With a remarkable knack for navigating the digital landscape, Dominic is known for his strategic prowess in acquiring and managing online businesses. In this enlightening discussion, he shares invaluable insights into the methodologies and philosophies that underpin his success. Dominic emphasizes their commitment to long-term ownership, aiming to continuously grow and scale acquired businesses by reinvesting profits into further acquisitions. 

Listen to this Episode:

• Apple Podcasts
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Evaluating Online Businesses for Acquisition

When evaluating potential acquisitions, Dominic emphasizes the importance of scrutinizing the digital marketing landscape. Regardless of the specific business model, the core value drivers revolve around generating demand through digital marketing and delivering products or services. While Onfolio initially focused on content sites, their approach evolved to encompass a broader spectrum of online businesses. They assess each business’s ability to operate autonomously and thrive without the founder’s direct involvement.

Navigating Risks and Opportunities

Dominic discusses the dynamic nature of risk assessment in the online business realm. Whether it’s evaluating the stability of revenue streams or anticipating disruptive factors like algorithm updates or geopolitical shifts, Onfolio adopts a proactive approach. Diversification serves as both a risk mitigation strategy and an avenue for capitalizing on emerging opportunities. By maintaining a diversified portfolio, Onfolio aims to mitigate concentration risk while remaining agile and adaptable in the face of evolving market dynamics.

Adaptability in a Changing Landscape

In an era marked by rapid technological advancements and macroeconomic uncertainties, adaptability is paramount. Dominic underscores the importance of businesses being agile and self-disruptive, especially in the face of emerging technologies like AI. Rather than predicting the future with certainty, Onfolio focuses on building resilience and flexibility into their portfolio companies. By embracing change and continuously learning, they position themselves to navigate the complexities of the digital landscape effectively.

Learning from Mistakes and Embracing Growth

Reflecting on specific examples, Dominic recounted early experiences, including acquiring a content site heavily reliant on Pinterest traffic, which faced a setback when banned by the platform. He emphasized the importance of adapting due diligence processes to identify dependencies on founders, ensuring effective transitions post-acquisition.

The conversation turned to the importance of founder retention and the structuring of deals to mitigate risks, such as implementing earn-outs tied to revenue or earnings. Dominic stressed the need for a tailored approach to optimization and scaling post-acquisition, advocating for a methodical, one-step-at-a-time strategy to stabilize the business before implementing major changes.

Identifying Opportunities in Undervalued Sectors

We explored Dom’s views on undervalued sectors in the online business landscape, with a focus on agencies, Ecommerce, and online courses. Dominic highlighted the potential of agencies and overlooked opportunities in Ecommerce, despite recent challenges. He cautioned against overvaluing SaaS businesses and emphasized the importance of nuanced valuation methodologies.

Looking Ahead: Growth and Expansion

For Dominic, his future plans include optimizing the existing portfolio, raising capital for acquisitions, and exploring opportunities in software and Ecommerce. He underscored the importance of continuous learning, honing skills, and compounding successes over time.

Final Thoughts

As Dominic Wells eloquently articulates, success in the online business M&A space hinges on a combination of strategic foresight, adaptability, and a commitment to long-term value creation. 

If you’re interested in learning more about Dominic Wells and Onfolio, you can visit their website at Onfolio.com or subscribe to Dom’s newsletter at Onfolio.com/newsletter. Additionally, you can connect with Dominic on LinkedIn and Twitter for further insights and updates.

Thank you for joining us on this enlightening journey through the world of online business acquisitions. 

Deciding which model aligns with your goals and resources requires a deep dive into the pros and cons of each. Dropshipping offers a hands-on e-commerce experience without the hassle of inventory management, while affiliate marketing appeals to those looking to earn through content creation and product promotion. This guide aims to shed light on both models, helping you navigate their unique opportunities and challenges. Whether you’re drawn to the operational aspects of running an e-commerce site or prefer the marketing-driven approach of affiliate sales, making an informed decision is key to your online entrepreneurship journey.

What is Affiliate Marketing?

Affiliate marketing is essentially a referral business where you earn money by promoting other people’s products or services. At its core, this model hinges on three main players: the affiliate (that’s you), the merchant (the one whose products you’re promoting), and the consumer (your audience). When you, as an affiliate, successfully drive a sale through your unique affiliate link, you earn a commission from the merchant.

This performance-based marketing strategy is built on partnerships and networks, creating a win-win situation for both affiliates and merchants. Affiliates get to monetize their content and platforms without the need to develop a product or handle customer service. At the same time, merchants benefit from a broader reach and increased sales at a fraction of the cost of traditional advertising. The beauty of affiliate marketing lies in its scalability and the diverse range of products and services you can promote, offering a flexible path to generating revenue online.

What is Dropshipping?

Dropshipping stands out as a streamlined approach to e-commerce, enabling entrepreneurs to operate online stores without ever handling the products they sell. When a customer purchases from your dropshipping store, the order is directly forwarded to the supplier, who then ships the product directly to the customer. This model eliminates the need for inventory management, warehousing, and logistics, simplifying the process of running an e-commerce business.

The mechanics of dropshipping revolve around finding suitable suppliers and products that align with your niche and marketing them effectively to your target audience. While it offers the advantage of low upfront costs and the flexibility to offer a wide range of products, dropshipping also brings challenges, such as dependency on suppliers, potential shipping delays, and thinner profit margins. Despite these challenges, dropshipping remains an attractive option for entrepreneurs looking to enter the e-commerce space with minimal risk and investment.

Pros and Cons of Affiliate Marketing

Starting an affiliate marketing venture comes with its own set of advantages and challenges. Here’s a look at what aspiring affiliates need to consider:

Pros:

• Low Startup Costs: One of the most appealing aspects of affiliate marketing is its low barrier to entry. Unlike traditional businesses that require significant upfront investment, affiliate marketing can be started with minimal costs, focusing primarily on building a platform and audience for product promotion.
• Passive Income Potential: Affiliate marketing offers the opportunity to create a steady stream of passive income. By creating content that continues to attract visitors and generate sales over time, affiliates can earn commissions long after the initial work is done.
• No Customer Service Responsibilities: As an affiliate, you’re not responsible for handling customer inquiries, complaints, or returns. This allows you to focus solely on marketing and promoting products, simplifying your business operations.

Cons:

• Dependency on Affiliate Programs: Your earning potential is tied to the policies and stability of affiliate programs. Changes in commission structures or terms can significantly impact your income, and there’s always the risk of a program shutting down.
• Commission Limitations: The commission rates and earning potential can vary widely between affiliate programs. Some may offer low commission rates or place caps on earnings, affecting your overall profitability.
• High Competition: The affiliate marketing space is highly competitive, with many affiliates vying for the attention of the same audiences. Standing out requires innovative marketing strategies and the ability to create compelling content that resonates with your target audience.

Pros and Cons of Dropshipping

Dropshipping is an enticing model for many entrepreneurs due to its accessibility and flexibility, but it’s not without its challenges. Here’s what you need to weigh before diving in:

Pros:

• Low Initial Investment: Dropshipping significantly lowers the barrier to entry for starting an e-commerce business. Without investing in inventory upfront, you can launch your store with relatively little capital, focusing your resources on building your brand and marketing your products.
• Wide Product Selection: With dropshipping, you’re not limited by the physical inventory you can afford or store. This freedom allows you to offer a broad range of products, test different niches, and quickly adapt to market trends without financial risk.
• Location Independence: This business model offers the ultimate flexibility in where you work. As long as you have an internet connection, you can run your dropshipping business from anywhere worldwide, making it an attractive option for digital nomads and those seeking a remote lifestyle.

Cons:

• Lower Profit Margins: Because of the convenience and low startup costs, dropshipping often comes with thinner profit margins. Competition can drive prices down, and suppliers’ costs of goods and shipping fees can eat into profits.
• Inventory Management Challenges: Despite not holding inventory, dropshippers can still face stock levels and supplier reliability issues. Out-of-stock items and delays from your suppliers can lead to customer dissatisfaction and impact your store’s reputation.
• Limited Control Over Product Quality and Shipping: When you rely on third-party suppliers for product fulfillment, you have less control over the quality of the products and the shipping times. Any issues on the supplier’s end can directly affect your customer’s experience and, in turn, your brand’s reputation.

Can You Do Affiliate Marketing and Dropshipping at the Same Time?

Exploring both affiliate marketing and dropshipping concurrently can offer a diversified approach to online entrepreneurship. This combination allows for multiple income streams, leveraging each model’s strengths to build a more resilient business. For example, you could use affiliate marketing to monetize content on platforms like blogs or YouTube channels while running a dropshipping store to sell products directly to your audience. This strategy can enhance your overall earning potential and provide financial stability by not relying solely on one income source.

However, managing both models simultaneously requires careful planning and time management. Each has its demands, from content creation and SEO for affiliate marketing to customer service and supplier relations for dropshipping. Balancing these responsibilities can be challenging, but it also offers a unique opportunity to learn and excel in diverse areas of online business.

The key to success lies in understanding how these models can complement each other. For instance, you might find products to dropship that are related to the content you create for affiliate marketing, providing a seamless experience for your audience. Yet, it’s crucial to be aware of the potential challenges, such as dividing your focus or diluting your brand message. 

Is it Easier to Make Money with Affiliate Marketing or Dropshipping?

Whether affiliate marketing or dropshipping is the easier path to profitability hinges on several factors, including startup costs, operational complexities, market saturation, and personal skills or preferences. Affiliate marketing often appeals to those with a knack for content creation and digital marketing, offering a relatively low-cost entry point and the potential for passive income. However, success in affiliate marketing can take time, requiring patience and persistence to build a platform that attracts significant traffic and generates consistent sales commissions.

On the other hand, dropshipping allows entrepreneurs to dive directly into the e-commerce world, selling products without the complexities of inventory management. While it offers a quicker start and the excitement of running an online store, dropshipping involves narrower profit margins and the challenges of maintaining supplier relationships and ensuring customer satisfaction. The ease of starting a dropshipping business also means facing stiff competition, requiring effective marketing strategies and exceptional customer service to stand out.

Ultimately, the ease of making money in either model depends on your ability to leverage your strengths, manage the inherent challenges, and adapt to changing market dynamics. Both affiliate marketing and dropshipping offer viable paths to income, but they cater to different interests and skill sets. 

Dropshipping vs Affiliate Marketing: Which One is Less Risky?

Evaluating the risk associated with dropshipping and affiliate marketing involves considering factors like initial investment, market volatility, dependence on external platforms or suppliers, and the sustainability of income streams. Affiliate marketing is often viewed as less risky due to its low startup costs and the absence of inventory or shipping responsibilities. Since you’re promoting products for other companies, you don’t bear the direct risks associated with product quality, fulfillment, or customer service. However, affiliate marketing relies heavily on external affiliate programs and platforms, which can change their terms or commission structures, potentially affecting income stability.

While offering the appeal of running an e-commerce store without inventory, dropshipping introduces risks related to supplier reliability, product quality, and customer satisfaction. Factors outside your control can directly impact your brand reputation, such as shipping delays or product issues. Additionally, the competitive nature of dropshipping can make it challenging to maintain profitable margins, especially when starting.

Both models have unique risk profiles, but risk mitigation strategies like diversifying income streams, carefully selecting reliable partners, and continuously adapting to market trends can help manage these risks. The choice between dropshipping and affiliate marketing should also consider your comfort level with these risks and your ability to navigate the challenges specific to each model. 

How to Know if Affiliate Marketing or Dropshipping is the Right Choice for You

Whether affiliate marketing or dropshipping suits you best hinges on your interests, skills, and goals. Consider these key factors:

• Focus Area: If you thrive on content creation and digital marketing, affiliate marketing could be your path, allowing you to earn by promoting products. Dropshipping might appeal more to you if you’re more inclined towards running an online store, handling sales, and interacting with customers.
• Risk and Investment: Evaluate your willingness to take risks and the capital you can invest. Affiliate marketing typically requires less upfront investment and is seen as lower risk. Dropshipping, while potentially more lucrative, demands more initial spending on marketing and carries higher operational risks.
• Control Level: Dropshipping offers more control over your business, including pricing and customer experience, but depends on suppliers for product fulfillment. Affiliate marketing provides less control over product and pricing but frees you from fulfillment and customer service responsibilities.
• Product Interest: If exploring different products and niches excites you, dropshipping allows you to experiment without significant inventory risk. Affiliate marketing may limit you to products within your niche but also offers flexibility.
• Lifestyle Preferences: Consider whether you prefer a more active role in your business, as seen in dropshipping, or if you’re seeking a passive income model, which is often associated with affiliate marketing.

Ultimately, the choice should reflect what aligns with your personal preferences, investment capacity, and how you envision your online business journey. Both paths require commitment and adaptability for long-term success.

Final Thoughts

Both dropshipping and affiliate marketing offer unique paths to online entrepreneurship, each with pros and cons. While dropshipping provides a hands-on approach to e-commerce with the potential for higher profit margins, affiliate marketing offers a lower-risk way to earn income through content creation and promotion. Your choice should align with your interests, skills, investment capacity, and business aspirations.

Remember, success in either model doesn’t come overnight. It requires dedication, learning, and the willingness to adapt to market changes.

Whether you’re drawn to the creative aspects of marketing and content creation or the operational challenges of running an e-commerce business, there’s potential for growth and fulfillment. Carefully weigh the pros and cons, consider your long-term goals, and choose the path that best suits your vision for online entrepreneurship. With the right approach and mindset, dropshipping and affiliate marketing can lead to rewarding online business ventures.

FAQ Section

What distinguishes dropshipping from affiliate marketing? 

Dropshipping involves selling products through your online store without holding inventory, relying on suppliers to ship directly to customers. Affiliate marketing earns commissions by promoting other companies’ products or services through your content.

Can I integrate dropshipping and affiliate marketing into one business?

Yes, combining both models can diversify your income streams and leverage different aspects of online entrepreneurship, although it requires careful planning and management.

What are the primary benefits of dropshipping?

Low initial investment, flexibility in product selection, and the ability to run your business from anywhere are key advantages.

What are the primary benefits of affiliate marketing? 

It offers low startup costs, the potential for passive income, and freedom from inventory and customer service responsibilities.

What are the inherent risks of dropshipping and affiliate marketing? 

Dropshipping risks include supplier reliability and lower profit margins, while affiliate marketing risks involve dependency on affiliate programs and competition.

Which field faces more competition: dropshipping or affiliate marketing?

Both fields are competitive, but the level of competition can vary based on niche, market saturation, and how well you differentiate your business or content.

Mario’s journey into Ecommerce began in the late ’90s, a time when online resources for learning were scarce. He started by building websites, eventually transitioning into a career as a software engineer. However, the slow pace of enterprise-grade development left him craving more agility. Enter WordPress, a platform that revolutionized Mario’s approach, allowing him to focus on business logic rather than reinventing technical wheels.

Over the years, Mario’s focus expanded to encompass high-scale Ecommerce solutions, working with Fortune 1000 companies, startups, and digital publishers. Observing the industry’s evolution, he notes the dominance of what he calls the “Holy Trinity” – WooCommerce, Shopify, and Amazon – as key players driving Ecommerce growth.

The pandemic accelerated the shift to online shopping, with consumers becoming increasingly comfortable with digital transactions. This surge in Ecommerce, coupled with evolving consumer behaviors, presents a ripe landscape for aspiring entrepreneurs.

Three Pillars to Build a Successful Ecommerce Portfolio

Mario emphasizes three pillars for building a successful Ecommerce portfolio:

1. Diversify: Rather than diving headfirst into entrepreneurship, Mario recommends starting small and gradually expanding. Acquire a starter Ecommerce property – be it an Amazon or Shopify store – and use it as a learning platform. This approach allows newcomers to familiarize themselves with the nuances of Ecommerce without taking unnecessary risks.

2. Join the Community: Networking and learning from others in the industry are invaluable. Platforms like Flippa provide a wealth of resources and opportunities for aspiring Ecommerce entrepreneurs. Engaging with the community, seeking advice, and learning from experienced sellers can significantly enhance one’s chances of success.

3. Follow the Trends: Stay abreast of industry trends and market dynamics. Understanding how macroeconomic factors influence consumer behavior and Ecommerce trends is crucial for making informed business decisions. Whether it’s through industry publications, online forums, or networking events, staying informed ensures adaptability and relevance in a rapidly evolving landscape.

Advice for Future Entrepreneurs

Mario’s advice underscores the importance of strategic planning, consistency, and adaptability in Ecommerce endeavors. Whether you’re a seasoned veteran or a newcomer to the field, embracing these principles can pave the way for a successful Ecommerce journey.

In conclusion, as Mario aptly puts it, “Innovation comes from adopting technology.” By leveraging available resources, staying connected with the community, and staying attuned to market trends, aspiring entrepreneurs can carve out their niche in the dynamic world of Ecommerce.

Mario’s insights offer a roadmap for those venturing into Ecommerce, reminding us that success in this ever-changing landscape requires not only technical know-how but also strategic vision and adaptability. As the Ecommerce ecosystem continues to evolve, opportunities abound for those willing to embrace the challenge.

The lower middle market is exciting because it’s filled with companies just waiting for the right investor to tap into their potential. This is where to look for those looking to diversify their portfolio and get involved in something with room to grow. However, like any investment, it comes with its challenges. Navigating these waters requires a good understanding of the sector and a strategic approach to investing. Let’s dive deeper into what makes the lower middle market a segment worth considering for your next investment venture.

What is the Lower Middle Market?

In the lower middle market, you find businesses making between $5 million and $100 million in annual revenue. It’s a crucial sector of the private equity world, acting as a bridge between the small startups and the giant corporations. These businesses are in a unique position—they’ve outgrown the startup phase but haven’t yet reached the size of larger corporations. With the right investment and strategic guidance, this makes them ripe for growth.

For investors, this means a chance to get involved with companies that have the potential to scale up significantly. It’s about finding businesses at a turning point, ready to take the next step but needing that extra push. Understanding this market’s nuances is key to identifying and making the most of these opportunities.

How To Efficiently Manage Lower Middle Market Businesses

Managing businesses in the lower middle market requires a tailor-made approach. These companies often operate on the cusp of significant growth, making them ripe for strategic guidance and investment. However, their size and resources necessitate a nuanced touch, blending agility with a keen eye for operational efficiency.

The key to thriving in this segment is understanding its unique challenges and opportunities. Effective management strategies often involve proactive leadership, operational streamlining, and agile decision-making. For investors, this means providing capital and the strategic oversight and resources these businesses need to scale up. It’s about promoting a partnership that leverages the strengths of the lower middle market—its flexibility, responsiveness, and potential for innovation—to achieve mutual growth and success.

Why Invest in Lower Middle Market Businesses?

Investing in lower middle market businesses comes with a compelling set of advantages that can be too good for the discerning investor to pass up. This market segment is characterized by its fragmentation, meaning a wide variety of businesses are spread across different industries, each with its unique value proposition. What makes this fragmentation attractive? It offers investors a chance to dive into niche markets with less competition and the potential for significant returns.

Moreover, businesses in the lower middle market often have more attractive valuations than their larger counterparts. This affordability and the potential for operational improvements set the stage for substantial value creation. By targeting these businesses, investors can achieve financial gains and contribute to the growth and development of companies on the brink of breaking into the next level of their industry.

The diversity within the lower middle market also allows for strategic portfolio diversification. Investors can spread their risk across various sectors and industries, minimizing the impact of market volatility while capitalizing on the growth opportunities that different markets present. This approach not only bolsters the financial health of the investment portfolio but also enriches the investor’s experience with a broader understanding of different business landscapes.

Biggest Opportunities of Lower Middle Market Private Equity

The lower middle market is not just about overcoming challenges but seizing opportunities. Let’s delve into some of the most promising prospects this sector has to offer:

Growth Potential

The agility and size of lower middle market companies make them perfectly poised for expansion into new markets or regions. With the proper strategic guidance and investment, these companies can quickly adapt and scale, tapping into untapped markets that larger, less nimble companies might overlook. 

Private equity investors have the opportunity to drive this growth, leveraging their expertise and resources to unlock the full potential of these dynamic businesses.

Acquisition Opportunities

The fragmented nature of the lower middle market means acquisition targets are abundant. For investors, this presents a chance to consolidate businesses, achieve economies of scale, and expand their market footprint through strategic acquisitions. 

Identifying and integrating complementary businesses can create powerful synergies, driving efficiency, innovation, and growth.

Limited Competition

The lower middle market tends to attract less attention from larger investment firms, offering private equity investors a competitive edge. With fewer players vying for deals, investors can often secure investments at more favorable valuations, enjoy greater negotiation leverage, and access a broader range of investment opportunities without the intense bidding wars common in larger markets.

Biggest Challenges of Lower Middle Market Private Equity

While the lower middle market is rife with opportunities, it’s not without its hurdles. These challenges can test the mettle of even the most seasoned investors, but with the right strategies, they can be overcome. Let’s explore some of the key obstacles:

Limited Resources

One of the most significant challenges facing lower middle market companies is the constraint of resources. Compared to their larger counterparts, these businesses often have limited financial, operational, and managerial resources. This scarcity can hamper growth and operational efficiency, making it difficult for them to scale or innovate at pace. 

For private equity investors, the challenge lies in identifying ways to augment these resources, whether through direct investment, strategic partnerships, or operational improvements, to drive sustainable growth.

Access to Financing

Financing growth initiatives can be particularly challenging for lower middle market companies. Traditional financing sources, such as bank loans or equity funding, may be less accessible due to these businesses’ perceived risk profile or smaller size. This limitation can stifle expansion plans and limit the company’s ability to capitalize on new opportunities. 

Investors can play a crucial role here by providing the necessary capital and leveraging their networks and expertise to secure additional financing options.

Market Volatility and Economic Uncertainty

Lower middle market companies are often more vulnerable to economic downturns and market volatility than larger entities. This sensitivity can lead to unpredictable performance, affecting revenue stability and growth prospects. 

Private equity firms looking to invest in this segment need to devise robust risk management strategies and contingency plans to safeguard their investments against the whims of the market.

What are the Main Capital Sources for Lower Middle Market Companies?

Navigating the financing landscape is crucial for lower middle market companies aiming for growth. Here’s a look at the primary capital sources for businesses in this segment:

Bank Loans

Traditional bank loans remain a common financing avenue for lower middle market companies. These loans can provide capital for expansion, operational improvements, or acquisitions. However, securing a bank loan requires navigating stringent eligibility criteria, including solid credit history and business performance. 

Investors can assist these businesses by optimizing their financials and leveraging banking relationships to improve loan terms.

Asset-based Lending

Asset-based lending offers a flexible financing solution for companies with significant physical assets. This type of lending uses the company’s assets, such as inventory or receivables, as collateral. It can provide quicker funding than traditional loans, especially for businesses that may not qualify for bank loans based on creditworthiness alone. 

The key advantage lies in its flexibility and the ability to secure funding based on the value of tangible assets. However, the risks include the potential loss of assets if repayments are not met, making it crucial for businesses to manage this financing option carefully.

Public or Government Sponsorship

Various public and government programs offer grants, subsidies, or incentives to support growth and innovation in lower middle market companies, particularly in specific industries or regions. These funding sources can be invaluable for businesses investing in research and development, expanding into new markets, or undertaking significant capital projects. 

Identifying and securing such sponsorship requires a thorough understanding of the available programs and how to navigate the application process effectively.

Choosing the Best Lower Middle Market Private Equity Investment

Selecting the ideal investment in the lower middle market requires a strategic blend of comprehensive due diligence and a keen understanding of your investment goals. Start by thoroughly evaluating potential companies, focusing on their financial health, market position, and operational efficiency to ensure they align with your objectives for risk, return, and growth potential. This careful examination helps pinpoint businesses with the resilience to navigate market uncertainties and the agility to capitalize on growth opportunities.

Beyond the numbers, the quality of the management team and the company’s capacity for innovation within its industry are paramount. Investments should fit within your broader strategy and offer opportunities where you can actively contribute to value creation—whether through strategic guidance, operational improvements, or leveraging your network. Identifying where you can make a significant impact is crucial for fostering long-term growth and achieving substantial investment returns in the dynamic lower middle market landscape.

Final Thoughts

Investing in the lower middle market private equity sector offers a unique blend of challenges and opportunities. While navigating this landscape requires a nuanced understanding of the market and a strategic investment approach, the potential rewards are significant. Investors can unlock the vast potential of lower middle market businesses by focusing on the right opportunities, employing thorough due diligence, and leveraging their expertise to drive value creation.

The importance of a disciplined investment approach cannot be overstated. It involves choosing the right targets and actively managing investments to foster growth and mitigate risks. Adapting to market dynamics, understanding the intricacies of the lower middle market, and building solid partnerships with portfolio companies are essential practices for success.

As we’ve explored, the lower middle market is a sector rich with potential for those willing to delve into its depths. With the right strategies and a commitment to understanding this unique segment, investors can create long-term value and contribute to the success of businesses poised for the next level of growth.

FAQ Section

What defines lower middle market private equity investments?

Lower middle market investments are those made in businesses with annual revenues typically ranging from $5 million to $100 million, occupying a unique niche between small businesses and large corporations in the private equity landscape.

Why invest in lower middle market businesses? 

These investments offer the potential for significant growth, attractive valuations, operational improvement opportunities, and portfolio diversification across various industries.

What challenges do lower middle market investors commonly face?

Key challenges include limited resources within target companies, difficulties accessing financing, and the heightened impact of market volatility and economic uncertainty.

What are the biggest opportunities for lower middle market investments?

Significant opportunities include tapping into growth potential through market expansion, strategic acquisitions, and benefiting from limited competition.

What are the primary sources of capital for lower middle market businesses?

Main sources include bank loans, asset-based lending, and public or government sponsorship programs, each with advantages and considerations.

How do you choose the best lower-middle market investments?

Successful selection involves thorough due diligence, alignment with investment objectives, assessment of growth potential and operational stability, industry expertise, and identifying opportunities for value creation.

While still in high school Nolan established a six-figure e-commerce brand – a remarkable achievement that set him up a future of online business ownership. Alongside Sean, Nolan ventured into the realm of digital marketing, providing invaluable assistance to small to medium-sized direct-to-consumer (DTC) brands in navigating the intricacies of paid advertising.

Their entrepreneurial drive soon led Nolan and Sean building their own e-commerce brands.   Among these ventures was their notable creation, Tags Mate, which would ultimately become their biggest success. Identifying a gap in the market surrounding trackable accessories, particularly in the wake of the release of products like the AirTag, Nolan and Sean capitalized on this opportunity by combining innovative design with cutting-edge technology.

Their journey to success was not without its challenges, from sleepless nights and moments of doubt, however, their shared passion for online business and entrepreneurial drive to build a thriving e-commerce business. They founded and sold the business within 2 years, growing the business to over $2.1M in annual revenue at its peak.

Central to their success was their astute understanding of the e-commerce landscape. As the business flourished, Nolan and Sean recognized the importance of strategic planning, laying the groundwork for a seamless transition when the time came to exit. 

Reflecting on their journey, Nolan and Sean impart valuable insights garnered from their experiences in the e-commerce arena. From the importance of content creation to the leveraging of AI and technology, their advice serves as an insightful guide for aspiring entrepreneurs venturing into the ever-evolving world of online business.

Their story serves as a testament to the boundless opportunities that abound in the realm of e-commerce—a realm where dedication, innovation, and a willingness to adapt pave the way for success. As Nolan and Sean bid farewell to one chapter of their entrepreneurial odyssey, they eagerly anticipate the adventures that lie ahead, armed with the invaluable lessons gleaned from their remarkable journey.

These shifts in the economic landscape, coupled with pent-up demand following a period of diminished deal volume spanning more than a year, have spurred optimistic forecasts from industry leaders such as PwC and Bain, predicting a robust year ahead for deal-making.

In anticipation of heightened activity, researchers at Flippa—the world’s leading platform to buy and sell online businesses—analyzed key deal characteristics of more than a thousand business sales over the past two years. This extensive dataset encompasses nine primary business types, 15 sectors, and nearly 60 subsectors, providing valuable insights to assist potential buyers and sellers in navigating the evolving landscape of M&A.

Profit Multiples by Deal Size

Source: Flippa marketplace transactions

Profit multiples vary depending on the dollar value of the acquisition, with a clear trend of increasing multiples as the deal size grows. For micro businesses exiting from $25,000 to $100,000, profit multiples averaged 3.1, with the top quartile reaching 4.1. However, for businesses exiting in excess of $1 million, the trend accelerates with profit multiples rising to an average of 6.1, and the top quartile reaching an impressive 7.1.

The observed trend of increasing profit multiples with larger deal sizes can be attributed to several factors. Larger acquisitions often entail businesses with established revenue streams, stronger market positions, and greater growth potential. Consequently, buyers may be willing to pay higher multiples for businesses with a proven track record of performance and scalability. Additionally, larger acquisitions may offer strategic alignment or operational efficiencies that justify higher valuations. Moreover, larger deals may attract a more competitive bidding process, driving up valuations and resulting in higher profit multiples for sellers.

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Company Financials by Deal Size

Source: Flippa marketplace transactions

A common question among sellers revolves around what it takes to achieve a seven-figure exit. Analyzing data spanning the past two years shows that businesses that sold for at least $1 million had an average annual revenue of $2.8 million, with an average annual profit of approximately $1.6 million. Interestingly, there was no statistically significant difference in the average age of businesses across the sales tiers, with the typical business age at the time of sale falling between nine and 10 years. It was surprising to see how established and tenured these businesses are. 

Days on Market by Deal Size

Source: Flippa marketplace transactions

Another noteworthy difference between the sales price tiers pertains to the time it takes to complete a sale. Businesses that achieved seven-figure exits typically remained on the market for nearly twice as long as those that sold for $100,000 to $500,000 (193 days compared to 105  days). Despite the prolonged waiting period for higher-price-tier sellers, they generally secured more favorable profit multiples than their lower-price-tier counterparts. As discussed previously, the average profit multiple for seven-figure exits over the past two years was 6.1, compared to 2.9 for businesses in the $100,000 to $500,000 tier.

Profit Multiple by Business Type

Source: Flippa marketplace transactions

Profit multiples also vary significantly across different business types. Over the past two years, marketplace, apps, and SaaS businesses commanded the highest multiples.

Marketplaces often benefit from network effects, where the value of the platform increases as more users and transactions occur, leading to higher profit multiples. Additionally, the scalability and potential for rapid growth associated with marketplaces and apps can justify higher valuations. Software as a service (SaaS) businesses are also highly attractive assets due to their higher margins and recurring revenue models, but profit multiples range widely based on several factors related to their viability and growth potential. Revenue metrics such as monthly or annual recurring revenue provide insights into revenue stability and growth trajectory, while profitability metrics like gross margin and EBITDA gauge operational efficiency and financial health. Customer metrics, including customer acquisition cost and lifetime value (LTV), help evaluate marketing and retention strategies. Additionally, factors such as market size, competitive advantage, and product roadmap are crucial for understanding growth prospects and market positioning.

At the other end of the spectrum, content and e-commerce businesses saw the lowest multiples, likely due to higher competition and lower barriers to entry when compared to other business types.

Below is a complete breakdown of profit multiples by sale price tier and business type.

Source: Flippa marketplace transactions; groupings with limited data are not displayed

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Flippa’s intelligent valuations engine is the industry’s most accurate tool, taking into consideration thousands of sales and live buyer demand. Find out what your business is worth with our free valuation tool and plan your next move.

Transaction Volume by Business Type

Source: Flippa marketplace transactions

Analyzing the total business acquisition volume across different business types reveals notable variations in market activity. SaaS businesses emerged as the dominant force, comprising the largest share of acquisitions over the past two years. This trend underscores the enduring appeal of SaaS models, driven by their recurring revenue streams and scalability. E-commerce businesses also commanded a significant portion of the acquisition volume, indicative of the continued growth and evolution of online retail platforms in response to shifting consumer behaviors.

Content-based businesses, although representing a substantial share, experienced slightly lower acquisition volumes compared to the SaaS and e-commerce sectors. This trend suggests that while content remains a valuable asset, market dynamics may have favored other business models during the period. Apps, while constituting a smaller share, retained significance due to their potential for user engagement and monetization. Finally, marketplace businesses, while niche, played a notable role in the acquisition landscape, reflecting the enduring appeal of platforms facilitating peer-to-peer transactions.

Industries With the Most Transaction Activity

Source: Flippa marketplace transactions

Among business sales in which the industry was known in 2023, those in the pets, beauty, and fashion industries dominated. Together, these industries constituted approximately one-third of the total transaction volume. What’s noteworthy is not only did each of these industries experience year-over-year growth in total transaction volume, but they also expanded their share of the overall transaction volume. Other industries that experienced notable growth from 2022 to 2023 include football, humor, SEO, and cars. Industries that declined year-over-year include travel guides, shopping, colleges and courses, and cycling.

INVEST IN AN APP BUSINESS

When considering investing in an app, it is important to do thorough research to find potential rising stars. Checking metrics such as download data, app store optimization data and reviews can be helpful in this process.

Final Thoughts

The analysis of business acquisitions leading up to 2024 reveals optimistic trends for prospective sellers. Marketplaces and apps have demonstrated higher profit multiples compared to SaaS, content, and e-commerce businesses. Notably, larger acquisitions have consistently yielded higher profit multiples, indicating the strategic value attributed to established revenue streams. Industries such as pets, beauty, and fashion have dominated transaction activity, signaling sustained investor interest. 

Additionally, strong financial performance emerges as a key driver of valuation, with businesses boasting solid revenue and profit trajectories commanding favorable attention. These trends collectively underscore promising opportunities for sellers aiming to maximize value in the competitive acquisition landscape.

Methodology

The data used in this study is from a proprietary set of digital asset sales that occurred on the Flippa.com platform between 2022 and 2023. For the purpose of this analysis, only transactions involving mature (at least four years old), profitable businesses with a sale price greater than or equal to $25,000 were included. Additionally, to improve relevance, only the top 50th percentile of transactions based on profit multiples were included in the analysis.

Initially, there was a sense of hesitation as he didn’t quite have the confidence to completely extract his living expenses and invest in an online business. However, after much research and vetting of the industry, Chase found the courage to take a leap of faith to entrepreneurship.

Becoming a Business Owner

In 2017 Chase came across Flippa and bought his first Amazon FBA ecommerce business. He wasted no time jumping on the opportunity to place a ‘buy it now‘ bid to the seller who was considering other prospects. This was the beginning of Chase’s roll up strategy. This approach of acquiring multiple assets in the same industry and consolidating them into a large company proved to be advantageous. By combining small like-kind businesses into a larger company, Chase was able to pull resources together, cut down on operational costs, and increase revenues.

“I’ve found it to be helpful to establish a relationship directly with the seller,” says Chase. “The number one thing is to have your financing in place. You have to be nimble enough to strike a deal. If you tease it out, someone will swoop in.”

Related: How To Interact With Sellers

For Chase, there was an art to finding the right business to invest in: this could look like hitting 25 different roadblocks before finding something with merit. Out of those 25, one in 10 would have enough opportunity still left in the business to accelerate growth. If the business met this criteria, Chase would immediately jump to the opportunity and speak to buyers.

“I loved the idea of having product pages that were on Amazon,” says Chase. “That already existing search volume was taking place and all I had to do was come up with the creative art – that was the exciting part.”

“I’ve found it helpful to establish a relationship directly with the seller. The number one thing is to have your financing in place. You have to be nimble enough to strike a deal. If you tease it out, someone will swoop in.”

Chase Levitt, Flippa Buyer with $650K worth of acquisitions on Flippa.

Transitioning to Digital Products

Chase maintained a frugal lifestyle saving his extra income to buy a few businesses.

It wasn’t until he started working with an author who was in the process of releasing his second book that he recognized the similarities between book listings and physical products. 

“I told him, what you need is not to finish your second book, but to find a way to scale this so you can release 100 books,” says Chase. “As soon as I said those words,  it dawned on me that there’s where I need to be.”

So he jumped on Flippa and purchased his first digital product business for $355,000, and shortly after he made his second purchase for $195,000.

“Fast forward now about a year, I ended up selling all of my products in a roll up,” says Chase. “That was an exciting time for me and I wanted to continue on in the online ecommerce space and I made one difference, and that was I wanted to sell digital products that didn’t require being in the warehouse.”

Running all three businesses and maintaining them wasn’t always easy. It took plenty of trial and error, deploying the right contractors, and gaining tangible skills. 

Today, Chase enjoys the passive nature of his portfolio as it allows him to spend more quality time with his kids. These days you can find him focused on maintaining his business, enjoying the fruits of financial flexibility, and keeping an eye out on businesses on Flippa that piques his interest.

“The best part about Flippa is the newsletter, and it dials in pretty close to exactly what I’m looking for,” says Chase. “I love the newsletter. I love the auction and access to the seller — that’s really tough to beat when you stand it up against its competitors.”

“I love the sales approach and access to the seller — that’s really tough to beat when you stand it up against its competitors.”

Chase Levitt, Flippa Buyer with $650K worth of acquisitions on Flippa.

The Next Level for Chase’s Portfolio

“The second big inflection point in my business is when I started to acquire similar businesses that I could integrate into my standard operating procedures.”

Chase Levitt, Flippa Buyer with $650K worth of acquisitions on Flippa.

In phase two of Chase’s online acquisition journey, Chase has now acquired $650K worth of online assets on Flippa. Growing to this level is an accomplishment in itself, but also worth noting is his strategy for growing his acquisitions.

As part of his selection criteria, he invests in businesses that are in an exciting growth stage and can integrate well with his existing standard operating procedures.

Next Steps

Inspired by this story? Read up on others who have successfully bought and sold their businesses here.

If you’re ready to sell, check out our First Time Seller’s Guide, or start looking for a website to buy.

Like this buyer and seller, you too can master proper buyer and seller communications etiquette. We’ll show you how to do that here.

Want to Hear More from Chase?

Watch his Humans of Flippa interview about becoming a high-Growth digital business aggregator here.

There are several popular newsletters, and finding the best one might be overwhelming for you. Well, fret not! We have curated a list of the world’s biggest newsletters that deserve a place in your inbox.

Let’s disclose and bookmark the world’s biggest newsletters!

Industry Snapshot:

Why subscribe to additional newsletters when your inbox is full? Some of the top reasons to subscribe to it are learning something new, getting exclusive deals, and following an expert’s opinion.

Several factors fuel the remarkable growth of the global newsletter market. These include:

• Content Saturation: Newsletters provide personalized and relevant information to subscribers.
• Mobile-Frist Design: Newsletters offer a seamless experience to smartphone users with their mobile-friendly interface.
• Evolving Formats: Aside from simple text, newsletters contain podcasts, videos, and other engagement-enhancing media elements.

10 Best Newsletters in the Industry

Here is a closer look at the world’s biggest newsletters currently captivating readers:

1. NYT’s The Morning:

• Total Subscribers:17 million
• Topics: Politics, World News, Business, Culture
• Paid Subscribers: 8 million
• Age:5 years
• Revenue: robust, primarily generated through premium subscriptions, sponsored content, and exclusive partnerships.

You must be a part of 17 million NYT readers if you want the top news stories of the day in your inbox. From a comprehensive overview to a list of feature stories, it covers the day’s most significant developments around the globe. With Times Journalists, you will never miss the most pertinent stories from business, politics, science, and culture.

2. Daily Skimm:

• Reach: 12 million
• Topics: Daily News, Politics, Pop Culture, Lifestyle
• Subscribers: 7 million
• Age: 8 years
• Revenue: strong and diverse, driven by premium subscriptions, sponsored content collaborations, and strategic partnerships.

Daily Skimm allows the readers to get a roundup of current events in an easy-to-read style. Its personal and ironic approach makes it versatile. Daily Skimm will be a great choice if you are pressed for time but want to cover politics, world events, and lifestyle news.

3. The Hustle:

• Reach: 8 million
• Topics: Business and Tech News, Entrepreneurship, Startups, Investment Trends, Career Insights
• Subscribers: 2.5 million
• Age: 3 years
• Revenue: robust, generated through premium subscriptions offering in-depth market analyses and sponsored content collaborations with industry leaders.

The Hustle provides a convenient 5-minute business and tech talk. The expert’s advice helps readers make smart business decisions quickly. You can glimpse emerging tech news, entrepreneurs’ opinions, and finance resources in video and audio formats. They’ve even created a spot for a digital water cooler, showcasing daily memes, shower thoughts, and more to add a touch of fun to your day.

4. Morning Brew:

• Reach:10 million
• Topics: Business, Finance, Technology, and Daily News
• Subscribers: 4 million
• Age:7 years
• Revenue: strong and diversified revenue streams, including premium subscriptions, sponsored content, and strategic partnerships.

Do you want to get tech news, entertainment, and social media trends at morning coffee? Morning Brew is the only newsletter that will keep you updated in a witty manner. Its subscribers get business news and stock market updates in more formal and humorous ways each morning.

5. Human Crapital: 

• Reach: 8 million
• Topics: Human Resources, Workforce Trends, Leadership, and Workplace Culture
• Subscribers: 4 million
• Age: 2 years
• Revenue: steady, fueled by premium memberships, sponsored industry reports, and corporate partnerships

Human crapital allows you to learn from the experience of HR pros. You can receive guidance and actionable tips weekly on Wednesday to handle various situations. Whether you are an HR professional or seeking HR-dynamic information, this newsletter will be your backstage pass to the real stories. 

6. 1440:

• Reach: 9 million
• Topics: Current Affairs, Global Trends, Science, Technology
• Subscribers:3.2 million
• Age:2 years
• Revenue: strong, driven by premium subscriptions, targeted advertisements, and strategic collaborations with industry leaders.

Millions of 1440 subscribers get an unbiased newsletter each morning with valuable information on science, sports, and politics. If you value policy over politics and want to get updated without filler content, you must subscribe to it. 

7. Hometalk:

• Reach: 8 million
• Topics: Home Improvement, DIY Projects, Interior Design, Gardening, Home Decor
• Subscribers: 2.5 million
• Age: 3 years
• Revenue: stable, generated through premium subscriptions, sponsored content from home improvement brands, and exclusive features on innovative DIY trends.

Hometalks offers a multitude of reasons for its subscription. Whether you are a DIY enthusiast or a passionate interior design expert, Hometalks gives you access to the latest trends. You will be inspired by fresh ideas, practical tips, special offers, and other home improvement projects.

8. Forbes Daily:

• Reach: 15 million
• Topics: Business, Financial news, Leadership, and Workplace Culture
• Subscribers: 4 million
• Age: 2 years
• Revenue: strong, driven by premium subscriptions, targeted advertisements, and strategic partnerships.

You can subscribe to Forbes daily to get in touch with various industries and professions. From leadership skills to entrepreneurship, Forbes will provide advanced guidance. Moreover, learning from experts and promoting personal growth are a few other reasons for its growing community. 

9. The Ankler: 

• Reach:6 million
• Topics: Hollywood Insider, Entertainment Industry Trends, Celebrity Gossip
• Subscribers: 60,000
• Age:6 years
• Revenue: strong, driven by premium subscriptions, exclusive industry insights, and event partnerships.

The trusted and seasoned voice of The Ankler provides insight into Hollywood and the entertainment industry. All its subscribers enjoy ad-free premium content. Also, it offers the opportunity to connect with like-minded individuals to foster network opportunities. 

10.  Lenny’s Newsletter:

• Reach: 15K
• Topics: Career Development, Workplace Insights, Professional Growth
•  Subscribers: 4.5K
•  Age: 1.5 years
•  Revenue: Growing steadily, primarily generated through premium subscriptions and sponsored content from companies.

You can subscribe to Lenny’s newsletter to get exclusive tips and valuable resources for career development. Moreover, you can get exclusive interviews and success stories of its dynamic community. This newsletter will serve as a career advancement tool if you are a busy professional.

Final Thoughts:

Whether you are looking for news, politics, finance, or tech, these newsletters have you covered. You can get fresh ideas, expert opinions, and actionable tips in your inbox by subscribing to your favorite newsletter.

The massive audience of these newsletters shows the authenticity of the information they provide. Subscribing to any of the world’s biggest newsletters saves you time and keeps you updated and informed about the latest industry trends. 

So, which newsletter deserves a place in your inbox? We’ll be happy to know!

References:

• https://www.statista.com/statistics/315041/new-york-times-company-digital-subscribers/
• https://digiday.com/media/why-theskimm-is-extending-its-daily-newsletter-to-the-weekend/
• https://thehustle.co/
• https://www.morningbrew.com/sponsored/bamboohr/inside-look-at-morningbrew
• https://join1440.com/about-us
• https://www.paved.com/sites/hometalk-67766b40-687f-4f9e-83d5-bb9cd1e0cdbc
• https://theankler.com/about
• https://www.lennyrachitsky.com/
• https://talkingbiznews.com/media-news/forbes-daily-newsletter-is-approaching-1-million-subscribers/
• https://www.niemanlab.org/2021/08/the-new-york-times-is-making-about-a-third-of-its-newsletters-subscriber-only/
• https://www.nytimes.com/2020/05/03/reader-center/morning-newsletter-leonhardt.html

Pivot tables can also be exceptionally valuable tools for analyzing data when buying or selling businesses and can be used for various functions. I’ll explore what a pivot table is and how to use them.

What is a Pivot Table?

Picture this scene: You open your spreadsheet to find what feels like thousands of numbers jumbled up. There are multiple columns and row labels that you need clarification on. Rather than spending hours making sense of the underlying data, you can use a pivot table instead. 

A pivot table is a tool that allows you to extract meaning from a large data set by letting you select the data and group it in varying ways so you can draw conclusions. 

But why is it called a “pivot” table? Well, because it allows you to pivot the data sources and see it from a different perspective. You’re not changing anything about the data range; you’re reshuffling it for better data visualization. 

What are Pivot Tables Used For?

You’re probably wondering what you can use pivot tables for. Data analysts will use this tool to analyze their original data to uncover new findings quickly. Let’s look at six possible scenarios where pivot table data might be helpful. 

1. Analyzing sales data by product, region, and time period

Data analysts commonly use pivot tables to see their total sales data in a new light. They can summarize and analyze sales data to uncover new patterns in a matter of seconds. At the same time, sales managers can quickly identify their best-performing products to optimize inventory levels and create a data-driven approach to marketing. 

2. Tracking marketing campaign performance

Without understanding how your customer base interacts with your products, you won’t be able to create a marketing campaign that truly packs a punch. Luckily, a pivot table provides easy steps toward aggregating sales data for the purposes of marketing. 

With your existing rows and columns full of valuable data points, you can analyze your campaign performance by segmenting click-through rates (CTR), conversation rates, and your return on investment (ROI). 

3. Identifying customer trends

Pivot tables can help you uncover valuable customer trends by examining your data from different angles. Whether it’s purchase behavior or demographics, pivot tables help you to identify patterns that may go unnoticed in your raw data.

4. Managing financial data

Financial professionals rely on pivot tables to make sense of their complex financial data. Typically using Excel templates, adding pivot tables helps them to create insightful financial reports and quickly spot trends.

5. Measuring employee productivity

HR departments sometimes use pivot tables to analyze employee productivity quickly using individual and team performance data. 

6. Forecasting future sales

In business strategy, forecasting future sales is vital. Pivot tables help analysts study past sales to recognize patterns contributing to their future strategies. 

Related: How to use data to drive up business value?

What Tools Can You Use to Create Pivot Tables?

Pivot tables are available on many spreadsheet applications, the most popular being Microsoft Excel and Google Sheets. We’re covering five tools you can use to create your pivot table automatically and offering a how-to guide for each one. 

1. Microsoft Excel

Creating pivot tables in Excel is easy when you follow these steps. This will work in all versions of Excel. 

Step one: Insert your pivot table

• Select the data you want to analyze using your mouse click to drag your cursor over the data. 
• You can also select all the data on your worksheet by clicking the triangle at the top left corner of your existing worksheet. 
• Once you’ve selected the data, click “Insert” and select “Pivot Table” in the top menu. 

Step two: Drop variables into the correct box

• Now you’ve selected the PivotTable Builder, you’ll have access to four boxes: “Filters,” “Table Columns,” “Rows,” and “Values.” 
• From here, you can arrange your variables to create your output. 
• You can drag and drop your variables into the columns and rows boxes depending on what information you want to uncover. 
• Let’s say you want to find patterns in your sales data depending on your products and timescales. 
• To uncover this, you’d drag your “Product” data into the “Rows” box and “Dates and Times” into the “Columns” box. 

Step 3: Set up the calculation

• Once you’ve arranged your variables, you’ll need to specify the calculation you want to apply to your subset of data. 
• This is done by inputting a calculation in the “Values” box.
• After dragging a variable into the “Values” box, click on the drop-down menu next to it. Standard calculations are “SUM” and “AVERAGE.” 
• For example, if you want to determine the sum of your sales, choose “SUM.”
• After you finish the pivot table editor, you can sort it from highest to lowest. 
• To do this, right-click on the data within the pivot table, select “Sort,” and then choose “Sort Largest to Smallest.”
• You’re now ready to create an Excel pivot table.

2. Google Sheets

Using pivot tables in Google Sheets is a handy way to analyze complex data. Let’s go through our guide on using pivot charts for your tables in Google Sheets:

Step 1: Insert the pivot table

• Start by going to your Google Sheets Dashboard and opening your Google spreadsheet containing the data you want to analyze. 
• Click and drag your cursor to select all the data. 
• You can also quickly select all the data by clicking the top left corner of the spreadsheet or by using the keyboard shortcut CTRL + A.
• Once your data is selected, go to the top menu and click “Insert.” 
• From the dropdown menu, select “Pivot table.” 
• This will initiate the process of creating your pivot table fields.

Step 2: Choose where to create the pivot table

• You can choose where to create the pivot table in Google Sheets, with the option to create it in a new or existing sheet. 
• It’s often easiest to select “New Sheet” to create the pivot table field in a separate sheet to keep your original data intact and make your analysis more organized.

Step 3: Customize the pivot table

• Google Sheets provides automated suggestions for your pivot table. 
• While this is convenient, using your own input for more precise analysis is often recommended.
• For more control, click “Add” on the right-hand side of the pivot table editor to create your personalized pivot table.
• Similar to creating a table in Excel, you can manually add variables to the pivot table in the “Rows,” “Columns,” “Values,” and “Filters” sections. 
• Depending on your analysis goals, you can drag and drop variables into these sections to customize the layout.
• After following these steps, you can create multiple pivot tables in Google Sheets.

3. LibreOffice Calc

Creating a pivot table in LibreOffice can help you automatically analyze and summarize your data. Here are some step-by-step instructions to create a pivot table layout.

Step 1: Open LibreOffice Calc

• Launch LibreOffice Calc and position the cursor within a range of cells that contain the data you want to use in your pivot table. 
• This will include your row and column headings and all your columns values. 

Step 2: Insert pivot table

• Navigate to the top menu on LibreOffice and select “Insert.” 
• From the dropdown menu, choose “Pivot Table.” 
• This will open the “Select Source” dialog.

Step 3: Select the data source

• In the “Select Source” dialog, make sure you select “Current selection” and then confirm by clicking the “OK” button. 
• Your data headings will appear as buttons in the “Pivot Table” dialog box. 

Step 4: Arrange fields

• Drag and drop the desired buttons into the “Page Fields” area.
• This will create a button and a list box on top of the pivot table, allowing you to filter the table by the contents of the item you selected.
• Drag and drop buttons into the “Column Fields” area to create the columns of your pivot table.
• Drag and drop buttons into the “Row Fields” area to create the rows of your pivot table.
• Drag buttons into the “Data Fields” area to specify the data you want to display in your pivot table. 

Step 5: Customize data fields

• If you want to adjust the calculation for data fields, double-click your buttons in the “Data Fields” section. 
• It will open the “Data Field” dialog.
• In the “Data Field” dialog, select the calculations you want to use for the data. 
• Hold the “Command” key (Ctrl key on Windows) to make multiple selections while clicking the calculation. 

Step 6: Reorder and remove fields

• You can change the order of the buttons in the “Page Fields,” “Column Fields,” and “Row Fields” areas at any time by moving them to a different position using the mouse. 
• If you want to remove a field from your pivot table, simply drag it back to the area with the other buttons on the right side of the “Pivot Table” dialog.

Step 7. Finalize the pivot table

• Once you’ve configured your pivot table to your liking, exit the “Pivot Table” dialog by pressing the “OK” button.
• The pivot table will be inserted further down in your spreadsheet, and you can interact with it to analyze your data. 
• We’ve now shown you a pivot table example for LibreOffice, and you’re ready to start properly analyzing your source data. 

4. Apple Numbers

Creating a pivot table in Apple Numbers is a great database management tool that helps you summarize your complex numerical values. Let’s take a look at how you can use this tool with a step-by-step guide:

Step 1: Select the data source

• Open your Numbers spreadsheet and elect a table or a range of cells you want to use as the source data for your pivot table.
• If you want to add a pivot table to a new sheet, select a table, then choose “Pivot Table” from the toolbar.

Step 2: Access pivot table options

• In the Numbers menu bar at the top of your screen, choose “Organize.”
• From the “Organize” menu, select “Create Pivot Table.”

Step 3: Choose a pivot table type

After selecting “Create Pivot Table,” you will be presented with the following options:

• On New Sheet:  Creates a pivot table on a new sheet using the entire table as the source data.
• On Current Sheet: Creates a pivot table on the current sheet using the entire table as the source data.
• For Selected Cells on New Sheet: This creates a pivot table on a new sheet using only the selected cells as the source data.
• For Selected Cells on Current Sheet: This creates a pivot table on the current sheet using only the selected cells as the source data.

Step 4: Add and arrange fields

• To populate your pivot table, you need to add and arrange fields. Click “Add and arrange pivot table data” to configure your table.

Step 5: Configure the pivot table

• Now, you can configure your pivot table depending on your unique values. To organize and summarize all your data, you can select which fields to include in the Rows, Columns, and Values sections.

Summing Up

Whether you’re a data analyst or a business strategist, pivot tables can go a long way in making your life easier. Rather than going through all your cells in Excel, pivot tables can help you apply the filters you desire to uncover new findings from your raw data, which can be an invaluable tool for anyone looking to improve their business’s operational efficiency.
Pivot tables can also be used to analyze large datasets, create powerful visualizations to analyze a company’s financials and inventory, and even conduct due diligence for buying and selling businesses.

Consumers are now looking for the fastest and easiest ways to access product information, enjoy customized experiences and ultimately, find and buy products with zero hassle. 

They expect businesses to recognize them as independent shoppers and therefore curate their experience to their exact needs and preferences. Research shows that 87% of customers believe brands should put more effort into providing a seamless omnichannel experience. 

With this in mind, let’s take a look at what omnichannel Ecommerce is and how your business can implement a solid omnichannel Ecommerce strategy.

What is Omnichannel Ecommerce?

Omnichannel Ecommerce focuses on providing customers with a smooth and consistent shopping experience, whether they’re in a physical store or shopping online. 

Successful omnichannel Ecommerce allows your customers to switch between channels and still receive the same great experience.

So, whether you’re browsing products on a website, your smartphone, or walking into a store, the idea is to make it all work together seamlessly, like different parts of the same shopping experience.

3 Core Benefits of Omnichannel Ecommerce

There are several benefits to utilizing an omnichannel Ecommerce approach. From enhanced customer satisfaction to increased traffic and sales, having multiple touchpoints to interact with your customers is crucial in today’s consumer landscape. 

Let’s look at the top three. 

Enhanced Customer Experience and Satisfaction

Personalization is essential to the modern consumer. 

They expect every interaction with your brand to be personalized to their preferences and expectations. For example, let’s say one of your customers finds your product via their smartphone, pop it in their basket, but later decide to visit your physical store to make the final purchase. 

With an omnichannel approach, the transition between these channels would be smooth, and the customer would experience a consistent product display, pricing, and promotional information. 

More Sales Opportunities

Following this, omnichannel strategies create multiple touchpoints for customers to explore and purchase products. Whether online or in-store, businesses can capture sales opportunities through various channels, expanding their reach and maximizing revenue potential.

Your customer could start their journey on your social media channel, and then end up purchasing from your mobile store. As long as their experience is consistent throughout their journey, they won’t mind where they make their final purchase (and neither will you!).

Increased Brand Loyalty and Customer Retention

Having a strong brand presence across multiple channels helps create trust between you and your audience. However, it’s not simply a case of being omnipresent on every channel. Everything from your messaging, imagery, payment options and branding has to be consistent to gain this trust.

If your brand isn’t consistent across every channel, it can break down that trust and lose potential customers to competitors. A consumer research report in 2022 discovered that 46% of customers who had chosen to buy higher-priced options did so because they preferred to pay a higher price for a brand they trusted.

How your brand is perceived through your various channels is absolutely essential for not just sales, but customer retention.

How to Implement an Omnichannel Strategy

There’s a lot that goes into structuring an omnichannel Ecommerce strategy. 

But don’t get bogged down in the intricacies, it doesn’t have to be that complicated. The key is to build a strong foundation to base your strategy. From here, you can begin implementing your omnichannel strategy with a clear and strategic approach. 

Here’s how to get started:

Identify Your Audience

You can’t expect to turn scrollers into buyers without first knowing who you’re targeting, right? 

So, before you start strategizing, you’ll need to conduct some thorough market research to identify customers’ demographics, behaviors, and preferences. 

Analyze data from your existing customer base, utilize tools like Google Analytics, and gather insights from social media platforms (if you’re using any).

You might also find it useful to create a buyer persona using this data. From here, you can create your ideal customer (or customers depending on your audience segmentation) to create campaigns and strategies that specifically target and align with their needs. 

All of this enables you to be better equipped to create content, promotions, and interactions that resonate with your customers.

Understand Your Customer’s Journey

Knowing how your customers are exploring and interacting with your online store can help you create a solid omnichannel strategy. First, pinpoint the different touchpoints your customers are interacting with through their buying journey.

This includes their journeys on mobile, your website, social media and even physical stores. Each touchpoint should be seamlessly integrated to guide users toward their desired goals. 

If, at any point in their journey, they encounter challenges or obstacles, it becomes your responsibility to pinpoint the issues and implement solutions for a smoother and more enjoyable user experience.

Understanding the stages of customer journeys will help you align your omnichannel efforts and ensure that every interaction contributes positively to your users’ experience.

Make Your Online Store Mobile-friendly

Most users who shop online do so using their smartphones. In fact, smartphones today now account for 87.2% of mCommerce sales (sales through mobiles and tablets).

So, it’s pretty important that your online store is mobile-friendly. 

This means talking to your managed hosting provider or web developer to ensure that things like load speed, site layout and design, responsiveness and UX (user experience) are all running smoothly on mobile. 

Additionally, as an Ecommerce business, your mobile site must have an easy payment option. For example, payment solutions like Apple Pay, PayPal, SumUp, Square and Klarna are not only widely trusted forms of payment, but they’re incredibly user-friendly. 

As opposed to having to manually type out their card details, users can use face recognition or PINs to purchase items swiftly and securely.

Create Engaging and Personalized Content For Your Channels

While you may find success on one platform for a particular piece of content, it doesn’t mean you’ll see the same results on another. Each piece of content you create should be tailored to specific channels. 

For example, social media platforms like Instagram typically thrive on visually appealing and snappy content, whereas platforms like LinkedIn often prioritize more in-depth and long-form content.

By creating engaging and personalized content for each of your channels, you not only maximize the impact of your messaging but also ensure a consistent brand experience tailored to the expectations of your users.

Engage Your Audience With the Right Tools

With there being thousands of engagement tools floating around, finding one that’s tailored to your needs might seem a bit difficult.

However, top of our list are chatbots and/or live chat. In a recent survey, 31% of US B2B marketers are using AI for chatbots, coding, and design. The main benefit of this technology is that it offers instant personalized support to your customers when you’re not able to. 

For example, if a customer has a question about returning an item, they can ask the chatbot and it will provide them with a response tailored to their specific request.

On the other hand, live chat support allows you to speak directly with your audience in real-time. This is a far more personalized support service and allows you to get straight to the query at hand. However, the only downside is that this does require you to be available whenever a customer sends a message.

Ultimately, the choice between chatbots and live chat depends on your specific business needs and resource availability. If you’re a corporate multinational business driving hundreds of thousands of visitors each week, chatbots might make more sense. Whereas SMEs and startups may have more time to answer customer messages personally.

Test, Assess and Repeat

To ensure all your hard work is paying off, you’ll need to dive into your analytics to see what’s working and what needs improving. Google Analytics should cover your customer demographics, behavior and interactions but there are other ways to optimize your online store.

A/B testing is one of the best ways to evaluate and compare different versions of your landing pages. For example, you could experiment with different product descriptions, images or CTA buttons (call-to-action) to see which yields the best results. A/B testing allows you to switch up certain elements of your landing pages based on your customers’ preferences.

You may also want to invest in heat mapping tools like Lucky Orange, as they are great for gaining visual insights into how your customers are interacting with your website. 

Tools like this can identify hotspots where they’ve clicked and also areas that might need improving. From here, you can chop and change elements that are stunning your customer’s journeys to make their experience easier and more enjoyable. 

Conclusion

Customers have come to expect a shopping experience that’s fast and simple, and anything that derails these two pillars can see them leave and never return. Being able to provide a personalized and seamless omnichannel experience is crucial to keep up with this increasingly demanding industry. 

The good news is that there are plenty of tools and helpful information to keep you up to speed with the (often volatile) consumer landscape.