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Opportunities

Web Design and Site Development

CASH FLOW
$96,955

Specifications

  • Price
    $296,000

  • Revenue
    $153,229

  • Cash Flow
    $96,955

  • Location
    Lincoln, Nebraska

  • Service Area
    Local small businesses, some national and international small businesses

  • Reason for Sale
    Retirement

  • Profit Margin
    65%

  • Equipment
    $1,500

  • Lease
    Currently working remotely

  • Account Receivable
    $61,000

  • Employees
    1099 contractors (4 as needed, with 1 main contractor working consistent hours)

  • Intangible Assets
    Many long-term relationships, very diversified client base, spotless record with the BBB, established relationships with contractors, excellent social media reviews

This firm has been doing web design (80%) and print design work (20%) for small businesses since 1987. Building imaginative sites with WordPress gives the customer the ability to update content easily or this team can be contracted to update content and graphics in a timely manner. All functions of this business are currently run by an owner/operator who does not work from a traditional office which leads to very low overhead cost and is currently operating with a 59% profit margin. Four experienced 1099 contractors are on staff with one contractor as the main source of support and coding for the owner.

 

The company also provides original graphic designs for print materials.  From business cards and brochures to forms and promotional materials, this company has the artistic eye to do it all!  Though print design is not the focus, it is a convenient service for those already partnering with this company for website creation and management. 

 

Through currently operating with a huge margin, growth can be found in improving search engine optimization, offering maintenance contacts, or offering web hosting services. 

Business Highlights

  • Year Established: 1987
  • Location: Lincoln, Nebraska, but easily relocatable
  • Clients: Local small businesses, some national and international small businesses
  • Services: Web design 80%, print design 20%
  • Lease: Currently working remotely
  • Reason for Selling: Retirement
  • Employees: 1099 contractors (4 as needed, with 1 main contractor working consistent hours - The main contractor has been with the company for over 3 years!)
  • Seller Training Period: 6 months transition
  • Growth Opportunities: Focus on SEO and adding this service for customers, include web hosting in services offered, continue to build relationships, advertise in a targeted manner, build contracting base in specialized areas
  • Current Owner’s Responsibilities: Owner/operator

Financial Highlights

  • List Price: $296,000
  • Gross Sales:
    • 2018: $153,229
    • 2017: $171,260
    • 2016: $151,319
    • 2015: $186,753
  • Cash Flow:
    • 2018: $98,955
    • 2017: $101,597
    • 2016: $79,602
    • 2015: $109,010
  • Assets Included in Purchase*
    • Equipment: $1,500: Multiple software subscriptions
    • A/R: $61,000
    • Intangible Assets: Many long-term relationships, very diversified client base, spotless record with the BBB, established relationships with contractors, excellent social media reviews

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L Statement
January - November
Tax ReturnTax ReturnTax ReturnTax ReturnNotes
20182017201620152014
GROSS SALES$140,460$171,260$151,319$186,753$174,535
Annualized$153,229
Net Income Shown on Financial Statement$29,778$31,876$25,169$45,372$47,721
ADDBACKS
Compensation to Owner$36,119$53,335$48,210$47,778$41,093
11% Tax on total W2 Salaries$3,973$5,867$5,303$5,256$4,520
Meals & Entertainment$29$0$342$12$24
Depreciation$0$519$578$592$602
Pension & Profit$9,167$10,000$0$10,000$10,000To Owner
Health Insurance$6,694$0$0$0$0
Life Insurance$4,949$0$0$0$0
TOTAL ADDBACKS$60,931$69,721$54,433$63,638$56,239
Seller's Cash Flow = Total Addbacks + Net Income$90,709$101,597$79,602$109,010$103,960
Annualized$90,709
Profit Margin64.58 %59.32 %52.61 %58.37 %59.56 %
  • Excellent profit margins!

Typical Clients

  • Local small businesses
    • Law firms
    • Health centers
    • Florists
    • Dentists
    • Construction companies
    • Nonprofits
    • Travel and tourism
  • Some national small businesses
  • Some international small businesses

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • Web design
    • Design
    • Maintenance
    • Updating
    • E-commerce
    • Web hosting management

 

  • Print design
    • Business cards
    • Brochures
    • Flyers
    • Forms
    • Informational items
    • Advertisements
    • Promotional items

Employees

  • 1099 contractors
    • 4 as needed
    • One of the contractors is considered the main contractor due to the fact that he works fairly consistent hours for over 3 years!

Growth Opportunities

  • Focus on SEO and adding this service for customers 
  • Include web hosting in the list of services offered 
  • Implement website maintenance packages for customers 
  • Continue to build relationships in the community 
  • Advertise in a targeted manner 
  • Build contracting base in specialized areas

Valuation Details

The Firm Business Brokerage used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

For this business, a 2017 cash flow was used with a prescribed multiple is 2.92.  With this information, the computation is as follows:

$101,597         x          2.92     =          $296,663

The fair market value found above positions the business list price at $296,000.

Funding Example

Purchase Price:                                $296,000

30% Buyer Down Payment:               $88,800

30% Seller Financing:                        $88,800

40% Bank Loan:                                $118,400

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,656.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $1,556.

After business expenses and loan payments, a buyer with a 15% down payment of $88,800 would retain a profit of $63,060, which results in a 70% return on investment in the first year.

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $296,000 with the terms listed above, the coverage ratio is 2.64. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

 

Purchase Price:

$296,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2017 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2017 Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.