January 15, 2019
Jake spoke with Brian about his subscription business. Created in July 2015 in the lead generation niche, this growing business provides Amazon FBA sellers with daily leads and is making $8k/month in profit. The entire sales pipeline is run via Facebook Groups and communities, including the business’s own groups. Customers come in automatically, with no advertising, no SEO, or anything related to Google.
Find more businesses like this one on our marketplace: http://bit.ly/2AoXbS0
Interviewer: 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 the P&L. 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 insights 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. This week I spoke with the owner of a subscription business in the lead generation niche. This business provides Amazon FBA sellers with daily leads, which are sourced by a remote team of VAs. The business is making over $18,000 every single month in net profit. Brian, thank you for coming on here today and taking the time to discuss this business with me. How are you doing?
Brian: Good, good. Thank you.
Interviewer: Yeah, it is my pleasure. I’m really looking forward to discussing this business with you. It’s rather unique. But before we dive into the questions I have for you, I’m gonna go ahead and run through a little quick summary of the business.
Again, the business was built in July of 2015. It has a monthly revenue of $12,536, expenses of $4,391 to make for a net profit of $8,145, which is generated on a 12 month average. Included in the sale of this business are Facebook groups, website, PayPal and Gumroad accounts, email lists, custom made Chrome extensions, Amazon professional selling account, which is four years old, all previous research, SOPs, and employee relationships.
Brian, can you tell us a little bit about your background in building and running online businesses?
Brian: Sure. Well, I used to be in the corporate world doing wealth management. After a number of years doing that, I wanted to get out of the office and try the E-commerce thing, so I basically went to one of my friends who had been doing Ebay for a long time. We got together and were discussing E-commerce, and we basically learned about this Amazon FBA thing that let us work from anywhere. We decided to start selling on Amazon. The easiest model at the time was to resell products. We started to resell products on Amazon. We started to get into what products are good to resell, and we realized that, that was a huge gap. People weren’t really sure, and so that led me to the business of telling people what to buy and sell on Amazon.
Interviewer: Now, you’re here today, so why have you decided to sell the business?
Brian: I’ve been doing it for three years, and got it to a good level, and I really want to try something else. I’ve been doing reselling for years now. I got into a nice little package, so I thought it would be good for someone else who wants to really get into Amazon selling, and take it away.
Interviewer: You mentioned this briefly before, but can you describe exactly how this business makes money?
Brian: Sure, okay. When you are an Amazon seller, a reseller on Amazon, you need to find out what to buy and sell, okay. Every single day people buy products from your store. You need to restock your store. That’s not so easy when you are a reseller, so you need to find out in the information, where can I go buy new products for my store every single day?
What we do is we research the entire internet, and we come up with a list of products every single day that are available immediately that you can sell in your Amazon store. Basically, a group of Amazon sellers pay us for daily research, so essentially they pay us a monthly fee, and we give them research on weekdays. Our only costs are the research staff, and other small costs.
Interviewer: Do you do any of the research yourself, or do you have a team?
Brian: Yeah, I have virtual assistants doing all the research, doing all the quality assurance. They train each other. They work on their own. Yeah, there is about seven of them. The business can run with five, but I always keep more, and it improves the research. But yeah, we have a remote team of VAs.
Interviewer: What does that leave for you to do for the business on a week-to-week basis?
Brian: Basically, what I’m doing is managing the staff, if they have any issues, or scheduling issues. Then at the end of the day when my team has finished their research, and my quality assurance staff has checked it all, I will copy it to basically the publication sheet, and then I won’t post it to the customers. Right now we have a private Facebook group, and we have email distribution.
Interviewer: If you had to quantify the number of hours that you spend on the business on a week-to-week basis, what would you say?
Brian: It’s about 5 to 10. Some days I basically don’t do anything. Then at the end of the day I spend 10, 15 minutes just sending the research out, which really can be done by a staff member, but I like to keep my hands in it because it’s my core business.
Interviewer: One thing that you notice or at least that I noticed when I looked back over the last year is that, compared to a lot of other subscription based business that I see, you have a relatively stable profit level for the whole year. There was a dip in January though, so what happened in January?
Brian: Well, the reason that we’re stable is, because we have a waiting list of people trying to get in, so when someone wants to leave our subscription, we have someone that’s standing to take their place and they’ve been waiting about three or four months usually. In February is the Chinese New Year, and it’s customary to give a bonus on the Chinese New Year. At the same time, all the workers here they basically take long vacations, so in January I decided I was gonna pay above and beyond the normal bonuses, and I paid double salary to all of my staff that had been there for a considerable amount of time. A. I did it as generosity as they really powered the launching of our second product. It was all their hard work. And also to convince them, “Hey, during Chinese New Year I need you to work more days than you think you want to work.”
Interviewer: It was really a one time expense. You doubled their pay, but that’s not gonna be an every month thing. It’s not like the business lost money.
Brian: No, we just gave bonuses for the New Year. I think that next year if I’m not in charge someone could give a normal bonus. I think that’s in the neighborhood of a small percentage of their salary, not near 100, maybe less than 50. It’s up to the owner.
Interviewer: What do you do for the business in terms of marketing? You mentioned that you have a steady supply of perspective customers, how do those customers come in?
Brian: Well, we don’t do any marketing because we’re too overloaded with customers. Basically, the way that it works with Amazon sellers is if you go into Facebook there is a large amount of big groups where people are giving each other advice, and asking questions, and everyone from the person who doesn’t know how to ship something to that super advance person, they’re all asking question. When the topic of where do you find … where do you get your sourcing data from, our name comes up often. People just come into our group, and they request to join, and it’s been working like that for years now.
Interviewer: Have you explored any marketing opportunities, or you just really haven’t because of how busy you are?
Brian: We have a waiting list of over 50 people, okay, so we haven’t even considered marketing. About a year ago, we decided that we had a big waiting list, and we went for a second product after we built up the staff. Depending on what happens with the sale, we may just do a third product coming up, but we certainly have the demand for it. Advertising is easy actually. When we first started the business it just spread so quickly when you have good sourcing data because so many people are trying to sell on Amazon, and work from home, and do their whole thing, if you have a good quality product and clearly you’re giving research that works, it seems like we’ve had some just good traffic.
Interviewer: 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 marketplace 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.
What do you feel are some of the major opportunities for growth?
Brian: Well clearly, the waiting list is the main one. Sourcing for products on Amazon it’s a [inaudible 00:08:48]. You can hire many different types of people to search for these things. You can sell them in many different ways. You can chop up the groups into smaller groups, or you could rearrange the way that they’re giving out the data. You can just flat out raise prices. And if you are an Amazon seller and you’re interested in just selling on Amazon, we have all of the data for all of the resellers, and we give the Amazon account that I’m also selling, you can use that data and create a very profitable business just from the reselling.
If you look at the Amazon account that’s for sale, I think we did maybe 250,000 sales in 2017, and it just wasn’t for me, so we stopped doing it, and we did a second list instead. But, if you’re interested in selling on Amazon, the account that comes with it, and the research that we’re doing daily is a huge super power over top of all the other people doing this business, so those are my two ones for growth now. It would be use the waiting list and probably do something with the Amazon account.
Interviewer: Do you feel like there are any potential risks associated with this business?
Brian: The one that I thought of really, and then you asked me the question before, is that if Amazon makes it really hard for resellers in the future, and that doesn’t look like the trend, that doesn’t look like that’s gonna happen, but that’s a risk because basically the business is just like all the other Amazon businesses that are for sale, it’s dependent on Amazon. That’s really the risk. We’re dominating the space in terms of customers, and we have too many, so I don’t see that currently as any sort of risk, but that’s pretty much what I can think of.
Interviewer: What advice would you have to someone who wanted to get started with something like this? Actually, this is an interesting topic here because of your knowledge with Amazon, so let me just say, what would be your advice to someone who wanted to get started with being an Amazon reseller?
Brian: Well, there is some easy books you can read. Of course, if you know nothing about it, I’m gonna provide training. But, when I started this list I had done a total of maybe $5,000 in sales on Amazon, which is nothing for Amazon. It’s very easy to learn what a sales history looks like, and if it matches up with the current price. You can learn that very quickly without having to learn all the ins and outs of Amazon selling that take a longer time to learn.
Interviewer: I mean there is certainly learning materials. Anything really good that you would recommend to someone listening to pick up and try to learn from?
Brian: I really don’t have a specific suggestion for a one piece of content that’ll tell you what to do. There is a book that’s kind of The Bible. It’s called Online Arbitrage by Chris Green. It’s so outdated I almost don’t want to recommend it, but it will give you the idea of what’s going on. Many of the things in the book are a little bit different, but it gives you the whole idea, why does it work, how does it work, and all the information you might need to know, I think that applies. That’s pretty much the only book I’ve ever read about the reselling on Amazon.
Interviewer: Would you commit to a non-compete?
Brian: Of course, I would.
Interviewer: How much support are you willing to offer a new owner during the transition period?
Brian: Really any reasonable amounts. I understand that it’s a business that you might have to learn a little bit if you don’t know about Amazon products. There is a staff that you have to at least get to know a little bit. I would probably provide what I would call is extensive support compared to all of the other listing I see on Empire Flippers, and that could be negotiated with the seller. I really want my company to keep going really well. I want my staff to be happy and compensated well, so I want to make sure that, that happens, and the new owner gets it, and that we can … I can set them off in a really good shape.
Interviewer: Are you willing to discuss something like an earn-out?
Brian: Yes, I would discuss that.
Interviewer: Awesome, Brian. Thank you so much for taking the time today. I do have one final question for you, but before we get to that, I want to go ahead and run through that quick summary of the business again.
Interviewer: The business was built in July of 2015. It has a monthly revenue of $12,536, expenses of $4,391 to make for a net profit of $8,145, which is generated on a 12 month average. Included in the sale of this business are the Facebook groups, website, PayPal, and Gumroad accounts, email lists, custom made Chrome extensions, Amazon professional selling account, all previous research, SOPs, and instructions, and employee relationships.
Brian, looking at this business objectively here, why do you feel like it’s a business worth buying?
Brian: I think that the wave of people trying to work from home and E-commerce is just getting bigger, and Amazon is the key player there. I think selling shovels in this space is pretty strong. On the other side that I mentioned earlier about the Amazon selling, that’s for the same reason that everyone else is getting into it. It would be a good opportunity for the buyer. I basically just see that this whole sector as continuing to grow, and I think that it’s pretty good.
Interviewer: I like that analogy there of providing a shovel for people. That’s pretty good. Brian, thank you so much for taking the time with me today. I really appreciate it.
Brian: Thank you.
Interviewer: You’ve just learned how this business works. 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 on 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.