Our Q1 2018 Quarterly Report: January, February, and March 2018
It’s time for us to publish our first quarterly report of the year and share exactly what went down in Q1, 2018.
This report is part of a long tradition in which we talk about our growth and our failures, sharing with you exactly where we are in on our company’s development. We’re happy to note that Q1 2018 was our best quarter ever and much of what we worked on in Q1 (and now through Q2) has been scaling our team and processes up to match that growth.
One of the big reasons we have written this report is for you. As always, we hope our reports will help keep you up to date on what’s going on “behind the scenes” with our company and will also serve as an inspiration for your business.
There is no way we would be where we are today without you. Thank you for all of your support throughout the years.
Let’s get right into the data and delve into what went down during Q1 2018!
Executive Summary: Q1 2018 Report
This quarter was another giant leap forward for our company. It was our biggest quarter by a long shot, as you can see below:
As we continue to do larger and larger deals, we will likely keep seeing these big leaps—both upward and downward—on graphs of our quarterly results.
The reasoning here is that bigger and more complex deals take a longer time to close compared to the smaller deals in our pipeline. Large deals can inflate (or deflate) individual months or quarters, depending on when they close.
The swings aren’t as noticeable in the longer-term, but are felt month-to-month and even quarter-to-quarter.
As you can see in the graph below, the marketplace deals across our company history illustrate how much we’ve grown:
Let’s take a glance at our business data for the quarter.
Q1 2018 Business Data
Total Team: 36
Customer Service: 7
Email Subscribers: 54,106
Podcast Downloads: 28,836
Site Visits: 244,464
Brokered Site Sales: $8,032,173.14
Listing Fees: $9,989.00
Additional/Other Revenue: $24,439.80
Average Deal Size: $119,883.18
Total Revenue: $8,066,601.94
Brokered Site Earnings: $1,041,058.88
Listing Fees: $9,989.00
Additional Revenue: $89.91
Total Gross Earnings: $1,051,137.79
Alright, that’s a lot of data to take in all at once. Let’s break it down and see what it all says about what we’ve done and where we’re heading as a company.
Brokered Site Revenue
We brokered 67 deals in Q1 2018 for a total of $8,032,173.14 in revenue. This is a significant pickup in deal flow, as we closed out our last quarter (Q4 2017) with just 47 deals sold on our marketplace, yielding $5,328,905.75 in revenue. That’s an extra 20 deals closed and nearly $3 million in additional revenue.
Every year we sit down with our management team to determine our new annual goals and they can sound extremely difficult. We got some grumbling from the team when we sat down in January to lay out the 2018 goals, but we all ended up committing to making them happen.
And, great news! We were able to blow past the Q1 goals, exceeding them by just over 50 percent!
A big part of our success in Q1 is due to getting paid back for work done in 2017. Our commitment to developing our team, eliminating bottlenecks, and refining our processes last year has started to pay off in a big way.
This allowed us to reap the rewards of the increased deaflow. It was being able to do more deals that got us over the hump, as our average deal size did not increase too much from the previous quarter.
In Q4 2017, our average deal was $115,845.78, while in Q1 2018, it was $119,883.18. The extra $4k or so definitely helped, but it wasn’t the definitive factor moving the needle for us this quarter.
You can see how our average deal size has been increasing over time:
One interesting observation on deal size is that it should either consistently stay the same or start moving up. Since we sold our first seven-figure deal last year, more and more seven-figure deals have started to arrive in our marketplace.
Here is a list of our current seven-figure deals that are live in our marketplace:
- Listing #43981: An Amazon FBA business in the confectionary niche, listed on our marketplace for $2,194,899
- Listing #44069: A mixed monetization business created in 2012 in the apparel & accessories niche, listed on our marketplace for $1,552,755
- Listing #44564 (SOLD): An Amazon FBA business created in 2015 in the beauty & cosmectics niche, listed on our marketplace for $1,550,936. Expect a case study on this one soon!
- Listing #44131: (SOLD) An Adsense and advertising business created in 2015 in the political news niche, listed on our marketplace for $1,322,275. We will be writing a case study on this business soon as well!
- Listing #44299: A dropshipping business created in 2015 in the apparel & accessories niche, listed on our marketplace for $1,198,824.
Through 2017, we established ourselves as the leader in online business brokering for any business under $1 million. Now, we’re starting to attract much larger sellers and buyers to our process-driven brokerage. I’d like to see us do the same thing in the $1M – $5M range through 2018, 2019, and beyond. It’s starting to happen – we’ve already closed a few million dollar deals and will likely close a few more this year.
While $8,032,173.14 is a huge number for quarterly revenue, it is important to remember we only take home a small percentage of this. For years, we had a flat 15% commission fee for all of our sellers. Recently, we changed our commission structure to start attracting even bigger deals to our marketplace, something we’ll talk about below.
In terms of our actual commission, we took home $1,051,137.79 of the gross earnings in Q1.
Let’s break this down a bit.
Website Listing Fees
In Q1, our listing fees came in at a total of $9,989.00. We charge $297 for new sellers and just $97 for returning sellers. Ultimately, we refund any of the listing fees paid for businesses we decline or just aren’t a fit for our marketplace.
Here’s the breakdown:
- 32 new sellers
- 5 returning sellers
Keep in mind we have many more submissions and even listings that go live aside from these who have paid the listing fee. The listing fee primarily acts as a filter for those looking to submit that we’ve never worked with before, are new to our company/marketplace, etc. The fact that we had 32 new sellers pay the listing fee and get submitted is a good sign that we’re still bringing in new blood.
The listing fee is just a filter – one of many we use to filter out fake businesses, sellers who aren’t serious, etc. We sometimes run into people who say that their business is solid, but that they shouldn’t have to pay a listing fee. (Or don’t have the money to pay…what?) The truth is if your business really is so big and profitable, then a $297 listing fee shouldn’t be much hassle at all, right? If they’re not able to afford it, well…there are probably things about their business that would never pass our vetting process anyway.
We made $24,439.80 in additional revenue in Q1 by selling the tickets to our Empire Retreat happening in Q3. This retreat is an exclusive mastermind of six-figure and up online entrepreneurs that meet with us every year in beautiful Phuket, Thailand.
Over the years, the company’s additional revenue often came from one-off projects, old affiliate promotions, etc. Today, we no longer promote anything using an affiliate link; rather, we just promote quality products (courses, tools, etc.) to our audience and pass any savings we can on to them.
Alright, let’s break away from revenue and start dissecting our traffic and audience.
Traffic and Audience
Below is a breakdown of our web traffic, podcast downloads, and email list.
Blog Traffic and Analytics
Our traffic is up again from the previous quarter, though not by a huge margin this time. In Q4 2017, we had 235,560 sessions on our website, and in Q1 2018, we had 244,464 sessions.
You can see our traffic for Q1 below:
Much of our content strategy for our blog consists of using our high domain rating (DR) to rank for what are called “shoulder” niches. These niches are related to internet marketing and online business but are not directly related to buying and selling online businesses.
An example of this is our article explaining how to set up an Amazon seller central account. This article does not focus on buying and selling online businesses, but it is still tied to the overall online business world. Someone who is searching for an article like that obviously has the intent to create a business, so we can get on their radar early in their journey. Or, as often happens, they’ll end up buying an already profitable business from us rather than building one from scratch.
Our high DR allows us to write articles like these. Consequently, we can rank highly in search engine results pages (SERPs), pixel the user, and do plenty of remarketing down the road in other advertising channels.
Speaking of channels, here is a look at our different traffic channels for Q1 2018:
A heavy portion of this traffic results from organic search, which shows us that everything is going according to plan. As you can see, users logged in almost 50,000 sessions through the direct channel. Typically, “direct” means people are physically typing our domain name into their browser. The higher that number grows, the better brand penetration we have with regard to our target audiences.
Referral traffic is up by a few thousand visitors as well. In Q4 2017, we had 9,487 users coming from referral sources, and in Q1, we saw that number increase to 13,055. Again, this is a good sign that our brand is being featured on other influential sites, which are finding new audiences for us and bringing potential new clients over to Empire Flippers.
Creating new and useful content remains at the core of our marketing strategy. Content is used everywhere: from the top of the funnel to the bottom and from lead generation to conversion. We’re a big believer in the snowball effect when it comes to content, and some of our articles from years ago are still automatically generating leads for us every month.
One goal we want to accomplish in 2018 is to do a major upgrade and overhaul of our blog and podcast. A common complaint we receive is that it is difficult to find our content in our current site setup. In the redesign, we’re hoping to eliminate that problem using various category pages that will make it easy to browse all of our content.
You can check out some of our top-performing content, pages, and listings below from a traffic perspective.
Here are our Top 3 Most Viewed Pages:
Here are our Top 3 Most Viewed Listings:
- Listing #43981: This is the same listing as above, our 7-figure Amazon FBA business in the confectionary niche.
- Listing #44131: (SOLD) This is the same listing as above, our 7-figure political news AdSense & advertising business.
- Listing #44144: (SOLD) A mixed monetization that was purchased by the seller in 2016 in the beauty & cosmectics niche, listed on our marketplace for $24,706.
Here are our Top 3 Most Viewed Pieces of Content:
- The Most Popular Online Business Models Explained
- A Little Known Method to Removing Negative Reviews from Amazon FBA Product Listings (Note: This piece of content is a bit outdated due to Amazon changes)
- How to Start an Amazon FBA Business
Here are our Top 3 Most Viewed Recent Pieces of Content:
- How to Create Great Content that Ranks for Tons of Revenue Generating Keywords
- What are the Rewards and Risks of PBNs?
- [CASE STUDY] How We Sold a $1.7 Million Amazon FBA Business
Podcasts & Shows
Podcasts are still one of our favorite channels. We love producing them, and many of our audience members first found us through the Empire Podcast. (Or one of the many guest interviews we’ve done on other podcasts)
Lately, we haven’t been producing nearly as many podcasts as we’d like, but we have a few projects in the works that are going to overcome this shortage big time in 2018.
Here are the download statistics for our three shows:
The Empire Podcast
This quarter, we did launch a few new episodes—four in total. These new episodes led to a huge uptick in downloads compared to Q4 2017, when we had under 10,000 downloads. In Q1 2018, we more than doubled the number of downloads, from 9,840 to 22,562.
In Q2 2018, our aim is to publish three more high-value podcasts for our audience and keep this download trend going in a positive direction.
The Web Equity Show
The Web Equity Show is a co-branded podcast that we do with Ace Chapman. We produce these podcasts in seasons, with Justin Cooke and Ace Chapman diving into a certain topic or theme each season. The subject matter is always related to buying and selling online businesses.
In Q4 2017, we had 2,312 downloads, and in Q1, we had 3,896 downloads. We haven’t published a new episode to this podcast since August 2017, but we still garnered a nice uptick in downloads. One reason for this might be that publishing new Empire Podcast episodes brings people’s attention back to the other shows we’ve produced.
Here is a snapshot of the downloads:
Another season has been planned for the Web Equity Show. It will be coming out soon, though the release date has not been set yet.
The Digital Journey Podcast
This show was a spinoff podcast we did with Rob Fortney and Nick Nimmin. The idea here was to interview entrepreneurs in the trenches of the digital nomad lifestyle in order to inspire others looking to transition into that lifestyle.
Unfortunately, due to the tragic passing of Rob last year, we’ve set this project aside.
Nevertheless, the podcast episodes we completed are still available, and in Q1, there were 2,378 downloads of this podcast.
You can see a snapshot of the downloads below:
While this project is no longer being pursued, Nick Nimmin is still working with us on our YouTube strategy, which we will be rolling out in late Q2 of this year.
In addition to these podcasts, we’re exploring additional podcast productions that we think our audience will love. We expect these podcasts to be launched and live sometime in Q3 or Q4 2018.
Email and Contacts
Our email list has grown from 46,764 to 54,106.
This isn’t a huge jump, despite our conversion rate optimization (CRO) project (more on that later) vastly increasing the number of leads we’re getting. While it’s still somewhat early to say, many opportunities are still out there to improve our various email sequences, which will keep more people active on our list.
The growth trend for our email list has been pretty stable quarter to quarter. Our progress is slow and steady in the race to build the largest audience in the industry. We’re cooking up a few things in 2018 that should help improve the growth trend of our email list significantly.
Here is the growth graph for our email list:
Our email lists are segmented into two main categories: buyer interests and seller interests.
We tailor the content we send out based on these interests. We’re constantly trying to improve delivering high quality content that matters to you. If you’re not currently on our email list, select one of the options below to start getting content from Empire Flippers that interests you the most:
Which One Are You Interested in?
Click Here to Share Your Buying Interests
Click Here to Share Your Selling Interests
In the last quarterly report, I talked about how we revamped our entire customer experience by breaking down our operations department into three sub-departments:
- Customer Service
In Q1 2018, we sought to improve this process even more by helping remove one of our biggest bottlenecks: Vetting.
In the past, vetting was run by just one person. By having only one person managing the vetting, we were limiting how many businesses could go live on our marketplace every week. The workload became too much for one person to handle, and the waiting list of business owners looking to sell their businesses with us was becoming too large.
In adding 4 new people to the Vettings team in January, we’re seeing that we can at least keep up with how many new submissions we’re getting on a weekly basis. As our average deal size has grown, the businesses we work with have also grown in their complexity. Instead of just dealing with relatively simple affiliate sites, we’re vetting full-fledged ecommerce stores with sourced products and Software as a Service (SaaS) products that require deeper analysis.
Our new vetting team members have shown they’re up for the challenge. In the first few weeks of Q1, we launched 10+ new listings almost every week, considerably shortening the waiting list of businesses that wanted to go live on our marketplace.
In the future, we’ll likely be hiring more vetting specialists as our company grows and our brand attracts even more digital entrepreneurs looking to make profitable exits. In addition to vetting specialists, we will also be hiring more migration specialists to help spread the workload of transferring assets over to the new owners.
Let’s examine some of the reports we have on customer experience in depth.
Zendesk is a critical piece of software for our business. It allows us to keep everything organized for businesses involved in the vetting process, and it allows us to stay active in the marketplace and in the transfer process after a sale. Zendesk is also a medium that allows our sales team to communicate effectively with depositors who are doing their due diligence on various businesses. Although Zendesk was not designed to be used in this fashion, it is still the best solution for our current needs.
Here are the numbers for Q1 2018:
Our customer satisfaction rating went up by 2% compared with that of Q4, even though our first-reply time is slightly worse – from 3.07 hours to 3.37 hours. This increase in reply time is partially due to a switch of focus from Customer Service to Vetting in Q1.
We asked our Director of Operations (Andy Allaway) to focus on getting the Vetting team up to speed in Q1, even at the cost of Customer Service. It was a trade-off we had to make, knowing full well that once we got the new hires in Vetting up to speed, we could double-back to improving our Customer Service team and processes.
Now that we’ve got the team in Vettings trained, the first-response time is likely to go down in Q2 2018 as more resources can be allocated to the customer experience overall – something we definitely needed considering the huge increase in tickets we saw in Q1 versus the previous quarter.
In Q4 2017, we had created just 5,781 new tickets in Zendesk, but in Q1 2018, 8,005 new tickets were created. The huge jump in the number of tickets didn’t negatively affect our statistics overall, with first-reply time being the only major statistic falling marginally.
All of this shows that our focus on leveling up our operations department is paying off in dividends. The longer we continue to expand this arm of our business, the more we will be able to handle, which, of course, will lead to greater deal flow in our marketplace and more happy customers.
In Q1 2018, there were 8,005 new tickets, 7,641 resolved tickets, 439 good ratings, and 59 bad ratings.
We had a significant bump in the number of good ratings this quarter—from 277 to 439—despite the increase in first-reply time. While our bad ratings also increased from 45 to 59, they didn’t increase proportionally, which is a great sign.
Let’s look at some of our customer feedback, both positive and negative, that customers provided about working with us:
As you can see from the customer feedback, most people are loving the new systems we’ve implemented. One common complaint we still see (and likely will always see) is that some people don’t like our deposit process. However, once we explain how the process works and why it is so beneficial compared with the processes of other brokerages, most of these individuals change their minds.
There were a few other complaints about our response time, but overall, the majority of feedback provided on response time and the client experience in general has been positive.
What Happened in Q1 2018?
A lot went down in Q1 2018.
It’s been a whirlwind quarter and ended up being our biggest quarter of all time financially. Throughout our growth, a major focus for Empire Flippers continued to be refining our processes across all departments in Q4 2017 and Q1 2018.
As our company gets larger, new challenges have appeared. We’ve started tackling these issues by creating new systems, implementing new processes, and hiring for new positions the business needs.
Let’s break down some of the events that happened during Q1.
Training Vetting Specialists and Business Analysts
In the largest hiring round Empire Flippers has ever done, we hired four vetting specialists and four business analysts.
Our biggest obstacle was twofold: an inability to stay current with how many businesses were submitting with us and then following up with all the leads coming through our system. Both of these are in the category of “good business problems”, but we knew we needed to fix the problems as quickly as possible if we were going to hit our goals.
After hiring our vetting specialists and business analysts in Q4, we spent resources on these new hires in Q1: training them, getting them up to speed with our industry, and developing them to become invaluable players on the team.
We started to see some of the success at the end of Q1 as the businesses in the Vetting process were being handled more efficiently. You may have noticed as we’ve been able to publish as many as 15 new listings live each Monday over the last few months, up from our previous 7-9 new listings.
When you have greater deal flow, you have more people making deposits. In our case, this increased deal flow meant that our new business analysts were incredibly busy handling “top-of-funnel” calls. Toward the end of the quarter, our analysts were starting to host their own buyer-seller conference calls, closing deals on their own.
Growing this section of our business has significantly contributed to us reaching our goals. We see this hiring spree continuing through the rest of the year to match the growth of the business. We have some longer-term development projects that may help as well, but we’ll have more to report on there later.
If you’re interested in working for Empire Flippers, check out our careers page here.
CRO Project #1
CRO is a powerful tool in the online business world. If you are able to squeeze out more customer conversions from the same amount of traffic, that can turn into a huge win.
We’ve seen clients do this with the businesses they purchased from us. They will take a highly profitable business, perform CRO, and see a 30–40% uptick in revenue. The beauty of CRO testing is that it often doesn’t take long. You can perform these tests quickly and start reaping the benefits right away—unlike SEO, which can take six to nine months before you see any benefits.
For our first CRO project, we hired Kurt Philips from Convertica to look over our valuation tool and our sell your site page. The project was a great success. We saw lead generation across the two pages increase overall by 51.6% over a 47-day testing period.
Because of the success of this project, we’ve moved into CRO Project #2. This project involves split-testing our homepage, marketplace, and listing pages, and it is more complex because these pages involve more than just lead generation goals. Early signs of the homepage test show that CRO Project #2 is going to be a success as well and we’ll have more to report in the next report.
After CRO Project #2 is completed, we will be pursuing a third project as well to overhaul the rest of the website.
If you want to read a case study on CRO Project #1, read more about our conversion rate optimization case study that Kurt wrote for us.
The Nomad Summit is a conference held in Chiang Mai, Thailand at the start of every year. It is a great event full of people who are looking to transition into the digital nomad lifestyle. At the summit, we got to give a brief speech about how people can “fast track” their transition into such a lifestyle by buying an already-profitable business.
They’re having their first event stateside in early September.
In 2017, the Dynamite Circle announced at Dynamite Circle Bangkok (DCBKK) that they were going to roll out smaller events under the heading DCx. These events would take place in different “hub” cities in which digital nomads tend to congregate.
It was a privilege to be a part of the DCx Saigon event since a lot of the EF team tends to hang out in the Vietnamese metropolis. The event had a lineup of quality speakers and was likely the best DCx event to be held thus far.
While we didn’t end up sponsoring the event, we did host a big night out with a lot of DCers, many of whom were long-time friends of ours.
Peepcon 3.0 is one of the largest SEO conferences in Southeast Asia. We decided to attend as there were people there whom we wanted to meet. While we did sponsor the event, we realized afterward that it wasn’t the right crowd for us.
Most people in attendance were employees at various marketing agencies or in-house SEOs for their companies rather than entrepreneurs who owned companies they could sell, or with the cashflow to buy a business.
However, we did get to meet a former Moz employee and got to connect with him. This afforded us the opportunity to publish a guest post on the Moz blog, which made the whole event worth the effort.
One of the biggest values from going to conferences is getting to meet influential individuals through networking. You never know where a lead may come from or where an opportunity might open.
That wraps up Q1 2018!
Now that this report has been published, we’re well into Q2. Watch for our next report, as there are A LOT of exciting things that are happening in Q2 that you will want to know about.
Ultimately, I hope this report serves as a reminder of just how much you can grow when you put consistent effort into your work, systems, and team building.
Whether you’re building an affiliate site portfolio, an ecommerce empire, or an industry-changing SaaS product, you can do amazing things. You just need to build out with the right people, systems, and marketing strategies.
Here’s to another quarter in the books!
Let us know in the comments how your quarter went and how you’re doing this quarter – we’d love to hear from you!