The Business Inquirer #147
Sharing a security service in Miami, two home services businesses, plugins for Bubble.io, and a B2B fraud prevention SaaS for Shopify.
Hello Friends!
Happy 2024! I’m slowly recovering from the holidays and am now back to our regularly scheduled publishing cadence.
In this week’s issue:
☁️ SaaS - 2 listings
🏡 Main Street - 3 listings
⚒️ Tools & Resources
💡 How I Can Help
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☁️ SaaS
B2B Order Verification & Tracking for Shopify - $400k
Launched in 2020
Proveway is the name of the business
Focus on fraud prevention and order tracking
Revenue: $150k
Profit: $117k
Margin: 78%
Multiple: 3.42x
✅ What I Like
Strong Market Niche
Specializing in Shopify-PayPal integration, Proveway addresses a specific, high-demand area in eCommerce.
Impressive User Base
With over 2,000 installations, the app shows significant market penetration and acceptance.
Recurring Revenue Model
Monthly subscriptions offer a stable and predictable income stream.
Low Churn Rate
A 10% churn rate indicates high customer satisfaction and product stickiness.
Partnership with International Couriers
Extensive courier network suggests efficient and broad service capabilities.
Focus on Fraud Reduction
Critical in eCommerce, enhancing trust and reliability for merchants.
Geographic Focus
Targeting major eCommerce markets (U.S., U.K., Germany) is strategically sound.
Continual Product Improvement
Ongoing updates imply a commitment to quality and customer satisfaction.
❓ Concerns
Marketing Dependence
Heavy reliance on PPC and video ads could mean high ongoing marketing expenses.
Geographic Limitations
Focus on specific regions might restrict global market expansion opportunities.
Product Complexity
Requires buyer’s IT team education, indicating potential onboarding challenges.
Limited Pricing Plans
Only two basic plans may not cater to diverse customer needs.
Seasonal Sales Immunity Questionable
Despite claims, fluctuating market trends could impact sales.
Digital Marketing Untapped
While there's potential, current underutilization could mean lost opportunities.
eCommerce Market Volatility
Rapidly changing market dynamics could pose risks.
Dependence on Shopify and PayPal Platforms
Changes in these platforms could directly affect business operations.
💼 Due Diligence Questions
Customer Acquisition Cost: What is the current cost to acquire a new customer, especially through PPC and video marketing?
Market Expansion Strategy: Are there plans to extend beyond the current geographic focus?
Customer Retention Strategies: How does the business plan to maintain its low churn rate?
Revenue Breakdown: How is revenue distributed between the two pricing plans and additional charges?
Competitive Landscape: Who are the main competitors, and how does Proveway differentiate itself?
Partnership Details: What are the terms and conditions of the partnerships with international couriers?
Technical Infrastructure: How scalable and secure is the current technical infrastructure?
Customer Feedback: Is there detailed customer feedback or case studies available?
Legal Compliance: How does the company ensure compliance with international e-commerce and data privacy regulations?
🚀 Growth Levers
Expand Geographic Reach: Target additional global markets to capture a broader customer base.
Diversify Pricing Plans: Introduce more tiered pricing options to cater to varying customer needs.
Strengthen SEO Efforts: Enhance online visibility through optimized content and backlink strategies.
Leverage Email Marketing: Build a strong email marketing campaign to nurture leads and increase conversions.
Develop Strategic Partnerships: Collaborate with complementary businesses or platforms for mutual growth.
Enhance Customer Support: Offer exceptional support to improve customer satisfaction and retention.
Utilize Social Media: Engage more actively on social media for brand building and direct customer interaction.
Invest in Analytics: Use data analytics to understand customer behavior and refine marketing strategies.
🙋🏻♂️ The Buyer
B2B Marketing Savvy: Ideally possesses strong skills in B2B marketing and digital strategy implementation.
Technical Acumen: Should have a good understanding of eCommerce platforms and software integration.
Global Expansion Vision: Capable of strategizing and executing market expansion plans beyond current regions.
Customer-Centric Approach: Committed to maintaining high customer satisfaction and retention rates.
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Web Development Plugins for Bubble.io - $695k
Launched in 2019
Suite of 17 plugins; Owner operated;
Revenue: $114k
Profit: $107k
Margin: 94%
Multiple: 6.50x
✅ What I Like
Rapid Growth
Over 48% YoY growth shows a strong upward trajectory.
Large User Base
1,200 paid and 50,000 free users signify market acceptance and potential for conversion.
Strong Bubble.io Ecosystem
Leverages the robust and growing Bubble.io platform, with 3 million users.
High Profitability
Excellent cash flow margin, indicating efficient operations and a strong business model.
Untapped Marketing Potential
Opportunities in video marketing and improved top-of-funnel awareness.
Pricing Flexibility
Room for revenue growth through pricing experimentation.
Affiliate Opportunities
Potential partnerships with Bubble.io agencies could provide a significant revenue boost.
Expansion Potential
Opportunities to expand the plugin suite and add consulting services.
❓ Concerns
Valuation
The 6.5x multiple is elevated for a business with this level of gross revenue.
Plugin Suite Expansion
Requires resources and expertise to maintain and expand the current product line.
Consulting Demands
Offering consulting services may require additional expertise and time commitment.
Market Competition
The growing popularity of Bubble.io is attracting many competitors into this space.
💼 Due Diligence Questions
Revenue Breakdown: How is revenue distributed across the 17 plugins?
User Conversion Rate: What is the conversion rate from free to paid users?
Platform Analytics: Is there detailed user engagement data available for the plugins?
Marketing ROI: What has been the return on investment for past marketing efforts?
Technical Scalability: How scalable is the plugin architecture for new features and platforms?
Customer Feedback: What feedback have users provided, and how has it been addressed?
Competitive Analysis: Who are the direct competitors, and what are their market strategies?
Consulting Service Feasibility: What is the potential market size and demand for consulting services?
🚀 Growth Levers
Enhance Marketing Efforts: Utilize SEO, social media, and video tutorials to increase brand awareness.
Expand Plugin Suite: Develop new plugins, especially for emerging needs like mobile app development.
Refine Pricing Strategy: Experiment with tiered pricing models to maximize revenue.
Establish Affiliate Programs: Partner with Bubble.io agencies to drive sales and expand reach.
Offer Consulting Services: Formalize and publicize consulting services to leverage expertise.
User Engagement: Implement feedback loops and community-building initiatives for user retention.
Develop Educational Content: Create tutorials and guides to educate users and attract new customers.
🙋🏻♂️ The Buyer
Technical Expertise: Understanding of web development and SaaS platforms.
Marketing Acumen: Skilled in digital marketing, especially in SEO and content marketing.
Strategic Vision: Ability to capitalize on Bubble.io's growth and expand into new markets.
Resource Allocation: Capability to invest in marketing and product development.
Growth Mindset: Willingness to explore and implement new revenue streams.
🏡 Main Street
HVAC Business in WI - $2.5M
Launched in 1935
16 employees; RE available for $1.3M;
Revenue: $4.9M
SDE: $856k
Margin: 17%
Multiple: 2.92x
✅ What I Like
Decades of Industry Presence
A 75-year history establishes trust and demonstrates market endurance.
Diverse Client Base
A 50-50 mix of commercial and residential clients ensures balanced revenue streams.
Technical Expertise
Being a factory-authorized dealer adds credibility and a competitive edge.
Consistent Financial Growth
Steady increases in revenue and earnings indicate a robust business model.
Experienced Team
Employees with over a decade of tenure imply strong company culture and expertise.
Stable Cash Flow
Demonstrated stable cash flow is key for financial predictability and planning.
❓ Concerns
Real Estate Investment
Additional $1.3M for real estate could significantly increase the total investment required.
Dependency on Skilled Workforce
Retention and recruitment of skilled technicians are critical for sustained success.
Capital Intensive Nature
The business might require substantial ongoing investment in equipment and inventory.
Economic Sensitivity
HVAC services can be sensitive to economic downturns affecting commercial and residential spending.
Competitive Landscape
Growing competition in the HVAC industry could impact market share.
Regulatory Compliance
Ensuring compliance with ever-evolving industry regulations and environmental standards.
💼 Due Diligence Questions
Employee Retention Strategy: What strategies are in place for retaining and training skilled technicians?
Customer Satisfaction Metrics: Are there records of customer satisfaction and repeat business rates?
Vendor Relationships: How stable and beneficial are the existing vendor and supplier relationships?
Real Estate Necessity: Is the additional real estate investment crucial for business operations or expansion?
Market Analysis: What is the current market share, and who are the primary competitors?
Technological Adaptation: How does the business plan to adapt to new technologies in HVAC systems?
Regulatory Compliance: Are there any pending regulatory changes that could impact the business?
🚀 Growth Levers
Expand Service Offerings: Introduce new services like energy-efficient and smart HVAC solutions.
Increase Geographical Presence: Gradually expand to neighboring regions to capture a wider market.
Strengthen Online Presence: Enhance digital marketing efforts to reach a broader customer base.
Forge Strategic Partnerships: Collaborate with construction firms and real estate developers.
Enhance Customer Loyalty Programs: Develop loyalty programs for repeat residential and commercial clients.
Adopt Latest Technologies: Stay updated with the latest HVAC technologies and trends.
Invest in Employee Training: Regular training to ensure technicians are skilled in the latest technologies.
Leverage Data Analytics: Use data analytics to optimize operational efficiency and customer targeting.
🙋🏻♂️ The Buyer
Industry Knowledge: Ideally possesses experience or understanding of the HVAC sector.
Operational Expertise: Experienced in managing a business with a substantial workforce and technical operations.
Customer-Service Oriented: Focus on maintaining high service quality and customer satisfaction.
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Plumbing Business in Omaha, NE - $2.0M
Multiple decades in business
21 employees; Owner retiring;
Revenue: $4.0M
Profit: $1.2M
Margin: 30%
Multiple: 1.67x
✅ What I Like
Strong Community Reputation
Decades of operation in Omaha have built a loyal customer base.
Impressive Client Retention
80% repeat or referral clientele indicates excellent service quality.
Consistent Financial Growth
Year-over-year revenue increase of 5.92% and 345% SDE growth.
Stable Employee Base
21 skilled employees with a high retention rate.
Comprehensive Service Range
From basic installations to complex remodels.
Healthy Asset Base
Includes a well-maintained fleet of vehicles valued at $581,245.
Debt-Free Operation
No outstanding debts or liabilities, indicating sound financial management.
❓ Concerns
Dependence on Local Market
Limited to Omaha, potential challenges in geographic expansion.
Owner Transition
Risk of losing personal goodwill built by the family owners.
Industry Competition
Plumbing services face stiff local competition, affecting market share.
Economic Sensitivity
Vulnerable to economic downturns affecting construction and renovation sectors.
Workforce Management
Continuously attracting and retaining skilled plumbers is crucial.
💼 Due Diligence Questions
Customer Satisfaction Data: Are there detailed records of customer feedback and satisfaction levels?
Vendor and Supplier Relationships: How stable and beneficial are these business relationships?
Market Analysis: What is the current market share, and who are the primary competitors?
Employee Retention Strategies: What methods are used to maintain high employee retention?
Technology Integration: How has the company adapted to new plumbing technologies?
Marketing and Branding Strategy: What efforts have been made in marketing and brand positioning?
Environmental Compliance: How does the company ensure compliance with environmental regulations?
🚀 Growth Levers
Expand Geographic Reach: Explore opportunities to extend services to neighboring areas.
Enhance Digital Marketing: Utilize digital channels for broader market outreach and brand visibility.
Develop New Services: Introduce innovative plumbing solutions, like eco-friendly options.
Forge Strategic Alliances: Partner with construction firms and real estate developers.
Strengthen Online Presence: Improve the website and use social media for customer engagement.
Employee Skill Development: Invest in ongoing training for the latest plumbing techniques.
Implement Customer Loyalty Programs: Reward repeat customers to enhance client retention.
Leverage Technology: Adopt modern tools for efficient service management and customer interaction.
🙋🏻♂️ The Buyer
Industry Experience: Ideally possesses knowledge or background in the plumbing or related industry.
Local Market Understanding: Familiarity with the Omaha market and its dynamics.
Customer-Service Focus: Committed to maintaining high service standards and customer relationships.
Growth-Oriented: Vision and capability to expand the business while retaining its core values.
Leadership Qualities: Ability to lead and grow a team of long-term employees.
Tech-Savvy: Open to integrating new technologies into the business model.
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Security Guard Service in Miami, FL - $2.0M
Launched in 2007
3 FT management staff; Owner is retiring;
Revenue: $4.5M
Profit: $800k
Margin: 18%
Multiple: 2.5x
✅ What I Like
Stable Client Base
63 long-term clients provide a reliable revenue stream.
Strong Market Presence
Established presence in Miami's dynamic security sector.
Effective Management
Superior management staff ensuring operational efficiency.
24-Hour Dispatch Capability
Highlights commitment to service and client needs.
Scalability Potential
Business model and operations designed for growth.
Attractive Valuation
2.5x price to cash flow ratio presents a compelling investment opportunity.
Robust Revenue
$4.5 million in annual revenue demonstrates strong business performance.
Service Reliability
Reputation for trust and reliability in a critical service sector.
❓ Concerns
Market Competition
The security services market in Miami is highly competitive.
Margin Improvement
Gross margin of 17.8% could be improved for better profitability.
Staff Retention
Maintaining a skilled and reliable workforce is crucial in the security sector.
Technological Advancements
Need to keep pace with evolving security technology and practices.
Regulatory Compliance
Adherence to strict industry regulations and licensing requirements.
💼 Due Diligence Questions
Client Retention Rates: What are the historical client retention rates and strategies for client satisfaction?
Competitive Analysis: Who are the main competitors and what is the company's competitive edge?
Employee Training and Retention: What are the current strategies for staff training and retention?
Technology Utilization: How does the company incorporate technology in its operations?
Regulatory Compliance Records: Are all regulatory and licensing requirements up to date?
Client Contract Terms: What are the typical terms and conditions of client contracts?
Growth Strategy: What specific plans are in place for expansion and scalability?
🚀 Growth Levers
Expand Geographical Reach: Look to expand services beyond Miami to neighboring areas.
Diversify Service Offerings: Introduce new and innovative security services.
Enhance Technology Integration: Invest in advanced security technology and systems.
Strengthen Online Presence: Improve digital marketing to attract new clients.
Develop Strategic Partnerships: Partner with local businesses and communities.
Optimize Operational Efficiency: Streamline operations for cost savings and improved margins.
Invest in Employee Development: Continuous training and development programs for staff.
Focus on Client Relationships: Enhance customer relationship management for repeat business and referrals.
🙋🏻♂️ The Buyer
Security Industry Experience: Knowledge of the security services industry is beneficial.
Operational Expertise: Ability to manage and grow an operationally intensive business.
Growth-Oriented Mindset: Vision and strategy for expanding the business's reach and services.
Technological Savvy: Understanding of the role of technology in modern security services.
Strong Leadership Skills: Ability to lead and motivate a team in a service-focused industry.
Community Networking: Skills in building relationships with local businesses and communities.
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.
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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.
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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
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