Justin Cooke

April 2, 2015

Welcome to our Monthly Business Report for February, 2015.

After a strong start to the year in January we took a bit of a step back in February.

Ok…a big step back.

To be frank – February was the worst month we’ve had to date at Empire Flippers. We’ll get into our take on the reasons for that in the details below.

We’re clearly not happy with how February turned out, but there were a few lessons learned and some bright spots leading us to believe the negative trend won’t continue.

As always, our goal is to share with you our successes and failures in business in the hopes that they help you build and grown your own profitable business.

We’ll cover everything in depth but first, let’s take a look at the overall numbers for the month of February.

Our hope is that this report encourages, inspires, and helps you as you build your online empire.

Executive Summary

Our poor sales in February led to a rather dismal month. This was the first month since we’ve been in business that we did less than 5-figures in top-line revenue and, with some of the issues I’ll mention below, we were in the hole pretty deep for the month.

Here’s a look at all of our revenue streams over time:

Chart All Revenue Feb 2015

February 2015

Business Data:

  • Employees: 7
  • Apprentices: 1
  • Contractors: 1
  • Contact Records: 27,733 (+1,678 from previous month)
  • Email Subscribers: 17,906 (+1,145)
  • Site Visits: 34,196 (+4,113)

Earnings:

  • Brokered Site Sales: $30,202.20 (-$188,644.71)
  • Brokered Site Earnings: $4,934.97(-$25,270.90)
  • Listing Fees: $3,358.00 (-$2,376.00) 10 new, 4 returning
  • Our Sites Sold: $0.00 ($0.00)
  • Outsourcing: $1,000.00 (+$1,000.00)
  • Additional Revenue: $284.33 = ($272.75 Affiliates) ($11.58 Other)

TOTAL Revenue: $9,577.30 (-$27,466.25)

Revenue Breakdown

Alright, so that’s a look at our overall numbers. Now let’s dig into the details to find out exactly where that money came from.

Brokered Site Revenue

Here’s a look at our all-time brokered site revenue:

Chart Marketplace All Time Feb 2015

And our month by month chart:

Chart Marketplace Monthly Feb 2015

With only $30,202.20 in website sales, this was our worst month since December 2013. Our revenue came in at only $4,934.97 – a full $25K less than we took in for January.

There were a few reasons for this:

  1. A couple of deals closed right at the end of January (and the beginning of March)
  2. We had to reverse a few deals that went through (more on that later)
  3. We had a $100K+ deal that was really close, but fell out at the closing table

This led to much more inventory than we’d ever had before that we needed to move, but it just wasn’t happening. There were still plenty of depositors and interest, but none of them were pulling the trigger on closing the deal.

It also didn’t help that Joe, Mike, and I headed out to Phnom Penh, Cambodia for the last week of the month for a visa run. It wasn’t something we had to do to renew our visas in Vietnam, but we spent a full week in Cambodia which doesn’t have the best internet access and isn’t the best setting for knocking out work.

All that being said, we’re setting ourselves up for an excellent March and agreed to make some changes to give us a strong close for the quarter.

Website Listing Fees

We had a decent month for new listings in February, pulling in $3,358.00 for the month.

  • 10 First-time listings @ $2,970.00
  • 4 Repeat listings @ $388.00

It’s good to see we’re still strong on the supply side with both new and repeat sellers. We’re starting to see more 6-figure websites and businesses listed which is attracting more buyers in that range. We’ll continue to head up the value chain and are currently accepting listings up to $1M in value.

Additional Revenue

We’ve sold a few copies of Long Tail Pro as an affiliate, but there’s not much in earnings to speak of here. We have nothing planned in this area, but I’ll continue to list it as a place I can stick any revenue that doesn’t apply elsewhere.

Investor Program

We have no revenue here to speak of, but we spent some time in February hashing out all the details and are on track to launch this by the end of Q1. The goal is to work with a few high net-worth investors to build $1M in assets by the end of the year. Based on the success of our beta testing, we’ll roll this out more publicly in 2016.

In the meantime, I’ll still report on what’s going on here behind-the-scenes, but might have to leave out some of the details. (Specific sites or businesses purchased, investors, etc.)

Traffic And Audience

Here’s a peek at our blog traffic, podcast downloads, and email list for Februay.

Blog Traffic & Analytics

For a short month, we continued to do extremely well in terms of traffic and brought in 34,196 visits.

This is a trend for us and, after a very long time of relatively stable traffic, we’re finally starting to break out and see some growth.

GA Overall Feb 2015

Here’s a look at our traffic sources for the month:

GA Deposit Channels Feb 2015

We saw 10% gains in both organic and direct traffic. We’re doing really well with some of our important keywords and are in the top 10 positions for many of them which has helped to drive the right traffic. We saw a nice bump in FB traffic in February as well.

Our top content for February:

GA Content Feb 2015

A majority of our traffic went to the marketplace. We’re finally getting to the point where the marketplace is the focal point of our business and the content is secondary – mostly lead generation for our main business.

Here are our top three posts:

Build & Sell A Website For $10K In Only 8 Months

AdSense Account Disabled – What To Do?

How To Buy A Website – FAQs

Here were our top referral sources and all goal conversions for February:

GA Referrals Feb 2015

Our referral traffic was pretty consistent and includes the usual suspects.

Podcast Downloads

Skipping a podcast episode in February didn’t help our numbers and we dropped down to 12,783 downloads from 13,519 the previous month.

Podcast Downloads Feb 2015

Not a ton of growth here, but the quality of our listeners is solid and many of them are customers. (Buyers and sellers) We’ll continue with the podcast and hopefully improve a bit on the consistency!

Emails & Contacts

We’ve to grow our contact records and ended with 27,733 for February – up 1,678 from the previous month.

Contact Records Feb 2015

We had a total of 17,906 active email subscribers at the end of February.

On the surface, that seems like an awful lot of email subscribers and I’d have to admit that it does add up to quite a bit of revenue for us each month.

It’s important to keep in mind, though – this wasn’t an overnight success. It’s been a long, slow journey starting back in May 2011. It’s taken nearly four years to get our email subscriber base to where it is today.

There are ways to artificially boost that number, but the real value is in building a relationship with your subscribers based on honesty and trust. You just can’t manufacture that.

Customer Experience

We strongly believe that our customer experience helps set us apart from our competitors and that’s one of the reasons we measure our success (or failure) in this area every month. Keep in mind that the majority of our feedback and comments are overwhelmingly positive, but I’m highlighting the positive and negative equally for clarity.

Here is some of the behind-the-scenes feedback we’re getting from our customers.

Zendesk Support

Once again, we saw a bit of a dip with our customer satisfaction rating and a pretty significant (negative) increase in our response times even though the overall number of tickets decreased.

Here’s a look at February’s numbers:

EF Zendesk Overall Feb 2015

Vs. January’s numbers:

EF Zendesk Overall Jan 2015

With 10% not getting an initial response for 8-24 hours and another 7% getting their response in 24+ hours, that’s just unacceptable. This is especially true considering how little business we ended up doing in February and 52 less tickets to handle.

We felt the effects here with some depositors (rightfully) grumbling that it took too long to get them the information and we’ve added an extra week (3-4 weeks) for our vetting process)

Ideally, I’d like to see 90% or more of initial tickets handled in 8 hours or less with less than 2% taking more than 24 hours.

We’re working on this – our newest apprentice will be managing the customer service process and implementing changes to improve these metrics.

Customer Feedback

A quick (unofficial) glance shows a total of 217 good/satisfied tickets with a total of 6 bad/unsatisfied tickets.

Here’s a comment from a happy buyer:

EF Zendesk Good 1

And one from a happy seller:

EF Zendesk Good 2

Here’s feedback from an unhappy potential customer:

EF Zendesk Bad 1

This guy was asking a question about whether his (primarily local) business could be sold on our platform. Instead of answering the question, our agent said it would be “best to speak to Mike”, dropped a link to setup a call, and marked the ticket closed. As far as I know there wasn’t any follow-up from Mike and we didn’t even attempt to answer the question.

I ended up hopping in to answer it more fully, but not until after we’d received the negative feedback. (It would be a tricky sale for us. Possible, but not ideal) This was a case of passing the buck that I wasn’t happy to see, honestly.

Here’s another from someone who felt we didn’t properly address their question:

EF Zendesk Bad 2

This was a fairly simple question that we answered poorly. The answer from our team was basically, “It’s up to you”, but that’s not much of a response. I ended up following up to let him know that WP sites are better to sell, but that if he’s considering listing in the next 3-6 months he’s probably better off leaving it as-is to avoid changes heading into the sale.

The silver lining is that this potential seller did ultimately end up listing (and selling) his site with us in March, so I think it all worked out!

What Happened In February 2015?

There’s no way around it – we had a really shitty month and were pretty disappointed about it.

With less than $10,000 in total revenue, this was our worst month in business since we’ve started – even considering our AdSense Flippers days and our outsourcing company.

Why did this happen?

1. We spent too much time on “hopeful” deals

Quite a bit of effort/energy was tied up in a $100K+ deal that fell through. For every hour we spend on the phone with someone that may be looking to buy in the next few years, there’s someone we should be talking to that’s ready to buy right now. We have to get better at acting on our more immediate business interests and trusting that our plan from our strategy meetings will help us achieve our long-term goals and objectives.

2. Brokering websites is a streaky business

Some months you’re up, some months you’re down. While we had a good last week in January and a good first week in March, those numbers aren’t reflected in our February report. It was definitely a bad four-week period

To be honest, it’s probably more actionable for us to look at where we’re at quarterly rather than monthly.

3. Lack of focus on sales

Our Marketplace Manager (Mike) has taken over much of the sales role in our company, but I think that led Joe and I into a false sense of security. It’s a good reminder that you can’t completely outsource or delegate sales. As a founder, you’re always responsible on some level for the sales in your company and we should have stepped back in here.

4. Reversing deals done via credit card fraud

Not even accounted for in this report is the $25K+ we lost to a Russian syndicate that scammed us with stolen credit cards. We haven’t mentioned this much publicly as we’ve been gathering information and exploring our options. Now that this is mostly over, I’ll be publishing a detailed blog post in the next few weeks that will dig into all the details.

So… definitely not our best month! We’ve had plenty of time to dig through some of this, unpack it, and make changes for March. Hopefully, I’ll be putting out that post in the next 2-3 weeks with many more positive numbers to report.

That’s it for this month’s report – thank you for checking it out! Please feel free to share if you think others might find it useful too:

“New – Monthly Business Report for February 2015 from the @empireflippers!”Tweet This!

So how did your month turn out? Any thoughts or comments you’d like to share? We’d love to hear from you!


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Discussion
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  1. Will says:

    Sorry to hear about your month guys.

    Interestingly, I actually deposited money for the first time on your site in February or early March (can’t remember) as I’d been following the site for several months and was waiting until I was in a position to purchase a site.

    Over the months leading up to me making a deposit, I was very impressed with how you guys run the business, the way of angling your company against other competitors and the more open Flippa style market place and I was more inclined to work with you guys in both buying and selling websites because of the due diligence and high quality of sites that I’d expected to see.

    However, after I made the deposit I got access to the website I was interested in purchasing to see nothing more than a generic Woo Commerce WP theme and an API plugin running products through the site. There was absolutely no original content or anything else but this API plugin at work.

    You can understand how surprised I was, I thought the whole point of EF was to steer clear of these types of low quality websites, whether they are generating revenue or not it doesn’t take a brain surgeon to realise that this site in particular was “dangerous” and if I ran EF I wouldn’t want my brand being tarnished with anything like that.

    Anyways, it was fairly obvious I was not going to buy the site so I contacted the sales rep and asked if I could look at other sites, they replied quickly and happily provided me information on 4-5 other similar priced sites, excellent.

    I looked through the site and the quality was far better, still your standard types of affiliate sites but you could see some real work was put in to building them and creating the content and driving traffic.

    I asked a couple of questions regarding one or two of the sites and did find that the sales rep struggled to answer these, things like:

    – Can I know the amount of orders via Amazon: this is different to revenue, and I wanted to know orders so I could calculate the AOV and understand whether or not the seller was generating sales daily or just once or twice per week.

    Anyways, this is turning more in to a review of my experience which I guess is still fairly relevant but partially off topic (apologies).

    Now, for those of you who won’t get to the end of this comment having read it all, let me highlight some things:

    1. I was unhappy with the initial site I was interested in as the quality of website was absolutely garbage.

    2. I was very happy with the speed of reply from the sales rep, just the depth of their replies in response to some of my questions made it obvious they didn’t understand what I was asking.

    3. I was very happy with the quality of the other sites.

    To conclude, I’ve not yet purchased a site from EF as the biggest concern I have is purchasing a site which is heavily supported by PBN links, but I definitely will if the right site appears in the future.

    Anyways, thanks guys and hope you had a better March

    • Justin Cooke says:

      Hey Will,

      Thanks man. Yeah, Feb was a really rough month, but we’re looking pretty good for March, actually.

      A couple of things I wanted to point out:

      1) While all submitted sites go through a vetting process, the buyers are ultimately responsible for due diligence on their own. We’re representing the seller in these transactions and have a conflict of interest when it comes to providing buyers due diligence.

      That being said, we do our best to protect both buyers and sellers as it’s in our long-term interests.

      2) We look very closely at earnings, traffic, etc. to verify that the information is accurate, from legitimate sources, not doctored, etc. That being said…we’re much more open when it comes to things like aesthetics, themes used, plugins, etc. Anything that may come down to personal preference is not (usually) a reason we would deny a site from being listed.

      Think about it – some buyers see a site with a crappy WooCommerce theme and see an opportunity. They see limited content and also a way to expand the site.

      Additionally – you’d be surprised at some of the sites that do well as opposed to those that don’t. (Particularly true in eCommerce) In some niches and cases, a 2002-looking website performs much, much better than a nice, modern, clean design.

      3) I’m disappointed to hear some of your questions weren’t fully fleshed out and answered by the team. My guess is there was a miscommunication or misunderstanding on our end. I can assure you this is a problem we’re working to address. We recently hired an Account Manager (Andrew) that’s currently in training and getting up to speed. He’ll be working on buyer/seller communication and cleaning up some of our messaging and customer service mishaps in the very near future. We should have him up to speed in the next month or two.

      We look forward to working with you in the near future, Will!

  2. Matt says:

    You guys are all based in SEA and running this? Sounds interesting. Got a blog post on it/why?

    • Justin Cooke says:

      Hey, Matt – that’s right!

      We talk about it a little bit sprinkled throughout our blog posts + podcasts. Here’s the podcast where we dig into how we got started:

      http://empireflippers.com/afp-2-our-story/

      Basically, we were middle management at a mid-sized SEO company in California and had an opportunity to setup a company in the Philippines and move/live abroad. Both Joe and I had traveled overseas a bit and when we saw an opportunity to move overseas and build a business, we took it and ran with it!

      Quite a bit’s changed since then, but we’ve effectively built ourselves a location independent business. We hire apprentices to come out and work with us from the US, have a small team in Davao City, Philippines, etc…but we effectively just work/live wherever we’re at.

      Right now we’re in Saigon, but we’re heading to the Philippines on April 30th for 45 days or so to bring the new apprentice down to meet our Philippines team. After that…not sure!

      We’re doing business under our CA corporation, though. We had a Philippines corporation in the past, but have since gotten rid of that.

  3. I guess the site I bought fell under February numbers so glad to pitch in a small amount.

    I feel for you guys on the CC fraud, I’m guessing it was skimming like happened to me?

    I still haven’t been paid back since September 2011.

    Bank tellers told me I need to get a lawyer and sue the bank but the amount won’t cover the lawyer fees.

    • Justin Cooke says:

      Hey man – we’ll take what we can get! :-) Thanks for pitching in, hehe.

      Skimming? Not sure what you mean there…like rent skimming?

      Was a couple of Russians using stolen credit cards and buying websites from us. Quite a bit to it, actually…working on a blog post for that now. A surprising twist at the end, for sure!

      Yeah – sucks when you’re scammed for an amount that’s meaningful, but just NOT large enough to be worth the costs of litigation.

  4. Kae Kohl says:

    Very sorry to hear about the credit card issue! You guys definitely do not deserve that nonsense.

    Meantime, you have a lot to be proud of, including the helpful content you post here on in your podcasts. Much appreciated!

    Kae

    • Justin Cooke says:

      Thanks for the support, Kae!

      That was definitely a bit rough, but a good learning experience. We’ve put policies in place so that can’t happen again. Unfortunately, it puts a bit more pain/strain on buyers, but I think most are ok with the changes and understanding.

      Justin

  5. Quinton says:

    Wow. You guys are brutal on yourselves! I’m not sure I’ve ever taken such an honest look at my business… or that I even have the metrics in place to do that.

    Love it. Absolutely love it.

    I’ll be honest, I’m a little surprised that so many sellers sell when the site is so young. Most of them do a non-compete, right?

    I have a couple of sites I’ve seriously considered listing, but about everytime I do, I find a new angle in the niche and just expand the sucker. One of these days I’ll eventually get around to selling these guys, I promise.

    It’s the non-compete that keeps me hanging on for now. I suppose that means it is doing its job :p

    Sorry to hear about the Russians. Have a friend who runs an ecommerce business here in town and the fraud she experienced got to be really severe. She now runs this heavy verification system that runs folks through Lexis-Nexis and a couple of other databases before they buy.

    Not sure that it would help you, but throwing that out there…

    Enjoy the vacation. Glad to see you still doing these deep-dives on the business. I remember when I first read your ebook about site flipping back in the MFA hey day. You were inspiring then, and inspiring now. Keep it up!!!

    • Justin Cooke says:

      Hey Quinton!

      One of the reasons we do these reports is so that we’re FORCED to track (and report) some of the important metrics in our business. It’s a sort-of forced transparency and reflection approach, heh. It’s interesting for us to go back through previous reports and see where we were at, where we’ve come, etc.

      Non-competes are pretty common. In some instances they’re pretty wide-ranging, but in others it’s very specific to the niche – even down to specific keywords or products. Keep in mind that non-competes are only as valuable as they are enforceable, though. In many cases, it makes sense to look at the underlying reason the seller is selling, where their current focus is, etc.

      We looked into different checks we can use for buyers – most were pretty intrusive, put up too many barriers, etc. (I even found one that offers a sort-of insurance against chargebacks…interesting stuff!) Ultimately, we determined that only taking credit cards for deposits and wires for purchases seemed the safest route.

      It’s been a long journey – thanks for sticking with us!

  6. Jon Haver says:

    Happy to see you guys are not flinching from your strategy with a down month.

    I am sure you guys will bounce back and I look forward to hearing about the PayPal fraud and how to hopefully avoid it. $25k hurts!

    Jon

    • Justin Cooke says:

      Thanks, Jon!

      We made a few changes in March that (I think) will prove valuable, but we’re staying the course here. I know we’re on to something – one bad month won’t change that. :-)

  7. […] of my entrepreneurial friends take a very transparent approach and publish monthly business reports that […]

  8. […] a dismal February, Joe and I put our heads together on what we thought might be the best way to promote sales and […]

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