Is buying an existing SEO outsourcing business a good decision to go through with?
There is an SEO business being listed for sale. Before investing my money into owning such a business, I would like to get some expert advice on whether this is a good investment or not.
The business itself is basically a website that contains SEO packages for sale. The more expensive the package the more optimization options/modules/upgrades there are. These SEO packages are carried out through outsourcing methods. The outsourcing method directly relates to an external supplier that the seller of this particular business will provide me with after purchasing and/or signing an agreement to purchase the business.
Before buying an SEO business you need to know about links building which is the key to rank the client's website. If they got a good links building team which is well aware of penalty-free backlinks which won't let your client's website banned by Google. Thus if you find difficulty in finding links building partners than you can hire a guest posting service like https://www.globexoutreach.com.
Do you know about SEO? If you know the topic well then you should have the ability to get clients. Then this business will be profitable.
There are two parts to this business - getting orders (front end) and servicing & retaining customer (back end).
From what you said, the second part is totally dependent on the outsourcing company. That's a risk you will need to mitigate or at least factor in the price.
But this is something you can solve for even if the third party SEO provider is not up to the mark. In any case, if you want to grow this business, you will need to have multiple providers to reduce risk and to scale.
Ask the seller if you can talk to the company that does the outsourced work. Interview their folks to understand if they can do a quality job. If they can, great. Otherwise, you should check out FB / LinkedIn groups and search for white label SEO providers. Check out capability and pricing so you know if you can be profitable given the current pricing of SEO packs.
Ask the seller for references of current customers and talk to them to understand if they are happy. Get information about the average length of a contract, cost of servicing each contract (including the time you need to spend on supporting the client) and profit margins. That will give you an estimate for the lifetime value of existing clients and value of the business
Next, check their new business velocity - how many new leads and sales are happening each month, which plans people are buying etc. Then calculate net new monthly revenue. This is a more important metric since you can always find another agency at the back end to do the work. Most of the value of this business is at the front end so spend your time understanding it and nailing down the risks.
Hope this helps,
Estimate their revenue, margin, pipeline, past and perspective.
I think building your own SEO empire would be a better decision. If you are still thinking to make the deal, consider the companies ROI and other KPIs before you make the big move.