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I bought a business

More than three years after exiting from my previous company I purchased Brandsupply.

I spend the last few years pondering what the next chapter of my life should look like (that is, when I wasn’t exhausted due to lack of sleep or otherwise dealing with our new born son). Just the idea of starting yet another business from scratch would nearly make me puke. Having gone through the motions of a start-up several times in a row, I wasn’t interested in getting on that rollercoaster again anytime soon.

Since I had some cash in the bank, buying an existing business made more sense that completely starting over.

The decision

When I exited from my previous company, I negotiated a substantial buyout with the remaining partners. Had things worked out the way we agreed, I wouldn’t have had to work another day in my life. Unfortunately, things turned out different. After I left, the business took a turn for the worse and my former partners were not able to honour the agreement and make the payments as we agreed on. This sucked, for everyone. No hard feelings though; things just work out that way sometimes.

Fortunately, between the money I had saved up (and invested) and the amount my partners were able to pay me, I had a nice chunk of change sitting in the bank account. Nowhere near enough to last me the rest of my life, but enough to give me few years to sort out the next chapter of my life.

This all happened about a year before my son was born. The timing worked out great though, as this allowed me to not have to focus on work and instead be home with my lovely wife and our little bundle of joy.

There was still the question of what to do next though. Eventually, I would need to start making money again, somehow… I struggled with this for quite a while. Having started dozens of businesses throughout my professional life, I knew starting something new and making it successful was going to be hard. Having a child also made me look at things differently. Since it was no longer just me and my wife, I felt I had to be more responsible and take less risk moving forward.

I considered getting a regular job. Yeah, yuck! Even if I was able to find a job that I found interesting, I would still be beholden to an employer. I always considered myself rather unemployable; I am not a big fan of working fixed hours, fixed days, etc. This, combined with the fact that I have zero credentials and haven’t had a regular job for about 20 years, I felt this was not the way to go.

The next option was acquiring an existing, profitable business. The more I thought about this, the more it made sense. I would still have all the freedom I wanted and there would be money coming in from the get-go. I still had a nice little nest egg sitting in my bank account (in addition to my investments and savings). This was basically money earmarked for regular spending, living expenses etc, for the next couple of years. Why not use this money to buy a business and continue being an entrepreneur? But rather than starting from scratch, I’d get in on the 10th floor and continue riding the elevator to the top.

I discussed things with my partner and we both agreed this made the most sense.

Did I mention I made the decision to acquire a business over a year ago? Indeed, deciding to acquire one and actually finding one that checked all the boxes was a lot harder than I anticipated. News flash; interesting businesses that make good money are not that often for sale! For over a year, I scoured sites like acquired.com (previously MicroAcquire), empireflippers.com and other brokers. I also signed up for a several local brokers focussing only on The Netherlands (where we live).

Perhaps I was too picky. Perhaps not. Throughout the time I was looking, I had maybe five serious potential acquisition targets. For four of those, either the numbers didn’t work out or there was some red flag that made me turn away from an acquisition.

In the end, acquire.com did come through. At this point, I was seriously wondering if I was taking the right approach and if this was ever going to lead anywhere. I even started considering getting a conventional job again…. yuck! Then, one day, in acquire.com’s newsletter a business named “Brandsupply” was listed. It quickly caught my eye for several reasons:

I quickly reached out to the previous owner with a number of initial questions. I sent over an LOI a few days later and a couple of months (!) later, I was the new owner of Brandsupply. Hoorah!

The business

Brandsupply is marketplace for design services. It matches clients with designers through design contests, a concept very similar to 99Designs (which is also my biggest competitor). The business model is fairly simple and well established: a client signs up and creates a design brief. They then pay a listing fee which will activate their content. Next, designers can submit designs and after a while, the client chooses a winner (or not) and when they do they make the final payment. Brandsupply then forwards the award to the designer who won the contest.

The present

Tech

Brandsupply was founded almost 15 years ago and since then it’s tech hasn’t really been kept up to date. The site is running on a very old version of CodeIgniter (bet you haven’t heard about that before, have you?) which requires a very old version of PHP. The whole tech stack is in serious need of a make over so this is where I will focus my efforts the coming months.

There are a bunch of TLD’s, each serving a different country, served off a single codebase. Since its inception, a number of different contractors have worked on the site, resulting in a rather messy and fragile codebase. The fact that the founding team did not include a technical person has left its marks on the business.

The ancient tech stack also makes it very complicated to make any changes to the existing site. The version of PHP required to run the older version of CodeIgniter is hard to find and even harder to run. The same goes for MySQL. This makes running a local development version of the code nearly impossible.

What I am left with is production version and a live test version, which is essentially a copy of the live site (for a specific TLD). There’s no CI implemented which means making changes means changing a file locally and then uploading it over (s)FTP.

The site is not responsive and does not work well on mobile which is a major issue since more than half of today’s internet users are on mobile.

Business/finance

At present time, the sites (there’s different top level domains, for different countries, running on a single codebase) generate roughly €50k per year in free cashflow. The site currently has over 60k designers and about 30k customers.

Costs to operate the business are minimal; few hundred euros per month for a dedicated server (running the current server config in a cloud setting is virtually impossible) and a few hundred euros for other services (support system, SEO tools, etc).

Margins are pretty healthy at about 50%; prices for a contests are typically 300 euro upwards (depending on the chosen package and desired budget).

Since the site has been around for a long time, it’s got decent SEO considering the issues caused by its dated tech (no responsive site, slow load times, etc). The site gets around 10k monthly visitors, mostly from search engine traffic.

The future

I considered patching the current site and incrementally upgrading it to the latest version of CodeIgniter. This would be a risky endeavour though… requiring more than two dozen upgrades to a heavily modified version of an aging PHP framework. If I were pull this off without anything catching on fire, the end result would a site running on a niche PHP framework which is no longer actively supported which would still pose problems moving forward. That, combined with the fact that the site is extremely fragile and complex, made decide to take a different approach; a complete rebuild in Laravel.

I know, I know…. rebuilding the site also comes with a bunch of risks. However, taking everything into consideration, it’s the right course of action. I have no doubts about this.

My game plan is to take the next six months to rebuild the site using a modern tech stack. This means the rebuild should be done before the end of the year. Ideally a month or two before, but we all know how these things go. The development team who has been responsible for maintenance work and fixing bugs has agreed to take on this project.

I expect that new version of the site will automatically increase the traffic due to better SEO rankings in the months after launching it. Simply by having a mobile-first version of the site and better load times, rankings should improve and traffic should pick up.

In addition, once the new site is life, I will start actively working on:

Until the new site is live I will not be taking a salary just yet (although I will pay a small salary to my wife who will handle the books and other admin related stuff). I plan to start taking a salary early next year (2025) assuming the company’s finances allow me to.

My goals is to double the revenue by the end of 2025 :crossed_fingers:

Posted on July 3, 2024





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