New Deals - 23 Nov 2023

A youth sports equipment eCommerce brand, medical and school transportation van converter, and 3 other interesting finds.

Author

Helen Guo
November 23, 2023

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Hello SMB Deal Hunters!

First off, Happy Thanksgiving! I hope everyone is enjoying some time off with loved ones. I know I am:

Thanks for all the great feedback from the deals I shared on Tuesday! Looks like you all loved the custom sporting apparel and uniform business (gotta love repeat customers).

I’m excited to share 5 new deals worth checking out.

📣 Today’s issue is sponsored by Roast My Deal, a new service I’m offering where I share a 15-minute private video review of a deal you’re working on in under 48 hours. Today’s the last day to take advantage of the launch offer!

1/ Medical And School Transportation Van Converter

📍 Location: N/A
💰 Asking Price: N/A
💼 EBITDA: $1,000,000
📊 Revenue: $11,100,000
📅 Established: N/A

💭 My 2 Cents: Here’s a business idea that I would have never thought of. This company converts vans for medical and school transportation. Surprisingly there’s a lot of demand for this service; they have a $10.1M backlog through Q2 of 2024. And if you dig in further, the non-emergency medical transportation sector is set to grow 9% to $10.2 billion in the next five years. Crazy, I know. I like that the company has a moat from being a government-approved supplier with five-year contracts in six states and government vehicles are mandated to be replaced every 5-7 years. Additionally, their national network of over 80 specialized transportation dealerships presents a significant barrier to entry due to the difficulty of building these B2B relationships. However, I’d want to make sure these dealership deals don’t come with any concentration risks. The main growth opportunity here is to hire more production staff so that the backlog can be filled. The only problem is that it’s hard to find skilled labor, so I’d probably start an internal apprenticeship program to help ensure a steady supply of labor.

2/ Children's Products FBA Brand

📍 Location: Remote
💰 Asking Price: $3,693,220
💼 EBITDA: $904,464
📊 Revenue: $4,866,780
📅 Established: 2021

💭 My 2 Cents: This is an Amazon FBA brand (with a small DTC and Walmart presence) selling children's safety and play products. And judging by their top-selling SKU’s 4.3-star rating and #1 best-seller status, it seems like they have a good product. The brand is just about 3 years old, but it’s shown steady growth over time instead of some overnight success story (which I’m always wary of). I also like that they only have 11 SKUs because it simplifies inventory management. The lack of major seasonality is also a plus as it means consistent cash flow. While the business has a solid 19% net profit margin, I want to better understand the gross margin and ad spend. I’d also want to know what’s on the product roadmap and what SKU expansion opportunities exist, but regardless, there are definitely avenues for growth here. Expanding Walmart sales is an easy one because Walmart is increasingly becoming a rival to Amazon but with less competition. There may be an opportunity to grow the DTC business as well, depending on the AOV and search volume of the products.

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3/ Youth Sports Equipment eCommerce Brand

📍 Location: Remote
💰 Asking Price: N/A
💼 EBITDA: $4,200,000
📊 Revenue: $19,000,000
📅 Established: N/A

💭 My 2 Cents: This is an eCommerce brand selling outdoor youth sports equipment on Amazon FBA and Shopify. For those who don’t know, youth sports equipment is a $3.5B (and growing) market. I like that the business includes experienced managers and support staff and that the products are patented. Speaking of the products, they are produced by two overseas manufacturers, so it’s important to understand the payment terms. I’d also dig into the product pipeline, SKU count, breakdown of sales on Amazon vs Shopify, the AOV, and the repurchase rate. If that all checks out, then there are definitely good opportunities to grow this business. For one, because they generally hold 2 months’ worth of inventory at all times, there may be an opportunity to get a line of credit from a bank or finance the inventory with a service like Wayflyer so not all of your cash is tied up in inventory. You could also expand internationally, sell to schools, or venture into wholesale with sporting goods retailers.

4/ Multi-Location Hair Salons

📍 Location: Oklahoma
💰 Asking Price: $2,300,000
💼 EBITDA: $711,818
📊 Revenue: $7,341,558
📅 Established: N/A

💭 My 2 Cents: If there’s a boring business that’s not talked about enough, it’s hair salons. They often show resilience even during economic downturns because people still prioritize personal grooming, and they like that personal touch. It’s also a business that has a decent amount of repeat business because people like going back to the same stylists and often require regular care. This particular salon business is a great fit for someone who wants to be hands-off, as the current owners live out of state and only visit once in a while. However, if you were to be hands-on, you would probably incentivize the staff more and boost business performance. Either way, there are opportunities for growth by adding on services and treatments and improving the marketing to drive more repeat business. However, you’re going to want to dig into the breakdown of sales by location (to see if any are really lagging behind) and what staff longevity/churn looks like.

5/ Five Crumbl Cookie Franchise Locations

📍 Location: Oregon
💰 Asking Price: $3,500,000
💼 EBITDA: $1,018,781
📊 Revenue: $5,889,086
📅 Established: 2021

💭 My 2 Cents: I talked about my love for Crumbl Cookies back in September, and nothing has happened to change my mind. With over 7M TikTok followers, 4.9 stars on the App Store (over 3M ratings!), and the fourth-fastest growing restaurant chain in the country, this very well could be the best franchise in the country. If you want to go your Crumbl on, I really suggest buying an existing performing location instead of starting a new location. Existing locations are massively de-risked AND you step into immediate cash flow AND it’ll cost around the same as starting a new location anyway. It’s a super underrated way to get into entrepreneurship, and I honestly don’t understand why you’d get into a franchise any other way.

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🐦 The Best of SMB Twitter (X)

The best cash-flowing business you have ever seen (link)

4 simple businesses that print cash (link)

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Make sure to get a transition services agreement (link)

Franchising lessons from Aaron Harper, CEO of Rolling Suds (link)

An honest take on ETA (link)

An interesting example of a root cause analysis (link)

Shop your insurance coverage on an annual basis (link)

What best-in-class franchise training looks like (link)

Tactical thinking on building a top-level team (link)

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See you next Tuesday!

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This publication is a newsletter only and the information provided herein is the opinion of our editors and writers only. Any transaction or opportunity of any kind is provided for information only; SMB Deal Hunter does not verify nor confirm information. SMB Deal Hunter is not making any offer to readers to participate in any transaction or opportunity described herein.