The Reality: Not Every Side Project Is Sellable

You built something. It has users. Maybe revenue. You think it’s worth selling.

The hard truth is most side projects aren’t liquid. They can’t be sold at reasonable multiples because they fail basic acquisition criteria that buyers use to filter deals.

I’ve watched founders spend months trying to sell projects that were never sellable in the first place. The issue isn’t always the product or the market. It’s structural problems that make the business impossible to transfer or operate profitably.

What Buyers Actually Filter For

When someone says they’re acquiring SaaS businesses, they’re not browsing marketplaces hoping to find hidden gems. They’re running systematic filters.

Here’s what passes the initial screen for a 2-4x ARR valuation:

Revenue threshold: Minimum $500 MRR or $6K ARR. Below this, transaction costs don’t justify the deal for most buyers.

Customer concentration: No single customer can represent more than 30% of revenue. If your biggest customer churns, the business shouldn’t collapse.

Churn rate: Monthly churn under 5%. Preferably under 3% for premium valuations. High churn means you’re running on a treadmill and the buyer inherits a leaking bucket.

Cash flow: Either profitable now or clear path to profitability within 6 months. Buyers aren’t VCs. They want cash-flowing assets, not growth stories that need capital injections.

Tech stack: Modern, maintainable code with low technical debt. If the codebase requires a specialized engineer to maintain or relies on deprecated dependencies, it’s a red flag.

Why Customer Concentration Kills Deals

This is the most common dealbreaker I see.

You have $2K MRR. Looks promising. Then buyer asks for customer breakdown. Turns out one customer pays $1.5K and everyone else is on the $10/month tier.

That business is worth whatever that one customer is willing to pay. Which is probably $0 if they find out you’re selling.

Buyers calculate HHI (Herfindahl-Hirschman Index). If it’s above 1,500, you have concentration risk. At 2,500+, the business is essentially a single-customer contract, not a SaaS product.

How to fix this before you try to sell:

• Cap individual customers at 20-25% of revenue
• If one customer wants to pay more, upsell them features that benefit other customers too
• Build multi-tier pricing so revenue distributes across customer base
• Track HHI monthly and actively work to reduce it

The Churn vs Valuation Multiplier

Churn rate directly determines your valuation multiple.

2-3x ARR: Monthly churn 3-5%. Business needs operational work. Customer retention isn’t great. Buyer assumes they’ll need to invest in reducing churn before they can scale.

3-4x ARR: Monthly churn under 3%. Diversified customer base. Documented systems and processes. This is a healthy business that can be operated without heroic effort.

4-5x ARR: Exceptional businesses only. Churn under 2%, proven growth trajectory, automation in place, and expansion revenue from existing customers.

Technical Debt: The Silent Deal Killer

You don’t find out about technical debt problems until due diligence. By then, you’ve spent hours on calls, shared metrics, and gotten excited about the sale.

Then the buyer’s technical team reviews your code.

Red flags that kill deals:

• Hardcoded credentials or API keys in source code
• No test coverage whatsoever
• Critical dependencies that are deprecated or unmaintained
• Custom infrastructure that requires specialized knowledge
• No documentation on deployment or operations
• Monolithic architecture that can’t be maintained without deep context

What buyers want to see:

• Clean separation between configuration and code
• Automated deployment process (CI/CD)
• At least basic test coverage on critical paths
• Standard tech stack (mainstream frameworks, not obscure libraries)
• Documentation on how to deploy, monitor, and maintain
• Reasonable code quality (doesn’t need to be perfect, just maintainable)

If you’re planning to sell in the next 12 months, invest 20-40 hours cleaning up technical debt now. It’s the difference between a deal closing and falling apart in week 3.

The Economics: Why Buyers Pay 2-4x ARR

From a buyer’s perspective, they’re betting on ROI over 8-12 months.

Example: They buy your business for $24K (2x ARR at $1K MRR). If they can maintain that $1K MRR, they recover their investment in 24 months. If they can grow it to $1.5K MRR, they’re profitable in 16 months.

Their playbook:

1. Automate operations to reduce overhead 50% in 90 days
2. Scale customer acquisition through paid channels or affiliates
3. Hold 8-12 months while improving unit economics
4. Exit to strategic buyer at 8-12x ARR (institutional buyers pay more)
5. Target 4-5x returns on their capital

This only works if the business has solid fundamentals. If churn is 8%, they’re fighting attrition the entire time. If technical debt requires hiring a senior engineer, margins disappear.

What Makes a Business Sellable at Any Price

I’ve seen deals happen at $6K ARR and deals fail at $100K ARR. The difference isn’t size. It’s these factors:

Transferable operations: Can someone else run this business without you? Are there documented processes? Or does it require your specific domain knowledge and personal relationships?

Defensible revenue: Are customers locked in through integrations, workflows, or data? Or can they churn with zero switching cost?

Growth potential: Can the new owner scale this? Are there untapped acquisition channels? Or is it maxed out in a tiny niche?

Clean financials: Are revenue and expenses clearly tracked? Stripe dashboard plus real accounting (QuickBooks, Xero)? Or is it a mess of personal and business transactions?

The Unsellable Side Project

Some projects are fundamentally not sellable, no matter how much revenue they generate.

Agency-type businesses: If customers are buying your personal expertise, not a product, it’s not transferable.

Single-customer contracts: Even at $50K ARR, if it’s one contract, it’s not a SaaS business.

Heavily regulated industries: Fintech requiring money transmitter licenses, healthcare requiring HIPAA compliance, anything with heavy regulatory burden scares off buyers unless they’re already in that space.

Burn rate exceeding unit economics: If you’re spending $3K/month on infrastructure and support to maintain $2K MRR, the business is structurally unprofitable.

How to Make Your Side Project Sellable

If you’re 6-12 months from wanting to sell, here’s the work:

Fix customer concentration: Diversify revenue across more customers. Cap any single customer at 25% max.

Reduce churn: Improve onboarding, add features customers actually use, implement email sequences for at-risk users.

Document everything: Write down how to deploy, how to handle support, how to run marketing campaigns. Make yourself replaceable.

Clean up technical debt: Refactor hardcoded secrets into environment variables. Add basic tests. Update deprecated dependencies. Make the codebase maintainable by someone who isn’t you.

Organize financials: Separate business and personal expenses. Use proper accounting software. Track unit economics (CAC, LTV, churn) monthly.

Prove sustainability: Show 6+ months of consistent revenue and churn data. One good month doesn’t prove anything. Buyers want trends, not spikes.

The Market Right Now

There’s active demand for profitable micro SaaS businesses in 2026. Buyers are looking for exactly what I described: $500+ MRR, low churn, clean tech stacks, B2B models.

The gap is supply. Most founders either don’t know how to sell or their businesses don’t meet acquisition criteria.

If you have something that fits, the market is liquid. Deals close in 30 days. You get cash, not earnouts or equity swaps. The buyer takes over operations and you move on to the next thing.

But if your metrics don’t pass filters, listing on marketplaces won’t help. You need to fix fundamentals first or accept that this particular project isn’t an asset you can liquidate.