this?

tomcam3• 5 years ago

I don’t drop ship. Obviously it’s hard to find opportunities like the one I had, otherwise everyone would I have one! I bought this business back in 2000, when everyone was getting out of web properties so the price was very low.

My business is on the buying end. I do however consult for a huge eBay seller that had some pretty deep experience in drop shipping. They got out of that business in a few years and switched to private label products to reduce competition. The problems with dropshipping are sort of obvious: no exclusivity, nothing stopping your supplier from entering the same business, and massive supply chain problems lately.

gdixit369• 5 years ago

Small business

JSeymourATL• 5 years ago

solo entrepreneurs or small teams acquiring a pre-built product or service business...

The Built to Sell podcast often features these types of stories from the sellers perspective > https://builttosell.com/

Ask HN: Who here has been successful buying a small business or tiny project?

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