Agency Business For Sale: But It Might Never Sell

In this episode, we dive into a fascinating deal for a no-code app development agency listed at $2.1 million. Sounds intriguing, right? But here’s the twist—this business isn’t quite ready for sale. Let’s break down why this deal caught our attention and what you can learn from it.

The listing

We found this deal on Acquire. Check it out here.

The Deal Breakdown

The agency in question specializes in creating no-code apps—basically, apps that don't require traditional coding skills to build. It’s got a solid base: 150,000 newsletter subscribers and 5,000 people attending their open house classes. However, it has a few significant hurdles.

Why It’s Not Ready to Sell

1. Lack of Recurring Revenue: The business is built around one-time app sales. This model can be risky because there’s no steady income stream. Buyers typically prefer businesses with recurring revenue because it’s more predictable and stable.
2. Dependence on the Founder: The agency heavily relies on its charismatic founder for marketing and customer relationships. If the founder leaves, the business might struggle to maintain its current performance. A business that’s too dependent on its founder can be hard to sell because it feels like a one-person show.
3. Missed Opportunities: The agency has a strong following, but it's not fully monetizing it. The hosts pointed out that there are other services—like SEO—that could be offered to the existing customer base. Expanding service offerings could significantly increase the business's value.

What Can Be Done to Improve the Deal

1. Build Recurring Revenue: Adding services with subscription models or ongoing support could help stabilize the business’s income. This makes it more appealing to potential buyers.
2. Diversify Marketing: The founder’s personal brand is crucial, but it shouldn’t be the only marketing strategy. By using other marketing channels and showcasing a broader range of actors in their ads, the business can reduce its dependence on the founder.
3. Prepare for Sale: Before selling, the business should address these issues. This means creating a plan to stabilize income, diversifying marketing strategies, and possibly even working with an exit planner to ensure the business is truly ready for the market.

Takeaways

If you’re looking to buy or sell a business, this episode offers valuable insights. It shows why it’s important to build a business model that attracts buyers by offering stability and growth potential. You’ll learn about the importance of recurring revenue, the risks of a founder-dependent business, and how to prepare a business for sale.