Thinking of Buying a Business? Start with SaaS

When you’re thinking about buying a business, knowing what you’re looking for is everything. Making the wrong choice can be a disaster for your finances and your reputation. If you’re just getting started, it’s a good idea to explore different business models and industries to see what clicks with you.

One area that’s particularly promising, especially for first-time buyers, is the SaaS world. Let's break down why SaaS businesses are such great acquisitions and what you should be looking for before you even think about making an offer.

What Exactly is a SaaS Business?

SaaS simply stands for "software as a service." Think back to the old days when you had to install software from a disc onto your computer or a private server. The SaaS model flipped that on its head. Now, you subscribe to software and access it through the cloud. Companies like Salesforce, Adobe, and Shopify are perfect examples of this model in action.

This approach saves customers the cost of hardware, storage, and expensive licensing fees. You get automatic upgrades, continuous maintenance, and customer support all wrapped into one package. Plus, you can use the software from any device with an internet connection. The recurring revenue from subscriptions is what pays for the hosting, customer service, sales team, and the ongoing development that keeps the product competitive. While monthly and yearly subscriptions are the norm, some even offer pay-as-you-go options, making it a very flexible model. This flexibility is a key reason why it's considered one of the you can acquire.

The Profit Potential is Huge

SaaS businesses are known for having very low overhead. If you're a developer who can handle your own sales and marketing, you could literally run the whole operation from your bedroom. A lean, efficiently run SaaS company can see profit margins around 70 percent. That number assumes you’re either doing most of the heavy lifting yourself or have found a cost-effective way to outsource, like using remote teams. If you have to hire expensive engineers and marketers, those margins will naturally come down.

It’s important to remember that SaaS margins are tied to scale. When you’re looking at an acquisition target, you need to dig into the numbers. Ask about customer counts, growth trends, Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), and the churn rate. These metrics give you a clear picture of the business's health and its future potential. Sometimes, you might even take a chance on a business if you believe its technology has massive potential in the right hands—yours. For that to work, you either need the skills to develop and market it yourself or a partner who does (and you’ll likely have to offer them some equity).

One of the Easiest Business Models to Flip

Let’s say you’re a software engineer or you’ve teamed up with one. Building a product from scratch and bringing it to market is a long and grueling process. You’re guaranteed to make mistakes, spend months on development, and even longer on marketing. You might pitch your idea a hundred times and still not get enough traction to build a real business. This is why buying an existing SaaS company is often a much cleaner path to profit, especially if you're .

You don’t have to aim for a huge company. All you need is to find something with a good foundation that just needs a little push. That missing piece—whether it’s better marketing, a stronger brand, a more effective sales process, or improved customer service—should align with your expertise. You become the "golden ticket" that unlocks the business's growth. The SaaS market is incredibly competitive, but having the right skillset can help you claim your share.

Unlike other ventures, you don't have to buy stock, manage inventory, or negotiate with a long list of suppliers. You don’t need a physical storefront. What you do need is a great product, reliable servers, a compelling brand story, and a motivated team (if you’re not a one-person show). Once you have those pieces, you can focus on growing the business or prepare to flip it and move on to the next project. The resale market for lean, profitable SaaS companies is enormous, making them ideal for serial entrepreneurs.

Your Pre-Offer Checklist

If this sounds like the right move for you, here are five things to investigate before making an offer on a SaaS company.

1. Fit

Start by listing your strengths. Then, find a business that would directly benefit from them. Once you’ve figured out what the business is missing, make sure that filling that gap will actually lead to growth. There’s no sense in bringing in a world-class sales team if the product itself can't compete on price or features.

2. Growth

Flipping a SaaS business is often a numbers game. Get your hands on the ARR, MRR, churn rates, and other key financial data to see where the business is headed. If growth has stalled, your job is to figure out why and determine if you have what it takes to get it moving again. This analysis is crucial whether you're planning a quick flip or want to grow it from a into a full-time venture.

3. Market

How big is the potential market? Is there an opportunity to expand into new areas? What are your competitors up to? Is there an untold story about the product that could ignite sales? Answering these questions will help you understand the true potential of the acquisition.

4. Technology

Get to know the product inside and out—its strengths and its weaknesses. If something is broken, you need to know how to fix it. If you’re not a technical person, hire a software engineer to do an audit for you. You need to understand what it will take to maintain and develop the technology and, just as importantly, how much it will cost. This is a critical step for any or acquisition.

5. Team

SaaS companies are often filled with talented people. You need to decide who you want to keep on board and then convince them to stay. An existing team knows the business better than anyone, which is a huge advantage. However, sometimes the team is the root of the problem, and you might be better off starting with a clean slate.

The acquisition process can be unpredictable, but the more prepared you are, the smoother it will be. Whether you’re a seasoned entrepreneur or just starting out, SaaS offers some of the lowest barriers to entry and can be a fantastic way to build or flip a business with the right skills. It remains one of the and offers a clear path to turn a .