The Business Inquirer #036
In this shorter issue, I highlight 5 listings including a niche staffing firm, a back-in-stock Shopify App, a fireworks display business, and What I Learned Last Week.
The Business Inquirer covers the most interesting tech-enabled business acquisition opportunities. Written for entrepreneurs, search funds, investors, and business owners. It’s completely free and you’re guaranteed to learn something new.
Let’s connect: LinkedIn, Twitter, Facebook Group, Calendly
Hello Friends!
Due to the holiday, this issue is shorter than usual. For those celebrating, hope you had a great 4th of July long-weekend!
In this week’s issue:
🛒 eCommerce - 1 listing
☁ SaaS - 2 listings
🕸 Content/Marketplace/Service - 2 listings
🧐 What I Learned Last Week
🛒 eCommerce
Artificial Succulents FBA - $349k
For sale is a 2-year-old FBA business that sells artificial succulents.
3 SKUs; 100% positive reviews; Amazon’s Choice badges;
Inventory handled by Amazon & a 3PL
Trademarked; Amazon Brand Registry registered;
TTM Revenue: $457k; Profit: $108k; Margin: 24%
Asking: $349k; Multiple: 3.23x
✔ What I Like
I still like this space in general. Faux succulents are easy products to sell. Unlike electronics, there aren’t a lot of parts that can break. This leads to less product returns. A lot of opportunities to design new products. Sounds like the supplier relationship here is strong. The Amazon Choice badge is great. The seller will supply training. Is there a way to get into the corporate market? Maybe a faux succulent subscription box? Broadly, succulents have seen very strong interest starting in 2012…
People are searching for fake succulents online as well…
❓ Questions & Concerns
Interest in succulents has exploded over the last few years and there’s no guarantee it won’t be replaced by something else. Tons of competition entered this space. There’s always someone selling it for cheaper. Not clear how you build a brand and differentiate.
You can view the listing on Quiet Light Brokerage.
☁ SaaS
B2B Intelligence - Open to Offers
For sale is a 5-year-old business intelligence company that sells a dataset of curated purchasable business contacts with robust search functionality.
Competitors: ZoomInfo, Lead411
26M verified global contacts; Enriched data;
SEO focused; 8,100 keywords ranked; 1k keywords top 3 rank;
TTM revenue CAGR 25%
TTM Revenue: $1.5M; EBITDA: $1.0M; Margin: 67%
Asking: Open to Offers
✔ What I Like
Well aged business that’s focused on flexible pricing and quality UX/UI. A lot of automation built-in. I like the focus on SEO which lowers the CAC and offers a moat. Seeing strong revenue growth over the TTM. Nice margin.
❓ Questions & Concerns
Very competitive space. Implementing the obvious growth levels would take a lot of investment and lower margins. E-mail marketing/sales industry is rapidly evolving where these types of services may see limited use-case. How is the data sourced?
You can view the listing on PrivSource from broker Ben Furtado.
————
Back in Stock Shopify App - $2.5M
For sale is a 2-year-old Shopify App that helps merchants grow sales by informing customers when a particular product is back in stock.
Competitors: Back in Stock, Watchlist
800 5-star reviews; Top 50 app;
TTM Revenue: $500k; Profit: $350k; Margin: 70%;
Asking: $2.5M; Multiple: 7.14x
✔ What I Like
Shopify just removed rev share on first $1M. The value of each Shopify app just increased and this app is no exception. See WILLW below to get a full details on this announcement. There’s some organic search volume for this category…
❓ Questions & Concerns
This app operates in the Conversion and Marketing categories which are relatively crowded…
The valuation here is something to think about. Even if margin is 100%, that’s still 5x which is towards the higher end.
You can view the listing on MicroAcquire.
🕸 Content/Marketplace/Service
Staffing & Consulting Agency - $1.8M
For sale is a 17-year-old staffing and consulting agency that operates in a high-demand, niche industry. Owner is retiring.
75 independent contractors; 40 clients;
Home-based business can be operated anywhere;
2020 Revenue: $5.4M; SDE: $605k; Margin: 11%
Asking: $1.8M; SDE Multiple: 2.97x
✔ What I Like
A well-established business with a long operating history. The seller is the original founder and operator. Seller is willing to train new buyer.
❓ Questions & Concerns
The broker doesn’t provide any further detail until an NDA is signed. I’d want to understand why the seller is choosing to retire now. What has changed in the business and industry over the last 17-years? Who are the end clients and how have their options for this type of staffing changed? How easy is it to find contractors in this industry?
You can view the listing on BizNexus.
————
Fireworks Display Business - $300k
For sale is a 9-year-old fireworks display business based out of NJ but is relocatable. Not a typical business I would write about but had to include this one for this 4th of July issue 🎆
TTM Revenue: $134k; Profit: $114k; Margin: 85%
Asking: $300k; Multiple: 2.63x
You can view the listing on BizBuySell.
🧐 What I Learned Last Week
——
Opportunities in Shopify
Last week, Shopify rolled out several new updates to its shopping platform, including reducing the developer revenue share to 0% for the first $1 million the companies earn annually. That's a decrease from the 20% developers had to pay before, and will go into effect as of August 1. The value of each Shopify App increased with that announcement.
Stefan of Alternative Assets published a great analysis on why now is a great time to buy a Shopify App. The basic takeaway is that from 2016 to 2021 the number of apps has increased 4.3x, GMV has risen 24x, and the number of merchants has risen 8x. This translates to opportunity. I won’t reveal the whole deep-dive analysis. It’s a must-read if you’re looking into this space: Why now is a great time to buy a Shopify app (might be behind paywall)
To go one step further, Marketplace Apps published an analysis on which category within the Shopify App Store is the best spot to buy or launch a new app (spoiler: Store Management). Read it here: The biggest category opportunity on the Shopify app store
——
CAC doesn’t matter, it’s all about loyalty
Jason Bornstein is a Principal at Forerunner Venture and has written an interesting piece on the importance of building customer loyalty and not relying solely on acquisition.
If the last decade met the market desire for starting online businesses and changed the game for acquiring customers efficiently online, the next decade will push forward opportunities for businesses to invest as many resources in loyalty as they do in acquisition.
For digital brands and consumer tech platforms on accelerated trajectories, growth has historically been synonymous with acquisition.
Many consumer companies obsess over CAC and don't conceptualize the strategy and levers for LTV. While focussing on the 3x LTV: CAC benchmark, CAC usually receives more airtime and resources than LTV.
Yet, some of the most successful, beloved, and iconic brands of the past few decades are built on compelling and sophisticated loyalty efforts which massively push LTV forward.
According to a recent Forerunner survey, 75% of consumers belong to a loyalty program, 48% belong to 3+ programs, 61% are more likely to spend where they are a program member.
The loyalty landscape is shifting: a path is emerging for venture-backed brands and platforms to create compelling and modern loyalty offerings that have previously been reserved for incumbent at-scale brands and platforms. Successful strategies will vary by category, business model, and scale, but now is the time.
——
10 marketing lessons
A quick read from Sophia Bendz and Christian Meerman about the 10 marketing lessons for every early-stage founder. They were CMOs at early stage Spotify and Zalando, respectively. They’re looking at this from a startup perspective but I really think you can apply the same concepts to any business.
Create a unique and protected brand name: check any brand protection infringements on Day One. Ask a brand lawyer to check your name and register it on at least a continental level. You really don't want to change your name after having already spent millions of dollars in advertising with it.
Nail what your brand stands for: who are you and what role do you want to play in your users’ lives? Think seriously about what’s your reason for being as a brand, what’s the insight that took you there, who you want to present yourself as. Repeatedly ask yourselves this when you define your brand.
Get your 3 USPs straight once and forever: customers can have a hard time remembering too many USPs (unique selling propositions). Zalando used 10 different USPs initially but those got diluted by missing consistency. They thus defined 3 core USPs and from that day onwards they were put on every single marketing product and ad exactly in the same wording, order, and so forth. This made everything more streamlined and consistent.
Don’t scale before you know your product is badly wanted: to see if you’ve built something that consumers want, roll out a beta where a limited number of users are invited. For some reason, we humans seem to get more excited when access is limited. That way you can also scale the technology in a controlled way and see how your users interact with the product. This type of back-and-forth also builds a relationship of trust and loyalty, creating a strong foundation to build a brand on.
Every dollar counts - bulletproof your marketing analytics: you need absolute clarity on all marketing spends per channel. Build a complete landscape overview of your marketing spend, efficiencies, and revenue resulting in your main steering KPIs, CAC, and CLV. A bulletproof marketing analytics team is crucial to give you the database to make the right decisions.
Look at your KPIs every single morning: each and every morning, look at all important KPIs and take immediate actions if some KPIs are out of place. Double down if suddenly a channel proves to be more efficient than anticipated and shift budgets to more efficient channels if a channel’s KPIs worsen.
Marketing doesn’t stop at traffic: When there’s room in your budget for segmentation studies, such studies can well be worth every dollar spent. You'll need to deeply understand your users’ behavior in order to create compelling communication and build your product in relevant, tailored ways.
It’s all about repeat: once you’ve identified your core messages, make sure you stay consistent throughout your communication channels and repeat the message. Repeat it all the time, everywhere. This makes it easier for current and desired users to remember who you are, what you stand for, and why they should choose your brand.
Define, optimize, and fuel your marketing flywheel: A marketing flywheel gets kickstarted through a sophisticated overview of all relevant customer acquisition and retention channels that a company uses successfully to grow its customer base and to nurture its existing customer base leading it to further engagement and ultimately monetization and revenues.
Create a loved brand and community: The way you greet someone calling the reception, behave at our office, approach external communications, train the customer support team, create offline expression at events will reflect your true DNA. Think about what kind of brand and community you want to foster.
——
Learn to buy, grow, sell a small business
Colin Keeley is the founder of Verne which buys, grows, and holds great SaaS companies. Colin is launching a course to teach everything he knows about buying small businesses. It covers sourcing, evaluation, deal structure, financing, and growth of a small business. I don’t know Colin, I can’t personally vouch for the course but the curriculum looks great and includes a lot of helpful document templates. Plus for $199 (limited time), I think it’s a great deal and cheaper than any other course I’ve seen. I may signup for it myself. You can check it out here: https://www.indiepe.com/
——
Free access to BVR Deal Stats
Searchfunder has partnered with BVR to provide free access to their Deal Stats database. The BVR database is the largest dataset of deal comps covering more than 40k transactions. You’re able to look up EBITDA multiples by six digit NAICS code.
——
Shopify for kids
Mighty is an e-commerce platform where kids are operating their own storefronts. Basically a Shopify for kids. Not much more to add here except that I think this is an interesting startup that seems to have traction (3k stores). Check out the article here.
——
That’s all for this (shorter) issue of The Business Inquirer!
Help us improve with anonymous feedback. How did you like this issue of the newsletter?
If you enjoyed reading this newsletter, why not share it?
Let’s connect: LinkedIn, Twitter, Facebook Group, Calendly
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.