Justin Cooke

April 14, 2014

Welcome to our Monthly Business Report for March, 2014!

We finished March strong with nearly $100K in online businesses sold and just over $50K in gross business revenue.

While that’s not a significant change from previous months, it is interesting to note that the source of that revenue has shifted considerably from where we were last year. With less focus on building out our own websites and more emphasis on helping others in the buying/selling space, we feel our scalability could improve dramatically and we’ve continued to double down based on that feeling.

We love to hear how much these reports inspire and encourage you and the feedback we get from publishing these each month is tremendous. That’s a part of why we publish these reports, but there’s also some value to us in the introspection that comes in having to take a detailed look at our business.

Having to take an open and honest look at our strengths, weaknesses, and growth opportunities (along with the feedback you deliver) provides us insights into our business we wouldn’t have otherwise. It gives us an opportunity to look at our business from the outside in, and (hopefully) leads us to make better decisions about the direction our company should take. To be clear:

Most of the revenue comes from you.

Whether you’re an outsourcing client of ours, purchased one of our products/services, or you happened to buy one of the vetted, profitable sites we have available on the marketplace, we wanted to thank you for your continued support as we continue to expand our online empire.

What We’re Working On

We have three main areas of focus in March and I’ll go over each in some detail:

1. Rebrand/Redesign – A New Look For A New Focus

If we’re going to be the #1 source for established, profitable websites and online businesses in our space, we need to look the part. We went through a comprehensive review of designers and development shops we might like to work with and started digging into the details. Our plan was to come up with a longer list and look for reasons to disqualify each of them based on:

  1. Poor Communication
  2. Not Following Directions
  3. Pricing

We were ultimately able to narrow it down to a short list and have chosen to work with Jon @ JonMyers.co on the design side and Eliza @ IlluMedia.net for development of the marketplace. Both have been wonderfully responsive to our inquiries and we really like the work they do.

2. Did We Just Lose Out On $160K (And Is That A Good Thing?)

We’ve run into a major snag that will likely keep us from selling our outsourcing company.

This isn’t something I’d normally talk about as it’s still pretty new/raw and we don’t have all the details, but I’m hoping that sharing this with you will help you learn from our situation.

While we’ve had some great inquiries and responses from parties looking to purchase, it was always our goal to target strategic acquisition opportunities through back channels. A part of that involved reaching out to our current clients and, in particular, Client #3. He would have been a great option for us as he knows the business well and actually made the introduction to our largest client and had previously worked for them. (Client #1)

We offered him a discount upfront hoping to entice him to dig further and eventually pull the trigger, but his response surprised us. He’d mentioned he was already in the process of setting up an outsourcing company in the Philippines and, while he didn’t intend to compete directly with us to steal our business from Client #1, the fact that we’re selling marks us as fair game. Since he wouldn’t be buying the contract for Client #3 (himself,) and he felt he could steal, compete, and take our largest client easily, he was only willing to pay for Client #2 which would mean a fraction of our current asking price.

While we originally thought this might be just a negotiating tactic to get a better price, it soon became apparent that he had no intention of actually purchasing and instead had focused his energy on taking Client #1 for himself.

Ouch!

The problem is that Client #1 wasn’t particularly happy with the work he’d done when he was there. In fact, they were beginning to question the value of the arrangement he’d setup with us here in the Philippines.

Double-Ouch!

Our efforts are much better spent building out the brokerage side of our business.

The outcome from all of this is that Client #3 (small) has given notice that he’s canceling with us and Client #1 (large) is now questioning the value in working with us. That puts us in a situation where we simply can’t in good faith offer the business for sale.

While there’s still value in the corporate setup, the office/equipment, Client #2, etc. and some of the prospective buyers are more interested in that than the clients, the price would have to drop significantly and we’re not sure it’s worth it (for us or prospective buyers) to sell at this point.

While we’d always assumed the sale of our outsourcing company would come along with some sort of earn-out based on the clients sticking around, we missed how vulnerable we were to this particular client turning the tables and going after us.

Joe and I both think we could put effort into our outsourcing company, build a stable foundation back up, and then sell it off…but at this point we feel our efforts are much better spent building out the brokerage side of our business. We’ll be going with Plan B – leaving current management/staff in place and letting things run on their own until we have a better understanding as to how all of this will play out.

3. Finding Qualified Sellers And Websites To List

There are some interesting problems that come about when building a marketplace. It’s almost like you’re building two separate companies where both are reliant on each others success for the business to work and to create the network effect required.

If we list great sites for sale, the buyers will come

It’s fairly clear that we have many more buyers than we do sellers. With few exceptions, most of the websites we list for sale on our marketplace tend to sell pretty quickly (those that don’t seem to require technical or specific knowledge, limiting the buyer pool.)

Because of this, we realized we need to double down on our approach to sellers specifically. If we list great sites for sale, the buyers will come.

To that end, we’ve been focusing on:

  • Thought Leaders – People who talk about niche sites, online businesses, entrepreneurship, etc. In addition to forming strategic relationships, we’re also inviting them to join our Partner Program. (Which, so far, hasn’t done much for us)
  • Paid Traffic/Advertising – We’ve done Remarketing/Retargeting – but we’ll be specifically looking to focus on website sellers in coming months.
  • Forums – Paid/sponsored posts, special offers, etc.
  • Our Readers/Listeners – We’ve been asking for sellers on the podcast and laying out the case and value in selling your business to focus on new projects.

Alright, let’s start digging into March’s numbers:

Traffic And Audience

We saw an overall bump in traffic, pulling in 23,094 visits in March – a full 2K+ more than the previous month:

EF Google Analytics March 2014

Here’s a look at our top content pages for the month:

Selling Our Outsourcing Company

We’re Hiring! – Marketplace Manager (Apprentice) Wanted

AdSense Account Disabled

EF Top Content March 2014

It’s interesting to note that this is the first month that our marketplace has actually received more visits than our homepage. Overall, our website sales draw much more attention than our blog posts or podcasts when it comes to site traffic.

Here’s a look at our top referral sources and their email subscriber conversions for March:

Top Referral Sources

The only thing that stands out to me here is that we don’t get a ton of traffic from referrals, typically. We should probably do more guest posting with others that are in or around our industry to boost our exposure and cast a wider net.

Podcast & Email Audience

There was a slight bump in podcast downloads, bringing us to 13,554.

EF Podcast Downloads March 2014

We skipped a podcast in March. We actually edited the show and had it ready to go, but after listening to it again I just couldn’t bear to publish the episode. I think we need to improve the quality of the show if we want to grow and that may mean not pushing it live if it’s just not good enough.

Our Contact Records are up to 14,703 as of March 31st.

EF List Size March 2014

Our apprentice (Vincent) has been testing through CRO on our website using tools like Virtual Website Optimizer and others, looking to improve our conversion rates with our current traffic.

Combine that with our remarketing efforts and a new service called AfterOffers we’ve been testing out and we like our growth in this area.

Our Sites

We saw a little bump in our AdSense earnings in March. This was primarily due to:

  • Dropping dead/expiring domains and adding that content to one main niche site
  • Some of our Expanded Niche Sites finally coming around months down the road

EF AdSense March 2014

I’ve been looking around for a website to purchase and we came really close to buying up this site on Flippa. I really liked the design and the idea/offer. We questioned the revenue, but figured it was worth at least $8K – $10K to us even if the site didn’t have ANY revenue. Our idea was to use the brand as an entry-level subscription for those looking at ideas, just getting started with entrepreneurship, etc.

Unfortunately, the seller went dark and didn’t answer our questions for nearly a week. In fact, the auction ended with the buyer not around, even though there were multiple bids in the queue that were not accepted. The seller did end up getting back to us eventually, but we were so put off that we thought it might not be worth it to work with someone so flaky. Another problem, it was nearly impossible to independently verify who the owner/seller was – a big red flag.

I’m still on the hunt for a site we can purchase in the next month or two. I’d really like to find a great strategic purchase that would match well with what we’re already doing, but these tend to be much more difficult deals to find.

Products & Services

We’ll be revamping our Products & Services in April/May to better match our direction of supporting buyers/sellers.

We brought in a total of $3,919.00 in March, most of which came through Empire Starter Packs and website sellers looking to sell their sites with us. Due to the fact that we’re no longer creating smaller niche AdSense sites, we’ve had to shut down the Pro/Premium version of the starter packs which will likely affect sales in the coming months.

We’ll be revamping our Products & Services in April/May to better match our direction of supporting buyers/sellers.

Brokered Sites

We had our best month ever in March, selling a total of $97,765.46 worth of sites and bringing in $15,706.51 worth of revenue to our business. Overall, that puts us at $259,803.21 for Q1 and well ahead of our goal of $240K. We still have a long way to go if we want to hit $2MM in total sales this year, but we are off to a great start. We’re going to have to be close to $400K in Q2 if we want to stay on track to hit our annual goals.

We also got PayPal to raise our $10K limit to $60K for purchases after showing them we were having to receive multiple payments for sites over $10K. We had to get it approved through a manager, but we were also able to reduce our fees to 2.2% at the same time which definitely makes it worth it.

I still don’t think we’d be happy to accept $60K payments on site sales and would prefer wire transactions at that level, but it’s helpful for sites in the $10K – $20K range.

Affiliate/Software Revenue

IntelliTheme once again brought in $194.00 and WP Rank Tracker brought in $47.00 for the month. Our affiliate revenue came out to $570.25, with most of that coming through LongTailPro sales, primarily because of our LTP review.

We completed the wireframe for our website valuation tool and have passed it on to our development team to get it completed. We’re probably looking at a May/June release if everything works out. I’m excited about this project – there aren’t many great valuation tools out there and I think ours will provide some real value. (And, hopefully, drive website sellers to our brand.)

Outsourcing Clients

Our outsourcing revenue was a bit lower, totaling $21,518.45 for the month. We did end up having our smallest client cancel, but this is fairly low-margin work and shouldn’t make too much of a difference to our revenue or net profit per month.

I’ve covered most of the issues surrounding our outsourcing company and the sale above – I’ll just add that we’ve made our decision in terms of business focus and are confident that doubling down on our marketplace and buying/selling sites is the smartest play at this point.

Summary

We’ve had some mixed results in March. We’re really excited about how everything is working out regarding our brokering business, but the issues with our outsourcing company have certainly been an emotional drain (And soon financially?). We’ll be keeping our heads down through Q2 to knock out the work required to continue building our online empire.

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

EF Revenue Chart All

And here are the same revenue streams without the outsourcing revenue:

EF Revenue Chart No Outsourcing

March 2014 Business Data:

  • Employees: 37
  • Interns: 1
  • Contractors: 2
  • Contact Records: 14,703 (As of 3/31)
  • Email Subscribers: 8,304 (As of 3/31)
  • Site Visits: 23,094

Earnings:

  • AdSense: $1,316.31
  • Site Sales: $8,244.60
  • Products/Services: $3,919
  • Brokered Sites: $15,706.51 ($97,765.46 in vetted sites sold)
  • IntelliTheme: $194.00
  • WPRankTracker: $47.00
  • Affiliate: $570.25
  • Building A Niche Site Empire Guide (via Amazon sales): $178.34
  • Outsourcing: $21,518.45

TOTAL: $51,694.46

“Check out this detailed monthly report for Mar 2014 from the guys @empireflippers!” – Tweet This!

So…what do you think? Did any of this give you ideas to help you grow your business? How does this compare to your business and what you’re working on? We’d love to hear your thoughts – please leave a comment below!


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Discussion
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  1. Aaron Goh says:

    It is always inspiring reading income reports from you guys. It pushes me and motivates me to work harder. Sucks about losing sale on the outsourcing business. There are always sketchy people out there trying to get you if you leave yourself too vulnerable. I don’t know about the phillipines, but I have learned to TRUST NO ONE back then when i was working in China. Even your clients, your employee can come back and stab you in the back. Sorry to hear about this issue guys!

    • Justin Cooke says:

      Thanks for the support, Aaron, glad to hear you’re inspired!

      Yeah, we’re not too happy about how the business/sale is working out, but we’ll muddle through it, for sure. You’re right about being careful who to trust, but don’t get so cynical that you don’t trust anyone – that’s not a good position to be in either! Too many missed opportunities down that path…

  2. Tung Tran says:

    Still a very good month for you guys. I’ve not been focusing much on my blog and niche websites last month due to a new exciting project.

    Writing this month’s report now ;D

    • Justin Cooke says:

      Thanks, Tung!

      Yeah, man – I’ve got the inside scoop on what you’ve been up to, so I’m really looking forward to your monthly report for March, lol. It’s going to be an interesting read, I’m sure.

  3. Jeff says:

    Justin –
    Bummer on the outsourcing decision, man. I was hoping you guys would find a way to divest that asset sometime soon. Otherwise, great revenue for the month and keep up the solid work.

    • Justin Cooke says:

      Same here, Jeff.

      We would have been happy to pass it on to someone who could take the reigns and grow it, but that doesn’t seem to be the case at this point. We’ll ride it out and see how everything plays out, heh.

      Appreciate it, man.

      • Jeff says:

        Even though it’s not the most optimal solution as you are looking to move a different direction, you can still pat yourself on the back because you’re not losing money hanging on to it.

  4. Hi Guys

    Great to see the brokerage going so well. Just knew you could make this a great marketplace

    I still believe you can take down flippa in the price range your targeting.

    The Loss of the sale is painful surely but I’m sure your trajectionary is rock(et :-)) solid

    Steve

  5. Josh Escusa says:

    Hey Justin. Ouch on that outsourcing business situation. Glad to hear the brokering is doing well for you though. BTW, I submitted a site to sell with you guys and sent a follow up email. Let me know what I need to do from here. I’m excited to work with you guys and get this site sold. I’ve sold on flippa before for 12x monthly rev and on my own blog for 15x monthly rev, but this is my first time going through another third party such as yours. I’m excited to see how things turn out.

    • Justin Cooke says:

      Definitely ouch! It’s all good, though…we’ll work it out.

      I’ve seen your ticket – awesome, man! Michael had replied to you and I wanted to make sure you saw his questions. (I’ve just sent them to you again)

      It should be a week or two for the vetting process and to get you up/running with your site for sale.

    • Tung Tran says:

      Good luck with the sale man :) It’s definitely a good site.

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