Have you considered buying or selling an FBA business? Then you came to the right place! On this episode of The Amazing Seller, Scott sits down with Justin Cooke. Justin specializes in facilitating the sale of eCommerce businesses. He runs Empire Flippers and has some powerful insights to share with the TAS audience today. Justin and Scott cover the importance of diversification, how to position your FBA business for sale, and how starting and selling small FBA businesses can be profitable. There is a lot of content in this episode so make sure you grab a pen and some paper and even check out the transcript at the end of this post!
How important is it to diversify your business?
How important is it to diversify your business? You hear a lot about how important it is to diversify your income in the eCommerce industry. Scott and Justin emphasize how necessary it is to grow your business in other sectors. Justin learned this firsthand when he had to make adjustments to his first business early on. The key is to remember that your business isn’t the moneymaker, you are. You are the one who has the skills and the ability to get stuff done. That is the lesson that Justin learned when he had to take his skills and pivot to find success. To learn more about Justin and Empire Flippers, make sure to listen to this episode of The Amazing Seller!
What makes an FBA business attractive to a potential buyer?
What makes an FBA business attractive to a potential buyer? If you are considering selling your FBA business, you need to know that cash flowing assets are key. Potential buyers are looking for a business that is ready to go and making consistent profits. They want to be able to take the products that you have refined and marketed and plug them into their operation. To learn more about how you can position your FBA business to look attractive and turn a profit, make sure to listen to this episode of The Amazing Seller!
Is starting up and selling FBA business a feasible business model?
Is starting up and selling multiple FBA businesses a feasible business model? If you have found your niche and you are really successful at identifying and marketing products well it would be a great plan to start up small FBA businesses and sell them for a profit. Going down this route would put you in a great position to understand the market and leverage your skills as an entrepreneur and startup specialist. Scott’s guest Justin Cooke goes through the benefits of honing in on this ability and turning a significant profit. You don’t want to miss valuable episode of The Amazing Seller!
OUTLINE OF THIS EPISODE OF THE AMAZING SELLER
- [0:03] Scott’s introduction to this episode of the podcast!
- [3:20] Justin Cooke joins the show.
- [10:30] Scott and Justin talk about adapting to changes in the industry.
- [12:40] Justin talks about diversification.
- [17:30] What makes an online business attractive to buyer?
- [24:40] Justin gives an example of an online business helped sell.
- [28:40] Who are the buyers who purchase these businesses?
- [33:30] Justin talks about how these online business are purchased.
- [36:30] How does the inventory factor into the sale?
- [39:30] How to do you transfer an FBA business?
- [44:00] Do lawyers get involved in this process?
- [46:00] What are these buyers doing, are they growing it or maintaining it?
- [48:40] What is the selling sweet spot for FBA businesses?
- [51:10] Are Amazon Associate and Ad Sense sites still selling well?
- [54:20] Is it a business model for someone who can start up these Amazon seller businesses and then flip them?
- [59:00] Last tips from Justin.
TRANSCRIPT TAS 329
TAS 329: The EXACT Steps to Buy and SELL FBA Businesses + Mistakes to Avoid with Justin Cooke
[00:00:03] Scott: Well hey, hey what’s up everyone! Welcome back to another episode of The Amazing Seller Podcast. This is episode number 329 and today we are going to be talking about a very exciting topic…
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…That topic is, ‘The Exact Steps to Buy and sell FBA businesses or ecommerce businesses for that matter or any type of business and actually some mistakes to avoid in this process. I have got a special guest on, you may have heard of him from Empire Flippers, his name is Justin Cooke. And I have been following Justin for over probably six or seven years now. He had a site called, AdSense Flippers and then it turned into Empire Flippers. He will talk about exactly why that all changed and what AdSense Flipper was and what Empire Flippers is and all of that stuff.
Really I wanted to get him on because I'm in interested in myself personally right now as far as, can I sell and when I should I sell? Then also like, is there any businesses I could be looking at to maybe shortcut the process a little bit? Maybe other people that have already started a business or maybe are good at starting the business but then don’t want to scale it or maybe someone that has built maybe an affiliate site business and I can turn that into a physical products business site. So, there is a lot of different things I wanted to talk to him about.
The best way is to invite him on the podcast, right? Then I could get a little bit of a deeper dive into this stuff and just talking to him for the short time. Him and I we hit it right off and actually he may be attending, I am going to say maybe because he said he might, he wants to is attend Steve Chou’s event out in Ft. Lauderdale which will be in May of this year. That will be really cool to hang out with him and get his ear a little bit more. But, we really do a deep dive so if you are at all interested in this, whether you have a business already or maybe you're thinking about possibly buying a small business… There are sites you can buy for $10,000 or $15,000 but they go all the way up to a $1 million or more.
[00:02:01] Scott: He is going to talk about that. We are going to talk about like how do they figure out the selling price and what kind of multiples and all that stuff? But also some things to look out for or things to prepare your business for or set it up correctly. So, if you do want to exit it makes it that much easier. Definitely check out the show notes, you are not going to want to miss all of the details that we talk about. This actually is about an hour long, maybe even a touch more. We also talk about business, we talk about a little bit of lessons learned through the process. He has pivoted a few times in his business and why with all the Google updates and all that stuff. It is always interesting to talk to another entrepreneur and Justin is definitely going to put it all out there. He is a no BS guy and he is going to just throw it all out there. We will get to really dig into this topic.
Guys, the show notes, theamazingseller.com/329. If you want to look more into this entire process you can head to theamazingseller.com/flip and that will take you over to Justin’s site where he has some resources, so this way here you can determine whether you are buying or selling, it will be over there linked up for you. All right guys, I am going to stop talking now so you guys can listen to this awesome conversation I had with my good friend Mr. Justin Cooke, enjoy.
[00:03:21] Scott: Hey Justin, what’s up? Welcome to the show, how are you doing man?
[00:03:26] Justin: Good man. Doing well, happy to be on the show?
[00:03:29] Scott: Yeah, it is going to be fun. This is going to be fun. It's something that I have been interested in. I know that my audience has been considering at least some of them as far as buying or selling an FBA business, and even for myself I have been thinking buying like an Amazon associate business which we can dig into a little bit. I think that is a huge opportunity that people are not looking at right now which I think is huge. I want to thank you for coming. I have been following your stuff for quite a while. I think going back it is got to be five or six years before you were Empire Flippers. It was… What was the other name? I forget now…
[00:04:05] Justin: AdSense Flippers back in the day. We started creating those small AdSense sites and we had organic traffic, where we monetize via AdSense. Those little small sites that we end up selling ourselves. That is how we got started in this whole crazy online business world.
[00:04:19] Scott: Yes, it is funny. I was following you and then Spencer Haws and how he was doing it, Chris Guthrie and it is funny now, I have you on the show but I have had both those guys on the show. I’ve got really good relationship with those guys, they are good friends of mine now. And it is just funny how I followed a lot of what they have done and now here we are. You have kind of evolved through this journey of AdSense sites were the thing, you are like building these sites and getting them into generate a cash flow and then turning around and flipping then and selling them. And now you guys evolved into this whole market place where you can buy and sell businesses which is really cool. I just think people out there don't realize… I kind of tried to highlight it on my show. It is like, you just never know where you are going to go but as long as you are doing something it is going to lead you to where you are going to end up. Would you agree?
[00:05:07] Justin: Yeah, it is crazy some of it is direction. Like you actually pick the direction when you are making choices and you see kind of the future where you want to go. Sometimes you are just forced. Like when we were creating these smaller sites that we were building, that was going well. We probably would have never become a market place or a brokerage until our process broke. So our process of creating these sites and being profitable was like cut in half. So we were like, “We are not profit anymore, what are we going to do?” We knew there were people that wanted to sell their business on our platform, we kind of pulled it off because we were like we are selling our own websites. That’s super profitable for us.
Like why would I want to cut my profits by having someone else and I get small piece of that, no way. Then when we run into problems we were like, maybe we will revisit that. So we started letting people list and sell their business. It really took off for us. Like going from at $200,000 in sales in 2012 to like just under $10 million in 2016.
[00:06:00] Scott: That is crazy, that is absolutely crazy. Now, let me ask you before we dig into this whole topic of buying and selling. Specifically we want to talk about FBA businesses but I want to talk about just business in general but like you said your process broke, was it the Google update that broke things because it wasn't the same as it was before? Was that the process or was it your internal process? What broke there that made you say we should probably pivot here a little bit?
[00:06:26] Justin: We built a machine, like a site creation machine of people stamping out these many websites. It was a very specific process for doing that and we’d survive some other Google updates so it wasn't a problem. And then the EMD update, that’s what they called it at the time, I don’t know what they call it now years later. The EMD update came out and devastated us. That was the one that actually hit us. We had survived like Panda, like we survived Penguin but EMD was painful.
That was the one that hit us. We were still creating some sites and it still was profitable. Effectively we would create a site for like $50 in cost and we would sell it a year later for $200. So, 4x our investment. We were creating a site for like $50 in cost, $50/$60 and then sell it a year later for $80 on average. It was just a big hit, still profitable but not much. The volume we’d have to do just did not make a lot of sense. We looked at fixing the process, which is obviously a great thing to do if we would fix it and get it back to invest $50, invest $100 or invest $1,000, and get $5,000 out of it. That’s great, everything is good again. We were working on that concurrently with allowing other people to sell their sites on our platform.
We started doing small sites, we allow them to sell four figure, five figure websites and online business, while we are working on our process in the backend. And when that started to really take off, we said, “Well we are struggling with creating new process but there is all kind of people out there with all kinds of interesting websites and online businesses. I think we’ll never…” Maybe we were in the same kind of website problem but I don’t think we will, I think the market is big enough and growing enough to where if we are constantly talking about, how to sell your business and the process for it, we are going to get enough people that we are going to be able to keep this rolling.
[00:08:18] Scott: I always like to highlight that though because it is like you guys were again doing something, it was working for you. You were also using that channel, that Google channel. I'm sure that you were still get some search ranking from other search engines but Google was the main driver. The EMD that you are talking about is the exact match domain. That was a big one, you would go out and you would find a domain that was exactly for that thing, stainlesssteelgaricpress.com like that was it. Then you were selling those and you build content around those. It was a great thing and it did work like you said but they did this big update and then all of a sudden peoples businesses like literally lost their rankings overnight and…
[00:08:56] Justin: You know it is interesting because we were selling our own sites before, we did not realize that at the time it came together, but we solved kind of the marketplace problem. If you have double sided marketplace today. We need customers both on the sell side, people to sell their business with us. We need customers from the buy side. It is a problem for like AirBNB, companies like Fiver, companies that have two sided marketplaces. We had already solved that because we are selling our own sites and we had built up this kind of buying audience, a group of people that were initially buying websites and online businesses.
That is kind of one of the advantages we had in starting the marketplace, which looking back as interesting. I think it would be really hard to say, “Okay, I want to be a brokerage or I want to be a marketplace. Come sell your businesses with me,” and you don’t any buyers. That is one of the challenges we kind of lacked in to that. We were testing things, we were doing things. That is kind of like how we got past that problem which is a legitimate one.
[00:09:55] Scott: I think you said, you created your own market place in a sense because you were building the product and then you were selling the product. So, now you had these people that were still buyers and then all of a sudden you were like wait a minute there is people now that want to get on my platform so I can actually let people get on my platform and just take a code of that. You guys definitely kind of graduated towards that. It seems like it would be easier for you guys because you were already doing it but the same breath you still want to do the work to do that and you had pivot. That was a pivot for you guys.
I actually seen the pivot and I was totally on board with them and I’m like… Because you know again whenever we are relying on that one platform it’s risky. Just like Amazon, like we are building an Amazon business. It’s risky if all your eggs were in that basket. If something happens you got hit… Look at the recent review update, everyone was just like Google updated. It was like, “oh my God, the sky is falling, what we are going to do? We might as well sell our businesses now and get out or we might not even start a business”. That is why people ask me like, “Is the marketplace saturated in Amazon businesses?” The answer is, kind of if you are selling like the generic stuff that everyone is trying to sell. But the same breath, there is a lot of people leaving the marketplace because they are scared of these updates that could pop, that could possibly happen.
[00:11:06] Justin: Scott, here is the other side of that mess. With that update, scares a lot of people. Others are like, “Oh my God that is really freaky.” Think about this though, it creates a barrier for new people getting started. If there is a barrier now between those that that are already up and running and having success with FBA, and people that have not started yet, that is good if you already have a business that is up and running. That barrier helps you and in fact makes your business more valuable. If that’s a harder barrier to cross for new FBA sellers, new FBA entrepreneurs to get into. That’s great for the one that is already around. I think that is going to be a sign that FBA businesses right now are undervalued. We will talk about that a bit more I’m sure.
[00:11:49] Scott: Absolutely, I agree whenever there is a barrier it is like… When there is more work for someone to do or it is going to be harder because you have to do more to get to that spot. To me that is always an opportunity. Even if you are not… Like, let us say someone is not even started their business yet, I still think it is a better opportunity if you want to play by the rules because it is going to be a longer game but in the same breath other people aren’t going to want to put in that time.
Like everyone when they launch their new business or their new products, they've all been, “Let’s us give away tone of units in the beginning, so we can spike the algorithm and then we can go ahead and get some reviews and all that stuff.” That has changed, you can still kind of do some of it but it is differently now. You cannot do it as easily as you could before. It makes it harder to get into the game in a sense but I still think that picking the right products and all that stuff in the market it’s a whole other conversation which we talk about a lot. But, like you said it is going to make people say, “It is too much work, I am not going to do that, I am going try find the next shiny object.”
[00:12:43] Justin: Scott, do you ever have this question from your audience? I get this question, and I'm not exactly sure how to answer that, I have my thoughts but I’m interested to hear yours. Some guy says, “I'm doing 95% of my business is via Amazon FBA. I have a website, I am getting a little bit traffic, I am selling a little bit. It seems like every hour of work I put into FBA I'm getting back $500. Every hour of work I put in to my ecommerce business I’m getting back 30 cents.”
Clearly they understand the value of diversification and making sure that they are getting traffic, that’s offside outside of FBA and the value of an email list and all of these things. We know we are super important and improve the value of your business. But, if I can get a lot more profit, out of spending building FBA it is like it is a hard sell to get me to worry about that email list when I could put my hours in it and double my FBA business where it may only add 15% on the ecommerce side. Do you know what I mean?
[00:13:43] Scott: I 100% understand exactly where you are coming from. It is funny, I have got one of my students who is doing about $250,000 in a month. He actually told me, he has not started his… I think he might have started his email list but he calls it the Amazon crack. It is like, you get on it and it is like it is just so good that…
[00:14:00] Justin: I add 10% on FBA and that is going to blow my ecommerce traffic out of the water.
[00:14:08] Scott: I know. The problem though and this is the thing that I think of is. I recently had a guest that this happened to, doing like $60,000 a month in revenue. Trucking along, doing great and he had two claims that he had a product that was violating another product’s patent. All of a sudden they removed his listing overnight, his sales went to nothing and now he is out of business in this sense until they get this fixed.
That was a big problem. That’s why I would say. It is a longer play, it is definitely a longer play but I think in spreading out that product line, if you have done it properly you can go out to Facebook and drive that traffic to your own website as long as… Like if you three products, I believe you can build a million dollar business on just three products because you are going to lead people through your sales cycle and hopefully you have something that could be replenishable, that would be even better.
I don't think that you have to stay on there but it is like you said it is almost too good and so easy in a sense. I’m not going to say easy, but it is easier than to go out and start your own ecommerce channel. I think that is where coming down to knowing how to find your audience in your traffic and then how to bring them through your own sales funnel in a sense to where now you can have them leading through or you can actually drive them over to Amazon, spike your sales, get your rankings but if, God forbid something happens you just replaced that buying place over to your place.
[00:15:29] Justin: There is some interesting things we were doing combination with the Amazon affiliates programs. They are buying sites that have traffic that is in their niche. Then redirecting that traffic to their listing page on amazon. There is interesting kind of like combos you can do. Amazon affiliates is making X amount of money anyway, now you are just improving your margins by directing it towards products that you are actually selling.
[00:15:53] Scott: Yes, actually that is something that I'm interested in. I'm interested in like taking like a business that is not selling on FBA right now and it is an associates business or even just maybe even on their own ecommerce site but they are not selling on Amazon yet, then I can go ahead and take that business and then bring it on Amazon. That to me is a great way, because we have already maybe 50% of their income is going to be coming from that own site and then yes, Amazon is going to trump it maybe but that is okay. At least you’ve got a good seller base of external stuff already happening.
[00:16:23] Justin: Hopefully you are going bump your sales across the board. You are going to hopefully bump your margin if that is possible too. But even if you don't, you just improved profit. That is going to improve on the value of your business because the value of your business is based on a multiple of earnings. The more earnings you have, the more your business is worth. Aside from that, it is also going to improve the multiple because if you have a business that has sales via FBA, sales via ecommerce, it is like a multi-throng approach at your business. It is going to get a higher multiple, it will command a higher multiple because buyers look at that and they say, it is more stable, it is less risky that kind of thing.
[00:17:02] Scott: That is 100% where I am at. I have already looked at some sites that you guys have in your marketplace. They looked good until I dug into them and they were just were a little too risky for me because I want more than just one leg that I am standing on to start. I want that, I want to talk about that too in a little bit. Let us first start off kind of like, I know people are going to be asking the question really like, “Okay, I have got my FBA business and it is doing some money but I’m not sure if it is even sellable”. I want to kind of go through that a little bit and kind of, let people know what makes a good business to sell to start? What is the main criteria that I should think to myself like if not do not even contact you. Like one of those?
[00:17:45] Justin: Buyers are looking at online businesses as assets. So, cash flowing assets is what they are really looking for. Could this business be set up as a cash flow asset? Let’s say I already have multiple FBA businesses, different product lines whatever. Can I take these particular products through this business, bold that into my current operation, my current team and everything, and either expand it through being parallel niches, which is they have themselves to each other. Will it just be a nice add on, is there something in that niche that I want to expand? There is all kinds of reasons that people want to buy but really they are looking for cash flowing assets.
Now, I know with FBA in particular. It is probably a lot of your listeners are going, “Oh my God, I have higher revenue, my cash was slack because I have put all the money back in the product.” Well we do take that into account and buyers take that into account too. If you are going through a heavy growth face, number one if it is heavy growth, you may not be in a position to sell. I don't mean that you cannot sell it. I mean maybe you should not sell it, because you are in such a high growth face that you are not going to get what you will be worth in six months.
But let us say that is not the case, you have been growing a bit, you have been dumping money back in the inventory. We look at that. When we are looking at your inventory cost, we actually do that on accrual basis. We will look at your total… Like if you have one month where you buy a bunch of inventory, we are not looking at cash flow, we are not looking at a cash basis accounting, we are looking at accrual based accounting for cost. We do cash based accounting on profit, or revenue on profit. We will look at units sold, we will get at per unit cost, rendered cost, then look at how units you sold, and your cost will be broken down on a per unit basis where your cash flow is on cash flow basis. Does that make sense?
[00:19:34] Scott: Yes, it totally does. You are not looking at it like you said. Like in one month I went ahead and I spent $20,000 on inventory. That inventory is going to last me over three months or whatever. You can spread that right out throughout and you are just going to look at total… Would you take like let us just say, someone has been running for 12 months, would you just take like almost like a profit loss in a sense to where you are going to take like all the units sold, cost of goods per unit sold, all of your FBA fees are in there, all your paper-per-click cost are in there, any other expenses to the business and then you are basically got take out the net. Then you are going to divide that amongst those 12 months, is that how you would do that?
[00:20:13] Justin: That is exactly right. In fact it is generally not always that we use Quickbooks but a lot of times people have the spreadsheet. So, we have the spreadsheet that they fill out, a profit and loss or loss for months. They fill that out, doing this when it comes to cost of goods, instead of putting I bought in January and did not reopen until May. We don’t do that, we just have them put the number of units and then the total… We have already figured out the cost of goods per unit, and so they’ll just put the cost in there per month. That’s how it’s important. Everything else is the same, when you paid traffic, anything else you did here is where goes, then you paid yourself and then here is your net profit at the end of the month. We exactly count money you pay yourself that does not count against you in terms of what the valuation is.
I actually mentioned this. Let’s just back up for a second. I can tell you the formula for valuation. So, we look at 12 months, ideally we are going to look at 12 months history. Just look at what your average net profit was over the last 12 months. Net profit does not include any salary, you’re paying yourself. We don't put take into account maybe you spent some money on this trip to Tahiti or wherever. That’s not going to be included in actual cost. We are going to take that as well. We’re going to look at your average monthly net profit. Based on that number we are going to come up with a multiple. Multiple could be anywhere from let us say, 18 times your monthly net profit up to a 30 or more times your monthly net profit.
That is a big swing. If it is $10,000 a month on the low end that means your business is worth $180,000 on a high end is $300,000 and there is a lot of things that go into that including… We will get into that a bit but just know that there is multiple and that multiple is applied to your net monthly profit average out of 12 months.
[00:21:56] Scott: Okay, so you used the 12 month example. Is that really like where you want to see people coming to you rather than six months or eight months like how new of a business can you actually sell or that you guys like to sell?
[00:22:10] Justin: We will do less than that in situations where it is gone down indefinitely. So, let us say that your business 12 months ago was doing much more business than it is today. Well then the 12 month average does not make a lot sense. Buyers will be like, “I don’t care what you were doing year ago, what are you doing recently”? So we might do like a six month average. Same thing if the business has been growing like crazy. So sometimes will do a six month average based on that.
We try not to use six month averages if it is like super seasonal. Let us say the last six months has included spring and summer and those are hot months for your niche whatever. We cannot just base the value of the business on… Like, we want whole cycles so we would rather do 12 months. We can do six months if the business is new enough, we can do six months. We need at least six months of running history though. So, we are going to base on it on six months. So, the business can be seven months old but we are going to be basing on the last six months. If that makes sense.
[00:23:05] Scott: Yes, it does. Let me ask you this, does that affect the multiple?
[00:23:09] Justin: Oh yeah. You are going to be much on the lower end of the multiple depending on how new the business is. For a lot of reasons. It is much more risky for a buyer. You are on a new somehow unproven niche, it is a little new, it is a little early. Now sometimes people have reasons to sell or they want take some chips off the table or they are nervous themselves whereas the buyer is not as nervous as they are. There is a lot of reasons that people sell. The earlier a business is, the lower the multiple. Generally as you get to a year, two years, three years old with an FBA business, the multiples are going to go up.
We’ve actually, across the board… We just did a post most recently, we looked up to data that we actually from the sales we did last year, we did like 13 FBA sales, ranging from $9,000 to $500,000. We noticed that the multiple for FBA businesses is much lower. The average least price was around 23x, three average FBA business for sale and the average sale price was like just around 21 just under 21 times net monthly profit. That is lower than like… We are normally in the range with most businesses are like 26 to 28x. I think the reasoning for that is FBA businesses are still relatively new.
A lot of buyers are still a little nervous about buying a business that is on Amazon platform only, it’s things like that. And lack of diversification. A lot of the FBA businesses we have sold did not have as much diversification which is one of the reasons we are saying, “Look, if you can diversify your traffic channels, your sales channels, your business is going to be worth more.” A really good example is, the biggest one we sold last year, $500,000 sales at 22x multiple. It was a year old, 12 months old. It was doing just about $23,000 a month in profit.
[00:25:00] Justin: We used a five month average, it only sold one product, it had one traffic channel. There were five new products ready to launch but hadn’t been launched yet. It is in a beauty product space, it got a multiple of 22x. Now pair that with… This is a business we have listed right now bit it is in the process of closing hopefully. There is one outdoor sports niche.
It is a $1.8 million sales price, little over $50,000 in monthly profit close to 60 now. It is a little over two years old, 12 month average, it has 20 different products has three different traffic channels, it is going over 30X. And outdoor sports is a $1.8 million sales price. So a 30x multiple, if we were to plug the 22X multiple to that same business that means it will be selling for $1.32 million as opposed to $1.8 million. That is a $500,000 difference in your pocket and that’s by having 20 products instead of one. It’s by having three traffic channels instead of one. It’s by being two years old instead of one year old. That is just multiple. Everything else being the same, it’s a $500,000 difference.
[00:26:20] Scott: It is huge. Even you saying you sold a business for $500,000 and they only had one product and one channel in 12 months like I’m nervous just thinking about that because I know that I can probably take that business and scale it. Yes, they had products in the queue but they have not launched it. They have been proven and validated, they have not been through that whole cycle. The other one much more expensive but it still seems like more of a sure bet.
[00:26:50] Justin: In a sense, it is selling in Europe, it is selling in the US, okay that is little better. But think about this too, you can also say and I think the aggressive buyer sort of $500,000 businesses is going to say it’s not in Europe, it does not have this, it hasn’t proven itself here, I see opportunity here like it should be $1.8 million in business not $500,000 in business. In fact it is just not big enough to where I care. I don't get out of the bed for $100,000 deal. A $500,000 deal it’s making enough money to where it starts to interest me.
We have people that own multiple business. One of our customers in particular has hundreds of businesses, online businesses. They have dozens of people on staff that coordinate these businesses that run these businesses. I mean there are like groups of investors that have teams of people that run the businesses after the fact. We have like kind of your professional portfolio buyers kind of.
They have this like portfolios of businesses. We also have people that have plenty of experience in the space, experienced FBA people that are like, “Look, I have cash flowed quite a bit from my businesses now I’m looking for FBA businesses that might have a bigger mote.” Things like, maybe the product is more expensive. It’s outside the range of where most would get into, those are the businesses I want to buy because they have kind of built in loads and barriers that I think will be valuable later on.
[00:28:22] Scott: That’s makes 100% sense. Now the buyers feel like a $1.8 million. Are you finding that that is like you said? Is that like a group of investors in a sense or what kind of clientele is that for you? I would think it would be partnerships of some kind where they go in on a third or on a fourth or who knows. How does that kind of all play out when other people come in on that?
[00:28:48] Justin: That one in particular is a small group of buyers. It is a small group of investors match with operators that will buy that business, are looking to buy that business. We are getting close to them buying that business. We have seen those for the larger deals. Honestly, this would be the largest deal we’ve done to date. I will say most of our deals right now are like a six figure range. We do a lot of $100,000 to $700,000 deals. Those are often done in like either sometimes solo and they will get like seller financing from the seller or they’ll partner just like two or three partners where one operates the business and then the others are more passive maybe in an advisory role. We see that a lot for deals. They just kind of pool their money or expertise.
They are in the pooling expertise or someone of them just don’t have that expertise but they got the cash, there are the ones putting in the cash. There is a lot of interesting deal structures being done that way. This one requires you to have those connections, those potential investors. We are thinking a lot about this Scott. There is a market for that. I’m sure we are going to tackle it sat some point where we are matching kind of the investors with the operators. So, like if we have people that have pretty of FBA experience how do we match them with the investors that are looking to do that. Actually we are testing through one right now with an FBA fund to see if there is any value there but I think there is a huge market.
[00:30:19] Scott: Yeah absolutely and I think the point is too like there is people at different stages. You have thrown on these big numbers but I went on the marketplace and there is sites there that you can buy for $30,000, you’ve got something you can buy for $70,000 FBA businesses but they are a lot lower. You might have an FBA business that’s doing a net profit in at the end of the month at $3,000 and then you are going to do the multiple on that three. But again you are buying a business that to me it’s got cash flow but it’s nothing huge but if someone knows about this business model they can see where they can, again like you said, scale that and then maybe build into something that they can sell for 500 or 1.8 million eventually.
[00:31:08] Justin: Yeah, we haven’t had a lot of this with FBA businesses because we are really new. We’ve got our first FBA business listed on our platform in December 2015. We didn’t have any listings before that and so we were weren’t really selling them. One of the reasons for that too Scott is like that we lagged the market. So we are the end lifecycle for an entrepreneur’s business so they are looking to exit it. We are not keyword or niche finder tools or anything, we are not on the front leading edge we are on the backend of that. So by the time they get to us like they’ve been at it a little while so the FBA bills are just starting to roll around. But we found Amazon’s associate program or AdSense like we actually list and sell these businesses multiple times. I think three is probably the most but we list it and like six months later someone will come back and sell it again with us and then a year later a year and a half someone will come back and sell it again with us.
It’s interesting I wonder if we’ll see that with these other FBA businesses or will they be rolled into other businesses to be sold larger. That’s one interesting things too with FBA is that, and not just FBA, any business overall the bigger the business gets, the larger the multiple is. You might have a lower multiple in the low like let’s say $200,000 FBA business have a lower multiple, that same exact business if you were doing a double, let’s say triple the profit instead of being of it being $600,000 business it might be a $700,000, $800,000 because of the multiple going up so just larger businesses have larger multiples.
Now, and this is outside of our scope but if you get into the eight figure businesses, they are not selling on a 20 or 30 or 35X they are selling at 4X annual, 5X annual. You are talking even larger multiples because then you are…
[00:33:01] Justin: And this maybe beyond the scope here, but then you are getting into capital markets, then you are getting like private equity that they are buying $15 million businesses and rolling those up so their leverage there is plenty of money in that space whereas in our space there is none. There is not so many financing options for even on the seven figure deals particularly the six figure deals so you have to get pretty creative if you are looking to finance a high five and low six figure business, you have to get pretty creative.
[00:33:36] Scott: Yeah I was going to say you are not going to walk into the bank and say, “Hey I want to borrow money to buy this FBA business.”
[00:33:41] Justin: No.
[00:33:42] Scott: That’s not going to really work out, like you said you are going to have to either get investors or you are going to have some other ways, some creative way to get the financing going. Is it uncommon for the seller to hold a portion of that and charge an interest on that money?
[00:33:56] Justin: They do sometimes, sometimes they are finance it with no interest so as a buyer that’s always your first negotiating position. Why not see if they will finance the deal, let’s say a $100,000 FBA business but I want to put $50,000 upfront, I’ll put up another $20,000 or 20% after 30 days of trading so to make sure you are up to speed and we are going to lay out, you are going to be on the phone with me just to make me feel safe as a buyer and then the other 30% will be financed over twelve months.
This is straight finance, 0% interest, so it’s great ask. Sometimes this will be tied to a gross revenue so based on the revenue of the business it will be $30,000 based on where it’s at today but it could go up or down so the seller could get more or less depending on how successful the business is. That’s another way it’s done. So now this is based on hitting certain goal posts so if it passes this level then I get a piece of it, if it passes this level then I get a piece of it.
Sometimes the seller will keep some equity in the business and sometimes the buyer wants that. There is a good reason for that. Let’s say the seller thinks they are, “Look I’m selling now but I shouldn’t. I’d rather wait twelve months but I need the cash for my other business. I need $200,000 to invest in this other project, it’s massive but I need it so I’m selling you my business but I know there’s promise in this. So if I can keep 10%, 20% equity and you pay a little less for the deal, I’ll stay on as advisor, you can get on the phone with me when you want but I know this is growable, this is how I’d do it and I’ll get on the phone with you once a month to walk you through it.”
[00:35:37] Scott: Yeah I was going to ask you that if there was anyone that was saying like, “I’m going to sell you this for this but I’m still going to have 10% equity forever or whether it’s for a certain period of time and then you are done.
[00:35:48] Justin: Yeah if the seller sees like a ton of promise in it or the buyer sees a real interest in keeping the seller around it can happen. It’s not generally for a major piece of the business because it’s pretty liquid so getting out of that position is just really, unless you sell the business it’s super challenging. Who else is going to buy in and are you ready to sell your position like it's messy. It’s just like you are going to wait for them to sell again so if they are onboard with that and that’s their plan then it might make sense.
[00:36:18] Scott: Let me ask you this too now because there is inventory involved here. Let’s say that we are sitting on $15,000 or $20,000 of inventory in there and it’s already been paid for. How does that go into the equation?
[00:36:34] Justin: Yeah for the valuation with businesses with inventory, FBA businesses being one of them we add on the wholesale value of inventory cost. If you’ve got let’s say it’s a $400,000 business and you’ve got $60,000 worth of inventory at wholesale cost then we’ll add that to the final valuation. So it will be a $460,000 business now. Is that a fair way to do it? It’s fair enough but it’s interesting because one of the things that we won’t add on are dead inventory. If you stocked up on whatever product and that does not just move anymore, no one wants to buy that stuff, that’s not going to be included. That was your loss, why is the buyer taking on your crappy deal? That’s not a part of it.
Also if you’ve super stocked up and you’ve got 12 months of inventory or something like that’s not ideal and so you may have too much inventory. One way that other people do it or that they think about inventory is they’ll look at your average inventory levels of the last twelve or eighteen months and say, “Okay I think this much inventory is included, this is where your average inventory is, this is what it needs to sell the business. So I’ll pay you for any inventory above or I want it discounted for any inventory you have below that level at the time of purchase.” That’s one way of doing it and normally when you do it that way the seller will want to bump their multiple. They’ll say, “I want a slightly higher multiple if you are going to do that.” It’s just playing with the numbers and when we do these valuation formulas we talk about your average indemnity profit times, a multiple and how you determine that multiple.
The only reason we do any of that is just so the buyer and the seller are looking at the same equation because as soon as you have a seller, and this stuff gets emotional Scott. So you are selling your business you are like, “Dude I’ve put blood, sweat and tears in this business, I’m not selling this for less than a $1 million.
[00:38:28] Justin: I’m just not I’m not giving less than a seven figure actually on this deal.” We as the brokers have to say, “Look man, it’s worth 750 it just is. I’m sorry it sucks but that’s what people are going want to pay.” We have to be the bearer of bad news but the reason we use these formulas is just so that everyone’s on the same page in terms of how they are coming to the conclusion, how they are coming to the valuation.
There is negotiation all over the place, there are lots of opportunities to up this lever or down this lever but if you are working on the same equation it just makes a lot more sense so it takes some of the emotional aspects out of it I think, not all but…
[00:39:08] Scott: No but it makes sense because at least you know where the numbers are coming from. I think that is the key it’s, “You came up with this number but how? Where did it come from?” And you are like well, “This, this and this.”
[00:39:19] Justin: I didn’t just pull it out of the sky.
[00:39:20] Scott: Exactly I think that’s huge. The other question I know that I’m going to receive and I have this question myself, I kind of know but I want you to go through it a little bit is how do you transfer an FBA business?
[00:39:36] Justin: Yeah so there are two different ways we do that. If you just transfer the entire account over to the new buyer that’s the easiest way to do it but a lot of times that just not doable. They’ve got other products, they’ve got other things in there. There is a unique way to do it. Our team does it but basically they will create another… I’m going to screw this up Scott I’m sure.
[00:39:57] Scott: You know what though, you don’t have to give us the exact but I mean it’s doable to basically take… Like let’s say that I started this business, I didn’t know it was going to blossom to what it has and I’ve launched three other businesses under that same seller’s account because I have one main brand but I have these three sub-brands underneath my main brand but I know want…
[00:40:17] Justin: You can section that off yeah, you can section that off so basically they’ll create the exact same page and then it will convert over. They’ll move the inventory of the person still adding inventory. There is a way to do it. We’ve done it for that. It’s better and easier and more straightforward to just include the account but when that’s not possible we have a way to sell off pieces of the business as well.
[00:40:39] Scott: Okay so if we did have it the way we could sell the entire account then we would just basically just transfer my account in my name to that other person’s name and their B-I-N and all that stuff.
[00:40:50] Justin: That’s the easier more straightforward way to do it yes.
[00:40:52] Scott: And is that something that you go through Amazon to help with that process? Is it something that actually has to go through them or is that something that you just do between the two people?
[00:41:03] Justin: Something we do between the two parties. We checked with Amazon to make sure that selling an FBA business was legal and it is. It wasn’t I think a couple of years ago so it is legal, it’s allowed, you are allowed to sell a business, you are allowed to sell an online business and yeah it works just fine. You don’t have to go through Amazon assuming that we will help you walk you the process. With an FBA business or any business that you buy from us part of what we offer is a migration process. We will help transfer the business from the seller to the buyer and make sure everything’s in place and taken care of. Our team helps out with that.
[00:41:41] Scott: Cool yeah because that would be something that I’m sure a lot of people would be thinking, “Okay how do I actually get this thing to get moved over?” Now do you also have a non-compete signed or anything like that because now they know this stuff what’s to stop them from just going on and launching a brand new business with the same type of product?
[00:41:57] Justin: Yeah for our smaller Amazon associates sites as soon as you, we require a deposit from anyone that wants the details about the business. So they have to put a deposit amount on their credit card or either to wire some money and once we have that then we’ll share the URL and we’ll share information about the business. We are actually more restrictive with FBA businesses. So just paying the deposit does not give you the exact niche of the details. You actually have to get on a call with one of our team and the seller themselves. They are going to walk through that with a potential buyer on the phone to see if there is a good fit, then to verify the person and get more information about them.
In terms of non-competes and stuff that is sometimes included. It’s not generally on the five figure deals because a lot of times with let’s say a $40,000 to $50,000 purchase you have to have some agreement in terms of… First of we will do it. So yes we can do a contract, we can do non-compete on $40,000 business but a lot of times it’s like is it going to be worth the enforcement? If you are not actually willing to enforce it with this Australian that’s living in Hong Kong and the American living in wherever, what jurisdiction is it, who are you going to go after and how? It’s probably just not realistic. You will have people who do it, you can sign the contract but it’s not terribly enforceable.
For the larger deals $500,000 deal, $700,000 deal, yes those generally includes contracts. Non-compete is part of the agreement, non-disclosure can be part of the deal actually can negotiated it just seems, “Look I only want two years not three years,” so that can be part of the negotiations yeah contracts are included for the larger deals so just depends on whether or not it would be enforceable or even worth enforcing.
[00:43:51] Scott: I get it. The other thing is, is there lawyers involved in this or is this something that is just done internally within your staff? How does that work?
[00:44:00] Justin: We have a team of lawyers that we work with and we are working with more and more in the last couple of years as we do more and more deals. So in terms of contracts they’ll generally do the contracts. Now that’s our representation and they are great if for smaller deals for looking at both sides of the deal because they are protecting us but they also want to protect both our buyers and our sellers. They want to make it good for everybody but when it comes to legal representation you should probably always have your own. The other thing is if you are going to spend $10,000 on lawyer fees on a $30,000 business that’s not such a good deal. Now $10,000 lawyer fees on a $600,000 business yeah probably worth it.
You just have to weigh that but you should probably have your own representation if that’s a viable thing for you and they are going to look out for your interests. One thing about lawyers is they can be deal killers so if it’s a lawyer just hiring off the cuff sometimes it’s easier for them to shoot down deals than to actually because they don’t want to put you at risk. They don’t know you very well, they don’t know what you are looking to do so it is easier for them to just keep on throwing up barriers. Whereas if it is a lawyer that you work with regularly or you’ve done other deals with before, like they kind of know your threshold and know what you’re looking for. So, that sounds strange but I guess it is good to have… And I’m not a lawyer fan but getting good lawyers that know how you work and know what you are looking for is really helpful.
[00:45:32] Scott: Absolutely, and it is like if you have a lawyer that understands what you are doing I think that is the key because a lot of them are just going to… If you are just going to hire a random lawyer they don’t understand maybe the online business base. Again to me it is risks, it is like if you go in and you invest in stock with your financial advisor, he is going to tell you there is a level of risk for this fund. There is a level of risk for this fund. There is a risk involved. I think you just need to know what your weaknesses and your strengths are and see if you are going to be able to make this thing grow because if you are just buying a business… Do you think people are buying a business strictly just to keep it maintained at where it’s at or do you mostly see people wanting to at least grow it a little bit?
[00:46:14] Justin: I don’t know Scott. Every time I think I know why people are buying businesses, they shock me. I’m like, I think there is one business that we sold. I can mention the name because it was we mentioned it publicly and it was fine. It was Ray Vade. It was a supplement for like post rave hangovers basically like an ecstasy cure pill. I thought this business was going to be like you need to up to all up in the rave forums and like talking to the crazy party kids. I was like, I don’t know man, it seems like a lot of work. The previous seller had done some of that and a buyer bought the business. I did a follow up podcast interview with him like 10 months later. I was like, “Oh man, do you have to do all that?” He is like, “What? No I didn’t do any of that” I was like, “Really?” He was like, “No.” I was like, “How are you doing it?” He says, “I’m up 30%.” I was like, really. I start to make like assumptions on what you should do with the business or what people will do and I’m often wrong.
By the way quick point I want to make, on the lawyer stuff. I just saw this, like literally today or yesterday I thought that was really interesting idea. I have a friend that was looking for an executive assistant. Someone to not just be like a virtual assistant but like someone to make C-level decisions with them on trips, like really be involved in their multiple facet business. Someone recommended a lawyer might be a good position for an executive assistant. His reasoning was confidentiality, it is always good to have a lawyer around too. But for confidentiality reasons like they are legally bound to protect your interest and to particularly look out for you. It is not bad executive assistant to have. I think that’s interesting.
[00:47:57] Scott: That is interesting, you can go on trips and stuff, hang out, become friends. Every time you go, wow wow back away from that. You don't want anything to do with that. And you don’t have to really pay anything additional other than what you have agreed upon.
[00:48:08] Justin: That is crazy, you’re rolling around with your lawyer. You are like, I’m taking a trip to Hong Kong, Brooklyn he is bringing a lawyer. Like, wow wow.
[00:48:15] Scott: Just find a cool lawyer and have him come along for the trips, that is all, that will be cool.
[00:48:19] Justin: It is going to be some other super cool.
[00:48:23] Scott: That’d be funny. We are going to wrap this up, there is a couple other questions. What are you finding that like the praising sweet spot is for like selling a business? Like, in the real estate market we see like houses that are $500,000 in certain areas they are the higher tier or maybe close to a million but then you see like those houses that are between $150,000 to $250,000, are selling like hot cakes. The other one is just slower in certain markets. Is that how it is with this type of businesses too?
[00:48:49] Justin: Yes, It is tough because like what we see may not account for all of the FBA sellers or buyers that are out there. I can just tell you what we have seen. I will tell that the norm sweets pod will be maybe $30,000 to $80,000. We saw those businesses and sometimes they sell quickly even but sometimes they stick around even longer. I think the reason is with an FBA business there’s more involved in let’s say, Amazon associate dealer and AdSense website or something.
There is more moving parts to it. To buy a $40,000 FBA business it’s like, FBA businesses is work and it’s not like pushing out 1,500 bucks in profit and it is just not that interesting. I would rather buy in AdSense site. $80,000 or more starts to get a little more interesting so $80,000 to maybe $800,000 we see selling pretty regularly. We are putting new in the seven figure space so I don't have enough experience to say. We are closing in on our first one now hopefully, fingers crossed but maybe I can come back in a year.
[00:50:01] Scott: So you are saying that… I'm imagining why it is like that because the $30,000 to $80,000 or probably just not… They are not big enough or they are not stable enough or they only have own product and it’s a little bit too much risk when you get to $100,000 and beyond. You are probably talking multiple products, maybe another channel started, maybe a little email list. Is that why?
[00:50:23] Justin: That helps with the multiple a bit, also the fact is larger deal has multiple but that is not the only reason. You could be I guess, you can have a diversified FBA business that is $70,000/$80,000 or $60,000. The problem is though it is not enough money. There is just not enough stuff there and like you have to deal with inventory and you have work, you have to deal with an FBA business. If you are doing all that work on a business that is only spitting out $1500 a month let’s say in profit. It is like, this doesn’t seem… That is not going to get me out of bed for a lot people, for 1500 bucks a month is like, ahh I don’t know. Definitely the people that have that kind of money to put in. So, they’re like, I’d rather look at $100,000 business. Now I’m making $4,000 a month in profit, that is interesting to me.
[00:51:12] Scott: Are you still seeing though, talking about like he Amazon’s associate’s sites, and then AdSense sites like are those still selling well those type of businesses?
[00:51:22] Justin: Oh yeah, they sell at better multiples than FBA businesses quite honestly. We see a lot of those sites in the 20 because we’ll go even lower with AdSense and Amazon associate sites. We have done a $20,000 to $300,000 or so. We see some that are bigger than that but that’s a pretty common range for AdSense and Amazon affiliate sites.
[00:51:48] Scott: Are you seeing too that if you have a, let's say you’re getting AdSense money but you are also getting associates and maybe get a little couple of click bank products in there, i6s that raising the multiple as well, than just having like all AdSense or doesn’t really matter?
[00:52:02] Justin: No, not so much, not really. The traffic channels will matter more because the traffic can be kind of the riskier piece. Like if it’s all Amazon or AdSense that’s not actually as bad. One thing that’s interesting too about that is if and we do see, we do have more they are blended. I wouldn’t say it is a big help. In fact I would probably argue this. I’m talking to a buddy, right. I will tell my buddy, look if you have AdSense, Amazon and some click bank products on there, one of those is working out better than the other. You didn’t find this like amazing blend to perfectly monetize your site… I don’t believe that, in fact I have seen generally sites that have multiple monetization methods do worse that if they had to pick one and ran with that. I will tell my buddy, I will say, “Look. You might want to test that out. You might want to switch over to Amazon to see if you can just get more with one monetization method.
[00:52:57] Scott: Yes, I agree. I guess my only concern would be again, is that one channel or like AdSense, let’s face this. If they want to stop allowing you to use AdSense now you are going to convert over to a different ad platform. We don’t know that is going to convert the same.
[00:53:13] Justin: I think that matters more if you are $700,000 business than if you are $40,000 business. Like a $40,000 small business and you are making some money 1,500 bucks or 2,000 bucks a month in AdSense or Amazon or wherever that is fine. But if you are doing $30,000, $40,000 a month and selling for $700,000 that is just a bigger deal. What happened to you? You did not diversify along the way. Why are you still on AdSense? That’s the other question.
[00:53:43] Scott: That makes sense, it is actually something to think about because again kind of going into this deals it is funny talking about a $40,000 or a $50,000 site, it is kind of cheap. Years ago I would think you are crazy. I would be like, “Gosh, man that is a lot of money to be spending it on a piece of property or an internet piece of property.” But, nowadays that is kind of like the lower end of spectrum which is good for us that are building businesses that can get into a level that we could exit at a really nice multiple. I guess that is what I want to wrap up with. Do you think that building… Like if someone is really good at building like these little Amazon businesses and they can do it pretty quickly, they can source it? They got everything down and they can kind of get it to $5,000 net a month, within 12 months or even 18 months. Is that a business model in itself? Do you think to then can contact you and go, “Hey, I want to sell this,” and they just keep doing that?
[00:54:40] Justin: Absolutely, absolutely. I know multiple people that last year made, both of them actually two different people that made mid six figures with us just simply building sites, building them for a year and a half, two years and selling them with us. Building them up and then selling. There is a ton of money to be made. In fact a lot of people that are new, maybe they are just starting out on FBA or just starting out with entrepreneurship at all. They are like, “No, why would anyone sell their profitable site, that is crazy. It is like winning the lottery, you locked out, you got this amazing business, you should keep that and never sell it.”
What they miss, what they don’t understand is that the really valuable skill, they are not selling off the golden goose they often think they are. What you do is you're just selling the eggs from that golden goose. The golden goose is your skills that you learned and your ability to kind of repeat that process over and over again. To build a new business and sell that out again in two years. There are people that are cranking out businesses and selling them every couple of years. Maybe they don’t like to scale their businesses to like a much larger deal they are really good at their process and at delivering on that process and they are making a really, really good money on doing that.
There is definitely a market. One other thing I will say for FBA people and this is not in my interest. Like it doesn’t help me, it probably hurts me to say this but I actually think that assuming there are no problems with the FBA program overall and no problem with your individual account and everything. That FBA businesses are probably going to be worth more money later. Keeping your FBA Business, growing it out, expanding it and just waiting 12 months or 18 months or 24 months. You are likely to get a higher multiple. My reason for saying that is because they lag normal online businesses. Your average online business right now sells for a higher multiple than FBA business. I think that is going to change, it is going to change because Amazon is being more strict on their programs, that means the better businesses are going to survive.
[00:56:41] Justin: It also means the industry… When the industry is growing, there is more buyers, there is more interest. I think valuations are going to go up as people have more access to capital to buy these businesses I think there should be a lot more opportunities. I think they are going to be worth later. Now, why would anyone sell their business right now? Well, if by selling this business that gives you the capital to work on the other business that you are growing, that is like really taking off.
By selling your $60,000 FBA business to focus on the $300,000 FBA business you have right now, maybe that cash, investment in terms of inventory will help you expand that business. That might be the better move. If you can put that capital to better use now, that is a reason to sell. If you can’t or you don’t have an idea of what you want to do you may want to hold on to your FBA business, keep growing it out and sell in 12 months, 18 months, something like that.
[00:57:30] Scott: Cool that makes a lot of sense. I agree with you. I think if you have the skill set or even if you have the skill set to take something that is kind of been letting go, even scoop it up from your market place and then build on that for 12 months and then come back and then resell it for a higher multiple. That is even another strategy. I think there are tone of opportunity. That is why I always tell people, whether your business is a huge hit out of the gate or if you just learned with a process but you build it to something, you learned along that way now you have got a scale set you can take with you anywhere you want to go. Just like again, like niche sites again people are still doing that even though three years ago now or probably more. People are saying it is dead, you can’t do it anymore.
[00:58:10] Justin: AdSense is dead, Amazon affiliates is dead, everything is dead. Scott I love this, it’s so funny. Recently people were saying drop shipping is dead, and I was like. “I don’t men, we sold a bunch of drop shipping businesses last year, they are still doing fine. I think they get this fatigue of hearing about it. I think right now there is like fatigue of hearing about FBA, and they are like, “Oh, it is so saturated.” Hell no Scott, there is so much more unless something drastic happens where Amazon cancels the program. That would be obviously bad but not accounting for any major catastrophes like that, no way, no way not even close to being saturated. A lot of people are going to make a lot of money over the next three, five, ten, fifteen years.
[00:58:54] Scott: I agree. This has been awesome. Is there any last tips you would like to give someone that is either buying or selling their website or just an FBA business in general?
[00:59:04] Justin: Yeah, we have our own podcast called, The Empire Flippers Podcast. We are talking about our business, location and independence and building a team and all that, it is fun. But if you are interested particularly in buying and selling, there is one podcast I do with a guy called Ace Chapman, who is another brokerage kind of the buy side, whereas I represent the sell side. It is called, the Web Equity Show. Season two we actually focused on like walking a buyer through the entire process start to finish. From like defining the terms, to like doing the hard core negotiations and what to do after you buy the business. That is season two of the Web Equity Show. Season three which we just recently started, we’ll be walking you through from a brand new seller all the way through the sales process. That’s like a great piece of content to send people to if they’re new.
[00:59:53] Scott: Yes, absolutely we’ll do that for sure. We will link up everything up on the show notes. I know you are going to put together some resources for our listeners about either buying or selling. A link to that will just be theamazingseller.com/flip. We can make it really super simple and then we will link up to that stuff. I know Justin you had said you want to give me some resources. We will link all that up. If anyone wants to reach out to Justin and just really go through that process or how to get started he can direct you in the right way. I‘m always frequenting the market place. I’m always there. I have already put a few deposits down on a few just to kind of see who is going to be in my will house. They haven’t been yet but very very close on one. Actually, one t I was really interested in before I could even it got sold. It was like, there it is done. I made up my own mind, I guess I’m done, I couldn’t sit that long.
[01:00:46] Justin: Easy decisions, I like easy decisions. I’m like, “Oh it’s sold. Then I’m out.”
[01:00:51] Scott: But anyway man, I want to just say thank you so much. Like I said, I have been a long time listener of you guys and you guys do definitely deliver the value. I just love that now Amazon FBA businesses are starting to really be available on your market place. I love hearing that you are saying that they are not going anywhere and if anything they are going to get more valuable to sell in the future which is pretty cool as well. Justin, I just want to say thank you so much, I appreciate it. We will link everything up. Have an awesome day man, I appreciate it.
[01:01:22] Justin: Thanks Scott. I appreciate it buddy.
[01:01:23] Scott: Okay, I wasn’t kidding. That conversation went out longer than I thought. I usually allow 30 to 45 minutes for an interview but we just kept rolling because we’re just talking right about this stuff. Hopefully you guys got a ton of value, also not just from whether you can buy a website or a business or sell it or any of that stuff but listening to Justin’s story, I think is huge to hear how you start somewhere, you start to go through a process, you learn along the way and the you might have to pivot a little bit and then you start going in another direction slightly pivot again.
We all do this and you have to expect that that’s what’s going to happen. You don’t have to plan for it right now because you are just going to go on that road, you are going to start learning. But, it is really, really important to understand that, I always like to highlight that it is really a major part of this process as far as how to be successful and knowing that you will have these changes and it is okay.
But, let us get back to the topic at hand. A ton of value there, a lot of things. I learned to ton just from talking to Justin and really picking his brain. I hope you can see or hear some of those different topics that I was kind of drilling down into it’s because that’s things that I’m thinking off right now. They are like top of mind for me. I’m interested in this, whether it is for a brand that I’m working with or if it is one that I want to buy in the future and then scale it, and then build it bigger and then maybe exit again. There is a ton of different ways that we can do this. If you are at all interested, I would definitely say, check out the resources that Justin has provided for us. It does not cost you anything to go over there and check that stuff out. Again the link will be theamazingseller.com/flip. Just head over there, check out the resources.
If you’re a buyer, you will see a section there for buyers. If you are a seller you will see a section there for sellers and just reach out to them and they will help you along the way and let you know.
[01:03:23] Scott: Maybe in your business right now, maybe you’re not ready yet. Maybe they are going to say, let it mature a little bit longer or you have to get these things. All these ducks in a row over here because they are going to need that. When we do the projections and like all of these different things, you are going to want to have done through this process.
Definitely, check that out. The show notes again, theamazingseller.com/329. It will have that link there too but it will also have the transcripts, which this one is probably a really good one to download the transcripts. It will have the show notes as far as the links and everything that we talked about inside of this episode.
So, guys I’m going to let you go. I know this was a longer episode but I hope that you see the value that was created here and that was provided for you to educate you through this process or just to keep it in the back of your mind that when the time comes, guess what? You are prepared. Guys, that’s it ,that is going to wrap it up. Remember I’m here for you, I believe in you and I am rooting for you but you have to, you have to… Come on say it with me, say it loud, say it proud, “Take action.” Have an awesome amazing day guys and I will see you right back here on the next episode.
LINKS MENTIONED IN THIS EPISODE
- Resources from Empire Flipper for TAS followers found – HERE
- Justin’s Twitter page: twitter.com/EmpireFlippers
- Justin’s Facebook page: facebook.com/EmpireFlippers
- Justin’s company: Empire Flippers
- Justin's Podcast: Empire Flippers
- Podcast: Web Equity Show – Don't Build a Startup, Buy One!
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