2024.07.03 - Online Biz Acquisition Opps

Hey hey peeps today we’ve got 4 online businesses.

🔫 Gun to my head question:

If I had to write a check for one of the businesses in this email, with no other details which one would it be?

Well my first pick would be the private tutoring business but… I see that one went under quickly, so what next?

I don’t want to do b2b sales any more so the Medspa Saas is out. I don’t like physical products with sub 10% margins — so the tool biz is out. It would be SEO SaaS for Wordpress and Shopify. Margins are high, the business lives in your laptop and, there’s lot of value-adds you could upsell to the customer base.

Low-Cost Private Tutoring Business with 50% Net Margins

This one went under offer while I was writing.

💰 Asking Price: $180,000
📊 Revenue: $121,901
💼 Profit: $60,649
📅 Established: 2020

This private tutoring business, established in 2020, offers one-on-one tutoring for K-12 students in math, English, science, and coding. By outsourcing tutoring to India, the business provides an affordable rate of $15 per hour for American families. With a fully transferrable team and 50% net margins, operations are managed by two full-time directors. The business has an established free trial session model, proving effective for paid advertising, with the potential for analysis on conversion rates to further optimize growth.

• Tutoring at $15/hour makes this very low cost for US market.

• Established free trial session (sales funnel) would likely do well with paid advertising.

• Two full-time directors managing operations

❓ What are the reviews like, and how satisfied are the customers?
❓ Could language barriers pose a problem for children understanding the tutors' accents?
❓ What is the conversion rate from free trials to paid sessions?

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Rapidly Growing Review Management SaaS for MedSpas and Local Businesses

💰 Asking Price: $620,000
📊 TTM Revenue: $230,000
💼 TTM Profit: $215,000
📅 Established: January 2023

This trust management software, established just 18 months ago, has shown impressive growth in the competitive review-building SaaS space. The platform helps MedSpas and other local businesses establish a strong online reputation by generating positive reviews through customized texts and emails. With a fair 2.9x profit multiple, the valuation seems attractive if the growth is sustainable.

• Impressive growth in 18 months

• Subscription-based revenue model

❓ How were the customers acquired, and is the growth sustainable?
❓ Does the SaaS have any differentiating features?
❓ Is this a white-labeled review builder?
❓ What is the churn rate?
❓ Was the business built by a med spa 'guru' persona, and how will that affect customer retention and acquisition?

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SBA Pre-Qualified eCommerce Brand in Tools & Personal Protective Gear

I’m not sure if I like this one or not.

💰 Asking Price: $1,600,000
📊 Revenue: $4,175,708
💼 Profit: $388,902
📅 Established: 2013

This eCommerce brand, established in 2013, specializes in professional-grade hand tools and personal protective equipment. The business has strategically chosen multiple suppliers for their capabilities, ensuring fast delivery speeds for over 38,000 products. With a strong focus on U.S.-sourced products, the company enjoys a loyal customer base, evident from its 20% repeat order rate and $150 average order value (AOV). This brand has been consistently profitable and is SBA pre-qualified, offering a secure investment opportunity.

Pros:

• All products sourced in the U.S.

• SBA eligible

• 11 years in business

• Diverse customer base across various industries

Cons:

• Valuation at 4.1x is on the higher side

• Margin is less than 10%

• Heavily reliant on Amazon for 61% of sales

• Managing 38,000 products can be complex

Questions: ❓ Are the tools sold under the company’s brand, or are they reselling other brands?
❓ Do these tool suppliers wholesale or dropship for other companies?
❓ What unique features or competitive advantages does the product offer in the competitive kitchenware space?
❓ What is the reason for the higher valuation at a 4.1x multiple?
❓ How is the business handling the 38,000 products in its inventory, and is there an opportunity to focus on fewer SKUs?

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Established SaaS for WordPress and Shopify

💰 Asking Price: $2,730,000
📊 Revenue: $1,111,679
💼 Profit: $606,521
📅 Established: 2019

This five-year-old SaaS business offers a popular premium WordPress plugin and Shopify app designed to improve website SEO. The platform serves an evergreen market, with every web-based business seeking to enhance their SEO. It boasts both WordPress and Shopify versions, making it versatile for various user needs. The company employs a full-time developer and three customer support representatives, ensuring smooth operations and customer satisfaction. The business has seen impressive growth, even in a competitive market.

• Available on both WordPress and Shopify platforms

• Full-time developer and three customer support representatives

• Low owner involvement, averaging 5 hours per week

• Potential for further growth with a reintroduced growth marketer

❓ What is the customer lifetime value (LTV)?
❓ Has there been a decline in revenue due to recent Google updates?
❓ Are there any unique features that set this SaaS apart from competitors?

Growth: As an SEO app, upselling additional SEO related services such as speed optimization could add easy revenue.

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