Business for Sale, Would I Buy It? | Marketing Agency
In this series, CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses up for sale and see if Matt would be interested in buying them.
Video Transcript:
Today in the series of Would I Buy this Business is a top-rated marketing agency, year over year growth, remote, and notable clients. Okay asking price 1.5 million. Sales 1.2 million (specifically $1,194,747). Gross or cash flow rather of 482,000 (specifically $482,524). So pretty good cash flow for this size business. Agencies generally though tend to be pretty good profit margins. Your selling somebody a service that you are then getting, a lot of times, freelancers and contractors to actually provide at a fraction of what you’re billing the client. There’s not a lot of other overhead into it or other expenses, so there can be a pretty good markup. A lot of times these businesses can be remote like this one. You don’t even need an office. You don’t even have that expense of a lease and office space. And you can really bill based on client value, right? So if you help somebody get 500 new customers for the year and these customers are worth $1,000 to them. Even if you’re billing $50,000 for the service, even if it only costs you $10,000, to the client paying you 50,000 to generate $500,000 in revenue to them, they’re happy to pay that all day long. So there can be good margins in agency work, you have to be a good agency, you have to be good at getting new business, you have to be good at delivering value, and keeping the customers that you have. But it’s definitely can be a good business.
So this one says agency is a trailblazer in the marketing industry. Hmm seems like a bold claim, there’s about a million marketing agencies out there. I don’t know how they’re a trailblazer but. Stands out for its expertise in social media, content creation, advertising, copywriting, trusted among leading brands. Has a portfolio of successful long-term clients, fully remote, team of contractors, like I mentioned. Keeps operating costs low. The agency’s edge over competitors is profound. It sets itself apart with unparalleled ability to outperform others which has cemented its reputation. Okay, well sure, we’ll see if that’s really true. Notable clients include 21 Seeds Tequila, organicgirl, RMS Beauty, NuFace, Newlam’s Own, and many more. Okay, I’m a little surprised they’re putting their actual clients in a business-for-sale listing, that seems like a recipe for somebody to go out and poach those clients.
But I mean in general this is a business model that I find, you know, attractive. I think it’s scalable and growable and I’m always a fan of businesses with high profit margins. So this is definitely one I would be interested in finding out more about. And the one thing I would be concerned about with any business like this is how much the current owner is involved, right? If the current owner is the one who has all these relationships with these clients and is the driving force behind any client signing up, to go “I wanna talk to Joe. Joe’s the main guy here. Joe’s the creative force. Joe’s the one that sells all the business.” And now you’re looking to replace Joe. Are you gonna be able to take over those relationships? Are the clients gonna trust you the way they trust Joe? are you gonna be able to get new clients the way Joe was able to leverage his reputation? In that obviously making up the name Joe, but whoever it is behind this agency, are you gonna be able to as the new owner transfer that? That’s the No. 1 risk in this kind of business and something that take seriously. And consider how you do the transition so that it goes smoothly and you don’t lose clients in the process. But if you can pull that off this kind of business is definitely one that would be on my radar for an acquisition.
