2024.08.05 - Online Businesses For Sale

Hey hey gang, to day we’ve got two very online businesses for sale!

Personally, I have been eyeballs deep in due diligence for a business I made an offer on. It was actually included waaay back in a March edition I did.

The due diligence process has been well mind tangling. I believe the process and emotion rollercoaster is similar for many buyers. When I first made the offer I felt like I understood the business, how it works, the growth plan (i had scratched out), and the risks of the business, but as I go into it, it all seems more chaotic and risky. This leads to burning a lot of mental energy and in inability to focus on much else. Perhaps I’ll do another email on all that.

Anyhow…

🔫 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?

I would go with the app builder platform.

Its a really got a competitive moat with the tech (building no code app creation software from scratch doesn’t seem easy) and the stickiness of the customer base has to be incredible.

315k/yr B2B Podcast Production Agency

💰 Asking Price: $1,000,000
📊 TTM Revenue: $380,000
💼 TTM Profit: $315,000
📅 Established: November 2021

I like this business because it focuses on B2B clients, which are less likely to leave for DIY options. The agency operates with a high 84% profit margin and strong monthly recurring revenue (MRR), with no single client accounting for more than 13% of total revenue. The seller only works 15 hours per week, which raises questions about the daily operations given the 16% margin that doesn’t leave much room for a full-time team.

• High margin at 84%

• Strong monthly recurring revenue (MRR)

• No client concentration

• Focus on B2B customers, reducing the likelihood of clients opting for DIY solutions

• 100% retainer-based model with clients on six-month retainers

• Multiple incumbents doing an estimated $10mm+

Questions:

❓ Who is actually running the business on a day-to-day basis if the seller only works 15 hours per week and ‘wages’ must be less than 16% of revenue?

❓Is this service custom or productized?

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101k/yr App Builder Platform for iOS & Android

💰 Asking Price: $450,000
📊 TTM Revenue: $176,000
💼 TTM Profit: $101,000
📅 Established: June 2022

I like this business because it has a current and progressive product as opposed to many businesses of this price point which have an aged and nearly dated product. The ‘no code app’ offer is also a true value-added product for its customers that is more economical, and quicker than custom app dev. The 14-day free trial offer is a strong selling point for advertising, and there are opportunities to sell higher-ticket consulting and integration assistance. With 75% of sales coming directly and 800+ published apps, this shows strong customer satisfaction and high switching costs for customers.

• High margin at 84%

• Strong monthly recurring revenue (MRR) with 330 subscriptions

• No client concentration, reducing risk

• 800+ published apps, indicating strong customer satisfaction

• 14-day free trial offer can boost advertising efforts

• Opportunities to sell higher-ticket consulting and integration assistance

• 75% of sales coming directly

Concerns:

• The 300 lifetime licenses represent a liability as they require service but bring in no revenue.

• The reason for selling is concerning. Despite the good traction, the sellers want to focus on other ventures, which raises questions about the future potential.

• The development team's affiliation with the seller needs clarification. There could be issues working with them going forward or misrepresentation of expenses allocated to this business.

Questions:

❓ Who is doing the development, and how affiliated are they with the seller?
❓ What is the reason for the seller's shift in focus, given the business's apparent success?

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