RMRB 10: Focused on One Territory

 

Chris only sells his products in Australia, but that hasn’t stopped him from growing his business to $10k/month in profit in less than two years. His ecommerce business offers a unique kitchenware that is useful and better for the environment. Chris explains why he only sells in Australia and he sees as some opportunities for growth for his business. 

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Speaker 1:           What if you could cut through the noise in the online business world and learn from someone who has built a real business? We verified the numbers and combed through [inaudible 00:00:13]. This is not only a real business, but a real asset that people want to buy. We’re going to pull the curtain back and give you the insight this entrepreneur has discovered that you can use to level up your knowledge. Whether you’re looking to buy a business or looking for inspiration to take your current business to the next level.

                                Hey listeners, welcome back to the Real Money Real Business podcast. Today I’m going to be taking a look at an eCommerce business that is selling its own patented products that are kitchenware but are also environmentally friendly and are very popular with people who are worried about the environment. I was able to sit down with the seller today to get his take on the business and what’s going on now, where can the business go. Really excited about this one. Thank you for coming on today Chris.

Chris:                     No worries.

Speaker 1:           I really do appreciate, I know it is 7 am for you over in Australia and I know that if I were asked to get up at 7 am it would be a struggle. So it’s a pleasure to have you on here and I’m looking forward to our chat.

Chris:                     Yeah for sure.

Speaker 1:           Before we get to the questions I have for you, I’m going to go ahead and run through a quick summary of the business.

Chris:                     Yep.

Speaker 1:           The business was built in November of 2015, has a monthly revenue of $21,032, expenses of $10,191, to make for an end profit of $10,841 which is generated on a 12 month average. Included in sale this business are the website, trademark and patents, email list with about 6,000 subscribers, Facebook and Instagram accounts, inventory is not normally included in the list price. Further details can be provided to active depositors.

                                Chris can you tell us a little bit about your background in building and running online businesses?

Chris:                     Well yes, my wife obviously loves to cook. She had a couple of kitchen appliances and she had this ball. She asked me to make the strappy thing to hold this ball together. So I sort of went away to try to come up with some ideas for it. Just tinkering around in the shed and I was driving over a bridge one day in Melvin and the cabling over the top of the bridge give me the idea for the strap. I was stuck in traffic become good type of thing.

                                So I made this strap for a ball. Then a couple of her friends said can I make one for me as well and then it just evolved from there. Then I started making things into the product side of it. So I did a lot of RND introduction making my own range. Went over to China, met some factories, came across a really good agent over there, then probably for a 12 month period we come up with a lot of concepts and then released our first product. That would have been towards the end of ’15, and it took off. It really went well and then we had demand for other sizes. So then we brought out other products, and it just evolved. Jumping into a website, we went through Woocommerce site, then we did Shopify site, and back to Woocommerce site, then back to a Shopify site. And ended up investing pretty well into a decent Woocommerce site.

                                Looked at a lot of digital marketers, everyone says they can sell your product not many people can actually sell your product. I’m going to keep it fairly simple because it’s one of those products, it’s great for the environment, it’s long lasting, and it has a lot of uses. So in a way, people just want to buy it. We’ve had great reviews on it and that’s gone from there.

Speaker 1:           So seeing as this is a product that is environmentally-friendly, you love it, and it’s doing well why have you decided to sell the business today?

Chris:                     Well we’ve got another hands-on business as well. We’ve also got a café there. We’re going to build a house this year. I’ve got three kids. One races motocross, if anyone knows that it’s a lot of time, a lot of running around, and something had to give. Doing all of it and we were traveling through New Zealand and I had a good think about it. It’s a great business that we could run remotely, but we feel it tied into our other business as well. We spoke to our accountant, and I spoke to other people and this one has a lot of potential to expand at the minute we only sell in Australia. We’ve had a lot interest from the USA, the UK, and it would take us a lot to put into to expand over there. So we looked at it and gone with its potential to expand it’s probably the most viable business to sell. Because it has a lot of opportunity for someone who wants to run it like that.

Speaker 1:           Awesome and we’ll touch on the opportunities in a little bit. When you talk about numbers for an eCommerce store, obviously the numbers go up and down. We don’t need to get into exacts, but there are two months that I really want to touch on here that seem to be outside of your normal fluctuation for profit of about $3,000 to about $15,000. And that would be April of 2017, let’s start there. So April of 2017 was a big month for you and you showed a net profit of $28,000. What was going on then?

Chris:                     We launched a new product. We launched another part of our range. There came the specifics of it and it solves a lot of problems for kids, schools, and fitness industry. We looked at something that people can keep food fresh with, keep it long lasting, you know to reheat, have a lot of uses. So when we launched that we already had the existing customer base and basically we just told them and said hey this is what we’ve got coming out pre order. And away it went. We have big days. Christmas is obviously a massive, massive time for us. Boxing day sales, Mother’s day, Father’s day, I’m not sure if you have that in the US, Easter, all those big days are big selling days for us.

Speaker 1:           And then taking a look at September of 2017 is the only time that I see that you posted a negative for profit. You were down about $600 for the month of September, so what happened then?

Chris:                     We bought more stock and then also I think on that month, the month previously we moved into a 3PL. We used to do a lot of the packing ourselves, shipping. And then we moved into a 3PL center. Obviously we put those costs in when we moved across and set all that up. Shipping and packing, so from the month before it moved into that month. [inaudible 00:07:13] as it was.

Speaker 1:           Mm-hmm (affirmative) so it was just kind of a one time situation where when you were transitioning things.

Chris:                     Yeah, yeah. Any business one month you do really well, but if they don’t invoice it to the next month you’ve got those costs in the next month.

Speaker 1:           Mm-hmm (affirmative) for sure. So you’ve mentioned the amount of time that it takes to run the business and that’s a big factor in wanting to sell it. Because you have family and other work commitments which is totally understandable, but how much time exactly does this business take from you week to week?

Chris:                     Well probably I’d spend maybe an hour a day on it. Because I would run it through a logistics company out of Melvin, I don’t handle the product itself. They would handle all the shipping for me coming in here as well. So basically it leaves China arrives into their warehouse, they shelve it, inventory the whole lot of it, send me the inventory lists, and then orders come through my website, they sent it off. It’s your traditional 3PL system.

                                So I just handle customer inquiries which you get someone will order a bundle set or a couple of items and go “Look I want to add something else” and go okay. So you just alter that on the website. People ask questions about your product. Just basic customer service and then reordering, keeping an eye on our stock. Then I’ve got a marketing guy that I use because we’ve only sold on Facebook and through Instagram. So he just handles all of our online marketing. Looking at our markets and I just give him a budget and he updates me on that.

                                So it’s not a lot of work, but as I said that’s why I thought it would be very appealing for someone for a purchasing point of view. If they wanted to buy my other business, they’d have to put in 40 hours a week, a lot of work into that. This one here was just more appealing.

Speaker 1:           Mm-hmm (affirmative) for sure. That’s a very good point. Now the couple tasks that you do have to do yourself, do you think it’s possible to outsource that? Maybe get a VA to handle some of that day-to-day stuff?

Chris:                     I have a VA that handles a few data entry stuff through our other business as well. We’ve had a VA for a total of 6 years. I come back to when I deal with a lot of companies as well, when you email and ask a question or something like that and you get a very generic response back you get that feeling that “Hey I’m just talking to a call center. I actually want to talk to a person that knows the product itself.” So I’ve always kept myself that handles all these inquiries and I do get an occasional phone call from someone and they go “Ah, it’s you. You have the business” and I go “Yeah, it’s me” type of thing. It’s not often that you get to talk to a person that runs the business itself and look that’s very rare I get that.

                                But my belief why it’s gone so well is because we’ve got that open line of communication. We don’t get shuffled around to call center, or press one for this or two for this, or you know you get a generic email response back. Then you ask a question and then you get a random answer back. I don’t know if you’ve dealt with many phone companies, where you email and you go “Oh my God, I just want an answer.” I don’t know if that makes sense.

Speaker 1:           No, it definitely makes sense and the option is there if someone wants to hand off some of the customer service, but I think that your reasons make sense as to why you want to do them yourself.

Chris:                     There’s no reason why they couldn’t. I think if you’re wanting to do that you’re just going to need to make sure that the person that you’re handing it across to knows your product really well.

Speaker 1:           Do you know if the email list you have currently performs well? What do you do for email marketing and is it successful?

Chris:                     At the moment we had a pre order on another product that’s sold out really fast. So we send an email out saying “Hey this is arriving on May 15th get online and order now.” So we got the customers and send them out some basic information and keep them in the loop or keep them active with our email list. And then we get great response from just sending out some small campaigns. If we wanted to put a small bundle together, we look at whether it’s doing as well here [inaudible 00:11:53] how we position some products, how we bundle some products together and how we sell it. Keep your food warm type of thing, once it’s getting a bit colder, or if there’s events coming up. Just remind people what they need the product for.

Speaker 1:           And then on the social media side of things. Your Facebook page has over 36,000 followers and your Instagram page has over 3.000 followers. I know you’ve touched on the social media marketing that you do a little bit, but would you feel like it’s utilized as well as it could be?

Chris:                     Well Facebook’s a tricky thing at the moment. They keep changing the algorithms all the time. So we’re constantly looking at different ways to how to sell your product in there and how to get that reach. My marketing guy always talks about the finals, the sales, the finals, the middle, the top, the bottom. So he’s constantly working on that and we could probably get a lot more active on Facebook as well. You don’t tend to get the reach as far as just with your Facebook page itself, but we’re actually active in a lot of groups. There’s a lot of, because we’re in the kitchen, cooking typ of market. There’s a lot of big Facebook groups themselves that are cooking groups, like closed groups. And there’s a lot of people in those groups that rave about our products.

                                So we actually had a really big sales day last year and we couldn’t figure out where it come from and then we were looking at our ads and going hang on a minute it’s not coming from the ads. Where is this coming from? We eventually found out there was a cooking group with about 140,000 users in there. Someone did a test on two of our products against a similar type of product. They did a whole review on it, how it stacks in the cupboard, how it keeps food warm, how it chills, lasting effects of it, what it does. It was some 60 year old lady that did this test and she raved on about it and then everyone on the site needed one. It just went nuts. So we get a lot of sales and a lot of traffic through those sites itself without having to spend a lot on Facebook ads or Instagram ads. We do that obviously to chase people around the net, but a lot of those people sell it for us. Lot of customers sell it for us.

Speaker 1:           Do you know if the social media specialist that you have is looking to continue working with the business when a new owner takes over?

Chris:                     Oh sure. Yeah. He loves the business. He’s a great guy to work with, he works for himself and he actually does the work himself. So we’re not getting pushed through a big company [inaudible 00:14:47]. Because it’s a business that can be worked remotely as well, so it wouldn’t matter where he is. Being into it now we’ve had him on board since November last year. He started doing some work through another company for our other business and I just got a good feeling about him and then said hey.

                                We had this business with a big marketing company and we put a big budget into it. Then they just didn’t come through with the goods, too many staff, they were too busy. The old story they just grew too big too quick and then couldn’t produce the goods. So he took it over and he’s really really hands on with it. It’s taken a few months til now that he’s got a good handle on how to sell it. So next week we’re actually going on like a little video series in the kitchen and he’s the guy in the video because he’s got a pretty crazy personality. He’s the guy in the kitchen showcasing the products and then launch that.

                                I suppose to answer your question he’d definitely keen. He’s got a bit of an interest in it as well.

Speaker 1:           Hey listeners, do you want to find a business that is just right for you? Head on over to Empire Flippers and have a look at our market place, where you can see real businesses making real money just like the one we’re looking at today. In fact, don’t miss out head over now, share your email address and we’ll send you hot, fresh new listings of successful businesses every week to your inbox. Now back to the interview.

                                You’ve mentioned some of these before primarily with talking about how you pretty much only focus on Australia and expanding beyond Australia could be an opportunity. But can you take a little bit to highlight what could be some of the major opportunities that a new owner could utilize to grow the business more?

Chris:                     Well basically our market here, audience here compared to the U.S. is very very small. So sort of picking up what we’ve got and then moving it over there as in terms of the audience. Because it’s very similar it’s no different to what people use it for here. So what people use it for over there, it solves a lot of issues in your kitchen, a lot of issues for storage and transportation, hospitality. It does a whole range of products, but moving it over there you’re just putting in front of a way, way bigger audience. And then it would just be they’d want to set up a logistics center over there, which I’ve looked at a few other there already. We’ve looked into Amazon at an early stage, but I just felt you lose a lot of control over your product with Amazon.

                                So if you had another logistics center there, setting it up, still running it through the website. Our website’s .com.au so we cover both ends of it and then market it as such, just shift your marketing towards a U.S. audience. And then away you go. The only reason why we didn’t do it because I don’t know the U.S. well going over there and finding a logistics center and stuff like that. I just wasn’t sure about it and my other option was looking for a contact over there, which I’ve had some interest with some people over there about settings things up. But at the same time I just wasn’t sure about that either.

Speaker 1:           And you’ve mentioned that there’s demand for a product like this, it’s unique. So clearly it could be a big opportunity if a new owner did choose to expand and they had the means and resources and connections to do it properly.

Chris:                     Yeah it’s a type of thing if you had connections to get it into department stores or whatever. It’s a unique product itself, there’s no real competitor like it on the market. There’s some similar products but don’t really do the same job and also from an environmental and they last forever these things, from that angle as well the opportunity is huge. For us, we looked at to expand that big something would have to give with what we’re doing and it was an extremely hard decision. Because this one has got the greatest potential, it does very well now and for what we do with it, it does extremely well. If you did more into it and expanded how far it could go. I sort of think if someone does that I’ll kick myself for letting it go. The position that we’re with now with our other two businesses and family it’s got the best selling potential because its got the best opportunity I suppose.

Speaker 1:           Yeah I mean it’s always bitter sweet to do that, but if it does sell then you’ll get a nice payday upfront, which is a pretty nice bonus there. But do you feel like there are any significant risks with this business that a new owner should be aware of?

Chris:                     Well the only risk that we’ve tried to streamline, we went from someone who had no idea about this at all. My background is in fitness industry, had no idea about this at all and then basically found someone in China. If you ever go to China and go through the factories over there you’ll understand that to find a good one it’s like a needle in a haystack over there. It’s crazy. To go over there and set it up and find a good factory and find a good agent over there. I’ve spent a lot of time over there and the factory that I deal with they’re a family-run business as well, which really appealed to me. Because they’re doing it for themselves so they handle both sides of all the products that are made.

                                My supply chain is very good. It’s not going to drop off. You know you buy in the U.S. dollar so that’s frustrating it goes up and down a little bit, but our supply chain is very good and our contacts over there are very good. And we’ve got our patents and our trademark set up in China which took a while to get. So we’re fairly well protected over there and the only thing is risks like any product or anything you buy is someone copying it and then trying to rip it off or something like that. Which a friend of mine had happen to him, but if your product’s good and you market it well people are still going to come back to it. That’s the only real risk we faced in terms of we always knew that we’d sell the product and the product would sell. So we had no issue with that it would be someone ripping your idea off or whatever it is. We’ve got good quality control, all our products meet FDA reach, LFGB certifications, so that meets all our worldwide standards. I don’t know, is the ship sinking?

Speaker 1:           I mean that’s pretty much a risk of any business. It’s funny you said that though my normal example would be if Google changes the rules, or if Facebook changes the rules or something like that, but I guess the ship sinking is another out of your control.

Chris:                     It’s out of your control, but if your products insured anyway. So you’re going to get that back, like you said Google, Facebook’s always an interesting one because they keep changing. We haven’t gone into Google shopping and such. That’s a whole other market that we haven’t looked into yet. Facebook constantly changes algorithms and how it sells and can be a real pain. And that’s the same for anyone. Anyone selling on there, they just need to understand it. I think still the key is people like your product, you create that group and they’re going to buy it. They’re going to keep buying your product. So we played around with that a little bit, we put a little bit more into Facebook then we take a little bit off and sometimes you spend $100 and you get $5,000 back and sometimes you spend $100, $1,000 and get nothing back, it’s one of those things.

Speaker 1:           Would you commit to a non-compete?

Chris:                     Yes I would. I would because we believe in the product, but at the same time I would want to know obviously that the person buying it is not going to be someone who will buy it and sit down there and hope for the best. Because I think no matter what kind of business you buy that doesn’t exist, you still got to understand it and put something into it. And from a new buyer I want to make sure that they kind of put a bit of time into it. And at the same time too I would want that because we come up with the idea of this product, it’s sort of our baby in a way. A lot of work went into the development of it and I want to see it grow a lot. So yeah, if someone was willing to do that, definitely I’d be interested in a buyout. What’s it called?

Speaker 1:           A non-compete.

Chris:                     Ah, that non-compete. Definitely a non-compete. Obviously I would comply with that. We’d still promote the product as well.

Speaker 1:           In the realm of helping the owner and helping promote and things like that. What would you be willing to do to help a new owner during the transition period? As you said, you want the product to succeed in everything, but what does that mean?

Chris:                     Well with them I had to meet up with them at some stage. I know I have a Skype [inaudible 00:24:34] but it’d be great to have a face to face. Depends on what they want to do from a supply. I’ve got a lot of inventory in Australia. How they want to operate in terms of getting all the inventory as well. I’ll own the IP and then get their own supply chain direct out of China which mean I’d probably introduce them to my agent and then meet them there and introduce them. Because you want to know where your products coming from. I’d be quite willing to do that and also there’s another market that’s just come up here which would be an enormous potential. It’s only recently come up, we’ve had interest from a [inaudible 00:25:22] company that we’re going to talk to probably in the next couple of weeks. I’d still be introducing him to those, if those opportunities come up I’d still be introducing him to those. If I see an opportunity, what I thought of it as well, I’d still maybe keep contact with them. To pass on information pretty much.

Speaker 1:           Would you be open to discussing something like an earn out?

Chris:                     The earn out yeah. That’s what I thought we were talking about before. The non-compete obviously once we hand you the key, the key’s yours. We won’t be setting up another thing like this. You wouldn’t do it anyway, from a moral point of view. But also to handing over this supply chain and all that. For what you’re talking about now as I’ve said because I’ve got confidence in it, someone wanted to put some down and pay off in a period of time I’d be open to that. Obviously depending on the person.

Speaker 1:           Awesome Chris thank you so much for taking the time here today. I do have one more question, but before we get to that I want to go ahead and run through a quick summary of the business again.

                                The business was built in November of 2015, has a monthly revenue of $21,032, expenses of $10,191 to make for a net profit of $10,841 which is generated on a 12 month average. Included in the sale of this business is the website, trademark and patents, email list, Facebook and Instagram accounts. Please note that inventory is not normally included in the list price. But further details can be provided to active depositors.

                                Chris can you kind of touch on some of the things we’ve discussed here and in your own words give me your best 30 second pitch on why someone should purchase this business.

Chris:                     Oh, well it could be because it’s a great business for one thing from an environmental side of things and it solves a lot of problems in the kitchen at home and for transport food. Which basically everyone has a kitchen, everyone eats so it solves, we’re not trying to tell someone why they need this product. People actually need this product and we just got to put the product in front of those people and then they’ll buy it. So it’s a simple business to run with amazing opportunities.

Speaker 1:           You know that opportunity is just kind of the main attraction here. You can expand to different market places. You can get outside of Australia, go into the U.S., go into Canada, Europe. You can sell on different platforms like maybe Amazon, maybe Ebay, something could be a really good fit. There’s just a lot of opportunity for this business, especially considering the fact that it’s pretty low time commitment for an owner.

Chris:                     Yes, one of the reasons why we never went overseas we wanted to test the market in Australia first. Make sure we got the product right, make sure what we’re doing was right before we went over there. And we’ve able to do it just very well just selling here in a small market. You think pick that up and put it out in California or where ever it is. Big opportunities.

Speaker 1:           And the numbers speak for themselves. In terms of sales and the demand. I really hope that you find that perfect match and thank you so much for taking the time today.

Chris:                     No worries.

Speaker 1:           You just learned how this business works and I want to give you the opportunity to learn more about what you can do to buy real online businesses just like this one. If you want to find out more about businesses making real money head over to empireflippers.com and sign up for our mailing list. There is an entire world of people quietly investing their money into online businesses and seeing great returns. Now we want to help you do the same thing.