Organic growth vs inorganic growth Organic growth:
The customer acquisition cost for 2021 was $2,487 per customer. They added 475 new locations and each customer on average spends $101 per location per month. Therefore we can conclude that the total sales produced from their internal marketing efforts to be $575,700
In 2021 they spent $1,124,278 on sales and marketing and another $100+ on initial set up fees. Therefore we can conclude that in order for the company to generate $1 of sales they need to invest approximately $2 in sales and marketing.
Inorganic growth:
The company has historically purchased other companies for 2 times sales which is consistent with their organic growth strategy. However, when they acquire companies, they are able to add customers as well as technology. This looks to be a better deal.
On the md&a there is an asterisk on the customer acquisition cost. The company believes they can reduce the cac to about $1,200 per location. One can refer to this as location acquisition cost instead. At 475 new locations added, the company would be able to spend ~ $570k to generate sales of $575k or a 1 to 1 correspondence.
In my opinion, if the company can reduce their location acquisition cost to $1200 then they are much better off to grow the business organically. This is certainly true if they are acquiring businesses at 2 times sales for client growth rather than technology growth.