The Business Inquirer - #7 (12/14/2020)
In this week's issue I highlight an influencer marketplace, invoicing SaaS, e-scooter dropshipping, marketing agency, and 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!
In this week’s issue:
Marketplace - Connect Brands with Influencers
SaaS - Invoicing App for SMB & Freelancers
Dropshipping - Electric Scooters
Agency - Marketing & Web Development Agency
What I Learned Last Week
Marketplace - Connecting Brands & Influencers (Asking: $15k)
Description
For sale is a profitable platform which connects brands with influencers. Not exactly clear if the revenue comes from a platform fee or transaction fees. The sellers bootstrapped the business and both recently joined a seed-stage startup so they need to sell.
Details
Founded June 2019. Bootstrapped
Online marketplace with API integrations with YouTube/Paypal
600 influencers on the platform. Avg influencer has 405k subs
Top YouTube talent using the platform
20 active brands using the platform
2019 revenue/profit: $20,000/$2,000
TTM revenue/profit: $45,000/$4,500
Profit Margin: 10%
Asking: $15,000
Profit Multiple: 3.33x
🤓 Why I’m Highlighting This Business
Broadly, the business of connecting influencers with brands is booming. Check out this Influencer Marketing Industry Analysis 2020 report from Influencer MarketingHub. The report outlines that the influencer marketing industry has been growing +50% each year over the last few years and is expected to reach $9.7B in 2020. I’d encourage you to check out the report as it has tons of great data. Otherwise, this business has a nice base to start from and grow. As with any business, heavy DD would be required.
This chart is a bit old from 2018 but US marketers need the most help in identifying the right influencers to work with…
Really interesting to see engagement rates by platform & follower size for 2019. Nano & micro influencers have the highest engagement rates…
✅ What I Like:
Marketplace is one of the best business models but hardest to start
Influencer marketing industry is only poised to grow. Good to be part of a growing industry.
Marketplace is already seeded with 20 brands and 600+ influencers. Somewhat proven business.
I assume the marketplace fee is 10%. Maybe there’s an opportunity to raise that for an easy win. Perhaps even switching to a platform fee would make more sense.
Many growth opportunities in this business and to add adjacent services
Many potential exit opportunities
3.33x profit multiple seems reasonable
❌ What I Don’t Like:
Market is growing but so is competition. Number of new platforms and agencies has jumped from 740 in 2018 to 1,120 in 2019 and I’m sure it’s continued to grow in 2020.
10% profit margin is small. There has to be a way to expand that.
Can’t tell if there’s any stickiness to this marketplace. My feeling is that influencers have no loyalty and will jump to whatever platform is cheapest/shiniest.
🚀 How I Would Grow This:
Unless you’re already in this industry - I’d do a full analysis of the influencer market, competition, niches, etc. With a lot of competition, you need to figure out where the opportunities are. Interview agency owners who work with influencers to uncover their pain points.
One thing I’m not sure of - do influencers follow brands or is it vice versa? Which one do you need to really grow to attract the other?
For a quick win I’d raise that 10% platform fee (if possible).
To attract influencers institute a referral program
I’d try hiring a sales person to reach out to brands to get them on the platform.
See if it makes sense to niche down. Only focus on micro-influencers or only on CBD influencers or only tech influencers, etc. Can also focus on only one platform.
Are there adjacent products/services which can be offered?
Diversify the revenue stream. Maybe implement display advertising strategy or e-mail marketing offers from relevant partners.
Partner with an agency which doesn’t have a tech-enabled platform to reach influencers.
You can view the listing on MicroAcquire.
SaaS - Invoicing App for SMB & Freelancers (Asking: $300k)
Description
For sale is an invoicing app designed for SMBs, freelancers, gig workers. The SaaS has a recurring revenue model. Seller is focusing on passion business in unrelated space and is open to all offers.
Details
Founded Jan 2009 with $1M in funding (unclear if self-funded or raised)
Strong brand & code base
Team of 4 people
Priced at $15/month. 30-day free trial.
800 paid users. 200 trial users
Tech stack is AWS + Ruby on Rails
ARR: $120,000
TTM Profit: $96,000
Profit Margin: 80%
Asking: $300,000 (open to offers)
Profit Multiple: 3.13x
🤓 Why I’m Highlighting This Business
I’d rather be a small fish in a growing pond rather than a big fish on Groom Lake. Any business which is serving a growing customer base is interesting to me. Here we have an established business in a growing industry with a lot of growth levers. Some competitors have 3M+ users so there’s room to grow.
It is projected that in 2028, 90.1 million people will be freelancing in the United States and will make up more than 51% of the total workforce…
FreshBooks is one of the most well known accounting & invoicing apps for freelancers and has seen it’s downloads and daily active users trend upwards…
✅ What I Like:
SaaS business model
80% margins
Growing customer base
Apple just lowered app store fees. Not sure if this would help this particular app.
Many growth levers
Large competitors to learn from
Open to offers so price is negotiable
Valuation is reasonable
Many exit opportunities
❌ What I Don’t Like:
Unclear if team of 4 are transferring with the business
Unclear if you actually need a 4-person team to run this
Need tech know-how to run
Listing doesn’t provide many metrics (churn, growth, trend) so immediate assumption is that they’re not flattering
🚀 How I Would Grow This:
I bet bringing in some marketing expertise would really help. Focus on converting trials to paid, e-mail marketing sequences, customer acquisition channels, blog, etc.
Analyze pricing. Having more than one paid plan would make more sense here.
Looking at Capterra reviews for some competitors shows that UX is often cited as a negative. I’d make sure that the UX for this app is top notch and a key differentiator.
Personally - I found that a lot of software geared to freelancers is overly stuffed with features and too complicated. I think there are tons of opportunities to take some bloated software and put it on a diet.
Collect reviews from existing users and make sure they’re all over G2 and Capterra (if they’re not already)
Run advertising where freelancers hang out. Reddit, Facebook, etc.
Implement an affiliate marketing program
Possible to expand outside the US?
You can view the listing on MicroAcquire.
Dropshipping - Electric Scooters (Asking: $11,000)
Note: I wouldn’t buy this business as it’s easy to create from scratch
Description
For sale is Electric Scooter Shop, a dropshipping business selling electric scooters. The niche is to sell high-powered scooters which can reach up to 74mph. The scooters are shipped directly from the manufacturer in China to the client.
Details
Started in 2019
WordPress website
Sold 18 scooters in 2-years to US, Canada, New Zealand clients
Niche are powerful scooters with speeds of 74mph
AOV is $1,500
Margins appear to be 30% - 40%
LTM monthly profit has ranged $0 - $3,154
Asking: $11,000. BIN: $20,000
🤓 Why I’m Highlighting This Business
Last-mile transportation is a growing industry. Unless I’m missing something, I don’t see anything unique about this particular business. This type of dropshipping store can easily be recreated and even improved upon. The main things to watch out for are returns and service. Tons of competition in this space so I’d tread carefully.
One positive thing about Electric Scooter Shop is that traffic and keyword rankings are trending upwards…
Strong search trends for electric scooters in general…
You can easily source electric scooters and accessories from Alibaba and Aliexpress…
This particular model looks good and has a quality HD video you can use on your website (with some editing)…
There’s a $48 Shopify theme which is already specifically designed for selling electric scooters…
Domain name “UberScooter.com” is available for $3.1k.
Easy business to get into with dropshipping but there is a lot of competition. You’d have to differentiate somehow. Having said that, if these guys can sell one or two scooters a month then I have to assume that it’s possible enter this industry.
You can view the listing on Flippa.
Agency - Online Marketing & Web Development (Asking: $51k)
Note: Actual listing is very detailed. Would take too much space here to highlight everything.
Description
For sale is The Portland Company, a 15-year old marketing, content and web development agency which has also built several internal tools and WordPress plugins which can be monetized in addition to the standard agency business. The owner has a team of freelancers who handle all the work and he just checks-in once in a while. This is a turnkey business. The listing is very popular and detailed so I’d encourage you to check it out.
Details
Multiple revenue streams including web development, design, marketing, SEO, WordPress plugin, in-house built tools.
All staff and infrastructure is in place and will come with sale
50+ 5-star reviews on Google. Dozens of reviews on Facebook.
5k email list
COVID has negatively affected the business but seller is very transparent in this
7-10 current monthly clients. About 12 pre-COVID.
Currently does $2k-$3k in recurring gross revenue from long standing clients.
LTM monthly revenue has ranged from $2k - $15k
LTM monthly profit has ranged from -$649 to $12k
Asking: $51k but it’s a popular listing and will probably sell for a lot higher
🤓 Why I’m Highlighting This Business
Three reasons why I think this listing is interesting. First, I think this is an interesting business with a lot of monetization opportunities. It would be a great add-on to someone who already owns an agency or wants to get into the industry. You can monetize and sell/divest their internal tools as well as the WordPress plugin. Third, the listing is very detailed and there’s a lot to learn. I would encourage you to look at the listing and comments.
You can view the listing on Flippa.
🧐 What I Learned Last Week
Only 14% of posts by influencers are compliant with FTC & CMA regulations
As I was doing some research for the influencer marketing platform I highlighted above, I came across this interesting statistic - vast majority of influencer posts are not compliant with FTC/CMA regulations. There may be a business opportunity here to help influencers avoid fines.
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Free collection of 10 guides on SaaS acquisitions
MicroAcquire made available a collection of 10 guides on SaaS acquisitions. They’re good and some can be applied to any acquisition, not just SaaS. You can download all the guides for free from MicroAcquire HERE.
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Newsletter-as-a-Service (NaaS) might be niche business
I posted this business idea in the FB Group with some discussion. The basic idea is that there are a few things that every new newsletter publisher needs: name, logo, tech stack, marketing. I have not been able to find any agency or products which specifically deal with this customer base. If someone can create a $500 package which takes care of all of that, I think it could be a win. I don’t think this would be a huge business but a nice side-hustle for someone. Let me know in the FB Group if this sounds interesting as I’d be happy to help.
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MassMutual puts $100M into bitcoin
Bitcoin continues to gain institutional acceptance with the latest news that MassMutual has invested $100M into the digital currency. It’s a tiny fraction of the total assets that MassMutual manages but nonetheless a vote of confidence. You can read about it in this WSJ article.
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That’s all for this issue of The Business Inquirer!
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