RMRB 7: Putting a Team in Place

This dropshipping and affiliate business in the apparel & accessories niche requires very minimal time to run. This is due to the trained team that Andrei has put in place to help him run the business. Utilizing Facebook and Instagram ads, the business has grown to $15k/month in profit in just 18 months. 

Andrei’s business has over 100,000 followers on social media and also has iOS and Android apps with 8k downloads as well. He has brought on a trained team to help him run the business, which allows him to maintain the business with little time commitment. 

Find more businesses like this one on our marketplace: http://bit.ly/2Q3U5sU

Check Out This Week’s Episode:

 

 

Jake:                      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. Today we’re going to be looking at a drop shipping business that was making its owner over $15,000 every single month in net profit. I got the opportunity to sit down with the owner to kind of figure out what made this business tick, and it turns out that he has a strong social media following, which is one of the things we’ll be talking about.

                                But Andre, how are you doing today?

Andre:                  I’m doing good. Doing good actually. How about you?

Jake:                      I’m doing really well other than that forsaken funny bone hit I was telling you about before we hopped on here. Still vibrating my elbow here.

Andre:                  Oh yeah. I know that feeling.

Jake:                      Hopefully I’ll live. So before we get to the questions that I have for you today, let’s go ahead and run through a quick summary of the business. Again, the business was built in October of 2016, has a monthly revenue of $54,594, expenses of $39,366, to make for a net profit of $15,229, which is generated on a 12 month average. Included in the sale of this business are the primary domain, secondary domain, site content and files, Shopify theme, Facebook ad account, social media pages, many chat subscribers, email lists and templates, native iOS and Android app, an experienced team consisting of eight freelancers, SOPs, detailed training videos, branding, and other accounts that are required to operate the business. For example, Zen Desk, Slack, and MailChimp.

                                Andre, can you give us a little bit about your background in building and running online businesses?

Andre:                  Yeah, sure. So since 2014 I’ve started my first online business. I’m basically based in Romania. It’s a small country in Europe, by the way. So I started my first online business here after I went to the United States and worked there for a summer. With the money that I put together, I basically managed to open an online store here. It was like a phone and accessories online store with stocks. It’s holding inventory here in Romania. But I soon realized it’s not really profitable, the margins were low. So I basically shut down the business and moved on, other physical kind of retail business here also in Romania.

                                And after that, I opened that physical business here and I realized it’s something that I don’t really enjoy doing because I was kind of constrained by all the people that I have to hire here. And I was depending on so many things. So like my dream was always to have an online business. That was something that I knew I’m good at. It’s kind of like my passion.

                                So I started digging. I was having that physical business and I was thinking like what could I do in order to do free up my time and also make more money than I was doing. So fast forward to summer of 2016. I was looking online, I was kind of digging into Amazon and whatnot. So I found a drop shipping, like the business model and it really looked interesting for me. I didn’t need any inventory. I could just start with relatively low amount of capital. And I could also build the brand around it. That was my initial ideas.

                                So what I did, I was documenting for a couple of weeks and then I just launched my store and firstly it was really funny because I was selling only some t-shirts, like kind of like print on demand t-shirts. So it didn’t really go well, but the margins were low. It’s not something that’s really getting a lot of attention even if it’s really crazy good like that design, or print on demand.

                                So I kind of thought about it and then I had like a click, like an idea and I said look I got to find some other suppliers. I’ve got to create a brand. That print on demand thing that I just started was not taking off like I would like it to take off. So I started looking for suppliers and you know, I actually found some really reliable suppliers back then. This is already in like autumn, in fall 2016, a few months after the initial contact with drop shipping.

                                So yeah, I found those suppliers and I was always good at spotting good design like aesthetics. I really like design. So I saw some footwear items. I saw them, they had like really cool, unique looking shape and they had some really nice features. Also those suppliers provided some really nice pictures. So I said, I think this is something that I could sell.

                                Now, after that with my relatively low experience in Facebook at that time I started promoting items on Facebook because I knew it’s like the go to option because it’s fast and it’s scalable. Facebook ads, rather than just going with normal influencers that we kind of tested. When we had the print on demand, we tested, we sent some t-shirts who like two influencers or three, but nothing really happens. So I said Facebook ads, let’s go all in with Facebook ads.

                                So at that point we really started to, the store started to take off and we actually started to gain some traction. And from that point on the start, it keeps growing. And it’s here, the moment that we’re in now, it all started with those footwear items that I knew they were going to really sell.

Jake:                      You talk about it like that, it’s clear that you have put a lot of time and effort into growing this business, which definitely shows in the numbers. The business been around for about a year and a half now. A little more than that and you’re making a lot of money with it. But after everything you’ve done for the business, why have you decided to sell it today?

Andre:                  Yeah, that’s a really good question. And like a part of me tells me everyday like Andre, you shouldn’t sell it, you shouldn’t sell it. And you know, it’s really painful for me to think that one day it will be sold or it might get sold because I had a really strong connection with my whole team and I love these guys and also the brand and everything is that part of me now. But besides having an ecommerce store, I think like the next big thing that I always wanted to be is a software business to be honest. I mean, I finished computer science in 2016 and I had my first computer when I was three years old. So I was always kind of like a nerd in a way.

                                And two months ago, actually at the beginning of this year, I had this idea, I found this gap in the market with a product, with a software product. I started working on it, just investing a little bit like my time into it. So I was talking with my friends and I really figured out it’s a good opportunity here because it’s like an untapped market, what I’m trying to build with this software.

                                So obviously I’m trying, like I was thinking, okay I should basically keep them both, the ecommerce store and the software business going because it’s not launched yet. But as the weeks go by I feel like like the software will require a lot more attention from my side than I would initially thought it would. So at this point I just decided if I sell this business, with all that capital, I would be able to really lift off the software business off the ground.

                                But maybe if I don’t have that capital to pump in at the beginning of this software project, it might not get off the ground. So it’s something that I don’t really want to do, but I feel like I have to, if I want to the software business, that’s one of my dreams, if I want it to grow. So that’s kind of the reason, actually as like the thing that pushed me to go ahead and be with you today here.

Jake:                      And that definitely makes sense and it’s fair. You want to sell it to make time for something that you’re more passionate about. So let’s talk now about what exactly is going on with the business today. You mentioned a team, what all do they do for the business?

Andre:                  Sure. So you mentioned eight people. Right now we have another one that is actually helping me with Facebook ads. So basically everything that’s operational, it’s being done by them. So that means order processing. We have two people for order processing and most of them, they’re working part time so they don’t work like eight full hours a day. Just because I want to mention this, we had this decision because sometimes, basically they’re all remote freelancers, just to mention that as well.

                                With remote freelancers sometimes you may have someone call in sick or you know they have to go somewhere or something like that. So we had this issue a few months ago when we only had, for example, one person in the order processing department. So that was kind of not good at all because everything relies on one person. So we decided to hire more people, for example, for order processing.

                                As I said, order processing is being covered. Customer support, for customer support and we have email support, we have live chat support, we have phone support and we have Facebook support, Facebook messaging and also the freelancer that takes care of the Facebook messaging oversees the Facebook comments and the Instagram comments because they’re all in the same platform. After that we have one freelancer that kind of oversees the order processing, basically looking every day is talking with our suppliers and APCs for example, that something’s wrong with them in order, like it’s out of stock and the order processing staff didn’t see that message from the supplier. This guy would connect the dots and then you know, make sure that everything runs smoothly. This is kind of like the operational side. Obviously as I said, email support, we have two people for email support.

                                After that we have influencer marketing person. She’s from Lithuania and she just basically joined us, I think about a month ago when we’re just going back and forth at this moment. We haven’t really started working with influencers, like fully working with influencers, but she’s been hired and she’s doing a great job negotiating with them. And we’re actually about to start working with some really nice influencers in the following days. Actually we start working with people like human influencers, but we’re now talking with Instagram pages. So she’s taking care of both of those things.

                                And we have the Facebook ads assistant, which is helping me now with ads, like ads creation, campaign management, and the basically the tedious tasks when it comes to Facebook ads. And that’s pretty much the team. Oh, and I also get help from my girlfriend, Lisa, is taking care of email marketing now and she also responds to messages on Instagram. So basically that’s the whole team.

Jake:                      So with the team handling all of that, what is left for you to do? What do you do on a weekly basis for the business and how much time, how many hours would you say you invest in the business?

Andre:                  Yeah, sure. So I would say roughly between like 14 and 20 hours a week, if I could say. It’s not much left to do on my side, especially now because I was most, like the last job that I’m doing, I mean, the only job that I’m basically doing is Facebook ads and strategic marketing planning and like sometimes discussing with suppliers by keeping a good relationship.

                                But now that I have this new freelancer here, I actually really reduced the time that I spent in the business. But yeah, as I said, most of the time it goes into Facebook ads and then a strategic marketing planning. That’s like the big chunk of my time going into. And after that that’s like looking at the metrics, looking at the KPIs on a weekly basis, on a monthly basis. And when we have stripe disputes, I’m the one that still handles them because I have to log in with the same IP and I didn’t really want to do outsource this because we don’t really have too many disputes. But it’s still something that I do.

Jake:                      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 you real businesses and 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 are some of the big opportunities for growth that you see available for a new owner to take advantage of?

Andre:                  That’s a really good question. So there are things that can be done for sure. First of all, let’s start with Facebook ads because that’s our main source, like Facebook/Instagram ads because that’s like our main source of traffic. And what I would do, and it might be something that we are going to do in the next few weeks, is hiring some translators, even Upwork or on Fiverr. And all the ad creatives that we’re using, translate them into other languages and promote them in specific languages. For example Spanish, promoting Spanish text to Spanish speaking countries.

                                I just talked recently with some of my ecommerce friends and they told me this could bring the huge increase in click through ratio and obviously in return on ad spend because people would see in their own language and they would click easier because it’s something they’re more familiar with. And this is one thing that I would really try out when it comes to Facebook ads.

                                Other than that, also in Facebook ads, I might hire an expert because this is like everything that I did for the business was self taught. I never actually hired an expert, an outside expert, to oversee what I’m doing with the Facebook ads. I don’t know if that’s bad or good, but I’m pretty sure there are people that are more experienced than me. So that means I’m pretty sure that someone can do a better job than I did with the Facebook ads. And I’m sure they can scale the business even further with the Facebook ads only. So those two things I would consider for Facebook ads, as I said, because that’s one of our key elements when it comes to traffic.

                                The other thing that I would do, I would definitely outsource marketing an expert or an agency. It depends. But anyways, it has to be someone with a lot of experience. We already had some discussions on this topic with an agency in Australia. So right now we don’t have that great results with email marketing. We have a list of about, I think it was like 47,000 people and we generate a few thousand dollars a month. This agency told us they can generate up to 20% of all total monthly sales just by email. That would be like an increase of 10 times of what we’re doing now with emails.

                                Of course, this is just an assumption that they did, but obviously there’s a lot to be improved in the email because we’re just using MailChimp, which is like a basic provider for sending emails and email flows. And switching to Klayvio, which every professional recommends, at least the ones that I discussed with, setting new flows, new targeted emails, better copyrighting, customer segmentation, ab testing and having a fresh approach would definitely increase sales and not only increase sales with be like a constant flow of sales into the business. This is just from email marketing.

                                Another interesting thing that I would do, as mentioned in the listing, we have a few white label items. Actually most of our main items that we sell are white labeled. So basically when the supplier ships them they’re already with our logo on the product, on the label and also on the box. So they ship the items that way to the customers, which really connects with the customers much more. And that means we have a good chunk of customers which are repeat customers because we’re not just the drop shipping company from China that sells all express Chinese stuff to our customers. We do sell good stuff.

                                So anyways, if we did white label more items and we get to market them with influencers marketing, what we are planning to do but we didn’t start yet, on Instagram by the way, it can really lead to a snowball effect because when you market the big number of influencers at the same time, what happens? Imagine like the whole network seeing our pictures, our products. They’ll start recognizing our brand even more. I think that will make also a really good thing, a really good technique to increase brand awareness and sales and also organic growth of the brand. But this is for the white label items. I would focus on the white label items because they already come with our brand. We don’t want to push other items into the market on a huge scale with normal products which are not labeled. We have really good feedback on these items and I have faith in the supplier that he delivers good items.

                                Other than that, there are also a bunch of other things that can be done. For example, it starts selling those items in physical retail location. Being white label items they can be sold, for example, wholesale or just sold through a network of retailers and so on. I don’t really have experience in this particular nature, like physically selling them, but it can also be something to look into.

                                Other than that, sourcing new items like totally different items. For example, we didn’t really tap into like watches or we have some jewelry but not that many. So there are other niches like sub niches that can be tapped into it and that would be a good opportunity because right now most of our items are footwear and are clothing items. so there are other sub niches that would go well with our brand.

                                Other than that we had a partnership with some resellers. So that means we have contacts for two of the world’s biggest drop shipping websites with branded products, branded fashion items. For a monthly fee, it’s going to be paid monthly or every six months or a yearly, it’s like a drop shipping fee, you get to sell items from brands like Dolce and Gabbana, D Squared, Guess, Jack and Jones, Team Berlin, The Northface and so on. This would be another good source of revenue, especially because even if you sell white label items that we’re selling and you put next to big recognized brands like these, it creates like an extra layer of trust to our brand because you’re just putting them next to big recognized brands. So it kind of helps our own brand grow. And we have the contacts for these websites and it’s something that can be also done in the future.

                                Other than that, let’s see Google shopping ads. We never tried them but I heard many people saying that they have good results with this and especially it would be good for us in my opinion because we sell pleasingly, resale items, we did design. That looked good. So that means when people would search for something like shoes, they will see some nice looking shoes from our brand there, not just something basic. They would see something nice. That means I think we have a good chance of getting traffic from Google shopping ads as well.

                                Let’s see. I mean do you want me to continue?

Jake:                      No, I mean that’s plenty. I mean, it’s clear that there’s a lot of opportunity for growth in addition to, I mean the business, I mean that’s just growing it. Even if you were to leave it, you’re still going to make a lot of money every single month. But now we have to say, on the other hand though, are there any risks? Is there anything that could come up that can negatively impact the business?

Andre:                  Yeah, I mean sure. From the beginning we kind of struggled with a lot of things. It wasn’t everything really smooth just to be fair because for example, one of the risks we kind of mitigated almost entirely is dealing with merchant accounts. So we had a few merchant accounts shut down at the beginning because we had so many charge backs. So it’s something that I didn’t even know what to charge back is.

                                So what we did, we implemented really sophisticated SOPs. It’s like a system right now and procedure that we trained our order processing staff to do. So each and every order that comes through, it’s basically scanned and verified manually. So that kind of reduced our charge backs to, it’s under 1% now, which is really good. So we have the same merchant account from last year in September, which is great. So that’s one of the risks that it’s still there, like having the merchant accounts shutdown, it’s there, but it’s really a lot of the, how to say, it’s there but it’s minimal, this risk is minimal.

                                Other than that, I would say like the biggest risk is relying only on Facebook ads as for the traffic source. I realized this a few months ago and we already started working on diversifying the traffic sources. That’s the reason why we actually have multiple traffic sources now such as Google retargeting, AdWords retargeting, we have email marketing that we’re working on, messenger bot campaigns, we’re sending out messenger bot campaigns through messenger. 

                                We have also some influencers that we’re working with. We’re always looking forward to solutions so we don’t rely only on Facebook when it comes to traffic.

                                Other than these two risks, I don’t see any other major risk that could impact the business.

Jake:                      Yeah I mean, having all of your eggs in one basket, IE the Facebook, could definitely be a risk. But it sounds like you’ve already taken the steps to try to mitigate that and improve upon that. So it doesn’t sound like that’s as much of a concern as it would have been a few months ago. Andre, would you commit to a non compete?

Andre:                  Yeah, absolutely.

Jake:                      And would you say that the business has a large learning curve? How much support are you willing to offer a buyer in getting used to handling the business?

Andre:                  Yeah, sure. So I think it’s fairly easy to learn what’s going on as from a managing standpoint. Obviously you have to know everything, like what’s going on. But for example, to take over like my side of the business, to put it this way, it would take a few weeks, I would say maximum. It’s not that much that’s needed. And to be fairly honest, if you outsource the Facebook ads and you hire an expert, like someone that’s even better than me, the business would just run almost automatically. You don’t really have to do anything.

                                Everything is explained. We try to create SOPs in a document, we documented everything in a Google drive folder so everything gets there from like templates to situations to even how we hire people. We have in place for hiring people. So back a few months ago I started thinking, when I started hiring people, at the same time I started working on SOPs. So everything’s kind of documented in a way, especially the core, the main things that needs to be learned are documented and also in video training. Also for the staff, everything is documented. I would say like 90% of the things are documented.

                                I’m also here to assist the new buyer in any way I can. And I’m willing to commit even for like a 60 days spirit support by email or Skype. Because like my goal here is to transform this business and make it even bigger with the new owner. It’s not just getting the quick cash and then disappearing with it. I really put a lot of effort into this brand. I would be really, really sad just to see the business on the right, having it on the wrong hands up someone. So I’m just here for the new owner and everything that’s needed, I can provide help with.

Jake:                      Are you open to discussing something like an earn out?

Andre:                  Yeah, yeah. That would be something that we can discuss.

Jake:                      Awesome. Andre, thank you so much for the time. I do have one final question for you. Before we get to that though, I want to go ahead and run through that quick summary of the business again. The business was built in August of 2016, has a monthly revenue of $54,594, expenses of $39,366, to make for a net profit of $15,229, which is generated on a 12 month average. Included in sale of this business are the primary domain, secondary domain, site content and files, Shopify theme, Facebook ad account, social media pages, many chats subscribers, email lists and templates, native iOS and Android apps, an experienced team consisting of eight freelancers, SOPs, detailed training, videos, branding and other accounts that are required to operate the business.

                                Andre really seems like this business has been built in a way that a new owner could come in and continue to actively work on the business and grow. And if you take a look at the numbers, the business is consistent and growing. But this is also a business where, and you’ve already started to try to do this, but this is also a business where someone could come in and try to hire, outsource a lot of the other work and try to turn this into as passive of a business as possible for them as an owner.

                                So in your own words, can you give me a 30 second pitch on why this is a business worth buying?

Andre:                  Yeah, sure. That’s a good question. But yeah, let’s see. So this business was built with a lot of passion right from the beginning and not only passion, but we put a lot of effort into selecting each item and each supplier that we work with. Other than that, it’s not just a simple like basic drop shipping business. It’s actually a real brand that we managed to create and our reviews say that, our following say that. Also our constant flow of organic traffic says that.

                                So in opinion this business has a lot of potential to grow and in the right hands, I think this business can go even higher scales that we managed to make it grow in the past months.

Jake:                      I agree. You’ve been working hard on the business and trying to hammer down these processes but you just have to look at the revenue for the business. The revenue for the business has grown pretty much every single month and it’s continuing to rise. The business is having higher and higher sales. It’s a business that in the right hands clearly continue to grow and I wish any buyer the best of luck and I wish you the best of luck in finding a buyer.

Andre:                  Yeah. Thank you. Thank you Jake.

Jake:                      Andre, thank you so much for taking the time today.

Andre:                  Of course, anytime.

Jake:                      You’ve 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.