EFP 64: 3 Business Disasters We Wish We Could Take Back

Justin Cooke

September 19, 2013

If you’re hustling, you’re probably making mistakes.

It’s unfortunate more entrepreneurs don’t share their mistakes with the rest of us. To be fair, nobody probably feels like talking about disasters when they’re in the middle of that shit…but some reflection on errors made and things they’d do differently always provide a ton of value for me.

And that’s exactly what we’re hoping to share with you today.

3 Business Disasters We Wish We Could Change

We’ve covered some of these in a blog post on failure quite a while back, but I thought diving into these topics on a podcast would force us to face them and articulate them in a way that would be valuable to you and us.

It’s great to learn from your mistakes, of course…but the nasty ones seem to follow you around like a bad virus. In this episode, Joe and I cover three of those failures in depth and the steps we’ve taken to (hopefully) avoid them again in the future.

Check Out This Week’s Episode Here:

Direct Download – Right Click, Save As

Topics Discussed This Week Include:

  • Can you really build a “business” and make $1,000 in 24 hours?
  • Giving up a major focus of our business
  • Partnering with a 1-trick pony
  • The problem with free in service-based businesses
  • Being “everything” to “nobody” – the problem with not specializing/productizing
  • A “Business Idea Of The Week” that we REALLY hope someone will rock with…
  • Can we invest in you? Let’s partner! Details inside…

Mentions:

We’re really hoping you dig this episode and get some value out of our failures and insights as you continue to grow your business!

What do you think about the Niche Site Coaching/Mastermind idea? Is it something you’d be interested in? Let us know on Twitter or leave us a comment – we’d love to hear what you think!

 


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Announcer:                        Welcome to the Empire Flippers podcast. Are you sick and tired and gurus who have plenty of ideas but are short on substance? Worried that ebook you bought for $17.95 won’t bring you the personal and financial freedom you long for? Hey, you’re not alone. Join thousands of others in their pursuit of niche profits, without the bullshit. Straight from your hosts, Justin and Joe from Empire Flippers.

Justin Cooke:                     Hey everybody welcome to episode 64 of the Empire Flippers podcast, I’m your host Justin Cooke and I’m here with my business partner extraordinaire, Joe “Hotmoney” Magnotti, what is going on brother?

Joe Magnotti:                    Hey everybody.

Justin Cooke:                     We got a great episode lined up, this week we’re going to be digging into three business disasters we wish we could take back. Oh my God we wish we could take some of these back.

Joe Magnotti:                    Well, it sounds really bad when you put it that way. They’re bad, but maybe not disasters.

Justin Cooke:                     Well yeah, no, things that we definitely … I think we learned from, we’re going to discuss some of those mistakes we made and how we learned from them, but things that we wish we could take back because we think that it probably would have been better off. Definitely the time we were dealing with them, but we’ll get into that in a minute.

                                                First, let’s do some updates, news and info. First thing we got buddy, two new five-start iTunes reviews, buddy.

Joe Magnotti:                    Hit me up.

Justin Cooke:                     So we got [DJ Ashton 00:01:14] says, “I’m basically addicted to the podcasts, loving them. Decided to listen to episode one and I’m not on number 47, starting to feel sad,” what is he going to do when he’s up do date? Well don’t worry about that man, we are knocking a podcast a week, we’ve also got Voyager 31 says, “Fantastic podcast, I’ve been listening to a couple of podcasts in this field, this is definitely the best one I’ve heard.”

                                                Appreciate the five star review guys, thanks so much.

Joe Magnotti:                    Yeah, thank you.

Justin Cooke:                     Next thing I want to talk about is a article that was written by [Noah Kagen 00:01:43] over there at AppSumo, it’s called, “The 24 Hour Business Challenge.” So here’s the deal, he put out a challenge to himself, basically where he has to make a thousand bucks in a 24 hour time frame, starting from scratch. And he had a couple of rules where, obviously he couldn’t just tap into AppSumo’s audience, that would be a little too easy. He couldn’t … Had to be like a real, sustainable business. Had to have these requirements.

                                                And he let his audience come up with a few of the ideas or niches he could target. What he ended up doing was targeting beef jerky. He’s a beef jerky eater himself, and he steps you through, step-by-step, exactly how it went from idea to getting a thousand bucks in his PayPal account in less than 24 hours.

Joe Magnotti:                    You know, this is really cool and it reminds me of what Chris Ferguson, the poker player known as Jesus. Reminds me what he did when he did the $20,000 challenge in 30 days, starting from zero. Literally went and won a tournament and got $5 then went to the micro tables, micro-stakes tables, and then worked his way all the way up. But the two things they think that these kind of challenges never really thought about, or never really talked about, is the fact that they … They require some intrinsic skills in order to be successful.

                                                But the one that you’re describing, and again, I haven’t read the article so I should go and probably read it, but Noah seems to be a great sales guy. He definitely has a lot of connections, he definitely has the ability to talk to people, he’s definitely relying on that inherent skill.

Justin Cooke:                     Well, the ability to talk to somebody, I think that’s kind of a … I mean most people have that. If you don’t, yeah, maybe you can’t run a business if you’re not able to reach out or talk to anyone. I get that, but I mean, yeah there’s some salesman to it. So you have to be able to sell stuff, but like, I mean you got to be able to sell yourself. You got to be able to sell things in business, period.

                                                And so, I think the fastest way to do it, you’re not going to passively earn a thousand bucks so yeah, you need to actively go out there and do it, but I mean it was things like, for example, reaching out to Skype contacts. “Hey man, blah, blah, blah, check this out, would you like to buy some beef jerky? Click this link if you’re interested.” And then I click it, check it out and they would PayPal him the money. A lot of them wouldn’t.

                                                Reaching out to Facebook contacts, just hustle. I’m not sure if he slept that day, I think he was just knocking it out for 24 hours, but I mean it’s not … I mean, if you have a Facebook account, and you have high school, college buddies, if you have things that most people have, I don’t think it requires any particular skill or ability that’s above or beyond what most people have. I don’t know.

Joe Magnotti:                    So what does this prove? This proves that it’s easy to make a quick buck?

Justin Cooke:                     No, I think it shows that you have bit of hustle … Like the people that are saying, oh my God I’ve been working for two years and I can’t … The most I’ve made is $300 in my two years. What are you doing? What are you doing? You’re not really trying. You’re just not.

Joe Magnotti:                    Yeah, well like we always say, people that are focusing on learning instead of actually going out there and do it. Yeah, I see that as a good point.

Justin Cooke:                     So yeah, I mean, it just shows that you can rip something together, right? Maybe you may fall short on a $1000 in 24 hours, maybe you only make $400, but for someone looking to get started, it’s pretty awesome to see that it is possible.

Joe Magnotti:                    Yeah.

Justin Cooke:                     Now, he also has a course that goes along with it, where he shows you how to get up to a business that, in 30 days, that makes $1000 a month or more. So I mean, there’s some value in him making sure it happens, of course.

Joe Magnotti:                    Salesmanship.

Justin Cooke:                     Yeah. But I mean, I think it’s a great article, we’re going to link to it in our show notes, you definitely should check it out when you’re done with this episode. Third point I want to talk about today is we have a new thing. Something that we’re not going to be doing anymore, which is outsourcing. So Joe and I have been mulling this over for a few weeks, we’ve been talking about our focus this year. And we have had a bit of a focus on acquiring new outsourcing clients.

                                                We’ve taken some leads that we’ve gotten through Empire Flippers and others and we’ve added a few clients, but it’s not really … I mean, for all the clients that we didn’t add, it wasn’t worth it. I don’t like our return on that.

Joe Magnotti:                    Yeah, I mean, we made it one of my priorities this year to get new outsourcing customers. And really, I brought on three deals, one of which the customer has already canceled, so really we only have two of those deals left. So, as a project that I’m supposed to be ongoingly working on, I’m not sure it’s overly successful. It’s profitable, barely, but I’m just not sure it’s worth my time, effort and energy, I think it’s better spent somewhere else.

                                                And after reading that “Built to Sell” book that you recommended, I mean I really see some of the problems brought up by that book is some of the things that I struggled with this year. And I’m just … I’m sick of it. I just don’t want to do it anymore, I don’t want to have to customize our solution to each and every customer. And that’s what a service-based business always is. It’s always about bending over backwards trying to get them to work and doing that.

                                                So, I think going forward, and we’ve agreed on this, is we’re not really going to actively pursue those custom outsourcing deals.

Justin Cooke:                     Yeah, we’d rather turn them into products, so if there’s something that people are asking for and they need it and they’re looking for agents to work with, if there’s enough of that, if there’s enough interest, then we can actually create a product that our agents can service and deliver. But now it’s a product-based approach rather than a service-based approach, I really prefer that.

Joe Magnotti:                    Yeah, I do too. And this is not to say that, you know, hey look 40% of our businesses still comes from the outsourcing side. So, I’d say we’re not going to go and cancel those customers or anything crazy like that, we’re going to keep those contracts and we’re going to keep servicing those customers. But we’re not actively going to pursue new customers just to be a middle man.

Justin Cooke:                     Yeah, I think it’s a good move. So definitely a change in our business, or our approach, but I’m really looking forward to that. Last one I want to bring up is we found a bit of a, I’m calling it a black hole, but Joe’s looking at me with a grimace on his face. A bit of a problem, a customer emailed us said, “Hey, I ordered the Empire starter pack four days ago, I didn’t hear it get an email right back from you. What the heck’s going on? You guys okay? Figured I’d get something.”

                                                Come to find out, basically, we’re sending people to PayPal. They would pay and they would go back to an order form. They got to fill out that order form so we could know their details. Filling out that order form would trigger a zen-desk ticket, it would get an email back saying “Thank you for signing up,” blah, blah, blah, all their stuff would go into OAP. But if they don’t fill out that order form, we don’t find out what’s going on. So-

Joe Magnotti:                    Yeah, so I used to do it myself directly, as of last week, but yeah I got very busy towards the end of last week and over the weekend I took some days off.

Justin Cooke:                     Yeah, so I didn’t realize you were doing this, so I was like, huh, that’s a huge hole. So now what we’re doing, basically you’re just going to fill that up by having our manager for the project go in on a daily basis and, long term, we’re going to be using a shopping cart to help automate that, and automatically send emails.  A follow up, make sure you fill out the order form, that kind of thing.

Joe Magnotti:                    Yeah, there must be a solution for this, on a larger scale. I’ve always been thinking about it too, even if someone manually checks it, I mean that’s still a manual check. What is the automated solution for relating payment to orders in the system. There must be … Larger companies that get hundreds of thousands of orders a month, certainly they have some automated way to check this.

Justin Cooke:                     Shopping cart, I’m sure will fix that, but I mean I wouldn’t call this a disaster we’re dealing with. More of a little speed bump, but we’re definitely going to get into the disastrous, and that’s what we’re talking about in the heart of this week’s episode.

Announcer:                        This is the Empire Flippers podcast.

Justin Cooke:                     So we’ve actually done a blog post on this, about a year ago we’re talking about some of the failures and mistakes we’ve had along he way. We never actually did a podcast episode about it, I thought it would be interesting to talk through a couple of the problems that we had, I’m interested in the blog post, but also some new ones that we wanted to address and kind of let you know how we think we screwed up, why we screwed up and some of the things we should have done to probably correct the mistakes.

                                                First one we got for you today is this; partnering with a one-trick pony. So, when you’re just getting started off, I mean a lot of times you’re working with a buddy, a family member-

Joe Magnotti:                    Ouch.

Justin Cooke:                     Yeah.

Joe Magnotti:                    Stay away from family members.

Justin Cooke:                     Yeah. Whatever it is, but you’re working with someone who’s kind of close to you and you say, “Hey, you’ve got this skill why don’t we partner up?” And a lot of things go into that decision, especially when you’re young and trying to start your first business. Like, look I want to be with someone that I’m friends with and that’d be awesome, but the problem is is when you partner with someone that has one particular skillset only that they’re bringing to the table, a ton of things come up.

                                                The first one we talked about is, what if your business pivots. And this happened a bit to us with our third partner in the mortgage business. We partnered with someone who was able to, moderately well, he was able to sell loans. He’s able to get on the phone and knock deals out. The problem is, is that when that became less of a focus in that business, when we started looking for agents that could do that, he became one of many people that were then closing loans on our team.

                                                He didn’t fill the role of a partner, do you know what I mean?

Joe Magnotti:                    Yeah, and he couldn’t even lead a sales team or have people underneath him because he had no management skills. So all he could do [crosstalk 00:11:07]

Justin Cooke:                     He was one … one of many people that were then selling for us.

Joe Magnotti:                    Yeah, and all he could do is just be a moderately good sales person. So that’s not really a good partner to have, that’s a good employee to have, I think. And we’ve done whole episodes on why we think partnering should be approached very, very carefully, but yeah. If you do decide to partner, partnering with a one-trick pony, especially if you can anticipate any pivoting, which, most likely, most businesses have to pivot. Especially early on. You want to make sure someone has more than one skill.

                                                Even if it’s something like … something moderate. Some secondary, redeemable skill that they can … they can do. Whether that’s management, whether that’s leadership, accounting. Something else that they can do a little bit.

Justin Cooke:                     That’s helpful. Ideally you’ll take a more of a generalist as a partner, I think that’s probably a better approach because then you can handle multiple things. The question comes up then, Joe, why isn’t that a good thing? Why would you want two generalists as partners rather than one person who has a specific skill? If you have specific skillsets like; you’re better at operations, you’re better at sales, isn’t that a better partnership than one where you have two generalists?

Joe Magnotti:                    No, as I would say, you just hire for the specialists and if you don’t have the money to hire then you need to go out there and earn the money to hire. A generalist is going to be a lot better at adapting to the situation, ’cause the situation is always going to change. So right now, you might need accounting help or right now you might need programming help. But in the future, that might be vice versa. That might be changed, and the generalist is going to be better adapting and getting over there to fix issue.

Justin Cooke:                     Let’s talk about a generalist here, when we say ‘generalist’ we don’t mean someone that’s, “Oh I just come up with the ideas and everyone else takes care of the work.” No. I mean, even as a generalist, you have to be able to hustle, you have to be able to take an idea and make it a reality. So it’s not … We’re not saying that there’s … You don’t have to sit down and actually knock out the work and get it done, we’re just saying that you may have a wider breadth of skills. Not the person that goes, “Oh, you know, I’ll just come up with it and I’ll hire everyone to make it magic.” ‘Cause that just … That’s a loser from the start.

                                                Also, I think with anyone that you’re partnering with, you need to make sure that they have a track record of success. Not promise, they can’t be full of promise, they can’t be shooting rainbows up your butt, they have to have some actual success stories. And we looked at this a bit, we’re going through the marketing apprentice applications, and we looked for people that have already had success. That have already done some things in particular areas that we’re looking for that shows that they are going to be able to continue with that and not juts promise, “Oh I’ll be able to do it eventually when I start working with you.”

Joe Magnotti:                    Yeah, you know if it’s one thing that a little bit of life experience has taught me is that luck plays a large percentage of value in your life. I’m not sure why, but it just does. So, I’d rather take someone who has a track record of success, whether it’s because they’re lucky or because they made their own luck and they took advantage of the situation and they ran out there and they hustled and they got it done. Whatever that was, that track record of proven success proves to me that it’s someone I want to associate myself with.

Justin Cooke:                     There are no perfect tires, right? But yeah, the people that are making their own luck are generally going to be better for you. Second part I wanted to bring up is that, we did this with the local SEO company we worked at, and worked for. This wasn’t our own company. But, we were offering a service-based product for free and at scale. So there’s a little bit of backstory here, let’s explain what we’re talking about.

                                                There’s a local SEO product that was offered to small to medium-sized businesses, help them get ranked on the first page, we created a profile and included a bunch of web references to help get them ranked. And it was successful, it would do that for them and their small niches and their small areas.

Joe Magnotti:                    Yeah, think plumbers, think florists, think laundry mats, think dry cleaners. That kind of thing.

Justin Cooke:                     And the company was having some success selling it for, I think it was $249, $247 up front and then $147 a month or whatever. So, they were selling that and they were having some success. And the idea became, why don’t we test through offering it for a buck, for $1, and then at the end of the 30 days, starting the next month, we’ll charge $249 or $247 or something like that. So the idea was to get them on board for virtually for free and start charging them after 30 days.

                                                And this is a great idea, honestly it’s a fantastic idea. And so we agreed, everyone agreed, to do a test. We’re going to do 50 this way, we’re going to do 50 at a different pricing scheme and then 50 with our traditional pricing scheme. Kind of see how it works out, right? And I think within a day, the ones that started at a buck were done. And then the sales team was going, “Look, we can just … we can knock these out of the park, let’s do a lot more.” So they said, hey let’s raise it to 100, got raised to 100.

                                                Raise it to 500. 500 went to 1000 and then finally we just started rolling it out. So every customer we started signing up was at $1, charging them 250-bucks, let’s say, at the end of the 30 days. Couple of problems with this. There were actual … There was manual hours of work that were done on the back end, so we’re spending I’ll say 40 to 50 bucks per sign up in manual … in man hours, in work that needed to be done, et-cetera.

                                                So we’re spending some money on the first 30 days, on people that spent a dollar. So your problem is, we’re paying commissions.

Joe Magnotti:                    That’s the big problem. You’re paying a commission on something that you have not realized the profit for yet. And that, to me, looking back on it, is crazy. You don’t know what the long term profit of a customer is. Because you haven’t done enough analysis in order to find these numbers out, and then you’re paying out a commission based on a product that you’re upside down on.

Justin Cooke:                     We’re going to get into that in a second, but yeah so, these are kind of like our two initial thoughts there. I mean obviously spending money to, as we call it, provisioning these customers, 40, 50 bucks or whatever, and we’re only seeing a dollar up front is bad. It could potentially be great, right? Because you’re borrowing from company money, or investor money, and looking for a long return in the long run. But as you brought up, buddy, one of our big problems was is that we didn’t know our numbers.

                                                So at this point, the company just fumbled its way through to success. There were hard-core sales team, smart people work in the company, and they got there, but they weren’t really sure how. So they started bringing in people that could help them actually make it a business and not just a sales team. And so, but it takes awhile to start to learn your numbers, like long time value of a client, like how long they’re sticking with you, what’s the drop off rate. And these are great numbers to know on a predictable, recurring revenue stream.

                                                How long does your average client stick with you? Why are they leaving? So we were in a process figuring these out, we didn’t know these numbers. So we didn’t know how long a regular client would stick with us and how valuable they were to us. Let alone know how much a dollar client, how long they would stick with us or what they were worth to us. So, yeah, knowing the numbers, I think, is really important.

                                                The other problem was that, I think we, you and I, and others in the company, allowed ourselves to get steamrolled a bit. So, sales team was adamant about it, and they were fired up. They said we can sell a share of this, they were making a bunch of money ’cause the sales team were getting commissions. Eventually we opened up to resellers, they were all getting commissions, so there’s a big push there ’cause it’s a relatively easy sale and everyone’s making money.

Joe Magnotti:                    Yeah, and you could cancel. I mean the biggest thing you should bring up, too, is that you could cancel before that second payment of $249. So basically, you get service for one month and the sales person would get commission on as if they sold the deal at $249.

Justin Cooke:                     Yeah, yeah.

Joe Magnotti:                    So, that’s … I’m not saying that this is the reason why [crosstalk 00:19:18]

Justin Cooke:                     You’re setting yourself up, potentially, for fraud. And we had a compliance team that was listening in, and did catch a few sales people who were doing that, but that wasn’t … I don’t think that was the case across the board, but you want to be careful and protect yourself against potential fraud like that.

Joe Magnotti:                    Yeah, and I think like you were saying, we did allow the sales team to drive that little bit more than we should have. And my lesson learned from that is, definitely not to allow it to happen, to stick to the numbers.

Justin Cooke:                     Well first off, know your numbers, and then we should have stuck to the test. We had a test, we carefully crafted and developed that test to make sure we knew how it was going to work. And the problem with companies like these, and many companies, is that you’re trying to just figure it out as you go along and sometimes waiting three, five, six months to get the results is … You’re like, oh let’s just roll it out, man. Let’s just try it.

                                                A you and I have done that in our own company before, even after that mistake, but it’s generally a bad idea to just roll it out. And so, especially with something like this that’s potentially costly. It’s a big risk so it’s better to know your risk a bit before you really roll down that path, I think that’s something we should have done. And you and I should have more vocally opposed. I think we probably could have stopped it, at least limited the test if we’d have stood up and said, “This is bullshit, let’s not roll it out.”

Joe Magnotti:                    Hindsight is 20/20, but yeah, I think the highlights there are, look, service-based businesses they have a fixed cost to them and unless you know the numbers you really have to test through it before giving the house away in commissions or in free products.

Justin Cooke:                     Third point we want to bring up is with our outsourcing company. And this is a problem when we were starting off and I think, over time, we came to understand this a bit better and realize it, but one of our problems was that we were trying to be everything to everyone. Right? We were … If you need outsourcers, oh yeah, we’re … Our USP was, “We are Americans on the ground, here in the Philippines,” and that was enticing to Australians and other American companies we talked to. They liked that.

                                                But the problem was, is that we would try to fit what we’re able to do into their box, rather than having a box of our own.

Joe Magnotti:                    And that makes sales so hard. You can’t just call people and go, “Well, what do you do? We do everything.” That makes referrals almost impossible.

Justin Cooke:                     Yeah, but even … Let’s say that you do tailor it down, let’s say you say, “We do medical transcription for dentists,” or whatever. Even if you narrow it down and say you’re able to do that, like actually focusing on that particular task, like really knowing how to knock it out of the park is important. And so, this generalist problem as far as our business focus, was problematic with outsourcing. I think outsourcing is too big of a niche for us to say, “We do outsourcing.”

                                                Our idea at the time, and I think some of you out there might have thought about this too, but we were like, it’s such a big industry. It’s a huge industry. We don’t have to be … We don’t have to own outsourcing, we don’t have to be the number one outsourcer, we don’t even have to be the top 10 outsourcers. If we just eat up a very, very small piece of the pie … I’ve heard this before, if we just capture one percent of the market, Joe, we’ll be crushing it. We can get one percent.

                                                The problem is is that there’s a number less than one percent. And we were well under that one percent.

Joe Magnotti:                    Yeah, I mean, I have no real strategy for capturing that one percent, other than to say, I know the one percent is out there and I think I can do it. There’s just no way to do that, it’s very hard unless you’re some great sales guy who can just hustle up the numbers and stay on the phone all day, but who wants to do that? I think it’s better-

Justin Cooke:                     A sales guy.

Joe Magnotti:                    Yeah, but I mean, I think it’s easier for a sales guy, even a good sales guy, to sell a productized offering rather than some general-

Justin Cooke:                     Yeah, yeah I agree. And I also think that a sales guy, that’s a big problem for a sales guy ’cause he’s able … Sales guys are chameleons a bit, right? They’re able to adjust what they’re able to do and really tailor it, or what they’re able to talk about what they do, and tailor it to the client’s needs. So that’s probably a bad thing if, on the back end, you’re not able to deliver that specific client.

                                                So, limiting the scope and the box that you put the sales person in, in what they’re able to sell, what they’re able to offer, I think would be helpful.

Joe Magnotti:                    Yeah, I think solving one or two problems really well is what you want to focus on. So, if you can do that, it’ll make it much easier for your sales people to know what they’re able to sell and what they’re not able to sell. And it’s easier for your customers to understand what you do, it’s easier for you to get referrals. It makes it easier for your operations team to know what they’re going to have to be working on on an ongoing basis.

                                                All of these things become a lot easier if you have an upfront problem or issue that you’re looking to solve.

Justin Cooke:                     So there’s a big, well not a big, but there’s been some debate over nicheing down, right? So you might have seen this before, I’ve linked to it, we’ve talked about it before, but people like [Dan Andrews 00:24:22], [Tropical MBA 00:24:23], like Damien Thompson from Lynchpin.net, us, we’re all proponents of really going down, honing down, to a very focused niche. And there’s several reasons for that; your leads, your [inaudible 00:24:37] clients are much cheaper, they’re easier to get, you’re going to get traction in that niche much faster if it’s a much smaller niche.

                                                I mean, you have people like James [Schramco 00:24:45], Chris [Cucker 00:24:46] that probably are okay with starting with a wider or broader niche, they think if you narrowed it down too sharp, you’re going to reach your limits too quickly. We’ve debated back and forth on that a little bit, some of our posts and podcasts, but one of the things I think is important with this is that if you can’t narrow it down to a tight enough niche that where you can own it, where you can capture a big enough piece of it, then it’s not worth bothering with.

                                                So if you say, oh if you’re at all thinking it’s such a big industry, if I can get one percent, five percent, 10% of that niche, I’ll be doing fantastic, you’re probably not niched down far enough.

Joe Magnotti:                    Yeah, and when you explain it that way, Justin, it makes more sense to me, I-

Justin Cooke:                     You didn’t even like it before the episode, we were talking about it, and you’re like, I don’t know where you’re going there, but …

Joe Magnotti:                    Yeah, now when you explain it that way, it definitely makes a lot more sense.

Justin Cooke:                     Yeah, going to niche’s you can own, and if you can’t own it, then you need to niche down further is kind of what I’m saying.

Joe Magnotti:                    Yeah, and I like that because you can always pull back a little bit, right? It’s easier to pull back rather than have to niche down more, because otherwise you have to take your customers on the outside and say, “Sorry, we don’t do that anymore. Sorry we don’t do that anymore,” and keep narrowing down, I think that’s not a great way to do business. I’d rather solve … a solution, a problem for these customers [crosstalk 00:26:01]

                                                Right. And then, as I seek things that other problems or issues that I can productize for these customers, expanding my service offerings and they say, “Hey, you’re able to do X, Y and Z for me, I have other people that need A, B and C done, is that something you’re interested in doing?” Oh, it’s very similar. I can create other services for that. There’s enough customers for that.

                                                So those kind of things become easier rather than trying to be too broad and it screws up your sales, it screws up your operations team.

Justin Cooke:                     Yeah that’s right, so I think [James Schram 00:26:35] would agree with that, we call it The Chocolate Wheel. Where you’re able to service … You’re able to help or supply value to a group of clients, and offer them different services and different needs. Because even though people that buy … Let’s say they buy small niche sites from us, they may have other interests right? They may need contents for other sites that they’re doing, they may need whatever.

                                                People have different needs, so, if we’re able to keep those customers coming back and buying other products and services from us, that’s a lot easier than trying to reach out and acquire new ones. But what we’re arguing now is that having a much smaller customer base that you targe and then expanding outward after the fact is a heck of a lot easier, heck of a lot easier to get some friction or traction than it is if you start with a wider base. Or a wider niche.

                                                So these are three disasters that I think would have been nice if we avoided throughout our career. We definitely have others, these aren’t the only three, there are plenty of others but we’ve had some successes in there too that help mitigate these disasters or problems.

Joe Magnotti:                    Yeah, and I think that these kind of things are always going to come up when you’re doing business. As long as you learn from them and don’t repeat them and you can use the strategies that we talked about here, similar in your business, I think you’ll be on the right path.

Justin Cooke:                     Yeah, [inaudible 00:27:50] just out of curiosity, you mentioned in the RP … We have, I mean of course, we’ve repeated mistakes before, which of these three do you think that we’re most likely to repeat? And why?

Joe Magnotti:                    Well I don’t think we’re going to part there, so … [inaudible 00:28:04] out. That one’s out, right? Not being … I don’t see us offering a product or a service for free, at scale, we’re pretty good about our costs

Justin Cooke:                     [inaudible 00:28:17] products, any of our products, whatever, for free, but anything that has a heavy cost to us in the back end, I don’t see us doing that.

Joe Magnotti:                    And the good thing is is we have control of our company so much, Justin, that we know where the costs are on different services, so, I think that number two problem that we brought up is an issue for medium-sized company’s and above. When there’s larger teams and management gets involved and all this kind of stuff. Here it’s just me and you, we debate these kind of things, so I don’t think that kind of stuff would happen to us.

Justin Cooke:                     We still steamroll each other a few times. There’s an interesting one, think about this a little bit, not being everything to everyone and we recently released a product where we do wire framing for mobile apps. Right? And that’s … It’s cool, it’s interesting and we basically, our limited partnership with one of our customers on that project. It’s not really great for our audience, we just thought we’d try it out. We have products, whatever, we thought we’d give it a shot, but it’s pretty far outside of our core mission, our core values. What our audience is looking for, wants and needs. I think that’s actually a great podcast, we should do that in the relatively near future.

                                                Do one on, how to avoid projects that aren’t aligned with your goals and where you’re headed. That’s definitely something I think we struggle with right now, I think there are some things we still need to learn in that area.

Joe Magnotti:                    Yeah, I think the products and services page on Empire Flippers can be pared down. I think we could offer less products and services, I think in the products and services we do have, we could have less options. I think a shopping cart will help with that, and I think it’s something we’re moving to. But like I said, we’re always learning, we’re trying to get new things going and it’s part of the process.

Justin Cooke:                     Alright, so let’s get into our business tip of the week. We haven’t done this for awhile, buddy, but I’ve got one that I really dig. And I really hope someone does as well. If you do, you have to let me know so that I can share it. Back in the day, the guys over at Tropical MBA …

Joe Magnotti:                    Back in the day.

Justin Cooke:                     Back in the day.

Joe Magnotti:                    50 years ago.

Justin Cooke:                     Yeah, no. So, awhile back the guys over at Tropical MBA came up with something called Tropical Workforce. The idea was to pair businesses with potential interns, apprentices and remote workers. These are people that were doing the lifestyle design thing, they’re traveling, they’re willing to work on the cheap but I’d like to work with someone and potentially be mentored and that kind of thing. And there were plenty of people that were looking for those opportunities, and there were some people that had those opportunities available so it was an interesting thing.

                                                The problem was was that they had other things that were higher priority, higher focus for them. So they let that one go, they said that was resource intensive and they’re just … And they’d rather devote their resources to things that are more profitable … more in line with their core values.

Joe Magnotti:                    Yeah, and I think the other problem, too, was there was a underlying problem of … companies didn’t want to hire MBA’s, they wanted to hire … They didn’t want to tutor people. They just wanted employees.

Justin Cooke:                     Yeah, and that’s the other thing, and getting these companies to take risks … Like they were finding themselves reaching out to these companies and trying to get them to take that risk, and they weren’t interested. But there’s still a problem, ’cause there are companies that are looking for these people and there are these people that are looking for these opportunities. I mean, we have a bunch of people we had to say ‘no’ to at our marketing apprenticeship.

                                                There isn’t a specific place we can send them, but I know a few other companies that are offering this, but it’s always scattered. Like this person way over here is doing it, this person way over there is doing it, so there’s definitely a business there. So if you’re in the travel, location, independent crowd putting something together, I think like this, would be fantastic.

                                                A job board for location independents to work with businesses that are looking for paid apprenticeships, interns and employees. I think, a guy like Sean Ogle or Cody [McKidman 00:32:05], someone like that would be great people to get a job board like that up. I don’t know how it would make money, I don’t know where you’re going to find the businesses, although I run across them all the time. I think maybe being involved in a lot of different membership groups and stuff will probably … You’ll see those opportunities pop up and can present them.

Joe Magnotti:                    Yeah, I think if you can attract the employers, that would be the hard part. Once you get the employers, getting the employees is not going to be that hard. I mean, you can just make it like, like an [inaudible 00:32:30] for traveling employees. 

Justin Cooke:                     Yeah, but not just contract work, not just a few hours … I mean, I don’t know how you’re going to do it, but yeah. Right now, we can send employers and potential employees there. So, I’d be happy to do it if there was something like that out there. Please, someone [inaudible 00:32:47] if you can create that, I’d love to see it and help you get it up and running.

                                                Alright man, enough about that, let’s get into our tips, tricks and our plans for the future.

Announcer:                        You’re listening to the Empire Flippers podcast with Justin and Joe.

Justin Cooke:                     Alright so no tip or trick this week, but we do have a plan for our future, potentially your future, that we want to just throw out there and see what you think. I’d really like to hear what you guys have to say in the comments about it. Here is the idea: we’ve done a lot of … We’ve offered a lot of products and services. We have sites for sale, we have brokered sites for sale, so we’ve done a lot on the spectrum for the … “I have more money than time,” crowd. Which has done well for us, we’ve been able to earn quite a bit and I have an income report coming out over the last three months.

                                                We’ve done really well with that. The problem is that I think we haven’t done as well on the people that have more time than money. I haven’t put out the content, ’cause really, I’m less involved in the niche site process, so I’m not as up on some of the things that we’re doing and our processes anymore. But what I would like to do is see if we can help that crowd out a bit more, and that’s part of our goal. So here’s the basic idea.

                                                I was thinking that what we could do is offer some kind of niche site coaching. Basically it’s funded, so the idea is to take, let’s say, a certain number, five, 10, applicants and fund their niche site creation. We offer a team, let’s say two or three VA’s, from our team, that specifically work with them on the site they’re creating. And what we do is we help guide the process, we pay for everything; content, expired domains with page rank, we pay for everything. We pay for the team that’s supporting them, and what they have to do is put in work to drive these sites home. To really run the process for their particular niche site.

                                                So it would be similar to, let’s say, the niche site [Dual 00:34:37] that [Pat Flynn 00:34:38] is doing, but we’re funding it. And the goal is to build these sites up to 500, $700,000 a month earners. At the end of, let’s say, nine to 12 months we sell the sites and split the profit. So, half the profit goes to the people that are running that particular site, half goes to us. What do you think, Joe?

Joe Magnotti:                    Yeah, I like this idea and I think it’s kind of a combination between the, maybe, the niche site tool and then the coaching stuff that Spencer’s doing.

Justin Cooke:                     Yeah, so it’s like taking someone under our wing, paying for everything, and then split it. But having them run it, right? ‘Cause I don’t have the time to build out five to 10 of these authority-type niche sites. I don’t have the time to focus on each one of those sites individually, but what I can do is get on the phone, get on the horn, get in Skype chats and be able to guide people through the process. Help them on niche selection and really help them build out these sites.

                                                I think it does a lot of things for us, I mean it helps some of our audience see how to build these sites. Opens up my time, ’cause I now have 10 people, let’s say, that are putting their time in to do this. We have the cash so why don’t we just put up the cash for them. These are people that don’t have the cash or aren’t willing to risk the cash on an un-proven process. I think it does a lot.

                                                So, I’m interested to hear … We’re thinking about rolling this out. I’m interested to hear what your thoughts are on it. Please leave us a comment about it, what your thoughts are and if you would be interested in something like that. We’d love to hear from you.

Joe Magnotti:                    Yeah, and we definitely want to know if our audience is enjoying this kind of thing. We don’t want to launch it if you guys are not willing to help.

Justin Cooke:                     Well that’s it for episode 64 of the Empire Flippers podcast, thanks for being with us. Make sure check us out on Twitter, @empireflippers, and we’ll see you next week.

Joe Magnotti:                    Bye bye everybody.

Announcer:                        You’ve been listening to the Empire Flippers podcast with Justin and Joe. Be sure to hit up empireflippers.com for more. That’s empireflippers.com. Thanks for listening.

 


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Discussion
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  1. RJ Cid says:

    I loved this podcast and definitely learned this recently the hard way. I have been practicing setting up niche websites for over 2 years now with small success. Last year I decided to take my small passion for marketing and business and left real estate to pursue website building and internet marketing. I got a job doing SEO full time, and while I have learned a TON about sites, I feel I have not made much headroom. Just recently I allowed a “partner” who has 1 skill, technical site building (url structure, interlinking, database management, server stuff), onto my project. Needless to say, everything got stalled for 3 months and traffic plummeted. He convinced me to remove WordPress and build on top of old school html/php platform. Once we transferred the site, almost 1K visits p/month after only 4 months, he doesn’t do anything else and didn’t do a single thing he promised…I just un-did our agreement and will be transferring back to WordPress, basically starting over. It feels like im running in circles!!

    I would love to be apart of a group where there is a coach or mentor that is invested. I am over-read and under-done and working with you guys would fit me well as I have time, created and sold my own ebook, have a income producing sites, etc.. Yet, nothings consistent, I pay for stuff i don’t use, and I am sick of trying, i want to DO what you guys do.

    I would love to know hands-on how to create the systems. I already have a va, but dont really know what project to work on, what is more important, etc.. and people like me are everywhere. I could really use this, if anything, if you guys know of an advanced training or coaching program, i would love to learn more. Yeah products are great, but i don’t need to “know it” anymore, just DO it and have real entrepreneurs helping me out…

    Sorry for long rant!

  2. Brad Z says:

    Where can I sign up for the niche site coaching? I’m a software developer with a masters in business and I’d love to do this.

  3. Wayne Sunderland says:

    As a small business advisor for a not for profit Business Enterprise Centre who specialises in start ups. Have advised this as an option. I would love the opportunity to walk the walk and use this as a case study and also make some extra money for my family. Have listened to the podcast for years but never pulled the trigger.
    Kindest Regards
    Wayne Sunderland

  4. Wayne Sunderland says:

    As a business advisor for a not for profit (Business Enterprise Centre) and having listened to your show for 18 months. I would love take up any opportunity to participate in this offer. I have advised businesses for 3 years and even talked ?to them about these issues but never got into this area myself ( tempted to pull the trigger but always found an excuse). Would love the opportunity to be taught by the masters and walk the walk. Be aware that I would challenge you on processes to understand and see why they are needed. I would love to make this a case study for my students and to make a couple of dollars to support my family. Just quietly bring the challenge on.
    Kindest regards
    Wayne Sunderland

  5. Ollie says:

    Awesome podcast as always, guys. I would definitely be interested in the niche site coaching.

    SIGN ME UP!

    Cheers.

  6. Hi guys,

    The way I see it the niche site coaching is a good idea, BUT you should still place some estimates. People are willing to give it a try so much because it’s a chance for them to make a buck and try this niche site thing out. What they don’t know is that it’s probably a 3-12 month commitment. It would be great if you shared some of your timewise experiences – how many hours / day is it likely to take and how much time overall to reach a decent income from the site.

    I also really enjoyed the talk about how custom services destroy your business. You said you could make another episode about it, which would be a great one in my books. It’s so hard not to agree to every job when you’re starting out – confidence to say no is needed and if you could provide that in a future episode, it would be great.

    Cheers and looking forward to the next episode!

    • Chris leiper says:

      Hey Krysztof, we seem to be hanging out on the same sites! You’re right about the time commitment. With my sites, I try not to think about what I’m actually making per hour of labor. I’m lucky because I actually enjoy doing it, which makes it a fun way to make a little money.

      • Hello my fellow Chris :)

        You make a good point – if we put a number on our work hour, we would turn down too many things and just focus on what gives the most income, which usually isn’t enough fun to sustain it for the long run. You gotta do what you gotta do, but be sure to put some enjoyment into it.

  7. PeterTrapasso says:

    Hi Justin and Joe,

    I think your Niche Site Coaching/Mastermind idea is brilliant! And the timing could not be better.

    Where do I sign up?

    Looking forward to working together soon.

    cheers,

    Pete

  8. Dr. Niche says:

    Justin & Joe,

    I’ve kinda been waiting for an opportunity like this from you guys. The reason it’s appealing to me is I’ve got time and I’ve got disposable income. We collaborate on an authority site and when it’s time to sell, I’ve got 50% sweat equity in the site. You get a built in buyer and I get a killer authority site at half price. Sounds like a winner to me. You’ve got my email, so let me know if your interested. I’ll be in Davao the last week of December so let’s get coffee or drinks if your around…

    Rod

  9. Iain Robson says:

    I love the niche coaching idea.

    As you mentioned, some people have more time than money so this would be a great idea.

    It allows people to get their feet wet in the niche creation process, and it allows them to get proper direction.

    When you’re new to niche site creation, you often ask yourself if something could be better, is this ok, and what could be improved. By having an expert there to guide you through the process in order to create a solid website , they’ll learn how to create a successful site. Obviously, if you’re footing the bill, you don’t want duds.

    Furthermore, you could record the chats you had with the people within the group and share them on your website. That would allow other people to get some insight into the process. Also, you could get each person who participated in the process to write a summary of what they learned through the process, which could lead to other potential ideas.

    Just some thoughts.

    Great podcast guys.

  10. Ethan Aiken says:

    Once my first niche site is sold then I would for sure be interested in the niche site coaching to get help and build my next round of sites better. Thanks guys for this podcast by the way.
    Ethan

  11. bobdak says:

    Ok .. Great podcast – I sent in a question on your contact us page …it was not really a question but a long shot lead for you … i know your team handles a lot of those questions but you might want to look at it yourself – it had to do with the Bill O’Reilly show last night – just fyi … So – who would not be interested in the idea you threw out in the last 5 mins of the podcast? You pay for everything, I do the bulk of the work and we split the sell of the site a year from now… Heck yeah (church guy) i am interested. I would think that your coaching 5 students through your processes could its self become a great product … make all of the students record their steps, require a mini podcast every week until the site is up and running with perhaps 2 more podcast with you guys giving advice and direction after the site is making money .. this could be a membership course, CD or DVD that could be on your Products page easily ..

    Plus you even gave a great niche to start looking into as well with the “tropical workforce” idea — hmmmm can these two things be combined? Great food for thought thanks bobdak

  12. Tim says:

    If you guys launch the niche site project, I’ll apply for sure. I’d love to work with you guys on that.

  13. Jawbone Up Tips says:

    One of the best topics to discuss will be mistakes. I’m always interested in people’s mistakes and failures. It’s a platform for us to learn and avoid if possible.

  14. Tom Guerin says:

    Great idea for the niche site coaching. I would definitely be interested to take my game to the next level. Sign me up

  15. Rick Healey says:

    Niche site coaching…love how you guys think outside the box. Definitely sign me up on the list.

  16. mark savastano says:

    Hey Guys,

    I love the idea of Niche Site coaching. I definitely fall into the category of having more time right now. It would be such a great boost to have you guys give guidance. Anyways count me. The money at the end is not a important to me as the coaching. I’m in it for the long-haul, and the sooner I learn how to fish the better.

    thanks,

    Mark

  17. Rob says:

    Regarding the “location independent contractor site” you guys mention, what would make it different from ODesk or similar sites that seem location agnostic? When you hire someone, you really don’t care where they’re located nor is this a factor in these sites.

    Cheers!

  18. Rob says:

    Hey guys. Thie Niche Site Coaching / Mastermind sounds like a great idea. Please put me on your contact list.

  19. Conrad says:

    I got this really interesting email in my inbox…. checked it out… HOLEY @#!# a niche mastermind from empire flippers? I’m in! Keen for the next step in the application process!

  20. Oluwaseun says:

    Justin,
    you guys gotta give me a chance in this Mastermind. I have been challenged with what you guys have achieved so far, I just burn’t another bridge in other to make my dream a reality. Paypal has always been one major stumbling block for me because my home country is not accepted on Paypal, but I just relocated to South Africa so that I can have this breakthrough I so much desire.

    I want in and I can’t wait guys. I can’t just wait.

  21. John Peden says:

    Interesting suggestion. You could take the initial group of signups and run something along the lines of a Creative Live course that you could then package and re-use/re-sell. It would be great to be a part of it and be able to learn from you both to subsequently share with others. Even being accountable throughout the process, obviously to yourselves, but perhaps equally to a private Ning group or something, would be a real incentive to put in work and make the site profitable.

  22. Nathan hibbs says:

    I would love to work with you guys! Listening to the podcast gets me pumped every time. My brother is now convinced you can make money online and I am showing him the ropes.

  23. seba112 says:

    Great Idea with consulting for niche sites. Add me to the list of interested people. I will be more than happy to split the profit with you guys.

  24. Arjen says:

    Add me to the list of interested people. I have been following you guys for a while (as well as Tropical MBA, etc…) and I’m always a little frustrated when I see posts for internships, etc. because they require one to drop everything and relocate. This would be the perfect opportunity to help transition from my old life to my new one :)

  25. Peter says:

    Certainly would be keen on being involved with this, do you only target the U.S. market or might other countries be in the mix as well?

    • With our sites we usually only target the US market. It’s the biggest one and that’s what we’re familiar with. So while I won’t say “no” up front, I think we have a better chance for success focusing on the US.

  26. Chris Leiper says:

    I would totally be up

    • Interesting Chris, is the dictation software really helping you over just typing? I would think with editing (no dictation software is perfect) it would actually take longer to dictate rather than typing. I assume outsourcing the content is out due to cost.

  27. Zachary Strebeck says:

    Coaching sounds like a great idea, especially for someone who is super new to the business like myself. Sign me up!

  28. Jacob Behnken says:

    I think the niche site coaching is a great idea. I’ve been following along with Spencer at Niche Pursuits and have found it very informative to see someone else go through the process. You get to see the mistakes, the corrections, and the strategy all come together. Looking forward to apply.

    • Justin Cooke says:

      Awesome, Jacob. I’ve gotten some value there as well – I always find it helpful to learn from other people’s mistakes! (and successes) :-)

  29. janet bartoli says:

    I would certainly find the mastermind Niche coaching idea of value and would apply for sure ! Ok now back to listening to you guys in the podcast

    • Justin Cooke says:

      Sweet, Janet!

      I think it would be valuable for us as well. Hopefully…9ish months down the road some site buyers will agree and we’ll all end up with something we want. (And a tested, repeatable process we can go through again!)

  30. Julie Kinch says:

    I would definitly be applying!

  31. Harrison says:

    I’ve been a follower here for quite some time (albeit mostly a lurker, haha) … i’ve been working on several of my own niche sites following tips from what you guys provide … but I’d say that having resources like VA/funding & more importantly, the strategy session would be tremendous amount of help. I think what I have most problem with is “well I tried this method … but it’s not working, what next strategy should I try?” … it’d be nice to really have a mentor to simply give suggestions on further techniques to take a niche site to the next level. Looking forward to u guys offering this “niche mastermind” help community!

    • Justin Cooke says:

      Awesome, Harrison! Glad you’re out of the shadows! hehe

      I’m pretty excited about this idea and it looks like the response so far seems pretty positive as well. Ultimately, I see quite a bit of upside for everyone here.

  32. John Gibb says:

    hey guys

    Awesome podcast

    I may be interested in your mastermind as niche site building/affiliate empire growing is my thing.

    Would love to hear more about it…

    john Gibb
    http://healthywealthyaffiliate.org/

    • Justin Cooke says:

      Awesome, John!

      Let us get our thoughts together on this one and flesh the idea out a bit more. We’ll put out a post in the next month or so if/when we roll it out!

  33. Sud.Lamiran says:

    Wow … Niche Site Coaching/Mastermind? Finally … I’m in! :)

    • Justin Cooke says:

      Sounds like fun, right?

      I’d really like to work with a small team to knock out some cool/interesting sites and this “feels” right to me. A bit of a risk and $$/time intensive, but definitely aligned with our goals! :-) Will have more out about this in the coming weeks!

  34. patric says:

    Hi! It sure sounds interesting. What level of knowledge is needed?

    • Justin Cooke says:

      Hey Patric,

      I’d say (at a minimum) that he/she should have a basic understanding of keyword research, building niche sites (with a couple under his/her belt), etc. Not for those that are brand new, but definitely for those that are looking to expand and/or take their site creation to the next level…

  35. anuj agarwal says:

    Hey would love to be a part of niche master mind – what do you guys have in mind ?? How will you be selecting the right applicants ?

    • Justin Cooke says:

      I’m not quite sure yet, but thinking there will be an application process involved. Since we’re funding the project, we’ll want to make sure we select those willing to put in the work/commitment. It’s still an idea in progress…just wanted to share and see if others were interested! :-)

      • anuj agarwal says:

        Hi
        Makes sense….Cant speak for others but example me – it would be best to work with you guys and learn over the shoulder where I will be okay to make my own investment regarding the whole process…
        What’s more important is to learn how to make sites that work and make money – you guys can make it like a case study.. Whr you record what you teach and make everything live… So people learn from watching and replicating in their own business

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