The Business Inquirer #020
In this issue I provide an update on the newsletter and the due diligence platform I'm building. I also share eight business listings as well as What I Learned Last Week.
Every week I highlight interesting online businesses which are for sale adding my own commentary. This newsletter is for those who are interested in business, finance, and entrepreneurship. Subscribe below to receive it directly in your inbox.
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Hello Friends!
Thanks for everyone who provided feedback on the new newsletter format. Most seem to like it so I’ll keep it going, for now. Keep the feedback coming.
In this week’s issue:
Newsletter Update
Due Diligence Platform Update
🛒 eCommerce - 2 listings
☁ SaaS - 5 listings
🕸 Content - 1 listing
🧐 What I Learned Last Week
Newsletter Update
With the 20th issue I figure it’s a good time to provide a quick update on the newsletter and how things are going.
First issue went out Nov 2, 2020 to ~80 subscribers and we’re now at 420 subscribers…
Subscriber growth has slowed substantially but I’m also doing nothing to promote it so it’s no surprise. I’m hoping to change that. Newsletter open rates have range from 46% - 56% with 24% - 32% CTR. I think those are decent numbers.
Substack is still terrible. I’m positive that 20% of people who sign-up don’t even see the newsletter in their inbox. My dad signed up a long time ago, received two issues, and that’s it. Not in his inbox, spam, or junk - just nowhere to be found. Substack is so easy to use though. Either way, I will be switching to another tech stack when I have the time.
Thank you to everyone who provides feedback. Whether you just use the buttons or provide extended feedback - it’s all very appreciated. Keep letting me know how I can add more value to you and/or improve this newsletter.
Due Diligence Platform Update
As I’ve mentioned previously, I’m building a platform to connect business buyers with due diligence providers. Think of it like an UpCounsel but for M&A due diligence.
I’ve boiled down the MVP to the simplest possible form. Thank you to subscriber Usman G. for his help in this. It’s being designed and built this week and I hope to officially launch it in the next week or two. Platform will be free to use but of course you’ll have to pay the due diligence pros.
If you’d like to join the platform as a due diligence provider, please fill out this form.
🛒 eCommerce
Amazon Business Selling Liquidated Inventory - $2.2M + Inv
For sale is an Amazon business which employs a proprietary method of buying liquidated products and reselling them. Growth has been consistent with revenue rising roughly 50% in the past three years, while the bottom line has increased by well over 200%.
TTM Revenue: $2,928,774
TTM Income: $654,967
Margin: 22%
Asking: $2,200,000 + Inventory
Multiple: 3.36x
📝 TBI Commentary
Popular business model which relies on relationships with retailers as well as proprietary systems to know which products will sell and for how much. This is a very hands-on business requiring warehousing of the products. Not an expert on this business model but a 22% margin seems low to me. This may be a good opportunity for someone who is already in this industry.
You can view the listing on Quiet Light Brokerage.
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Amazon Hemp Oil - $10.5k
For sale is a 3-year old Amazon store selling 2 hemp oil products. One is for humans and one is for pets. Revenue has been consistently trending down over the TTM as products have been tough to keep in stock.
389 5-star ratings, 0 negative feedback
2 products. No trademarks
Monthly Revenue: $3,360; Profit: $1,514; Margin: 45%
Asking: $10,500 (auction)
Multiple: 0.58x
📝 TBI Commentary
Hemp/CBD products are tricky in terms of regulations, advertising, and banking. Requires a lot of due diligence to make sure that there are no red flags. The revenue numbers are declining but they are consistent and explainable. I don’t think this is a bad thing. This would be a good add-on to an existing business or for someone who is just getting started. Simple 2 product store. There’s a reserve so it may go a lot higher.
You can view the listing on Flippa.
☁ SaaS
WhatsApp CRM - $100k
For sale is a WhatsApp CRM founded in Jan 2018 which lets you send custom messages to your customers, contacts, and prospective leads. Run your entire customer support and sales inside WhatsApp on your browser. Seller is focused on building a new startup which is gaining traction.
1,500 customers and growing at 50 new users per day
TTM Revenue: $25k; Profit: $20k; Margin: 80%
Last Month Revenue: $2.6k; Profit: $2.4k
Asking: $100,000
Multiple: 5.00x (3.47x on NTM)
📝 TBI Commentary
I’d want to understand who the target market is and how they’re using this software. It sounds like new owner would have to do a bit of work to integrate Stripe payments and there won’t be any revenue coming in until that’s done. The app requires an update each time that WhatsApp releases one. Buyer would either have to be tech savvy or have a team in place who can help.
You can view the listing on MicroAcquire.
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Xero Partner App - $35k
For sale is an add-on for Xero founded in Jan 2019 which enriches user accounting data and provides additional insights on top of Xero.
$100 ARPA
TTM Revenue: $15k; Profit: $7k; Margin: 47%
Last Month Revenue: $1k; Profit: $400
Asking: $35,000
TTM Multiple: 5.00x; NTM Multiple: 7.29x
📝 TBI Commentary
Valuation seems rich, especially on NTM estimated numbers. Would have to understand the pricing here. Perhaps there are high barriers to entry to the Xero app ecosystem, I don’t know. Need to understand why margin dropped last month compared to TTM. Sales and marketing is what’s required for this app to be succesful.
You can view the listing on MicroAcquire.
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Digital Credit Repair - $350k
For sale is an online digital credit report repair service founded in 2020. The service helps clients challenge all the negative marks on their credit report and repair their credit.
10k e-mail subscribers
Founder run (no employees)
Revenue: $119k; Profit: $102k; Margin: 86%
Asking: $350k; Multiple: 3.42x
Multiple: 3.42x
📝 TBI Commentary
I’m not sure if this business uses Credit Repair Cloud but it might. There are a lot of advertising restrictions on these types of businesses so it’s important to understand how this young business acquires customers.
You can view the listing on Website Closers.
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Graphic Design Productized Service - $665k
For sale is a B2B productized service which offers graphic design for a monthly subscription fee. Launched in 2018, the business has grown 17% over the last 8 quarters.
500k pageviews LTM
Customer LTV of $11.6k
MRR: $82k
LTM Revenue: $883k; Profit: $181k; Margin: 20%
Asking: $665k; Multiple: 3.67x
📝 TBI Commentary
I like productized service businesses. I’ve read that graphic design specifically for Webflow is on fire. This listing is somewhat vague. I’d want to understand customer acquisition channels and any sort of specialization(s) they may have.
You can view this listing on FE International.
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E-Mail Productivity - $6k
For sale is Silent Inbox which is a micro-SaaS which works on top of Gmail to hold certain e-mails until a specified time. It is able to automatically detect newsletters and other “annoying” e-mails. Paid version allows you to add custom scheduling and other options.
Free & premium versions ($17/year)
15 reviews with 4.5 rating
300 visitors per month
MRR: $50
Asking: $6k; Multiple: 10.0x
📝 TBI Commentary
I think the price here is negotiable. If the back-end works then it’s just a matter of marketing this add-on. There are reviewers who requested certain features which a new owner could add. I’d pay $5-$10/month for this depending on the features.
You can view the listing on SideProjectors.
🕸 Content
Digital Marketing Courses - $4M
For sale is a 4-year old digital marketing school for Hispanic audience. It is the largest and most well known digital marketing school for that particular audience. The business generates most of the revenue not from courses but from affiliate fees. Once enrolled, students need to purchase hosting and a few other services. That is where the revenue is generated.
244k unique monthly visitors driven mostly by FB ads and affiliates
2.4M e-mail subscribers, 271k FB, 136k YouTube, 192k IG
2M registered users
14 team members
Monthly Revenue: $221k; Profit: $144k; Margin; 65%
Asking: $4M
Multiple: 27.74x
📝 TBI Commentary
Interesting business. I’d want to understand the breakdown between affiliate revenue and course fees. The traffic and revenue numbers seem very volatile and have increased significantly since Aug 2020. I’d want to understand what drove this. Doesn’t seem like they focus on organic search and this could be an area to invest in. I’d also look into licensing the course to schools. Basically, I’d want to lessen the dependence on paid ads.
You can view the listing on Flippa.
🧐 What I Learned Last Week
New marketplaces for buying a business
Shopify Flips is a great Facebook group to network with Shopify store buyers and sellers. They just launched a broker platform called swiftexits and buyer pre-registrations are open.
Website Closers is going upmarket so they’re launching a sister company named SellerForce. SellerForce will only have business listings with EBITDA of < $250k.
Really interesting to see how these marketplaces develop. MicroAcquire is quickly approaching the “tres commas” club. Duuce is seeing an increased number of newsletters for sale. Empire Flippers has decided to put a 45x-55x multiple on everything they list. New marketplaces are launching.
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How to buy and price a newsletter
Indie Hackers posted an interview with Stefan von Imhof of Flippa & Alternative Assets. Stefan recently purchased the MakerList newsletter and in the interview he talks about his acquisition process and how he thinks about pricing. It’s a great read.
On the same topic - 100% check out Alternative Assets. Stefan, Wyatt & team provide insights and analysis on all types of alternative assets including websites, NFT’s, sneakers, trading cards, and more. I’m a subscriber.
They’re basically building a sell-side research firm for alternative assets (at least I hope that’s what they’re doing). I think they’re the first but there will be a lot of these popping up. Next will be alternative data to track alternative assets.
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Reflections on losing a deal
Henry Johnson is a newsletter reader. We’ve hosted a few Clubhouse talks. He’s been on the hunt for a Shopify app and recently lost out on a deal. He learned from the experienced and shared his thoughts in a Twitter thread.
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SMS is gaining traction
It’s been talked about for some time that SMS is really the next B2C communication channel but seems like it’s finally gaining traction. If you can convince a user to let you inside their iMessages, you can build a powerful and lucrative level of trust. Here are just a few companies which are building SMS-based products.
Vertical-Specific:
Qatch is style inspiration via text message that drives clothing purchases.
Wishroute helps people stick to their goals with text-based accountability.
PaybyCar uses SMS to let users make contactless payments at gas stations.
Qeepsake lets you text your favorite baby memories to them for safe keeping.
Verb makes DTC energy bars that you order via text message.
Hi Marley makes insurance more personable with a white-label SMS solution.
Arist delivers bite-sized training courses via text.
LifePod texts you when a loved one doesn’t respond to a smart speaker check in.
Platforms:
Cidewalk is an SMS-based local mobile geofenced advertising platform.
Fontative connects businesses with customers through voice and text.
Pluto helps brands engage customers to drive loyalty and re-purchases.
Tone helps companies seamlessly use conversational SMS to drive sales.
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State of consumer tech
We’ve got another consumer tech report. The team at Heartcore Capital published an incredible report on the state of consumer tech over the past year & the trends they’re tracking. Thing is > 200 pages so you know it’s good 😂
Joking aside, I’d highly recommend checking it out, lots of great data and insights there!
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Pricing & packaging for B2B
A lot of early stage companies struggle with pricing. Heck, a lot of late stage companies struggle with this as well. a16z published a great article on how to think about pricing for bottom-up companies.
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That’s all for this issue of The Business Inquirer!
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Important Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. This newsletter may link to other websites and certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, it has not been independently verified. The Business Inquirer makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. References to any companies, securities, or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any business, tax, or investment decisions. Content in this newsletter speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.