EFP 76: What Makes A Business?
When can you say to yourself, “I’ve got a business”? There are some arguments about what makes or doesn’t make a business and we wanted to share our thoughts.
What is a Business, Really?
Today we talk about what needs to be in place to make a business a business and break down what matters and doesn’t matter.
Keep in mind that much of this is subjective opinion. We’re interested to hear what you think as well!
Check Out This Week’s Episode Here:
Topics Discussed This Week Include:
- Our goals for the new year!
- Annual report coming in January.
- The importance of having a process in place.
- Having employees or VA’s to take care of certain parts of your business.
- Scalability and its effect on your business.
- Users and their value, whether or not they pay you.
- “If you don’t bring people in, you’re going to be capped because there’s only so much you can do on your own.” – Justin – Tweet This!
- “It’s very hard for me to conceive of a sellable business that’s only you running it. That’s like buying a job.” – Joe – Tweet This!
We’ve got our seatbelts on in case there are some arguments coming our way. That’s alright though because we love it when we get into conversations with our listeners. As always, leave us a message on SpeakPipe or comment below to join in on the conversation.
Speaker 1: Welcome, to the Empire Flippers podcast. Are you sick and tired of 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: Welcome to episode 76 of the Empire Flippers podcast. I’m your host, Justin Cooke. I’m here with my business partner extraordinaire Joe Hot Money Magnotti. What’s going on, brother?
Joe Magnotti: Happy new year, everybody!
Justin Cooke: We are through the holidays. We are back at you, got a great episode lined up. We’re going to be talking about what exactly makes a business; what makes a business from our perspective, what’s a real business versus a fake business? A biz? I don’t know what we’re going to call it, but we’ll get into that. We’ll talk about cash flows versus actual businesses today. Before we do that, let’s do some updates, news, and info. First thing, buddy, we got three new five star iTunes reviews.
Joe Magnotti: Hit me up, man.
Justin Cooke: I think we begged for them, man. We begged for a Christmas gift, and they delivered. First one, it says, “Entertaining and informative.” It’s from Greg M in the U.S. “Been a long time listener of the podcast, never missed an episode. These guys are always entertaining and a source of motivation for me and my business, and I look forward to selling some sites in 2014.”
We also got one from [Ilias D 00:01:21] who said he’s the review Santa, five stars. “This review Santa’s coming to town to give five stars, five stars, five stars, five stars. The Empire Flippers is one of my favorite podcasts, always on the money without any BS.”
Joe Magnotti: Ilias, all the way from Greece.
Justin Cooke: Yeah buddy, from Greece. Our Greek listener. Our favorite Greek listener. Next one is Freddy. Says, “Great podcast, five stars, just listened to the flip episode and listed my auction for sale.” Well, congratulations, Freddy. Hope you get some great multiples. Should’ve listed with us man. Nah, just kidding. Good luck on your flip auction, man, I hope you really crush it.
The second update we want to talk about it is Joe and I are considering another apprentice man. We just can’t get away from this intern apprentice thing, we’re all about it. We’re looking at some of our goals for this next year, for 2014. It’s a good time to do that at the end of the year heading into next, and we’re thinking that we might have another position available that we need to bring someone on for.
Joe Magnotti: Yeah, we were talking before the show. You just hit me over the head with this, but yeah I think it makes sense. I mean, we’re having very good luck here with Vincent and it’s going well, so I think another apprentice is something we should do in the future.
Justin Cooke: Yeah, there’s a whole bunch of stuff planned. We got a lot of work coming up so I think we’ve definitely got some room for growth there and room to add somebody. Next thing we want to talk about a little bit is our goal setting strategy. You know, a lot of people talk about their goals for the next year and this is definitely a time of the year to talk about that, but we do something a little differently. We do our goal setting regularly throughout the year. We do this through masterminds, we do it through a quarterly review, and what we do is we generally set our goals three or four years out and we work backwards. We say, “This is where we want our business to be in three years. Where does it need to be in two? Where does it need to be in one? What about the next six months? What’s our road map to hitting those goals?”
Joe Magnotti: Yeah, I think we do a whole podcast on this, and maybe because it’s the end of the year, probably would’ve been a good one, but yeah, the way we plan out our goals is doing that working backwards thing which it definitely helps you to get down to the nitty gritty.
Justin Cooke: Well, it’s easy to be in your business and just always dealing with and feeling, pivoting, and just going all over the place and not really having a set or laid out path. A great way to do that is with goals and I think the working backwards gives you a roadmap of sorts to get there. We review it every three months or so. We sit down again and make sure that we’re on track. If were not, or there’s something we’re not chasing after, we dump that, we move that down the priority list and move other things up, as long as it’s meeting our long-term goals, which are much more stable than maybe our six month roadmap, if that makes sense.
Joe Magnotti: Yeah. I think what we have to do is start taking a page from the advantage book that I recommended and start including our leadership team in that.
Justin Cooke: I like that. Yeah, so, we just did something with Vincent, the apprentice, and we’re going to be doing something with our manager here soon as far as like some big, hairy goals for them to work on. Other thing I want to mention is that around the middle of the month, January, we’re doing our monthly report and we’re also going to include an annual review or wrap up of 2013. It was a great year for us, but I see a ton of growth for us in 2014. We have some pretty big, audacious goals, so it’ll be interesting to see how that plays out.
Joe Magnotti: Yeah, it’s going to be cool. There’s going to be a blog post?
Justin Cooke: Yeah, our regular monthly report, but I’m going to do an annual review of everything. It’s going to take a little while to put together, but they’re good ones and I know people, readers really dig it.
Joe Magnotti: Yeah, I’m looking forward to that.
Justin Cooke: All right man, let’s get right into the heart of this week’s episode.
Speaker 1: This is the Empire Flippers podcast.
Justin Cooke: So, our title for this podcast, What Makes A Business, Joe, how this really came about was I was talking to one of our buddies, who’s also our mastermind here in the Philippines, our Philippines mastermind, we meet up every two months or so. We were talking about the requirements for being a part of that mastermind and we had originally said, and continue to say, that we want people that have a business, or that are on their way towards having a business. And I think that was an important distinction, and so we said, “Well, what is that exactly?” So we started to try to hammer it out, and he said, “Are we hiding behind that and really just looking for a personality fit?” And I think we do want a good personality fit, but really, we needed to work through what a business means and I thought it was an interesting idea for a podcast.
Joe Magnotti: Yeah, I love it. We were talking about it before the show. This doesn’t mean that it’s set in stone. This doesn’t mean that we know it all. It’s just, from our experience and our perspective, this is really what it means to be in a business.
Justin Cooke: Yeah, and we’re going to discuss some of the situations we’ve seen where people think they have a business and don’t, and in some situations that was us so we’re going to get into that in just a bit. But we should also mention that you can have a cash flow, you can have a cash cow, and not have it necessarily be a business. So maybe you’re reining in dough and that’s not necessarily going to determine whether you have a business or not.
But first off, let’s cover the things as far as what does matter for having a business. The first thing that does matter is process, right? Joe and I both agree on this one. Basically, what I mean by process is that you have to have a process. Maybe it’s a multi-step approach to creating a product or creating a service or creating whatever it is that’s there, and then you have to break that process into smaller chunks.
Joe Magnotti: Look, we’re big process guys. We’re big operational guys, and people, maybe we put too much emphasis on this, but it is true that you need that part of the business.
Justin Cooke: So what you’re going to need for that process is a walkthrough for each step along the way. Sometimes each chunk will have multiple steps. It’s normally done by a particular person or team. So if you have a five piece process, you have five different people working on it. Maybe one of those people can do multiple steps, but it’s broken down into different steps and it’s normally modular.
Joe Magnotti: Yeah, and so when we talk about a walkthrough, people are probably thinking, oh, Google doesn’t have a walkthrough for their process. [crosstalk 00:06:56]-
Justin Cooke: Oh, they do.
Joe Magnotti: I guarantee they have some training material.
Justin Cooke: Outrageously complex.
Joe Magnotti: Yeah, I guarantee it’s not … Maybe they don’t call it a walk through. Maybe they have a six week training period, but that is their walkthrough. They have a process. They’ve broken it down. They have people responsible for individual pieces of that process, and they train them.
Justin Cooke: And we have a great article on standard operating procedures which we’ll link to in the show notes, kind of show you an idea on what we consider process and broken down process. You now, I mentioned this being modular and what that means is that you can add pieces to the puzzle. For example, on our site creation process, we’ve basically taken out the module for link building. We could add a new one in or we could test that new one and we would just through that right into the process with a person or a team of people that are doing that. We can take one out. So if we need to take out [inaudible 00:07:43] research or whatever we want to take out, we can do that as well, and most of this can be done without your or I, my direct involvement. So we’re not directly involved in the net site creation process whatsoever at this point. We don’t do keyword selection. We don’t do any of that.
Joe Magnotti: Yeah, in fact, the skills and the training that they have really when we change a little bit of the process or we enter a new module, we don’t really have to do that much training because I can talk to the leader and then he can hand down the specific steps to the new people.
Justin Cooke: Yeah, and sometimes he or she will have several people that work for them and do most of the work, and one of them is, for example, the team lead, and they’d become a tier two. Now, over time you can actually bake in rules or answer frequently asked questions for those team leads, so that involves even less. Some of these processes we’ve done that for, so they know if they run into a particular struggle or issue, what their steps are for answering that, and others we haven’t done so well. So we’ve done a bit with the customer service stuff over the last couple of months, we’re working on that. We’ve got a few of those handled, but there’s more as it comes along and you find new mistakes. So we’re still kind of involved in that process ourselves.
Joe Magnotti: Yeah, I mean, look, we’re going to talk about people in the next section, but I really do think that removing yourself from the process as much as possible is a good sign that you have a business.
Justin Cooke: So let’s talk about an example of a business that didn’t have process and why we wouldn’t consider it a business.
Joe Magnotti: Uh-oh.
Justin Cooke: I will start with ourselves, we’ll point the finger right at ourselves. The first example will be our mortgage company, right? So we had people, right? We had a team of people that were doing the work. We had customers that were getting the loans. But the only process we really created, Joe, was our funnel for bringing loan officers into the business.
Joe Magnotti: You know, I laugh because-
Justin Cooke: We’d bring them in and then did nothing with them.
Joe Magnotti: Because we weren’t thinking. All we were thinking about was, can we get the loan officers who will get the loans? Oh, and then after that, it’ll magically take care of itself.
Justin Cooke: It’ll just work itself out but we didn’t have any of that. And the big problem, I think, with not having that process baked into our business was the confusion during the loan submission, right? So we’d have loan officers that didn’t really have faith in our team. There wasn’t a defined way to do it. And so they were less confident with their approach to submitting loans and doing business with us.
Joe Magnotti: Yeah, they didn’t look at us as a business. They thought that we were rinky-dink.
Justin Cooke: And they felt too, I think, independent, and they didn’t feel a part of something bigger.
Joe Magnotti: Now, I remember when we started to introduce training materials we had a book. Remember we got it all printed up and nice little cover letters and everything and-
Justin Cooke: But still, from where I’m sitting, that was just part of the onboarding process. That was our last step in the onboarding process, and we said, “Here you go!” Right? “Here’s the training program. Good luck to you!” And we kind of stopped it there. We didn’t really follow through on that. I think that was our weakness in process with that business.
Joe Magnotti: Definitely. If we had taken it the next step and showed them how to bring a loan all the way through and what to expect and how to get paid out and everything like that, I think they would’ve been much more confident in putting loans through our company.
Justin Cooke: All right, so the second thing that does matter in having a business, what would determine a business versus not a business, is people. You’re going to have to have people in your company, and we’re going to lay this out. What we mean by people are employees that can work for you directly, full-time, part-time. Partners. You can be a three man founding team. You can have close third-party vendors or contractors that work inside of your business or closely with your business, but you’re going to need people if you want to have a business.
Joe Magnotti: Yeah, I mean, I think that this will probably be the one we get the most pushback on, Justin, is people go, “Oh I can do the whole thing myself.” And we’ll talk about why, later, that’s not really a business. But honestly, in order to scale, in order to build your business, you’re going to need to build it on people. You can’t have everything just rely on that central point of failure.
Justin Cooke: So somebody will say, I’m sure they’re going to say, “Well, what about a consulting business? Isn’t a consulting business a real business?” We’re going to talk about what are the problems with that in a second. We actually did a whole thing on service business, but I think the other thing that’s important here is that you have individual people that are responsible for chunks of the process, right? So your people are responsible for their little area, their fiefdom, right? And they run that, they’re responsible for it, and they have to answer for that.
Joe Magnotti: Yeah, there can be a lot of problems with fiefdoms, but yeah, a cog in the wheel and you have a piece of the machine and the machine all comes together to produce of the service, the product, whatever that might be.
Justin Cooke: Yeah, and you have a manager or supervisors responsible for each step along the way, and we’re talking about both flat or tiered management structures. So it doesn’t matter whether you’re a flat company, you have five people in your business and you’re all partners and you’re all part of it and wear various hats, or whether you have founders, managers, supervisors, employees …
Joe Magnotti: Yeah, management structure, not really that important as long as there’s some sort of people there that can go ahead and carry out your instructions.
Justin Cooke: All right, Joe, so give it to me, buddy. Why is a solo consultant, why is this not a business? Why do you not feel it’s a business?
Joe Magnotti: Well, there’s a number of reasons, but you can’t step away, right? Meaning that if you step away or you stop working, the business fails to resolve itself. The business fails to get anything done.
Justin Cooke: Yeah, so we’re not talking about … There are consulting businesses that have people and have huge teams and have processes in place. They’re obviously a business. We’re talking about the solo consultant with some clients on their own. They’ve got a process, but they don’t have any people in place. Another thing that makes it difficult for solo consultants is that their business is very difficult to sell.
Joe Magnotti: Very difficult. I mean-
Justin Cooke: Not all other businesses are necessarily easy to sell, but this is particularly difficult. You can do it with like an earn-out or something, but it makes it much more difficult for someone to step into your shoes.
Joe Magnotti: Yeah you know, Justin, I’ll push back on you a little bit there. I remember we were talking before the show and I was saying it’s impossible to sell. I think it’s … maybe it’s not impossible, but it’s highly improbable if you’re a solo consultant that you’re able to sell your business.
Justin Cooke: O don’t know, okay, think about this one. Like the broker, trusted site seller. He sold his brokerage, right? That was a solo … I don’t know if he had VAs or anything.
Joe Magnotti: Yeah, I mean, I bet you he had people behind the scenes that were helping him with stuff.
Justin Cooke: [crosstalk 00:13:57]-
Joe Magnotti: And that’s kind of the thing that we’re talking about here. I mean, you have some sort of process in place that’s being carried out by people other than you. It’s just very hard for me to conceive of a business that’s sellable, that’s only you and you running it. I mean-
Justin Cooke: You have long-term clients, contracts in place, and doing an earn-out or something, I think that’s definitely possible.
Joe Magnotti: Well, I mean, I don’t know why you would buy it, though. You’re basically buying a job, so it seems just like a bad idea to me.
Justin Cooke: I don’t know, but … You see, that’s the thing though, right? That’s the different types of buyers. So yeah, some people would hate the idea of buying a job. A lifestyle Larry comes along, he’s like, “I want the job so I can stop doing this and I can move to Bali and sit on the beach and do my consulting.” So I don’t know, I think it’s sellable. I think it makes it more difficult, though, no question.
The other problem, it’s pretty clear, is that you have capped earnings or cash flow, right? If you don’t bring people into your business, you’re going to be capped. There’s only so much you can do, and adding people expands that cap, right? So you’re now able to get a lot more done with the people and process in place.
Joe Magnotti: You know, this is even a bigger problem than can’t step away.
Justin Cooke: I think so.
Joe Magnotti: Because you’re so capped that when you do want to step away, you don’t have anything to fall back-
Justin Cooke: You’ve got clients just hammering you about getting something done, you cannot get out. I mean, there is an answer to this through doubling prices. Let’s say you double your prices. You have less clients, but you do more work. But again, less clients is risky too, right? One of those clients drops or you can’t pick up another one to replace them, and we’ve been through that problem. You can have a business with just one client, but yeah, having less clients can be a bit more risky. So doubling your price can be problematic that way if you’re capped, right? So yeah, I don’t know, man. It’s tough. I don’t think you can have a business without people.
Our third point, now this is one that you brought up to me and I wasn’t sure I bought into, but I am now that we’ve discussed it a bit, I think, is customers, users, or readers. Basically, effectively a market.
Joe Magnotti: Yeah, originally I was saying just customers and you brought up some scenarios where people are not paying for the things that they’re receiving.
Justin Cooke: Yeah, not directly.
Joe Magnotti: Yeah, so users or readers, those constitute, quote unquote, customers, and you basically have a market for your product or services. You have to have this in order to have a legitimate business.
Justin Cooke: What we’re talking about is someone is specifically gets value out of what it is that you’re creating, and you have to be somewhat answerable to these people, or the business has to be somewhat answerable to these people. A benefit of answering to your readers, customers, users is that you can also get feedback from those customers and users and readers, and you can adjust, iterate, and make your product or service better, make your business stronger, but I think that’s just one of the value adds that having a business and having customers can do for you. One of the things that you can make … expand your business easily.
Joe Magnotti: Yeah, this is a huge part of it. I mean, if you’re willing to work with other people’s needs, other people’s wants, other people’s desires, that’s going to make your business that much more valuable. If you’re working, and we’ll talk about some examples later, but if you’re working completely without customers, your business is just, not only is it not a business, it’s not as valuable.
Justin Cooke: Yeah, you mentioned that they don’t have to pay you directly but have to have an interest in what you’re doing. I think a good example of that would be Distractify, right? So that company that just came out recently, like October 2013, they’re crushing it. They got like 20 million views a month or something, and they don’t have customers directly, right? But they have a user base that finds their videos buzzworthy and shareworthy and everything, and they have to keep that reader base active, right? They do a lot of advertisements so they don’t have customers that pay directly, and they will eventually, but right now it’s just third-party consolidation, AdSense and the like, but they have to keep that user base coming back, so their customers are their readers really.
Let’s talk about an example of a company, or a non-company, that does have process in place, may have people in place, but doesn’t have a market. And you brought these up before the show.
Joe Magnotti: Yeah, it’s the arbitrage type of situations; the poker players, the day traders, the Bitcoin mining guys, the guys that are as [Dan 00:18:02] Andrews likes to say, gaming the system. They’ve found some sort of process that works. Maybe they have other people working on their process, but they don’t have any customers, at the end of the day, that they sell to. They might even be making money, but it’s honestly, in my opinion, not a business.
Justin Cooke: Yeah, okay. All right, let me ask you this, then. If you have process and you have people in place, and let’s say you’re day trading, you can’t build a huge business out of day trading. Like with people and process in it, do you have to have those customers?
Joe Magnotti: A huge business in terms of what? In terms of revenue?
Justin Cooke: Yeah.
Joe Magnotti: Yeah, okay. It’s a huge moneymaker, but it’s not a business.
Justin Cooke: Why?
Joe Magnotti: Because, here’s the point that I forgot before, Justin. I think that with customers, you can build a moat around your business.
Justin Cooke: [crosstalk 00:18:49].
Joe Magnotti: Without customers, it’s so repeatable, it’s so easy.
Justin Cooke: Oh, it’s defensible.
Joe Magnotti: Yeah.
Justin Cooke: Okay. Yeah I got you. Okay, because otherwise anyone can hop in and they’re going to … Yeah, when you’re playing the arbitrage game, that’s the problem. You get squeezed from both ends, right?
Joe Magnotti: Yeah.
Justin Cooke: And the more competition you have in there, the tighter that squeeze, and the faster that squeeze comes. So, yeah, that’s really interesting. Yeah, okay, that’s a good point. I’m with you, buddy. I get you now, all right? I’m on the team. All right, buddy, so let’s talk about the three points that don’t matter in terms of building a real business. [crosstalk 00:19:20]
Joe Magnotti: Let’s get negative.
Justin Cooke: Yeah, let’s get negative. So the first one is revenue, and this may sound a little surprising. Like, what, you don’t have to have revenue? And we’re talking total revenue. We’re talking net profit. None of that matters, from our perspective, to define whether or not you have a business. You can have an unprofitable business. You can have a pre-revenue business.
Joe Magnotti: That was the amazing part to me, Justin. When you brought up a pre-revenue business, I’m like, “Yeah.”
Justin Cooke: Yeah, because we were talking about that, profit. And you were like, “Yeah, okay, you can have unprofitable business, I totally agree with that.” And I was like, “What about revenue?” And you were like, “Uh.” I was like, “Think about this though. You can have people in place, you can have process in place, you can have a market, and you’re not monetized yet. Maybe you’re funded, VC money or self-funded whatever, but you just haven’t monetized it yet. That’s a real business.”
Joe Magnotti: I mean, the first few years of Twitter.
Justin Cooke: It’s just not making money yet. Yeah, so I think that’s totally true. One thing with revenue too is that some people concern themselves with single source dependency, right? Let’s say that you’re totally reliant on one other company or one other business, and that is a concern, but I really think, and we’ve said this before, I think it’s a five figure a month problem. If you’re early and you’re single source dependent, double down on that single source, right?
Joe Magnotti: Yeah.
Justin Cooke: You don’t have all that much to lose. Build that revenue stream, build up your business around that, and then when you get to five figures a month, then you can start diversifying, then you can start looking at other sources.
Joe Magnotti: Yeah, we’ve heard this so many times. People, “I can’t believe you’re building all your revenue on Google. I can’t believe you’re building all your revenue based on Facebook.” But if you’re making money and you meet the other criteria and you have a good business, I say go for it.
Justin Cooke: Yeah, make that a problem later. That’s a five figure a month problem. When you get there, then you can expand it into other-
Joe Magnotti: And use that war chest that you used on that single platform [crosstalk 00:21:04] why it was good.
Justin Cooke: Yeah, to fund your new revenue stream or profit stream.
Joe Magnotti: Yeah, take advantage of that single source as much as you can.
Justin Cooke: Yeah, rather … Because it costs money. It takes time and money to jump into a new process, and that’s, I think, where people get the whole shiny object syndrome is they start chasing something else when they have something that’s working. If it’s working, man, double down on that. That’s your winner. Ride that puppy, and then worry about diversification later.
So, that’s revenue. Let’s talk about the second thing that doesn’t matter, and this is product or service. When I mentioned this, you shot me a look and were like, “What’s going on here?” But we talked about this. I mean, advertising revenue doesn’t necessarily require a product or service. Now, we would probably argue that if you’re really building a business, eventually you’re going to come to find out that you need a product or service.
We were on a podcasting panel in Bangkok in October, and the question was asked of the panel, “Would you advertise on your own podcast? Would you allow advertisements?” And all of us were like, “No, yeah that’s not a good idea.” The question was then, “Why?” Well, because we know that the advertisers are making more money on that advertising and selling whatever product or services they have, than they’re spending, or they better be, or they’re not going to stick around and be an advertiser for very long. So advertising is probably a lower form of monetization, but it’s easy, right? It’s relatively easy, and it’s a good way to get started.
Joe Magnotti: Yeah. I mean, I think I’ve said before in other podcasts that to have a business you need a product or service, but I do consider advertising kind of a service-based business. So-
Justin Cooke: I don’t know, I’m not buying that one that much, but yeah.
Joe Magnotti: Yeah.
Justin Cooke: Yeah, that’s squeaky.
Joe Magnotti: It is a little squeaky, but advertising revenue is definitely a business. You can meet the other criteria, and there are other forms of-
Justin Cooke: Yeah, I mentioned earlier distractify.com, the one that just started up. They got a team, they got process in place. They don’t have a product or service, but they’re definitely making money advertising. Any of these companies would work: Upworthy, BuzzFeed. They have advertisers and that’s the direction they’re going. They may have product or service later, but right now that’s their focus, and I think not having a product or service hasn’t hurt them. They’ve been crushing it.
Joe Magnotti: Yeah, and I mean, you think about these types of advertising firms. I mean, they probably have large sales forces that are sitting there running the phones all day, trying to find advertisers and running a big program. So the sales process is there. They have the whole process in place.
Justin Cooke: It feels like you have to have a product or service and I think we’ve even talked about the importance of having a product or service, but I don’t think it’s required to have a business. A third point I want to mention is scale. Also along with that is sustainability. We were talking about this before the show. Whether you have two people or 200 people, the size of the business doesn’t determine whether it is business or not. I know that owning a business, having more people gives you more opportunity, allows you to do more things in your business. You and I have looked at Chris Tucker, right? With his team of 300 people now or something. He’s got a huge team and all these resources at his disposal, but the guy with three people on his team still has a business or still can. That’s not a determinant for whether it is or isn’t a business.
Joe Magnotti: Yeah, and especially when you’re first starting out, as long as you meet the other criteria we’ve talked about, you have a legitimate business, and you just need to be patient, diligent, and work on what’s working for you.
Justin Cooke: And when it comes to sustainability, I think that has more to do with the health of the business and it doesn’t really factor into the definition of a business.
Joe Magnotti: Look, we-
Justin Cooke: You can have a bad business. An unhealthy business.
Joe Magnotti: I was just going to say, we could do a whole podcast on whether it’s a good business or a bad business, but that’s not what we’re trying to define here. We’re just trying to define, is it a business? And, yeah, sustainability, you could have a business for a week, and it might even make money. It might even be profitable, but for whatever reason it disappeared, it dried up, and you no longer have a business anymore.
Justin Cooke: Yeah, so to the scale point we’ve got Mark, who’s in our mastermind. He wants and he has a small business, and that’s what he wants. He’s not interested in scaling it to kingdom come. He’s happy to keep it in the five figures a month range. He’s at the point where now he’s diversifying it and making his business sustainable. So he was, I’d say, fairly AdSense dependent when he started off, and he’s now expanded that to Facebook and email marketing to where he’s not single source dependent once he broke that five figure a month barrier. So, yeah, I think he’s definitely there; an example of someone who doesn’t necessarily want to scale it, but definitely has a business. Another person would be Nathan, right?
Joe Magnotti: Yeah, Nathan’s doing some middle man type stuff in Amazon. He buys products in China, then finds what people want on Amazon, and uses the Amazon platform to sell to them.
Justin Cooke: And what you were saying is that product or whatever, that particular product may go away. It’s all interesting, but he’s got people in place, he’s got process in place, and he’s got customers and a market, basically. So if something changes, he can simply adjust his process to meet a new product that’s coming out. That’s always … The business is still there. It’s not reliant on that particular product or whatever or how sustainable that product is.
Joe Magnotti: Yeah, the individual products are not maybe that long-term sustainable, but the overall business is very sustainable.
Justin Cooke: All right man, let’s get right into our tips, tricks, and plans for the future.
Speaker 1: You’re listening to the Empire Flippers podcast, with Justin and Joe.
Justin Cooke: All right buddy, so our plan for the future, and we should mention this. We’ve got a bunch of sites for sale that are currently in the queue. So with the holidays, we’ve actually fallen a bit behind. We’ve got a bunch of sites that should be coming out, should be available by the first or maybe the second week of January. So any of the sellers that are listening to this, don’t worry; we’re processing your sites. We’re making sure they’re a good fit, and we will be posting them the first and second week of January. Anyone who’s looking for sites for sale, make sure to sign up to our email list. Indicate that you’re a buyer and we’ll send you an email as soon as those sites are out and ready to go.
Joe Magnotti: Yeah, if you’re a seller, and you want an update on your vetted site, please use the Zendesk system, and our staff will get right back to you.
Justin Cooke: Yeah, so we’re really pumping up the amount of sites we’re going to have for sale in 2014. I consider that to be a major part of our growth strategy through this next year. Be really exciting.
Joe Magnotti: Very excited about it.
Justin Cooke: All right, that’s it for episode 76 of the Empire Flippers podcast. Thanks for being with us. Make sure to check us out on Twitter, @EmpireFlippers and we’ll see you next week.
Joe Magnotti: Bye-bye, everybody.
Speaker 1: 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.
Photo Credit: Richter Frank-Jurgen – Flickr
Happy new 2014 to you, your families and everyone else reading this 🙂
My previous definition of business came from the book “The personal MBA”:
A BUSINESS IS A REPEATABLE PROCESS THAT:
(1) creates or provides something of value that
(2) other people want or need
(3) at a price they’re willing to pay, in a way that
(4) satisfies the purchaser’s needs and expectations and
(5) provides the business sufficient revenue to make it worthwhile for the owners to continue operation.
According to this definition any one-man-show can be a business.
I understand your considerations about the limitation of such a business model, and I think the main difference is about working IN your business or ON your business.
It’s very interesting the notion about “buying a job”, why does it have a negative connotation?
Of course it depends on what is on sale: a lead generator? a list of customers? active membership services?
Isn’t the same as buying an existing website vs. starting one from scratch?
For example, a web developer buying a website generating leads can be a good idea to get his job started rather than investing time starting from 0.
Just my 2 €cents 🙂
Your point about why “buying a job” isn’t necessarily bad rings true. I think we came down awfully harsh on that in the episode and if pressed…think that it’s not necessarily so bad. In fact, there are plenty of “Lifestyle Larry’s” out there that want to do exactly that.
From a “Portfolio Paul” perspective…someone looking for more passive investments…this wouldn’t be a fit though, eh?
Hey guys !
Even though it’s rather late , happy new year !!!
I wish all the best for you , your families and your businesses .
Many solopreneurs are just happy with what they have and don’t really want a business , as it was defined in the podcast .
To be honest I’m not very happy with my job and this year I will try to make it more of a business .
Be healthy and smile .
PS : Thanks for mentioning the review , it was quite odd to hear my name in the podcast . 🙂
Thanks for the comment, Ilias!
You’re right – I think some are perfectly happy with being consultants, managing a few clients directly, etc. Maybe they don’t want the extra stress or hassle of building a business around it and that’s totally fine, for sure.
Thanks for the iTunes review!
“It’s very hard for me to conceive of a sellable business that’s only you running it. That’s like buying a job.” Quote is definitely tweet worthy.
Thanks, Dionne…glad you dug it!
“What Makes a Business?”
OK – you said you have your seat belts on… prepare for my long winded rant… LOL
First of all – I have followed your podcast & blog posts for the past couple years, and have listened to and thoroughly enjoyed each and every one of your podcasts… well… except this one… (buckle up!)
I’m a HUGE fan, and I consider myself very fortunate to have met and hung out with you guys on a couple occasions in Davao, and I look forward to hanging out again in the future (so hopefully my post won’t piss you guys off!).
I’ve commented a few times on your posts & Facebook, etc.
For the first time, however, I find myself not only in disagreement with you, but actually a bit put off by things you said in this podcast.
Perhaps you were playing the “Devil’s Advocate” to stir up some conversation… and if so, well I guess I get to play the Devil.
OK – for starters, I must disagree with your whole pretext of saying “what makes a business?”. Even though you added the footnote that “much of this is subjective opinion” at the bottom of your post… throughout the entire podcast you seem to present your criteria as some sort of actual definition rather then your own opinions.
When you listed off several examples, ie: consultant,etc… you bluntly stated “that’s not a business”.
The truth is that there are MANY types of businesses that are all in fact a real business. They just don’t happen to be in line with your business model, what you may perceive to be a business, or the type of business that you choose to engage in or associate with.
A consultant is a business. A plumber is a business. An electrician is a business. A child who sets up a lemonade stand on the sidewalk is a business. Even a hooker walking the street selling herself, or a drug dealer… are all businesses.
If you do not agree, then I’m sure there are many consultants, lawyers, electricians, plumbers, and other independent business people who would be extremely happy to tell the IRS that they will no longer be paying any taxes… because a couple guys on a podcast in the Philippines said they are not a real business! LOL
And I did see your footnote about it being an opinion, but that’s just not how it came across in the podcast.
Now – if you had stated that you were defining what YOU consider to be a business, or what the definition of a “Lifestyle Business” is, or what is a business according to your business model… then that is fine and makes much more sense. But the implication that you were defining “what is a business” came off as just wrong, to me. But then that is just MY opinion… LOL
OK – now I think what started this topic, is actually what I disagreed with even more.
You were discussing your Mastermind Group, and what criteria you would use for deciding who would be eligible and qualified to be included in your group.
I believe Joe made a brief remark that you guys might be kinda using all this criteria as some sort of excuse for deciding who could or should be included in your group. I think THAT statement hit the nail on the head, and to me it made the rest of the discussion a bit redundant.
If what you were doing was indeed coming up with a detailed list of criteria for defining what and actual business “is” in order to “qualify” for your group… in order to have some sort of guidelines to go by… what it really boils down to is that you want some way to choose who is included or not without it seeming like a personal choice.
If this is the case – why all the BS then??? The honest way to handle it is MUCH simpler and MUCH more honest.
Here’s my suggestion…
The group is BY INVITATION. If someone would like to join, then you simply talk to them a bit about their business to see if you think they are a good fit and mutually beneficial for what you hope to accomplish in the group.
If after that discussion, it doesn’t seem like they are on the same page as the rest of the group, or simply not a good fit… then just say so. No hard feelings, no judgement on whether they are “worthy” of being in your group.
But if you require people to provide a bunch of documentation to prove that they are “worthy” of being included in your esteemed private club, then it comes off more like some sort of restricted country club, with a secret password & handshake… and frankly seems just as arrogant. 🙁
By using the simple approach I suggest – it also gives you an “out” in the case of someone who might have all the qualifications on paper, but simply doesn’t feel like they would fit into the group or be a positive addition.
On the same token, there may be some people that may want to be part of your group that may not meet some or all of your usual criteria, but yet you might think that their past experiences, business chops, or just plain sparkly personality, might make them a potential valuable addition to your group.
Personally – I would MUCH rather be told flat out honestly that I just wasn’t a good fit – then to be required to provide a bunch of “proof” to apply in order to qualify – then told I was rejected because I didn’t meet the requirements.
Groucho Marx said: “I wouldn’t want to belong to any club that would have someone like me as a member”.
But in cases like this… I doubt that many people really want to be part of a club or group that does not welcome them as a member either.
So… my point is… I’d skip the secret handshake society country club attitudes, and just do what it is that has ALWAYS set you guys apart and above so many other internet marketing, lifestyle business, and location independent business guru’s & podcasters… and just keep it simple and BE HONEST.
That is why I am a fan, and why I think so many others are fans as well.
I would LOVE to be part of a Mastermind Group – or really any sort of group of even somewhat like-minded internet entrepreneurs! But if and only if it was mutually good fit for all involved.
If there was a group that was simply not a good fit – then hopefully I could still hang out or participate in other events and meetups that had a broader scope or more casual purpose.
Anyway – besides disagreeing with you guys (for the first time) I am still a huge fan and look forward to your next and future podcasts!
Happy New Year!!! 🙂
Paul in Panabo
Wow – you had a lot to say about this one, eh?
First I should mention that we went into this episode knowing it might be a bit controversial. That and we were fleshing out our thoughts on the show. I’m not sure how it will play out quite yet, but I appreciate your thoughts. I’ll answer a couple briefly:
– It’s definitely our opinion. BUT – I think there are some serious issues for contractors, consultants, etc. that DON’T have a business (using our definition). They’re capped on earnings, hand-cuffed to an hourly rate, etc.
– We’re happy to hang out with, party with, and chat business with just about anyone. We love meeting entrepreneurs that come down to Davao to talk business…often into the wee hours of the morning. However…that doesn’t necessarily make them a fit for a mastermind group. It’s not some secret, behind-closed-doors elite group or anything…just a group of entrepreneurs helping each other out. We’re violently defensive as to whether we should allow others into the mastermind to protect ourselves and each other. That’s all…