Indie Hackers NEVER make it into TechCrunch, right? Well, there's one who did. And I talked to him this week. Louis Pereira got his AI-powered tool AudioPen featured on that coveted tech news page. He shares how he found product-market fit, why he values honesty and integrity as an indie hacker even above revenue, and why building in public was essential to his success.

In our chat, Louis talks a lot about why he wants to stay an indie hacker for life. He has found his favorite way of being.

I'm supremely happy for him. At the same time, I know that some of us out there are more "goal people" than "journey people."

Either way, I have something valuable for you today.

Recently, I had a great conversation with Kevin McArdle, an accomplished investor who essentially operates in the private equity space. He’s also the person who acquired my first successful SaaS business, FeedbackPanda. Right now, he’s building a holding company that acquires and operates already successful SaaS companies. During our chat, we delved into what he refers to as ‘Bootstrapped SaaS Exit Planning.’

The idea is that entrepreneurs should always have an exit strategy for their business, regardless of whether they currently have any intentions of selling it.

It’s like preparing your living will and testament long before you need it: we rarely get around to doing it, but it’s critical to have it in place when you need it. In that regard, I am a “preparer” — I like to have these things in order.

That’s why this concept resonated with me so much: I had already been doing it with my previous SaaS business. Well, almost unintentionally. I didn’t have a framework for it at that point.

That’s what I will share with you today: my framework for mentally and organizationally preparing yourself and your business for an exit — long before you sell or even want to sell.

The Mindset Barrier

And that’s where most founders already stop. When you’re enjoying the ride of building a business, and you see it grow into meaningful profitability, you think about many things: how to market your product, what features to build, where to expand to, and how you can slowly but surely build a team.

Most of the time, getting rid of the whole business is not in those considerations. And that can actually cause your business to be less valuable than it could be.

While preparing to launch my own SaaS business back in the day, I came across a profoundly influential book, ‘Built to Sell’ by John Warrillow. The book compelled me to confront the reality that a business incapable of being sold is more of a liability than an asset. It showed me how good business practices don’t just increase the value of your business but also make it more sellable. People want to buy a business that operates smoothly and efficiently. If a business is sellable, it signifies that it is well-run. And vice-versa.

I talked to John at a conference in Toronto a while ago, and one thing he said stood out to me. He mentioned that for most founders, selling their business was always “at least five years in the future.” Whether they just started or had been running it for a while, it’s future talk. And as funny as that is, it clearly deprioritizes any thought about an exit. For a growth mindset, thinking about documentation, P&L spreadsheets, and handover dynamics is just not important.

Or is it?

I believe it’s one of the most critical things to keep in mind! It’s not just about selling your business but making it as sellable as possible.

That makes thinking about the sale of your business a consideration of how well it is run. And that is something you definitely need to keep an eye on.

The Importance of Regular Business Check-ins and Exit Planning

So, how do you do that?

You conduct “sellability check-ins” or Exit Planning sessions, as Kevin McArdle would likely call them. They happen in addition to your regular business planning efforts.

This part can’t be stressed enough. They’re not replacements or even part of the usual business planning sessions. You need a different mindset between these and an exit planning day.

Perhaps on a semi-annual basis or even quarterly, it’s really important to reserve some time to review not only your business’s current trajectory but also prepare for a potential exit, regardless of your current disposition towards selling it. That’s the hard part of why most founders find themselves unprepared when they get into actual conversations with acquirers: most of the time, an acquisition develops much faster and for other reasons than you might think. Illness, economic changes, mental health issues: the list of surprising causes of having to sell your business is long.

Planning for an unforeseen exit is insurance, not a nuisance.

Forcing yourself to mentally simulate an exit allows you to fight your own day-to-day assumptions about your business. When people imagine continuing to run their businesses, they often consider the exit a distant prospect, something to deal with later.

But if you cultivate the habit of conducting these periodic check-ins, gauging where your business stands regarding sellability, it offers valuable insights into how you should run your business today.

Let me give you an example from my own experience right now. With my SaaS business PermanentLink, I schedule exit planning sessions every three months. I devote a few hours to introspect about the current state of the business. I look into my numbers, make sure the documents are easily found and complete, and wonder how I would proceed if I were to sell the SaaS tomorrow. I check if I am adequately prepared to do so and who would be the ideal buyers at this time. I keep a running list of Private Equity funds I’d reach out to and, most importantly, what the business is worth.

Or rather, what I would sell it for right now. PermanentLink makes a few thousand dollars a month, putting into the low 5-figure yearly revenue numbers. It’s probably worth somewhere between $100.000 and $200.000.

Would I sell it for $100k? Probably not. But if someone offered me a quarter of a million today, I’d sign the Letter of Intent within a week or so. Half a million? I’d sign within 5 minutes.

I also look into what kind of provisions would need to be part of such a deal. I use the tool for my own needs; after all, I created PermanentLink because I needed reliable links in my books. Those books will still exist after I sell the business, so the links need to stay protected. Ideally, the acquirer of PermanentLink would have to guarantee that for me. But as I built easy offboarding and alternative link redirection into the product by choice, I’m not too concerned.

What I would be concerned about is an earnout situation. I’d rather hand over the business entirely than have to work in it and on it for years after being acquired. For a buyer to feel comfortable with that, they would need to be able to take over the business completely within days. And for that, I need to provide air-tight documentation for everything in the business: operations, development, financials, and customer service.

And this is why early exit planning is so important. If I didn’t know what my dream exit would look like, how could I focus on making it possible? If I want a clean cut, my business manual must be pristine. And I only learned that through my exit planning introspection.

Reasons for Selling a Business and the Importance of Being Prepared

I hope that sharing my personal approach with PermanentLink inspires a regular habit of reflection in you. Being prepared for the eventuality of selling is always beneficial, no matter the urgency.

The critical takeaway is that there might be a point in your journey when selling the business emerges as an appealing option. Being prepared for that scenario is a good idea. The process I have outlined here isn’t rigid; it’s flexible and continuously evolving. You’ll find that you change the questions you ask yourself as your business evolves with you.

The Importance of Recording Your Reflections

One crucial piece of advice I would like to share here is to jot down notes during these reflection sessions — both about the questions and answers you find to them. It’s incredibly useful to compare your current thoughts and feelings about your business with those from previous sessions. You’ll observe how your answers have evolved over time and how your perspective may have shifted. Maybe a life event has prompted you to reconsider your previous conviction never to sell your business. (Many founders who become parents notice a significant reframing of their financial prospects in those moments.) You might even realize that while you can continue running the business for a few more years, you’re eventually starting to glance at moving on and exploring new ventures.

That is perfectly fine, and it’s why you run these sessions regularly.

Three Pillars of Exit Planning: Founder-Business Fit, Business Continuity, and Preparedness to Sell

If you need a checklist to get started with, here’s the framework I promised. Based on my experiences, I consider three primary elements during these exit planning sessions: founder-business fit, business continuity, and preparedness to sell. Let’s delve into each of these.

Firstly, the concept of founder-business fit essentially involves reassessing whether the original vision that inspired the creation of your business continues to be its guiding force. Is the current mission of your business aligned with the original vision you had conceived? How does the business’s trajectory look? Is it heading in the direction you envisioned? Are you still serving the clientele that you had initially targeted? Do you still like the people you have as customers? Or has the business shifted towards serving a different market segment?

It’s crucial to assess whether the business still aligns with your personal aspirations, goals, and vision of what a successful business should look like for you.

This perspective shifts from a purely individualistic one if you’re not a solopreneur — anymore. If you’re part of a team or building one, it becomes essential to ensure that your co-founders or partners share your vision, too. Often, one partner might be content with maintaining the status quo, while the other wants to go for a different strategy. It’s vital to ensure everyone is on the same page because misalignment will lead to motivational issues. If you’re not fighting for the same cause, it can tear a business apart. So ask yourself (and those you partner with) for your “why.”

The second critical element is business continuity. Here, the focus is on the future course of the business. What are its goals? If you started your venture as a bootstrapped business, do you want to continue on that path, or could you see taking on investors in the future? This is a massive decision because many entrepreneurs who bootstrap are almost allergic to the idea of taking on funding. And I get it: we cherish the autonomy that bootstrapping affords us. But, as the business grows, you might realize that bootstrapping is becoming a liability. The business might be your most valuable asset, especially if you lack substantial savings or other investments. In such a scenario, selling a stake in your business to an investor might not be such a bad idea. That’s where I was in 2019, just before we sold FeedbackPanda. I had a company worth millions, but I was effectively poor. De-risking my financial situation made selling the business a very tempting idea. It’s good to reflect on these things.

Finally, the most important aspect of exit planning is assessing your actual preparedness to sell. Life is unpredictable, and the most well-crafted plans can go awry due to unforeseen circumstances. You never know. You might run into situations where you really need to sell your business. If that happens, you must be prepared to transfer ownership effectively, smoothly, and without surprises.

This preparation has several factors. You must have up-to-date documentation of your business at your disposal. This documentation includes records of your business’s financial history, detailed information about its operations, the processes involved, your customers, and more. If you have diligently maintained this documentation, it will be much easier for you to present a clear and concise account of your business to any potential buyer. And as John Warrillow would say, a well-documented business is usually perceived as well-managed and reliable, attracting higher valuations from buyers.

In addition to good documentation —the “present,” so to say—you need to have good insights into your past performance and clear growth projections for your future. These insights will not only be helpful to potential buyers but will also enable you to plan your business strategy more effectively. So it’s good to have them anyway.

An essential part of being prepared to sell is minimizing your role in the business to the extent that it can function without you. This might seem counterintuitive, as most founders like to believe that they are indispensable to their businesses. But, if a company is overly reliant on its founder, it will deter potential buyers who are rightfully concerned about the business’s ability to function at all without the founder’s presence.

By documenting, delegating, and automating tasks, you can ensure that your business can run smoothly without you in the day-to-day operations, thereby making it more attractive to potential buyers. It also makes it massively easier to hire people when their job can be onboarded with existing standard operating procedures and guidelines.

Think of your business as a franchise. If you had to hand over the operations manual to a new franchise owner, would they be able to operate the business as efficiently as you can? By considering this question, you can find areas in your business that need improvement or automation.

The Ultimate Goal: An Optimized Business

The primary objective of exit planning isn’t selling your business. It is about optimizing your business’s internal structure and processes to the point where you, as the owner, are not needed. That’s how your business becomes as valuable as possible to potential buyers — and yourself, really.

Regular exit planning can help you figure out your personal feelings about your business and your role within it. You might actually discover that you are not as fulfilled by your business as you once were, or you start to realize that you are ready to move on to a new challenge. Those feelings can turn into resentment and burnout if you don’t catch and deal with them early. Exit planning does that for you.

No matter if you want to sell your business today, in five years, or never ever, consider planning for the eventuality. The side effects are incredibly useful for you, your business, and the wealth-generating potential it can have.

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I'm doing Twitter teardowns — so good that Rob Walling gave me a shoutout for them. For $100 (parity pricing enabled), I record a 15min video going through your Twitter profile, pointing out what keeps you from gaining more of the right followers more easily. Strategic mistakes, low-hanging fruits to immediately change, and confusing copy: I'll find it all and tell you about it. Learn more about the teardowns and watch a real free example video here.​

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