Featured Listing: Virtual challenge business in the cycling industry

About the business

Tell us a little about yourself. What’s your background? How did you start the business?

I work in the tech industry and enjoy cycling in my spare time to unwind. I actually set up the business whilst recovering from a sports injury, and was looking for ways to help with motivation and to challenge myself whilst getting back to fitness. I took part in some virtual challenges but felt I could add more value to the experience – and so the virtual cycling challenge was born! I crafted the initial version myself, but once this grew in popularity, I called in outside consultants to help with a complete redesign and the creation of an all-in-one platform for virtual challenges.

As an eCommerce business, where are your products made?

We design our medals in-house, but this could be outsourced to a designer very easily. Our medals are manufactured in China currently, via a trusted supplier who has served us since 2018.

What can you tell us about your Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC)

Our customer base has quite a range – some participants take part religiously each month (since 2018!), while some take part sporadically. Our acquisition costs are very low, and we mainly rely on recurring customers who take part each month without any marketing efforts. Facebook cost per purchase is $5 on average.

How have you marketed the product and where are your customers originating from?

Most of our customers originate in the UK where we are based but have customers from over 60 countries. We use social media and our mailing list as our primary forms of marketing. In terms of paid advertising, we use Facebook Ads and Google Ads. We have also partnered with cycling magazines in the past.

Is the asset on your listing owner-operated, how much time does it take to run the business, who else is needed on the team, and what is automated?

Yes, we currently operate everything ourselves. The business is very hands-off – around 15-20 hours per month is required to answer emails, market the challenges and fulfil medal deliveries. Everything is automated as regards the customer experience – the platform we have built takes care of the whole challenge event and basically, all we need to do is send a medal out to those who succeed in hitting their challenge target.

What does someone need to do to continue operating the business in its current form?

The business is very hands-off. The new owner would simply need to create a medal design for a challenge and instruct our supplier to produce this. This is the only physical component of the business. Everything else is taken care of by our system – customers can sign up, track their progress, submit for approval, etc; independently. Emails are automated and everything is set up for tracking (Google, Facebook pixel, etc). Medal fulfilment is currently in-house – but this could very easily be outsourced.

Growing the business

Can you list a few opportunities for a potential new owner to continue growing the business?

We see a lot of room for growth for the business. We do not put a lot of time or effort into marketing, and someone with the right skills in this area would do very well in expanding the customer base. The website has a shop section that we planned on using to sell sports apparel, which would boost revenue significantly. We focus primarily on the UK market but based on the number of worldwide participants we have reached, we can see that global growth could be very easily achieved, especially in the US and Canada. Also, we have yet to monetize the site via advertising for others – the site could easily be used to host ads from sponsors or conduct email list advertising campaigns.

What has been the evolution of this asset since its launch?

Initially, we had used Shopify to enable customers to purchase entry to our challenges, but we found this cumbersome to administrate. This led us to invest in building our own bespoke website that handled the entire process. All the pain points we identified earlier in the business lifecycle were addressed by the new system, which has now resulted in a largely hands-off, revenue-generating machine. The customer experience has also been increased dramatically, resulting in less support and higher recurring custom.

How does this business make money? What are the current revenue streams?

We make money from entry fees to take part in our virtual challenges. Entries are priced between $16-29. This is our sole revenue stream currently, though we have identified multiple low effort/high-value opportunities that the new owner could easily put in place.

What marketing channels are most profitable for the business?

Our mailing list is our most profitable marketing channel currently. Facebook ads would be the most profitable channel for us in terms of paid advertising.

How does the business currently acquire customers and what is your breakdown for marketing costs?

Our main source of new customers is Facebook advertising. We have no fixed marketing budget, but the cost per purchase is around $5.

How big is your current team? How many people does it take to run this business?

I run the business on my own.

What’s the reason for selling your business on Flippa?

I have recently taken on a senior position which has resulted in more responsibilities and a long commute now that lockdowns are behind us. This has led to less time to run the business, and I feel that it deserves a new owner who can devote time to fulfilling its potential.