Web Design and Site Development
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.
- 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
- 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 Statement||P&L Statement|
January - November
|Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$29,778||$31,876||$25,169||$45,372||$47,721|
|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|
|Pension & Profit||$9,167||$10,000||$0||$10,000||$10,000||To Owner|
|Seller's Cash Flow = Total Addbacks + Net Income||$90,709||$101,597||$79,602||$109,010||$103,960|
|Profit Margin||64.58 %||59.32 %||52.61 %||58.37 %||59.56 %|
- Excellent profit margins!
- Local small businesses
- Law firms
- Health centers
- Construction companies
- 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.
- Web design
- Web hosting management
- Print design
- Business cards
- Informational items
- Promotional items
- 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!
- 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
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.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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Omaha, NE 68114
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