Flippa Listing Review - ArtofHeadshots

Hi everyone,

A few weeks back on LinkedIn, I posted a small breakdown of a business for sale on Acquire.com.

A few people mentioned I should start doing more of these, do them as a newsletter, and if possible do listings that are publicly viewable.

So here we go, this is the first one.

If video is more your thing, I recorded an over-the-shoulder video as I went through the listing and have uploaded that to Youtube here.

But there’s only so much I can find out on a 5-10 minute walkthrough, so I wanted to do a more in-depth breakdown in written form.

For those who haven’t watched the video, here are the highlights of the listing in question:

Also, you can view the actual listing here.

The business claims to be a Saas platform, which confused me at first because it’s for sale for just 1.8x profit and 1.1x revenue. That does not sound like a software valuation.

At 61% profit margins, it also seems to be more like a service than a software business.

But let’s ignore that for now and just dig in to learn more about the actual business.

What does it do?

“Art of Headshots: Premier SaaS platform connecting photographers & corporations. Entrepreneurial venture with Global ambition, leading brand, domains & team.”

It’s common to see things like “global ambition” and “leading brand” in business listings. You can take it with a grain of salt, but I don’t blame the sellers for putting things like that in the listing.

What annoys me is when the description doesn’t really tell me what it does.

Ok, so it is a platform that connects photographers with corporations. Ok, let’s find out more. What does that mean? What does it look like? How does it work? Where’s the saas part? (For those unaware, saas is basically software you pay a monthly or yearly fee for).

“Art of Headshots™ is already a significant force in 15 cities and is poised for an extraordinary expansion. Under your ownership, we can realize our vision of dominating the North American market. Our trademark not only serves as our identity but also as a shield, uniquely positioning us to be the premier brand in the corporate headshots arena. This opportunity is more than a business venture; it's the creation of an international legacy.

My current financial limitations have restrained the company's full growth potential, which I believe is exponential. We address two vital market needs: providing photographers with lucrative self-employment opportunities and offering corporations and individuals high-quality, professional profile images that stand out.

Moreover, I am open to discussing a partnership arrangement, allowing me to continue contributing through the training and recruitment of new photographers. This could be an ideal solution for those not looking to fully acquire but rather invest in and collaboratively grow this promising brand.”’

Ok so now I am a bit confused. If you’re a software/saas, why are you mentioning cities you are in?

Also, why am I still not really sure what you do?

Also, tone down the sales speak please, I have allergies.

Maybe this isn’t so bad. The platform connects photographers with corporations, so clearly there is some physical presence needed and being in 14 cities just means they only have photographers in those cities.

But it’s starting to sound less like a saas and more like a service business or matchmaking business here. That’s not necessarily a bad thing at all, I’m just trying to get to the bottom of what exactly it is.

Let’s read on.

“Our cutting-edge SaaS platform is synonymous with unmatched quality and professionalism, seamlessly linking skilled photographers to discerning clientele. Whether it's corporations showcasing their ace teams, individuals striving for a powerful LinkedIn profile, actors eyeing the spotlight, or singles enhancing their dating portfolios, we ensure every shot leaves a lasting impression.”

This is getting frustrating.

I’m going to just visit the website and figure it out for myself.

Got it, that makes a lot more sense.

So it’s not a saas, it’s basically a service that offers headshots for corporations, and they presumably partner with local photographers to fulfil that service.

Now we know what it is, we can dig in a bit further.

This is where I like to go back and review the financials.

But seriously, I can’t believe how hard it was to figure this thing out.

Selling your business is hard, you want to make it seem attractive to buyers, you want to stand out from the crowd, and you’re probably not an elite copywriter.

But still, make it easy for people to understand.

Financials

Let’s dig into the financials. They’re actually not too shabby.

I am writing this in March 2024, so we need to get some updated financials from the seller. I assume the business was first listed in November 2023 and has been for sale a while.

This could be a red flag (nobody else wants it), or an opportunity (the seller has lowered their expectations).

It is probably why the business is for sale for 1.8x profit.

Given that it is much more of a physical business than most things listed on Flippa, it’s reasonable to assume there’s not been a buyer simply because most people want something 100% online.

Or, the business is in decline, or there are some other risks we haven’t found yet (like AI replacing the need for professional headshots).

The business revenues fluctuate, but even in their worst two months of the last year they made a small profit. That’s not bad.

Remember, we might be able to earn 55% cash returns on this business if it maintains its income levels, so we want to figure out the reliability and the trends. (The business is for sale for $195k and made $107k profit last year. That’s 55% coc returns if next twelve months is the same).

I took the table above, threw it into chatGPT and asked it to read the image, and convert it into a graph.

Here’s the output:

What I am looking for is an easy way to visualize the trend of the business for the twelve month period we have access to.

Expenses are fairly flat and stable. That’s good.

Revenue fluctuates and profit along with it. I can’t really see a discernible trend here though. I’d say the business fluctuates but is not obviously in decline, which is good.

(We of course need to find out the latest numbers and verify that, but let’s work with what we have for now).

So, the next thing we want to figure out is what else is in the financial picture. This is questions such as:

• Where exactly does it earn revenue from? What service, which cities?

• What extra capital requirements does the business have?

• What about if we want to grow it?

• What does it take to launch in a new city?

• Is any of the previous revenue one-off, or can we expect it to continue?

In addition to the financial questions, we’ll start to dig into the operations:

• What does it take to run this thing?

• What’s the team like?

• Are any of them leaving?

• What are the recruitment needs moving forward?

It’s worth noting the seller mentioned being open to partnering. So it’s quite possible that if you were to bring capital and buy a certain % of the business, he’d be willing to stay on and help a growth plan. That’s great for three reasons:

1.) Makes it a lot easier than figuring it all out for ourselves.

2.) A great vote of confidence in the business on his behalf.

3.) He’s much more likely to accept an earnout or less cash up front if he’s going to partner and stick around long term.

Financial Picture

Back to the questions above, here’s what we can see about expansion opportuniteis and costs:

“Current Operations: Art of Headshots™ currently in 15 locations. With a visionary partner, we aim to ambitiously expand our presence to 100 locations. Despite this tenfold increase, our operational costs, especially concerning the website, will remain remarkably stable.

Current Revenue: Our revenue from the existing 15 locations, though modest, lays a strong foundation.

Projected Revenue: Expanding to 100 locations, based on our current metrics, could exponentially increase our annual revenue, potentially reaching an impressive $3.33M. With 1000 locations the revenue grows exponentially gearing towards becoming a unicorn.

Startup Costs: Establishing a new location is remarkably cost-effective, requiring just $7,500. This cost efficiency underscores our lean and scalable business model.

Growth Potential: Our financial model is designed not just for sustainability but for substantial growth. This positions Art of Headshots™ as an exceedingly attractive and profitable venture for forward-thinking partners.”

Ok so let’s ignore the hype and look at the actual numbers there. If they’re accurate, it’s worth digging into.

Costs to open a new location: $7,500

Revenue from new location: ?

The seller says 100 stores will bring in $3.3M in revenue, so I guess that means one store is $33k. It’s not that simple though…because he said “potentially” and “exponentially”, which suggests just adding one store will bring in much less revenue.

Plus, the current business revenues are about $180k across 15 cities, which is more like $12k/year per city.

And I imagine each city is going to vary wildly.

But let’s just keep it reallly simple and say one new city brings in $10k per year in revenue, and has about $4k in costs (seems way too low, but they’re only spending $60k/year across 15 cities currently, so let’s go with it).

This means that for $7,500 setup, you get $6k per year in profit.

If true (big if), that is a very nice return.

I now have questions like, are those numbers accurate? Do they scale? Does the $7,500 include the marketing needed to start generating the revenue? Etc

The good thing is with 15 cities worth of data, there should at least be something to work with.

I’m also thinking, this doesn’t really sound like an online business anymore and I’m probably getting out of my depth…

As I scroll around to find out more about the actual operations of the business, I see this section which basically ends it for me:

“EXCLUSIVE OFFERINGS WITH THE "BUY NOW" OPTION:

1. Core SaaS Platform - ArtofHeadshots.com: Acquire our leading SaaS platform that has been the backbone of our operations. ArtofHeadshots.com is more than just a domain; it's an integrated system and a recognized online brand, associated with premium photography services.

2. Strategic Domain - TheArtofHeadshots.com: Secure a powerful, strategic domain name to safeguard the brand and preempt potential competition. This secondary domain is not just about protection; it’s also a potential avenue for brand expansion or diversification.

3. Registered Trademark: Receive the exclusive rights to the 'Art of Headshots™' trademark. Ensure brand consistency and gain protection against potential infringements or imitations.

4. Comprehensive Business Manuals: Gain from our years of experience with in-depth manuals that detail refined processes, proven methods, and industry best practices. They’re your key to maintaining and enhancing the brand's esteemed reputation.

5. Dedicated Staff: Inherit our skilled and dedicated team. Their extensive understanding of our systems, commitment to service, and passion for photography will be your greatest assets.

6. Comprehensive Business Plan: Get our holistic business plan that lays out growth trajectories, market trends, and actionable insights. A roadmap sculpted for future success.

7. Personalized Founder Support: As the founder, I'm deeply invested in ensuring the continued success of this legacy. I commit to a hands-on support period during the transition, sharing strategic advice, industry contacts, and insights that have shaped our unique business approach.

Bonus Inclusion: As a gesture of commitment, we will offer exclusive workshops over the first six months. These are tailored to optimize business functions, delve deeper into the industry’s intricacies, and unlock the secrets behind the Art of Headshots™ success story.

By opting for the "Buy Now" choice, you're not merely purchasing a business. You're stepping into a well-established legacy, inheriting a motivated team, and gaining access to a wealth of knowledge. It’s a holistic investment for immediate triumph and sustained growth. “

Buy Now is a feature of Flippa that allows you to just instantly buy a business instead of bidding for it and potentially paying less.

The problem is, throwing in these “exclusive bonuses” makes sense for a $20k blog, but not a $200k business that looks more like a brick and mortar franchise than an online business.

And those bonuses are all things that should absolutely be included anyway. If you bought the business via auction and didn’t hit “Buy it Now” you wouldn’t get them? They’re fundamental.

Honestly at this point the business is clearly not very good, since the seller is spending most of his time marketing how good the opportunity is, and not letting it speak for itself.

It makes a few grand per month profit, and seems like a ton of work. There’s just too many flags running through my mind:

• If you connect photographers with corporations, why do you need money to launch in new cities? You should already be nationwide no?

• Surely you just advertise in a new city, get some clients, find a service provider (hopefully you’ve done this in advance) and now you’re in a new city.

• All this talk about an amazing technology solution that is the backbone of the business, but I see nothing about it in the listing other than it exists. It sounds to me like a fancy CRM or spreadsheet.

• How can the yearly revenue from all those cities be so poor? It feels like you could make more than that just one from city.

So while I initially gave this a B- before digging deeper, and now giving it a D.

Yes, it is probably a legit business (but wouldn’t surprise me to find out it wasn’t), but it just doesn’t feel very appealing to me, and is definitely not a saas.

If you enjoyed this review, let me know. I plan to do more of them, perhaps 2 per month.

If this isn’t your thing but you’d like to stay on the newsletter anyway, let me know as well, so I can start different segments.

And finally, a quick reminder we are raising $$ right now to acquire agencies, and you’re welcome to invest alongside us.

Have a great weekend,

Dom