Overview

Sage & Twine Co. is an Australian-based e-commerce business specializing in handcrafted macramé home décor. Established in 2020 by Joel and Bethany, the company offers a range of products, including macramé hat hangers, plant hangers, shelves, and wall hangings. The business emphasizes sustainability by utilizing natural materials and eco-friendly packaging. citeturn0search1

Key Insights

Website Performance and Metrics

• User Experience: The website presents a diverse range of macramé products. However, the design appears somewhat disorganized and outdated, which may impact user engagement and conversion rates.

• Product Presentation: The site features various products, but the lack of cohesive organization might hinder the customer’s shopping experience.

Finances

• Revenue and Profit: In 2024, the business reported revenue of A$575,000 and a net profit exceeding A$141,000. Notably, there were revenue spikes in July and November, suggesting possible seasonal promotions or targeted marketing efforts during these months.

• Valuation Multiples: The business is listed with a 1.8x profit multiple and a 0.4x revenue multiple. These figures are below industry averages, indicating potential concerns regarding growth sustainability and profitability.

Operational Efficiency

• Time Investment: The business operates with minimal oversight, averaging three hours per day, even while the owners traveled through six countries in 2024.

• Automation: Integration with a third-party logistics (3PL) provider facilitates automated order fulfillment. Currently, stock is held in a Sydney-based warehouse, with established relationships ensuring smooth operations.

Customer Data and Relationships

• Customer Base: The company has processed 3,726 orders and maintains an email list of 21,328 subscribers, indicating a solid foundation for direct marketing efforts.

• Customer Feedback: Reviews on the website are predominantly positive. However, the absence of reviews on external platforms like Trustpilot raises questions about the authenticity and breadth of customer satisfaction.

Legal and Compliance Due Diligence

• Intellectual Property: There is no information provided regarding trademarks or patents. Verifying the protection of unique designs and branding is essential.

• Regulatory Compliance: Ensure that the business adheres to Australian consumer laws, especially concerning product safety standards and advertising practices.

Challenges Identified

• Revenue Stability: The observed revenue spikes in specific months suggest potential seasonality or reliance on intermittent marketing campaigns, leading to inconsistent cash flow.

• Customer Acquisition and Retention: The low revenue multiple may indicate high customer acquisition costs or challenges in retaining customers, possibly due to limited repeat purchase potential in the home décor niche.

• Online Presence and Trust: The lack of external reviews and a potentially outdated website design could deter new customers and impact conversion rates.

Recommendations

• Financial Verification: Engage with the seller to obtain detailed financial statements for the past two months to assess current performance and validate revenue and profit claims.

• Marketing and Growth Strategies: Discuss with the seller their customer acquisition strategies, marketing approaches, and any future growth plans to understand the business's scalability.

• Reason for Sale: Clarify the seller's motivation for selling the business to identify any underlying issues not immediately apparent.

• Operational Assessment: Evaluate the efficiency and reliability of the current 3PL arrangement and consider potential risks associated with inventory management.

• Legal Review: Conduct a thorough review of intellectual property rights and ensure compliance with all relevant regulations to mitigate legal risks.

Social Media Presence

• Instagram: @sageandtwine_

• Facebook: Sage and Twine Co.

Conclusion

Sage & Twine Co. presents as a profitable e-commerce venture with a niche product offering and a commitment to sustainability. However, concerns regarding revenue stability, customer acquisition costs, and online presence warrant careful consideration. Conducting comprehensive due diligence, including financial verification and strategic discussions with the seller, is essential to make an informed acquisition decision.