The Business Inquirer #145
Sharing an Amazon store in the pet vertical, a SaaS for SMBs, two newsletters, and a full service commercial printer in MA.
Hello Friends!
In this week’s issue:
🛒 eCommerce - 1 listing
☁️ SaaS - 1 listing
💼 Media - 2 listings
🏡 Main Street - 1 listing
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by Smash.vc
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🛒 eCommerce
Amazon Pet Brand - $882k
Launched in 2015
Revenue: $705k
Profit: $304k
Margin: 43%
Multiple: 2.9x
💬 Quick Take
This Amazon pet brand presents a compelling opportunity with its focus on e-collar straps for pets, showing strong profit margins and scalability. The use of lightweight products and low overhead is particularly appealing. The US manufacturing aspect ensures quick turnaround and inventory control, a significant plus. However, reliance on Amazon as the primary sales channel could be risky, and the lack of information regarding fulfillment and other key business operations is also a concern. The current lack of a robust social media marketing strategy, particularly on platforms like Facebook and Instagram, might be an opportunity.
✅ What I Like
Strong Niche Presence
The brand has successfully established itself in a specific niche within the pet industry, selling replacement e-collar straps. This focus allows for targeted marketing and product development strategies.
Scalable and Lightweight
The small and lightweight nature of the products makes them ideal for scaling, as they require minimal storage and shipping costs.
Low Overhead
With low overhead costs, the business model is financially efficient, contributing to its high profit margins.
Strong Amazon Presence
Having products that rank on the first page of Amazon for top keywords indicates effective SEO and a solid brand reputation.
Product Diversity
A wide range of SKUs and child variations provides a robust product portfolio, catering to a broad customer base.
Non-Geographic Dependency
The ability to operate the business from any location adds flexibility and attractiveness for potential buyers.
❓ Concerns
Amazon Dependency
Heavy reliance on Amazon for sales could be risky, as changes in Amazon's policies or algorithms could impact visibility and sales.
Lack of Social Media Marketing
Currently underutilizing social media platforms like Facebook and Instagram could mean missed opportunities for brand exposure and direct sales.
Competition Risks
The niche, while strong, is susceptible to new competitors, potentially impacting market share. The pet accessory market is increasingly becoming saturated, which might require more effort to maintain a competitive edge.
Limited Direct Sales Channels
The absence of a robust direct-to-consumer sales channel may limit revenue diversification and customer reach.
Inventory Management
Managing a large number of SKUs and variations could become complex, particularly in terms of inventory control and forecasting.
💼 Due Diligence Questions
Supplier Relationships: How strong are the relationships with current suppliers, and are there contracts in place? Understanding this can help assess the stability of the supply chain.
Customer Demographics: What are the key demographics of the current customer base? This information is crucial for targeted marketing efforts.
Amazon Sales Data: Can detailed Amazon sales data be provided, including rankings, reviews, and return rates?
Marketing Strategies: What marketing strategies have been employed so far, and what are the results?
Inventory Management: How is inventory managed, and what are the turnover rates?
Legal Compliance: Has the business faced any legal challenges, particularly regarding product safety or liability?
Growth Analysis: What has been the year-over-year growth, and what factors have contributed to it?
Exit Strategy: Why are the current owners selling, and what are their expectations for the transition?
🚀 Growth Levers
Expand Marketing Channels: Utilizing Facebook and Instagram advertising can significantly increase brand visibility and direct sales.
SEO Enhancement: Further developing SEO strategies, both on Amazon and through a dedicated website, can increase organic reach and sales.
New Product Development: Continuously introducing new SKUs and variations can meet evolving customer demands and keep the brand fresh.
Direct Sales Website: Establishing a direct-to-consumer sales website can diversify revenue streams and reduce Amazon dependency.
Email Marketing: Developing a robust email marketing campaign can improve customer retention and drive repeat sales.
Customer Engagement: Engaging with customers through social media, surveys, and feedback mechanisms can enhance brand loyalty.
Expand to Other Platforms: Exploring sales on other e-commerce platforms like eBay, Etsy, or direct retail partnerships can widen the customer base.
International Expansion: Considering expansion into international markets could open up new revenue channels.
🙋🏻♂️ The Buyer
E-Commerce Savvy: The ideal buyer should be well-versed in e-commerce operations, particularly in managing Amazon sales.
Marketing Oriented: A strong background in digital marketing, especially in social media and SEO, would be beneficial.
Supply Chain Management: Skills in managing a diverse and dynamic supply chain, especially with numerous SKUs, are crucial.
☁️ SaaS
SMB Software for Scheduling, Booking, and Payments - $300k
Launched in 2018
Bootstrapped; Single owner;
Revenue: $124k
Profit: $52k
Margin: 42%
Multiple: 5.8x
💬 Quick Take
The business has solid foundations and growth potential, ideally suited for a buyer with a blend of technological insight and marketing experience. The revenue distribution across pricing tiers suggests a need for optimization, especially given the less than 5% MRR from the Pro plan. The business model, while solid, could benefit from expanded marketing efforts and further software development to enhance its appeal.
✅ What I Like
Versatile and Accessible:
The platform's adaptability across various small business types opens up the TAM. Catering to businesses with 1-5 employees means a wide market reach.
Multi-Platform Availability
Availability on iOS and WordPress broadens market appeal.
Solid Technology Stack
Built with Laravel, React, and TypeScript, indicating robust and modern software architecture.
❓ Concerns
Unreleased Android App
The yet-to-be-released Android app indicates potential delays in execution and may require additional investment from the new owners.
Pro Plan Underperformance
The low MRR from the Pro plan raises questions about its market fit.
Competitive Market
The crowded SaaS market for SMBs requires a strong value proposition and differentiation.
Scalability Challenges
Potential challenges in scaling the business without significant investment in marketing and development.
Technical Support Requirements
Continuous technical support and updates are crucial for customer satisfaction and retention.
💼 Due Diligence Questions
Customer Retention Rates: What are the historical customer retention and churn rates?
Revenue Growth Trends: How has revenue grown over the past years, and what are the projections?
Marketing and Sales Strategies: What strategies have been used for customer acquisition and retention?
Technology Roadmap: Is there a clear technology development roadmap for future updates and features?
Competitor Analysis: How does the platform compare to its competitors in terms of features and pricing?
Customer Feedback: What feedback have customers provided about the platform and its features?
Operational Costs: Detailed breakdown of the operational costs and potential areas for optimization.
Legal Compliance: Are there any legal or compliance issues to be aware of, particularly regarding data security?
Integration Capabilities: How seamlessly does the platform integrate with other business tools?
🚀 Growth Levers
Marketing Expansion: Amplify marketing efforts to increase brand visibility and customer acquisition.
Feature Development: Enhance the platform with additional features based on customer feedback and market demands.
Pricing Strategy Optimization: Reevaluate the pricing tiers to maximize revenue and customer satisfaction.
Partnership Opportunities: Forge partnerships with complementary businesses or platforms to expand reach.
Customer Success Initiatives: Implement robust customer success programs to improve retention.
Market Expansion: Explore untapped markets and sectors that could benefit from the platform.
Technology Upgrades: Continuous investment in technology to keep the platform competitive and efficient.
Community Building: Develop a strong community around the platform for feedback, support, and advocacy.
🙋🏻♂️ The Buyer
Tech-Savvy Entrepreneur: An ideal buyer should have a strong understanding of technology, especially SaaS platforms.
Marketing and Sales Expertise: Skills in marketing and sales are essential to drive growth and customer acquisition.
Customer-Centric Mindset: A focus on customer success and satisfaction to maintain and grow the existing user base.
Network in SMB Sector: Connections in the SMB sector could be advantageous for partnerships and growth.
💼 Online Service, Media, Marketplace
Newsletter for Entrepreneurs - $140k
Launched in 2020
70k subscribers based in the USA
Revenue: $52k
Profit: $50k
Margin: 96%
Multiple: 2.8x
💬 Quick Take
A cursory analysis reveals a highly profitable newsletter business with a strong foundation. Its extensive email list of over 70,000 U.S.-based entrepreneurs is a goldmine for targeted marketing and personalized content delivery, akin to HubSpot's strategy with The Hustle. The potential for generating revenue through advertising partnerships and specialized AI or legal software solutions for startups is significant. However, the reliance on a single revenue stream (advertising) and the platform's limited technological stack may pose risks. The business also seems underutilized, suggesting a need for dedicated management and strategic direction to fully realize its potential.
✅ What I Like
Extensive Email List
The 70,000-strong entrepreneur list offers a robust foundation for targeted marketing and audience engagement.
High Profit Margin
With a profit of $50k on $52k revenue, the business demonstrates exceptional profitability.
Proven Revenue Streams
Last year's email campaign showcases the effectiveness of the business model, with potential for repeat advertising sales.
Low Operational Costs
The use of Wix, Zapier, and AWS suggests manageable operating expenses.
Scalability
The business model appears scalable, with opportunities for growth in content and advertising.
Flexible Business Model
Offers versatility for different monetization strategies, including direct advertising and software solution partnerships.
❓ Concerns
Reliance on Advertising
Heavy dependence on advertising revenue could be risky if market conditions change. The business could benefit from exploring additional revenue models beyond advertising.
Market Saturation
The newsletter space is highly competitive, posing challenges in maintaining subscriber interest.
Audience Engagement
Unknown metrics around subscriber engagement and retention rates.
💼 Due Diligence Questions
Subscriber Engagement Metrics: What are the engagement rates and demographic details of the subscribers? How have they trended over time?
Revenue Consistency: How consistent has the advertising revenue been over the past years?
Operational Costs Breakdown: What are the detailed operational expenses, including software and hosting?
Customer Acquisition Strategy: What strategies are used for subscriber growth and retention?
Competitive Landscape Analysis: How does the newsletter differentiate itself in a crowded market?
Content Creation Process: What is the current process for content creation and curation?
Advertiser Relationships: What is the nature and stability of relationships with current advertisers?
Technical Infrastructure: How adaptable is the current technical setup for scaling up?
Future Vision: What are the long-term goals and vision for the business?
🚀 Growth Levers
Content Diversification: Expand into related areas like startup advice or tech trends to attract a broader audience.
Partnership Opportunities: Collaborate with tech companies or startups for specialized content and sponsorships.
Subscriber Engagement Initiatives: Implement interactive content and community-building features to increase engagement.
SEO and Online Presence: Invest in SEO and content marketing to attract organic traffic and increase visibility.
Email Marketing Optimization: Utilize advanced email marketing strategies to improve open and click-through rates.
Monetization Strategies: Explore alternative revenue streams such as premium subscriptions or paid webinars.
Technology Upgrade: Upgrade the technical stack for better customization and scalability.
Data Analytics: Leverage subscriber data for targeted marketing and content personalization.
🙋🏻♂️ The Buyer
Digital Marketing Savvy: An ideal buyer would have a strong background in digital marketing and SEO.
Content Creation Expertise: Experience in creating engaging and relevant content for a niche audience.
Tech Insight: Understanding of startup ecosystem to provide valuable content. Connections in the legal or startup community would be beneficial for partnerships and content.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Newsletter Covering College Sports - $75k
Launched in 2020
17k subscribers; 1k paid subs;
Revenue: $114k
Profit: $85k
Margin: 75%
Multiple: 0.88x
💬 Quick Take
This college sports industry newsletter has substantial potential. With over 17,000 subscribers, including 1,000+ paid, it has organically grown into a respected source, especially in mid-major athletics. However, its reliance on subscriptions for revenue and limited exploration of alternative monetization methods could be areas for improvement. The lack of paid marketing efforts presents both a challenge and an opportunity for growth under new ownership. I would take a look at Huddle Up for a similar business model.
✅ What I Like
Strong Subscriber Base
Over 17,000 total and 1,000+ paid subscribers showcase a solid audience foundation.
Market Leadership
Unique positioning in the college sports industry, focusing on stories off the field.
Organic Growth
The organic growth of the subscriber base speaks to the newsletter's quality and market fit.
Potential for Monetization
Significant opportunities to diversify revenue streams beyond subscriptions.
Original Reporting
The focus on original content adds significant value and uniqueness.
Untapped Marketing Opportunities
A lack of paid advertising suggests room for growth through strategic marketing efforts.
Desirable Demographic
The audience includes academia and industry professionals, attractive for advertisers.
❓ Concerns
Limited Revenue Streams
Heavy reliance on subscriptions could be risky if subscriber numbers fluctuate.
Lack of Paid Marketing
The absence of a structured marketing strategy might have limited growth potential.
Resource Intensive
Quality content creation requires substantial time and resources.
Competitive Landscape
The media and newsletter space is highly competitive and rapidly evolving.
💼 Due Diligence Questions
Subscriber Retention Rates: What are the current subscriber retention rates, and what strategies are in place to maintain them?
Engagement: How do open rates and click-through rates look? How have they trended over the last few months?
Content Creation Process: How is content sourced and created? What resources are needed?
Marketing Strategies: What marketing strategies have been considered or attempted?
Revenue Breakdown: How is the revenue distributed across different streams?
Operational Costs: Detailed breakdown of operational costs and potential areas for efficiency improvement?
Legal and Compliance: Are there any legal or compliance issues to be aware of, especially regarding content rights?
Technological Infrastructure: What is the current state of the technological infrastructure?
Competitive Analysis: Who are the main competitors, and what differentiates this newsletter from them?
🚀 Growth Levers
Diversified Revenue Streams: Exploring additional monetization channels like sponsored content, events, or merchandise.
Strategic Marketing: Implementing targeted marketing campaigns to boost subscriber numbers and brand visibility.
Content Expansion: Broadening the content scope to attract a wider audience while maintaining quality.
Partnerships and Collaborations: Collaborating with other media outlets or sports organizations for cross-promotion.
Technological Enhancements: Upgrading the technological infrastructure for better user experience and reach.
Community Engagement: Engaging the subscriber community through interactive content, forums, or events.
Data-Driven Strategies: Leveraging subscriber data for personalized content and targeted advertising.
SEO and Online Presence: Enhancing the online presence through SEO and social media for organic growth.
🙋🏻♂️ The Buyer
Media or Sports Enthusiast: Ideally passionate about sports journalism, understanding the market's nuances.
Experience in Digital Media: Familiarity with the digital media landscape and its evolving dynamics.
Marketing Prowess: A buyer with a strong background in marketing can leverage untapped potential.
Content Creation Skills: Ability to maintain or enhance the quality of original content.
Strategic Vision: A clear vision for growth and expansion while maintaining the unique voice of the newsletter.
Resource Management Skills: Efficient in managing resources, especially in content creation and operations.
🏡 Main Street
Full Service Commercial Printer - $3.4M
Launched in 1985
HQ in Massachusetts
Serves manufacturers and service companies in regional and local markets
Revenue: $5.5M
Profit: $765k
Margin: 14%
Multiple: 4.4x
💬 Quick Take
This full-service commercial printer, established in the 1980s, offers a comprehensive range of services, including prepress, digital and offset printing, and finishing. Strengths include a stable client base and diverse service offerings. However, reliance on traditional printing in a digitally evolving market and the need for technological upgrades pose challenges.
✅ What I Like
Diverse Service Offerings
The business offers a wide range of printing services, catering to various client needs. This diversity helps mitigate market fluctuations and client turnover.
Long-standing Client Base
The company's long-term loyal clients ensure stable revenue streams and reduced marketing expenses.
Experienced Workforce
With 23 full-time employees, the company benefits from a knowledgeable and skilled workforce, crucial for maintaining quality and customer satisfaction.
❓ Concerns
Market Shift to Digital
The ongoing shift towards digital media may impact the demand for traditional printing services.
Technology Upgrades
Continuous investment in technology is needed to stay competitive, which can be capital intensive.
Owner Dependency
The business's success might be closely tied to the current owner's personal relationships and reputation.
Competitive Market
The printing industry is highly competitive, with constant pressure on pricing and margins.
Economic Sensitivity
As a service provider to other businesses, economic downturns can significantly impact demand.
Client Concentration Risk
A few large clients may constitute a significant portion of revenue, posing a risk if any of them were to leave.
Environmental Regulations
The printing industry is subject to environmental regulations, which can impact operational costs and processes.
Transition Challenges
The transition post-acquisition could be challenging, especially in retaining clients and key employees.
💼 Due Diligence Questions
Client Retention Strategies: What strategies are in place to retain key clients post-acquisition?
Technology Adoption: What recent investments have been made in technology and equipment?
Employee Retention: How does the company plan to ensure key employee retention during the transition?
Market Analysis: What is the current market position and share of the company in the local and regional markets?
Client Diversification: What is the breakdown of revenue per major client?
Operational Challenges: What are the key operational challenges faced by the business?
Supplier Relationships: Can details on key supplier relationships and contracts be provided?
🚀 Growth Levers
Digital Expansion: Expanding into digital printing and related services can capture emerging market trends.
Marketing Strategy Revamp: Updating the marketing strategy to focus more on digital channels can attract new clients.
Geographical Expansion: Exploring new regional markets could open up additional revenue streams.
Service Diversification: Adding more customized and niche printing services can attract a broader client base.
Technology Investments: Investing in the latest printing technology can improve efficiency and service quality.
Eco-Friendly Solutions: Offering sustainable and eco-friendly printing options can appeal to environmentally conscious clients.
Partnerships and Collaborations: Forming strategic partnerships with complementary businesses can enhance service offerings.
Online Presence Enhancement: Strengthening the online presence, including e-commerce capabilities, can broaden the client base.
🙋🏻♂️ The Buyer
Industry Experience: Ideal for buyers with experience in the printing or related industries who can leverage existing knowledge.
Operational Expertise: Suitable for those who have experience managing and scaling business operations effectively.
Growth-Oriented Vision: A buyer with a vision for embracing digital trends and expanding service offerings would benefit.
Client Relationship Skills: Proficient in maintaining and developing client relationships, crucial for client retention and growth.
Strategic Networking Abilities: Having a strong network or the ability to build one can enhance business opportunities and partnerships.
How did you like this issue of the newsletter?
⚒️Tools & Resources
I want to share some tools & resources that I have found helpful. Please note that some of these are paid sponsors of the newsletter.
PrivSource - PrivSource helps you source deals and connect with transaction partners without ever paying a success fee.
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Rejigg - Platform that connects searchers/investors directly with owners of off-market small businesses ($500k - $10m revenue) considering exits. All deals are sourced by the Rejigg team. Their team adds 7-10 new deals each week.
Acquisition Lab - The Premier Accelerator for Buying a Business created by Walker Deibel, Author of Buy Then Build: How Acquisition Entrepreneurs Outsmart the Start-up Game. They combine world-class education, a vetted community, extensive group coaching, and resources to provide the first do-it-with-you buy-side advisory service.
Smash.vc - Whether you're looking to sell minority stakes in your business to take some chips off the table, looking for a partner to acquire an asset, or needing capital to complete an SBA deal, we'd love to chat with you.
BizNexus - Marketplace + off-market origination in one platform. The marketplace averages about 10k active listings & pre-CIM opportunities, and the off-market origination focuses on data & multi-channel.
Search Fund Coalition - community for the Entrepreneurship Through Acquisition ecosystem. Monthly events and meetups for acquisition entrepreneurs.
Deal Sourcing Guide - a comprehensive list of business marketplaces, brokers, deal origination firms, and more.
💡 How I Can Help
Whenever you’re ready, here are a few ways for us to work together…
Schedule 1:1 consulting on deal sourcing, due diligence, M&A ecosystem, newsletters, entrepreneurship, or anything else you’d like to discuss
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