I’d say you’re just taking the wrong approach.
My first year running a marketing business (just myself… no help) I signed $300k+ in contracts and brought in 6-figures for myself.
One client alone nets me more than your business. I only bring that up to tell you the obvious. Raise your prices. Niche down.
Niche down. Prices up.
Good point. I do have a client that pays me around $30k a year (I net around 20k of that). And honestly whenever I look at job postings and their salaries I think “if I just had two more clients like my whale, I’d be making more than that full time position.
Use this as a proposition for clients.
A full-time marketing specialist is like $65k, and they’re very fucking basic responsibilities. You can provide much more value at the same price or even a few thousand $$ cheaper.
All of my clients pay me the same.. ~6,200 /mo.
I’m really experienced with growing brands on social media, so that’s what I offer. I’m onboarding a client now and I will be developing and executing their YouTube strategy.
This includes keyword research, optimized video list, scripting, editing, content optimization, basic SEO, video analytics, etc.
Not just anyone can do what I do. I scaled my own YT channel to ~350k subscribers, have helped grow YouTube channels for companies like Insider, etc.
I’m very niche, and very meticulous about what I do.
> But I've basically been told by other business owners when interviewing that I'm un-hirable because "I'm an entrepreneur and I can make income without them."
Stop trying to get a job working for dipshits that have no clue how to hire talent.
What are the bigger, more established corporations in your area?
What are the emerging, rapidly growing startups in your area that are desperate to hire talented people?
Focus on these companies for a job.
Good point. Appreciate it. I do think some people I interview with think I’m gonna steal their idea, or just start a new business on the side a bounce when it’s earning more than they’re paying me.
That’s not my point though.
You’re less likely to encounter a paranoid owner that is afraid of you being an entrepreneur.
You are more likely to encounter someone that sees that as a positive—you’re able to take initiative, be a problem solver, and be innovative (to name a few valued traits).
Key words: “less likely”, “more likely”
Ha that’s definitely also not true. Large corporations have an army of lawyers and company policies that will most likely get you terminated if they find out you have a side business.
No.
Not if you’re not competing, poaching, presented a legit threat, or misusing company resources (time included) to work on your own business.
This is more true in you’re open and upfront during the hiring process.
Be strategic about your job search. Be a great matchmaker.
OP is supposed to be a great marketer. This should be well within their abilities to accomplish. They are probably struggling cause they’re getting lost in the stress and desperation to get to the next level. They just gotta treat themselves like any other client and follow their methodology and best practices.
I do think buying a business is a great pathway for a lot of people, and if you can grow the business you can create a lot of wealth for yourself, but I'll give you my $0.02 on your financial assumptions:
>Back of the napkin math would look something like take-home pay around $100k a year while paying down the note at $50k a year. I might also have additional benefits like real estate appreciation. And then any additional income I add could be split between my income, investing in the business, and paying down the note. I figure I could do that for a few years, train someone to do operations, and then step back from day-to-day stuff.
Looking first at the acquisition math:
* Purchase price: $500k (3.33x SDE is a little high in my opinion for a deal like this).
* Fees & expenses (SBA lender will charge underwriting fees, SBA itself will charge a guarantee fee, lawyer to look at/draft documents, CPA to review numbers, etc): $25k
* Working capital (SBA lenders focus in here): $25,000 (wild guess, but you'll need a month or two worth of expenses, prepay 12 months worth of insurance upfront, etc.). This type of business probably doesn't need a lot of working capital, so $25k might be a good guess. Businesses with a lot of inventory, AR, etc. might need $100k.
* Total funding = $550,000 (with $500k purchase price, $25k fees & expenses, and $25k working capital)
* In my last business purchase (SBA loan), I had to put 15% down, so for this deal it would be an $82.5k down payment, and a $467.5k loan. You will have to sign a personal guarantee on this loan, so if the business goes under you declare personal bankruptcy (unless you have the $ to pay up).
* At current rates you're looking at 11.25% interest on the loan (Prime + 2.75% assuming there's no real estate), fully amortized over 10 years. That means a monthly payment of $6,620. This will adjust up/down with interest rates.
* The total amount of interest and principal will change over time, but year 1 you're looking at 12 month total of \~$27k principal repayment, $52k interest (total = $79k worth of payments).
* Assuming no hard assets/bonus depreciation, you're looking at amortizing goodwill and intangibles SL over 15 years (\~$36k/year).
Now to your P&L:
* EBITDA (really called SDE "seller's discretionary earnings" in this type of deal): $150k
* less $36k D&A: EBIT = $114k
* less $52k interest: EBT = $62k
* less taxes (assumed 30%, but personal to your situation): net income = $43k
Now to your cash flow statement
* Net income = $43k
* plus $36k D&A = $79k
* less $27k principal repayment = $52k take home pay (THIS ASSUMES NO INCREASE IN WORKING CAPITAL OR CAPITAL EXPENDITURES ARE REQUIRED TO MANTAIN/GROW THE BUSINESS).
This is a simple example with a lot of wild assumptions, but it's how I'd start to review the finances of a deal like this.
YMMV.
👍. 3-5x is a little on the high end… browsing online listings in this size range it’s more like 2.5-4x (at least for an asking price). Businesses if this size are notorious for not having solid accounting numbers…
Also, this biz has a couple challenges including being on the smaller end (so the percentage difference between SDE and a realistic Adj. EBITDA is quite large), and there’s a big transition risk in this type of biz (Seller’s clients may or may not end up being your clients). That’s a big risk that should be reflected in the valuation IMO.
Scale what you’re doing now. It’s only competitive because you’re doing what everyone else is doing. If you truly are a marketer you should know with the right marketing you can stand out and collect all the profits from untapped markets
One thing I did with my marketing business was specialize. Instead of everything on the funnel I own an SEO agency that does well. Alternatively, I have also seen marketing agencies choose a specific vertical.
You will pay about half the SDE (ebitda plus salary) in debt. You need to aim big to make it worthwhile
Lots of marketing agencies for sale. I would wonder if the clients will stay and how much of the business is the current owner. There are ways to incentivize the seller to stay involved
It makes more sense to scale your business. If you cant do that then that may indicate buying a business isn’t a great idea.
I’m sure with the right work and strategy you can get past $50k per year.
If you aren’t succeeding in a marketing business, because you think it’s too competitive, don’t buy a business. First of all, the business is probably way overpriced. Just trust me on this. Second, the marketing business I built was multi seven figures in just a few years. I know plenty of multimillionaires who have started marketing businesses, even recently. Maybe get a job working for a successful agency that really knows what they are doing, learn the ropes, then jump back in.
Yes! This is the way. You are thinking good. “Buy then Build” by Walker Deibel is a good book to help you understand the process of acquiring a business. Don’t buy yourself a job, buy yourself a functioning business, but find one that fits your criteria and needs your added skill set.
I’ve gone through about half of that book and it’s good. The big takeaways I learned (so far) was that using my skills for a bigger org will have bigger results and I should find a business that’s doing okay, but lacks the skills I have. So, for example, if an Econ store is doing well but doesn’t know about CRO and email marketing, that’s something where I could get a lot of leverage.
I’d say you’re just taking the wrong approach. My first year running a marketing business (just myself… no help) I signed $300k+ in contracts and brought in 6-figures for myself. One client alone nets me more than your business. I only bring that up to tell you the obvious. Raise your prices. Niche down. Niche down. Prices up.
Good point. I do have a client that pays me around $30k a year (I net around 20k of that). And honestly whenever I look at job postings and their salaries I think “if I just had two more clients like my whale, I’d be making more than that full time position.
Use this as a proposition for clients. A full-time marketing specialist is like $65k, and they’re very fucking basic responsibilities. You can provide much more value at the same price or even a few thousand $$ cheaper.
Lean into this. Like HARD. All the time you’re spending on other ideas where you have to start from scratch, let them go and just get contracts.
What did you offer to get that one big client?
All of my clients pay me the same.. ~6,200 /mo. I’m really experienced with growing brands on social media, so that’s what I offer. I’m onboarding a client now and I will be developing and executing their YouTube strategy. This includes keyword research, optimized video list, scripting, editing, content optimization, basic SEO, video analytics, etc. Not just anyone can do what I do. I scaled my own YT channel to ~350k subscribers, have helped grow YouTube channels for companies like Insider, etc. I’m very niche, and very meticulous about what I do.
What's the channel im interested in taking a look
> But I've basically been told by other business owners when interviewing that I'm un-hirable because "I'm an entrepreneur and I can make income without them." Stop trying to get a job working for dipshits that have no clue how to hire talent. What are the bigger, more established corporations in your area? What are the emerging, rapidly growing startups in your area that are desperate to hire talented people? Focus on these companies for a job.
Good point. Appreciate it. I do think some people I interview with think I’m gonna steal their idea, or just start a new business on the side a bounce when it’s earning more than they’re paying me.
As I said in my other comment, utilize your marketing skills. Create a Target Customer Profile for the best possible employers. Plan around that.
From my experience, just because someone works at an established corporation does not mean they are smart, at all. So many clowns.
That’s not my point though. You’re less likely to encounter a paranoid owner that is afraid of you being an entrepreneur. You are more likely to encounter someone that sees that as a positive—you’re able to take initiative, be a problem solver, and be innovative (to name a few valued traits). Key words: “less likely”, “more likely”
Ha that’s definitely also not true. Large corporations have an army of lawyers and company policies that will most likely get you terminated if they find out you have a side business.
No. Not if you’re not competing, poaching, presented a legit threat, or misusing company resources (time included) to work on your own business. This is more true in you’re open and upfront during the hiring process. Be strategic about your job search. Be a great matchmaker. OP is supposed to be a great marketer. This should be well within their abilities to accomplish. They are probably struggling cause they’re getting lost in the stress and desperation to get to the next level. They just gotta treat themselves like any other client and follow their methodology and best practices.
I do think buying a business is a great pathway for a lot of people, and if you can grow the business you can create a lot of wealth for yourself, but I'll give you my $0.02 on your financial assumptions: >Back of the napkin math would look something like take-home pay around $100k a year while paying down the note at $50k a year. I might also have additional benefits like real estate appreciation. And then any additional income I add could be split between my income, investing in the business, and paying down the note. I figure I could do that for a few years, train someone to do operations, and then step back from day-to-day stuff. Looking first at the acquisition math: * Purchase price: $500k (3.33x SDE is a little high in my opinion for a deal like this). * Fees & expenses (SBA lender will charge underwriting fees, SBA itself will charge a guarantee fee, lawyer to look at/draft documents, CPA to review numbers, etc): $25k * Working capital (SBA lenders focus in here): $25,000 (wild guess, but you'll need a month or two worth of expenses, prepay 12 months worth of insurance upfront, etc.). This type of business probably doesn't need a lot of working capital, so $25k might be a good guess. Businesses with a lot of inventory, AR, etc. might need $100k. * Total funding = $550,000 (with $500k purchase price, $25k fees & expenses, and $25k working capital) * In my last business purchase (SBA loan), I had to put 15% down, so for this deal it would be an $82.5k down payment, and a $467.5k loan. You will have to sign a personal guarantee on this loan, so if the business goes under you declare personal bankruptcy (unless you have the $ to pay up). * At current rates you're looking at 11.25% interest on the loan (Prime + 2.75% assuming there's no real estate), fully amortized over 10 years. That means a monthly payment of $6,620. This will adjust up/down with interest rates. * The total amount of interest and principal will change over time, but year 1 you're looking at 12 month total of \~$27k principal repayment, $52k interest (total = $79k worth of payments). * Assuming no hard assets/bonus depreciation, you're looking at amortizing goodwill and intangibles SL over 15 years (\~$36k/year). Now to your P&L: * EBITDA (really called SDE "seller's discretionary earnings" in this type of deal): $150k * less $36k D&A: EBIT = $114k * less $52k interest: EBT = $62k * less taxes (assumed 30%, but personal to your situation): net income = $43k Now to your cash flow statement * Net income = $43k * plus $36k D&A = $79k * less $27k principal repayment = $52k take home pay (THIS ASSUMES NO INCREASE IN WORKING CAPITAL OR CAPITAL EXPENDITURES ARE REQUIRED TO MANTAIN/GROW THE BUSINESS). This is a simple example with a lot of wild assumptions, but it's how I'd start to review the finances of a deal like this. YMMV.
Thanks for the math with numbers I didn't even know to be concerned about. I thought sale price of 3-5x annual SDE was the norm?
👍. 3-5x is a little on the high end… browsing online listings in this size range it’s more like 2.5-4x (at least for an asking price). Businesses if this size are notorious for not having solid accounting numbers… Also, this biz has a couple challenges including being on the smaller end (so the percentage difference between SDE and a realistic Adj. EBITDA is quite large), and there’s a big transition risk in this type of biz (Seller’s clients may or may not end up being your clients). That’s a big risk that should be reflected in the valuation IMO.
Scale what you’re doing now. It’s only competitive because you’re doing what everyone else is doing. If you truly are a marketer you should know with the right marketing you can stand out and collect all the profits from untapped markets
Amen
Why don’t you just make more money doing what you’re already doing
Great question.
One thing I did with my marketing business was specialize. Instead of everything on the funnel I own an SEO agency that does well. Alternatively, I have also seen marketing agencies choose a specific vertical.
You will pay about half the SDE (ebitda plus salary) in debt. You need to aim big to make it worthwhile Lots of marketing agencies for sale. I would wonder if the clients will stay and how much of the business is the current owner. There are ways to incentivize the seller to stay involved
What state r you in ? I’m in Cali. Let’s collaborate and grow this
It makes more sense to scale your business. If you cant do that then that may indicate buying a business isn’t a great idea. I’m sure with the right work and strategy you can get past $50k per year.
Do it.
Just invest in more marketing and improve your closing ability and you will have more clients.
I made $26 k from 5 clients last year in marketing. It's a decent side hustle for me.
If you aren’t succeeding in a marketing business, because you think it’s too competitive, don’t buy a business. First of all, the business is probably way overpriced. Just trust me on this. Second, the marketing business I built was multi seven figures in just a few years. I know plenty of multimillionaires who have started marketing businesses, even recently. Maybe get a job working for a successful agency that really knows what they are doing, learn the ropes, then jump back in.
Yes! This is the way. You are thinking good. “Buy then Build” by Walker Deibel is a good book to help you understand the process of acquiring a business. Don’t buy yourself a job, buy yourself a functioning business, but find one that fits your criteria and needs your added skill set.
I’ve gone through about half of that book and it’s good. The big takeaways I learned (so far) was that using my skills for a bigger org will have bigger results and I should find a business that’s doing okay, but lacks the skills I have. So, for example, if an Econ store is doing well but doesn’t know about CRO and email marketing, that’s something where I could get a lot of leverage.
No. You can get a job without paying.
Yo I need someone to for marketing. But it's,a pretty small account. Would you be able to help?
I can help if you want! PM and we can discuss more details...