EFP 104: Slaughtering Your Sacred Cows

Justin Cooke Justin Cooke July 31, 2014

 

Everybody overvalues certain things or ideas about their business, including us. This week we’re going to look at some of the more common sacred cows, overvalued metrics, and ideas entrepreneurs have and how to dump them.

Get Rid of Your Sacred Cows that are Holding You Back

Joe and I will be sharing some of our own personal stories and our old beliefs that we held onto before dropping them and moving on with our business. Moving past the internal barriers that are holding you back lets you focus on and scale the things that do matter.

We’ve all got our own sacred cows, so this episode may hit home!

Check Out This Week’s Episode Here:

 Direct Download – Right Click, Save As

Topics Discussed This Week Include:

  • Perfecting site design and copywriting before launching.
  • The size of your team and why it matters (or not).
  • Having an office and being a “real business.”
  • Blogger blindspots and vanity metrics.
  • Profit matters over revenue.
  • When networking won’t help you.

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What are some of the barriers and false beliefs you’ve had to overcome to scale your business? How did you overcome them? Leave a message on SpeakPipe or join us in the comments below.

 

Justin:                   Welcome to the Empire podcast, episode 104. Everybody overvalues certain things or ideas about their business, including us. This week we’re going to look at some of the more common sacred cows and overvalued metrics or ideas entrepreneurs have and how to dump them. All right, let’s do this.

Speaker 2:           Welcome to the Empire Flippers podcast.

Speaker 3:           Are you sick and tired of gurus who have plenty of ideas but are short on substance? Worried that ebook you bought for $17.95 won’t bring you the personal and financial freedom you long for?

Speaker 2:           Hey, you’re not alone. Join thousands of others in their pursuit of niche profits. Without the bullshit.

                                Straight from your hosts, Justin and Joe from Empire Flippers.

Justin:                   What kind of bullshit company are we running if we can’t even keep our office open? Remember the show, we actually had this conversation when we closed the office the first time. It was a big problem for me. I remember we were standing out on the balcony and we’re discussing whether or not we should close the office. And I was thinking what kind of company do we have if we can’t even keep our office open. We’re going to shit, we’re in trouble. Our business is out of business,

Joe:                        That was probably one of our most heated arguments over the last five years since we’ve been here [inaudible 00:01:14].

Justin:                   It was bad, I think things were tense anyway because we’d lost a major client and things weren’t great and we were just like, I was just thinking it was the end, man. Our business was over, it was going to be, you know, we were going to go home with our tail between our legs kind of thing. Or eventually it was going to dwindle down into nothing and that we’d lost something real about our business. Right. It was done. And I think other people have problems like this too, right? So they have something, some piece of their business in their entrepreneurial journey where they overvalue, they attach too much value to it. They think it’s more important than it actually is. And what I found out shortly after, it’s like, it’s actually better. It was better not actually having the office.

                                It was easier on our company. I think these are lessons that you have to learn through experience, but I thought we’d share some of them today with our listeners so that they could kind of get a feel for what we’ve been through and some of the other entrepreneurs we know have been through as well. So today we’re gonna be talking about, you know, things like limiting beliefs. We’re going to be talking about sacred cows and how to slaughter them just to all the types of ideas people have that entrepreneurs have that that they overvalue things like vanity metrics and things they really need to just drop

Joe:                        So many out there. I mean people get the wrong idea about entrepreneurship and running a company that they get stuck in their head that this one thing is key to making a real business.

Justin:                   Yeah. There was a girl I was talking to just a couple of days ago and she has a new website and if you look at the site, you would have no clue what she’s offering. It’s something about happy people and better life or something. I have no idea what she was offering and I was about to jump all over her shit. I was going to be all over about this. What are you doing? You need to do this, this and this.

                                And then you know, she told me she had like a, it’s a membership community, she had like 10 people paying 100 bucks a month, like 1000 bucks a month. But then she got none of her clients from search engine traffic, so they weren’t new to her. They all came through a blog where she had a bunch of traffic already, so they didn’t really care. They already know, like, and trust her. There is some value in her cleaning it up. But I was putting more importance on the look of her site because we’re going through a redesign right now, maybe. So I was thinking about that, but I was gonna put more value on it than was really needed.

Joe:                        Yeah. It’s weird when you see it from somebody else’s shoes. Somebody else perspective like that and kind of understand where they’re coming from with these things.

Justin:                   Yeah. So we’re going to be talking about some of the sacred cows we’ve slaughtered in our own business and we’re also going to talk about, you know, some of the sacred cows other people have that they’ve been able to get over as well. We’re going to give you some solutions I think to work through and we have six main points we want to talk about. Before we get into the episode though, we do have to make a bit of money, so we’re going to dig into our featured listing of the week. All right, up, we’ve got our medical education website. Laura’s actually the seller and we have an interview with her in the listing. I’m going to put a link to this in the show notes.

Joe:                        Yeah, so Laura is a Chinese national that lives in the Netherlands and what a weird combination. But yeah, she is a very smart girl, very detailed oriented, very process oriented.

Justin:                   She’s got her ducks in a row, man, she’s got it all laid out. She’s like, okay, let me get everything together. I got it all here. And we were like, wow, this girl’s, she’s ready. She’s ready to sell. She’s got everything ready.

Joe:                        Yeah. I remember in her application I was a little bit worried that she had everything so lined up and so well organized. I was like, huh, I got to talk to this person on the phone.

Justin:                   She’s just that way. You know that she does that with other things in her life too. Right? She’s got it laid out.

Joe:                        Well, once I talked to her on the phone, I knew that the site was legit and that everything coming from her was [inaudible 00:04:32].

Justin:                   Here’s the interesting thing, so it makes a little over $4,000 a month, almost 4,100 bucks in profit per month over the last three months. That’s already taking into account some of the expenses. It was created in September, 2012 and it gets around 14,000 visits per month. Here’s the interesting thing, Joe. It’s in the medical education space and it’s primarily monetized with adsense. It’s got some indeed stuff which is like a job board. It makes it a little bit, but it’s mostly adsense. We have another medical education site that was created in January, 2014 it has half the traffic, about 7,000 visits a month and it’s earning $3,300 per month with Quinn Street.

Joe:                        Quinn Street. Yeah. Quinn Street is, you know, for leads, for educational leads Quinn Street is the place to go.

Justin:                   Here’s the thing. So if just assuming that the traffic was the same, assuming it was the same niche and everything further as well. I mean with double that traffic that Quinn Street site would be making $6,600 per month. I just think there’s a big opportunity. I actually asked her about that in the interview. I was like, Laura, what are you doing? Why wouldn’t you put Quinn Street on this? And her answer was fair. It was that she didn’t want to mess up the monetization method. I mean, it’s earning well, she doesn’t want any problems. She’s doesn’t want to switch the monetization and have anything happen. She’s just worried about it.

Joe:                        Yeah. I mean she’s had some up and down before and so she’s leery of that. And I definitely, I understand that. But if someone has experience with Quinn street out there, this is definitely the perfect site for that kind [inaudible 00:05:53].

Justin:                   If we were buying it, that’s what I would do. I would absolutely switch over to Quinn street and I wouldn’t worry so much about the monetization. I’m pretty sure it would make more money, no guarantees, but that would be my path, for sure.

Joe:                        Yeah. I definitely think that the ads could be optimized a little bit better in terms of their placement, but this is all stuff that the new buyer would have to do.

Justin:                   All right, man. Let’s dig into the heart of this week’s episode.

Speaker 2:           This is the Empire Flippers podcast.

Justin:                   The first point we’re going to cover, Joe, is the idea or the overvalued position of my site must look great before I launch. Right. This is particularly relevant to us as we’re going through our relaunch right now. I’m trying to clean up all these extra things, but you know, I mentioned that at the top of the show about the girl who’s site had like horrible copy, like it didn’t even explain what she offered. It was not the best design probably, but she was still able to get it done because her traffic was from people that know, like and trust her. So maybe I was overvaluing copy and design there.

Joe:                        Yeah man. I think Vincent is a little bit guilty of this because he can do a little bit of editing, a little bit of CSS and some changes so all them little minutia that doesn’t really matter. He’s going in there and he’s saying, oh, it only takes five minutes, only takes five minutes. Well-

Justin:                   Five minutes add up.

Joe:                        It really does, you know, you do a hundred of those. It does add up.

Justin:                   Another good example is our buddy Dan Norris over at WP Curve. We’ve known him for quite a while and he used to stress about building out a product for months. He was really picky about his design and layout and that kind of thing. Now, this is the guy that launches a business in a week, right? Just throw something out. Boom, business done. He launched five businesses in two or three months or something. And you know, now he’s got WP Curve and it’s working out really well. But the thing is is that he got it out early, you know, started getting feedback, started getting customers and it’s much easier once you’ve got some money coming in, some profit you can go back and fix it. So I think holding off because it doesn’t look great or you think it needs this, that or the other before you launch is not right, in most cases.

Joe:                        In most cases. I mean if you’re on your third iteration you probably should get it right.

Justin:                   And I think there’s actually an interesting podcast here somewhere where we talk about, because we’re, you know, we’ve had friends beat us up recently about, you know, you guys have been talking about your redesign for four months. I know you guys have been putting all this time, effort, energy and we spent like 15 grand but more than the money, it’s the time we put into this thing. And it is true. Like when we talk to people just starting off we’re like, look, get something from WooThemes or Theme Forest. Whip something up there, get yourself a PayPal button and you’re good to go.

Joe:                        Go back in the Wayback Machine and look at Adsense Flippers.

Justin:                   It was donkey.

Joe:                        It was bad.

Justin:                   It was don- And we just, ah, whatever man it’s content, people dig it, whatever, they deal with our crappy design. And I think that is true when you’re starting out. There is a point though at which I think we realized we were probably turning away too many potential customers with design and it became a financial decision where we think that we’re losing money with what we have. But anyway, I think that’s for another podcast.

                                Talking about some of the solutions for the problem or the feeling that you know, your site has to look great first. We found is that, you know, when it comes to headlines or when it comes to copy or design in general, simple and clear is going to trump clever. So don’t try to be too tricky with your headlines, or your copy. Just be fairly straightforward and you know, cause some people are going to take it different ways and that’s just the way that it works. So you might as well just be very clear with what you’re offering and what your delivering.

Joe:                        Yeah, especially like trying to be funny in your copy. Look man, comedy is a tough thing. So unless you’re really funny, don’t try to be funny in your copy on your website, especially if it’s business related.

Justin:                   You should also follow the one week rule when starting out. Dan Norris’s approach is great, just launch it and get something together, launch it, get a couple of customers and see what they have to say. You can always go back and build or expand it later. I mean that’s something we’re doing right now. I mean we’ve been around for years. I think maybe we probably took a little too long for this redesign both in how long it took us to do it and in how long we decided to start it. But you’ll have the money, you’ll have the resources, and you’ll have the time to put into it once you’ve got something up and running.

Joe:                        And I think this is so true in the B2B space where a lot of people don’t buy online. Like if you had an outsourcing company that was directed at large companies and you could do that with a couple of page info website. If you’re a consultant that doesn’t … acquires your customers through a different venue rather than online by doing sales on the phone or something like that. You know, don’t worry so much about having your website perfected.

Justin:                   So the second sacred cow we want to talk about is, and this is particularly relevant to you, Joe, is the size of your team.

Joe:                        Size does matter.

Justin:                   Size does matter. Yeah Buddy. So this could be the total number of employees. It could be the types or the skillsets that you have employed. It’d be your payroll, right? You’re really excited about your payroll. And I think you Joe felt at one point like the more employees you have, the more real the business was. Why do you think that was? Why did you feel that way?

Joe:                        Yeah, I think early on in my career, a corporate career, the larger your company was, the more likely you are to have more employees and that meant that you were more likely to be a real company. You know, somebody who’s a plumber, which has two assistants, that doesn’t even really, it seems like a business, not really a company.

                                So there’s that part. And then the second part is, is that I always thought having a larger team enabled you to get things done easier. So you would have a specialist on your team that was in charge of design, one is in charge of development. One that knows how to get your coffee the right way, all that kind of stuff. It adds up and you wind up having this great team. I still believe in some value of having a team, but it has to be in relationship to the size of what you’re trying to do and accomplish.

Justin:                   Yeah. We were talking about this even a couple of years ago, you were talking about like the size of like Chris Ducker’s team. You’re like, he had like 250, 300 people. Yeah. Well, it’s easy for Chris to get it done. He was like five people that can just go knock it out for him. Right. And you were like just talking about like, it just must be so much easier with so many people when you’re a more real business. Right. I’d hear that and I would think, you know, I had my other problem, my limiting belief, we’re going to talk about that in a bit, but yours was how many people are on the team.

                                Another example I think is when we were talking about the outsourcing company and what we could do to kind of build that out. And you were like, yeah, we just hire two to three sales people, pay them $100,000 a year, with money we didn’t have at the time. And we’ll be successful. We just hire a couple of salespeople, give them a couple of hundred thousand dollars a year and that’s that. That’d be a fix, right? It was both the amount of people and the pay that we would give these people that would probably make us more of a real company or make us successful. And I think we’re both realizing now that, I mean, how many people would you want? In an ideal perfect situation, how many employers do you want?

Joe:                        Yeah, well I think it would be great to make a whole bunch of money and have zero employees.

Justin:                   Yes, so that’s perfect. Zero employees and a ton of profit. Right? That’d be fantastic. Right? That’s normally not doable. You just can’t do that. So you have to have some people on your team, but less is better. Less people, more profit would be a better scenario.

Joe:                        Absolutely. Yeah. I got to agree. And I think having metrics around that where you measure revenue and profit per employee, I think that’s pretty important.

Justin:                   Yeah. So that’s actually one of the solutions is to measure in your business revenue or profit actually per employee. So if you take a look at the revenue and the profit you’re bringing in and put it on average on every head that you have in your business and start tracking that, that’ll be an important metric as you continue to grow. And it will also tell you where you’re at, whether you should scale, whether you’re doing better or worse than you were previously. I think that’s one metric that’s, that’s useful. One of the thing’s that’s useful about it, I think is that, you know, you could see that on average, let’s say, every employee makes me, I dunno, let’s say in the Philippines he makes $30,000 a year or something and-

Joe:                        Wow.

Justin:                   [inaudible 00:13:44], but let’s say it makes us, you know, in the US, $100,000 per year, and I see year over year, it’s going down.

                                So I’m adding people and I’m losing profit. Right? That’s not a good thing. You can also look at each individual employee and say, if my average employee is making me a hundred thousand a year in profit, what’s this guy making me? What’s that? This person is making me 220 a year in profit. How can I remove the chains from this guy, thats holding him back from making me 400,000 a year profit?

Joe:                        So the winners-

Justin:                   Well, how can the winners do even better? How can I empower them to do better my business and make me even more money?

Joe:                        Right? But I think that is a little dangerous. You’re going to have operational staff that are just going to be quote, unquote, losers.

Justin:                   Oh, oh, Joe, now it’s kicking in, man. Now you’re at the same [inaudible 00:14:29]. No, but like thinking about this, so if your average is 100,000 you’ve got one guy making 15,000 or losing you money or whatever. What do you do with that guy, right? So what if you’ve got a bunch of people in that position? A bunch at the kind of the lower end of the spectrum that aren’t making you much money. I mean it’s a lot’s of you have to have, you’re right Joe, I’ll give you this. You have to have some operational staff or administrative staff that just, it’s really hard to tie a dollar amount to what they’re earning. Right? But maybe you have many of those people.

Joe:                        Well, I mean this is why very successful companies focus on sales staff and expanding sales staff and getting sales staff to the right point in which to speed because it’s directly related to revenue.

Justin:                   There’s a reason that VCs look at this number. They’re looking at this for growth. They’re looking to see how you’re managing your people, how well you can scale. They want to know if you go, if you’re making 10 x from what you’re making now per month, a year from now, how many people is that going to require? Right? Are you going to have to scale your people the same amount? So that’s one of the reasons VCs look, and I think as a entrepreneur is you should look at it too. And I think that’s even true if you have three, four or five people on your team, all the way up to several hundred or a thousand. I think it’s important at every level, but.

Joe:                        Our number’s getting better by the way.

Justin:                   So the third point we’re going to talk about, and this is something that a [inaudible 00:15:44], but that having an office is critical, right? Having an office in your business is critical and this could include you having the executive desk, it could include the big nice comfy chair. It could include, you know, a secretary, these types of things. The niceness of you’re office. Are you on the right street? Are you on the right city block?

Joe:                        This is a bit of keeping up with the Joneses here. I think.

Justin:                   It is. It’s like a business version of keeping up with the Joneses. So my problem, I thought and the thing that was replaying in my head was that not having an office makes us not a real business. If we don’t have an office we’re not real Joe.

Joe:                        Really old school. I mean definitely.

Justin:                   Yeah, it’s just not realistic, but it was something that I held on to and you really argued with me about and I argued the hell out of this with you when we shut down our first office and it turns out you were right, it was actually better for us as a business, better for us personally.

Joe:                        Yeah. The reason why I found out that we were going to be right about was that I just dug through the numbers and saw the expenses and I was looking more instead of profit per head. I was looking at expense per head and I just saw that we could close down the office, have everyone work from home and we would instantly improve our profit margins.

Justin:                   You know, and we should say that there is some truth to the value of an office, right? There’s some benefit to having an office, but it’s really, it can be problematic if you’re overvaluing this. If you’re putting too much stock on the office and the desk and the location.

Joe:                        Look if this redesign is teaching me anything, it’s teaching me that 10 people in a room can get a lot more done than probably 10 from home. So when collaborating on a project or doing a big launch or doing some big push, I see the value of getting together in person and working. But day to day basis, if you can run your company virtually, I think the lowered expense, especially if you’re based in somewhere like the USA would be exceedingly great.

Justin:                   I think the side point of yours too, is that, you know, everyone wants to be location independent, right? They want to run around, they want to go do this, they want to go here, go there and everywhere. But you know, maybe there is some value in you … or maybe they are overvaluing that and not focusing enough on their business. Right. I mean we know plenty of people we’re going to get into a later point that’s pretty close to that. But one of the solutions I think for fixing the, having an office problem, and this really relates to the size of your team or the number of people on your team is that there’s some kind of limiting belief or there’s some kind of piece in your head where you’re letting someone else’s determination of success drive your business or your thoughts on your own business. And it’s either, I think it’s old school, it’s from you.

                                You said it from your first corporate days. I think it’s from kind of what I expected. What was expected of a good business for me was to have the office. And so there are just some things in our head that were I think on different points, but we had the same problem where we wanted to make sure we were real. We wanted to make sure we were a real business right. And we didn’t feel real without those things.

Joe:                        Yeah. Well, I mean everyone will tell you that holding yourselves to other people’s standards is not such a great thing. Right. Comparing yourself to other people, you can’t do that. And that’s why I think the office comes back to that. There are other elements that you could talk about, how nice your office is, how good your employees is, the location of your office, all that kind of stuff comes up to keep up with the Joneses and comparison things that just, it’s not healthy.

Justin:                   The fourth point I want to talk about, I think this applies to a lot of people is the blogger blind spots, right? And for this, we’re going to be talking about things like watching your blog comments, just tracking your visits, looking to see who mentioned you on Twitter, checking to see if any post went viral, that kind of thing. So you’re basically measuring kind of the wrong stuff. And Joe, both of us have been guilty of this one, I think.

Joe:                        Well I think cause it’s so pleasurable.

Justin:                   Pleasurable. Yeah. Yeah. It’s the the vanity metrics, right? I think there was a time, a point in which you came to me, you said, look, I think we’re getting less comments on the blog Justin, what’s going on there? I was like, yeah, I dunno, whatever. And then you know, that’s not that big of a deal. And there was a time where I came to you, I said, Joe, I think we’re getting less emails. It feels like people aren’t responding as well to kind of what we’re putting out-

Joe:                        Thank God.

Justin:                   Thank God, yeah. Why is that a problem? Like why would I complain about that? Why would you complain about having to respond to less comments or something if the other metrics in our business are still good?

Joe:                        Yeah, I don’t know why you get caught up with that. I think a little bit of it is definitely the easiness of it. It’s so nice to be able to track that kind of stuff. You don’t need to dig into the hard data.

Justin:                   Yeah. It’s easy to track. Yeah, that’s a good point. So another example of this, I think, will be Vincent, our marketing director, the guy gets what, like 20,000 to 30,000 visits a month or something.

Joe:                        Unbelievable. I didn’t know he got that much.

Justin:                   Yeah. And the thing is if he were looking to monetize this site, he’d be looking at the wrong stuff. Because he talks about how many comments he’s getting and you know, his traffic that he’s getting which is more traffic than us, but he’s not making money with it, right. So because it’s a hobby, that’s fine and because he wants to do it and he likes to help people, that’s awesome. But if he were looking at this as a business, it’s wrong. Right? We’ve talked with him about this. We’ve discussed it back and forth. Another thing is that people look for things to go viral. They go, God, I wish I could make, you know, I wish I could get mentioned over here. I wish I could get on the first page of Hacker News, which we were on recently. And I was like, ah, that’s so awesome. Right. It’s really cool. And then I looked at the numbers, of the people subscribed. It was like, mah, I don’t know. I’d rather have a mention from Tropical MBA. I’d rather have Spencer give us a link or something [crosstalk 00:21:08].

Joe:                        Yeah, it’s amazing. Right? Just untargeted traffic like that where the numbers just don’t make sense. It just doesn’t help you at all.

Justin:                   Unless it’s a very targeted audience. So if that happens to go viral, capture the exact right audience for you from the exact right place, then boom, that’s magic. But that’s not as likely. You know, it’s something that’s likely to go viral. It’s maybe not the right audience for you.

Joe:                        Yeah, you can’t … and don’t depend on going viral.

Justin:                   Absolutely. Don’t depend on that. I think you know, some of the solutions for the blogger blind spots would be just to measure what matters. And you’ve probably heard this before, but start looking in your business and start measuring things that are important. I think we’ve been guilty of this a bit in our monthly reports, right? So we measure some of the easier stuff. Traffic, we do look at things like conversion rates from different referral sources. That’s a little more interesting and that’s I think a little more useful. But some of the stuff we track and we discuss, Joe, are different than what’s shared on the monthly report. I think they’re probably more important. I think we should probably get a bit more complex with our reports so that we can show other people I think you know what we’re measuring that we think really matters rather than just the visits. Right?

Joe:                        Yeah. And I think sales funnels, talking about sales funnels and how people go through sales funnels, how many conversions you’re getting that way that are actually leading into money. That’s when it starts to get interesting.

Justin:                   The other thing, talking about Vincent’s site, you know, let’s say he’s getting 20,000 visits a month right now, but the site’s not making anything. If this were a business for him and he wanted to turn it into a business, it’d be better for him to have only a thousand visits a month and have every one of those visitors pay him a buck a month. Right?

                                He would make infinitely more money than he’s making from it right now. And the cool thing about that is if he dropped that, let’s say he dropped, 19,000 visits a month from people that weren’t going to give him any money and he got it down to a thousand he now can talk to and engage with those thousand and find out how to get more of them. If he can get more of them. He scales that back up to 10, 20,000. Now we’re talking some cash. Right? But he has that nice core audience to build off of. Right now he’s got a bunch of people that are visiting that will never ever be customers. And so if he had to scale it from here, from 20,000 to 40,000, 100,000 a month or whatever, he wouldn’t know which of those people are going to pay him. So it’d be potentially scaling crap.

Joe:                        It’s amazing how that could work. Right. Scaling down in that case, might be the best thing for him.

Justin:                   Right? It’s weird. Yeah. So that’s why you need to be careful with what you’re measuring. If you’re putting too much stock in your visitors, in his case for example, and he was trying to make it into a business that might not be the best fit.

                                The fifth one we want to talk about today is revenue over profit and I think we’ve done a little bit of this with our monthly reports as well where we talk about our top line revenue but we’re not really looking at or focusing on the profit in some of our expenses are there. A guy I really respect, Derek Severus mentioned something like top line revenue shows the market interest, but bottom line profit shows your business chops. I think that’s probably true. How much of your money that you’re bringing in are you keeping.

Joe:                        I think that that’s so important. We’ll talk about it in the solution section how to get there, but it’s really important that you know your numbers and that you’re looking at those kinds of things because hey, we saw with drop shipping, right? A $3,000 a month site that’s only worth 1500 bucks.

Justin:                   Yeah, well I blew over $3,000 a month it’s making gross and you did the numbers recently, you were digging through it and it came out to like what, 70 bucks a month or something that’s making him profit.

Joe:                        Yeah. I had to double check with the guy, is he working four hours a week and making only 70 bucks? You know like I was just, I was crazy.

Justin:                   Yeah. And then you’re like, it’s just not worth a whole bunch of money, man. And you know that doesn’t seem good. I think you do see that a bit with drop shipping, where you have low margins, you have a lot more margin pressure when you’re using drop shipping, there are a ton of advantages of drop shipping but low margins are one of the problems. I think we were talking about this before the show, Joe, I think this might be why we don’t see labors of love selling for under 20,000 very often. Right?

                                So you won’t see someone that’s put their blood, sweat and tears into a website and then goes turns around and sells for 12,000 bucks. Sometimes it really, more often than not, that’s a side project for someone with a day job. Right. Because the people that are pouring their blood, sweat and tears, they’re looking for a cofounder or they’re doing all this stuff. They’re not looking for a $12,000 payday. It’s just gotta be worth more than that to them, otherwise they’re spinning their wheels. I’ve had people ask me for SaaS businesses under 20,000 and just difficult to find because a lot of times SaaS guys are looking to build, maybe they’ll do it for a couple hundred thousand dollars, maybe even 80, $100,000 if they want to move on to something else. But it’s not likely at a lower [crosstalk 00:25:42].

Joe:                        Yeah. I mean I was talking to James about his site and it’s really interesting. He makes good money. He makes $6,000 a month, so, but he, you know, if he sold it on our platform, he said, this is nowhere near what I would want to get from the site. Right? He’s looking for a much bigger payday in that because he’s put six years of his life into this thing. So it’s really interesting that these kind of labors of love, even on the high end, don’t work.

Justin:                   So if you find yourself overvaluing revenue over profit, one of the solutions would be to count for all costs. And not everyone does this. So they, you know, they’re not, they’re like, ah, that’s not really a cost, or I don’t really need to get paid for my time or whatever. But really when you’re building your business, this is all internal. This is just the stuff you’re looking at it. And I think you really should look in the mirror and get an accurate reflection.

Joe:                        Yeah, I mean set up an accounting software from the beginning and then as soon as you can, you should hire a bookkeeper. I mean, we have a bookkeeper in the United States. It costs us less than $500 a month. You could probably do it if you’re a very small business for a hundred or $200 a month. And then it’s so easy. You have receipts, you just forward them to him via email or if they’re actual paper receipts, take a picture and send it over. It’s really doesn’t get much, much easier though.

Justin:                   It doesn’t surprise me that this is your point, but you were harping on the profit and loss, hot money, talking about money. He loves it.

Joe:                        Yeah. I mean P and L’s and you know, don’t go overboard, but on a monthly P and L and along with projections so you can see where cashflow is at and that kind of thing. I think that that’s very important to understand where your profit and your loss are coming.

Justin:                   Now for our sellers that when they’re looking to sell their site, let’s say six months, nine months, 12 months down the road, they need to start looking at minimizing their costs and maximizing their profits. Sometimes you’re just reinvesting your profits in the growth, right. Especially when you’re kind of like getting up and running and trying to build some steam, enough steam to where it matters. We’ve done that with our business this year, Joe. Right. We agreed at the beginning of the year, look, we’re not going to get pay raises this year. We’re basically just gonna reinvest profits into growth, growth, growth, growth, growth this year.

Joe:                        Yeah. I saw a huge site available from another broker actually where a lot of the expenses seemed like things that could be cut and I was just thinking to myself, man if somebody buys this site they’re really getting it undervalue because they can just go in there and slash and burn and then really clear up some profit margin.

Justin:                   I was thinking now, let’s say, for example that we knew that we want to sell Empire Flippers. Let’s just say, right at the end of 2015, we start rolling towards the end of this year and we would start cutting, right? We’d start leveling out, okay, we’re going to slow our growth. We’re going to chill and we’re going to start maximizing profits so that we can show that profit and especially that growth through 2015 and start looking to sell at the end.

                                I think that would be the way to do it and it’s the way to do it if you’re looking to sell a website as well. Our sixth and final point is in regards to networking. And the reason I bring this up is I was talking to a buddy earlier today actually, and he was talking about how we needed to go to Ho Chi Minh and I was asking him why. He said, well there’s a ton of other entrepreneurs there and I want to be an entrepreneur. I’m working on it. And I think just, you know, if I can get there and I can hang out with these other entrepreneurs that are doing cool stuff, cool stuff’s going to happen for me. Right? And I think they’re putting a little bit too much value on the osmosis of entrepreneurship. I just don’t think that’s realistic.

Joe:                        I definitely think networks the multiplier, and if you multiply it times zero, you still get zero.

Justin:                   Is not going to help. So if you have nothing going on in your business, if you are just looking to get started and you’re thinking that coming out and hob knobbing is gonna do you any good, it’s not likely to do you much good because you have nothing and as a multiplier you’re going to get nothing out of it. So if you plan on using networking in your business, have something going on first. Right? Now there are exceptions to this. We talked a little bit about this. Is this always the case Joe? Is networking always just a multiplier? Can you get, you know the spark and can you get it just a spark and have a big flame from networking? It happens, right? So you look at guys like Derek Halpern, Social Triggers, you look at Billy Murphy, Forever Jobless. And these guys, for example, they had something going on.

                                They had some chops, right? But then they went out and networked the shit out of themselves and they went all over the place. And they just blew up.

Joe:                        I tell you it sounds miserable to me.

Justin:                   Well no, I mean there are people that can do it right. There are those guys that can walk into a room and just boom man, it’s good. They are just lighting the room up. But you’re probably not that guy. If you’re listening to this podcast, I mean you might be, there’s like one in a thousand, right? So you’re probably not that guy. So if you’re not that guy, you know that idea that you’re going to be able to just network your way into an amazing business. It’s just, it’s not going to happen for you. So you should probably get to work on actually building something beforehand and then you can use that networking to help. I think that’s really the solution that’s pretty clear. Just put your head down and build something first. You know, it’s a lot easier for high level contacts and networking to help you when you’ve got something specific to say or to ask about.

Joe:                        This is so true. I mean, it’s so easy for people to give you recommendations. It’s so easy for people to give you referrals. All that kind of stuff works much better if you have this is exactly what I do and I’m very good at it because of X, Y, and Z, and here are my previous experiences. People love to hear that.

Justin:                   All right Joe, let me give you an example of this. I’m going to ask you a question, right? And so I’m going to be, oh well my first question, hey Joe, I’d like to be an entrepreneur. What do you think I should do?

Joe:                        Something.

Justin:                   Something. But like you have no idea. It’s not a very specific answer, right? Like the most specific you can be in your answer is something cause you have no idea what my skill sets are. What I’m able to do. Well, what should I do Joe? What do you think I should do?

Joe:                        Anything really? Because I don’t know.

Justin:                   How about this? Joe. So I’ve been building a piece of software. It specifically helps out with lead … it works with lead pages and Ontraport. It’s a plugin. It does this, this and this. Are these problems you’re struggling with in your business right now, right?

                                Yeah. Okay. And now we can talk. Now we can have a conversation. No, not that, but this might help. Oh, okay. I get it. I get it. But you’ve got something going on right now we can have a conversation, but if you’ve got nothing then you know it’s like I can’t really even help you. Right. And so most people aren’t going to be in a position where they’re going to be able to help you either doing,

Speaker 3:           You’re listening to the Empire Flippers podcast with Justin and Joe.

Justin:                   All right, Joe, a couple bits of news and updates here that I think are pretty cool. First we should mention our new apprentice is in the Philippines, man, boots on the ground. We got Mike in town. He is here. He actually was a trooper, got here, landed, ate some lunch and then worked with us for like nine hours trying to do all this prep for the redesign. So it’s great to have him here. He’s going to be bringing a ton of value to our business, I’m sure. I’m really excited to get him up to speed.

Joe:                        I’m excited to get him up to speed too. I’ve been cc-ing him on a bunch of customer emails. I hope he gets into the flow quickly.

Justin:                   Yeah, it was cool. It’s interesting how we did this one. So this time we started integrating him a bit while he was still in the US, so he was in our Slack channels and kind of he’s able to catch up. He listens to podcasts and kind of got a good feel I think for where we’re and where our business is at. What are companies like before he even got here. So I feel like he’s going to have a smoother transition in and isn’t gonna take as much handholding to understand how we work and what we’re all about.

Joe:                        Agreed.

Justin:                   Last bit of news. We are out, buddy. We are, we’ve dumped some projects over the last month or two and we are strictly focused on the buying and selling space. The outsourcing thing is wrapping up. We’ll be done with that by the end of August. We gave away a couple of projects, we sold a couple of projects and we’re done.

Joe:                        Yeah. We’ll be looking to sell [inaudible 00:33:13] the next couple of weeks. Office actually closes on, well we hand it over September 1st so, yeah.

Justin:                   Well don’t talk about the office closing again. My knees are starting to shake. I’m like getting nervous, sweaty over here, man. Office closing. Oh my God, we’re not a real business.

Joe:                        Yeah, so we’ve really consolidated our crew down to eight people then us, so everything else is outsourced and that makes life a lot easier.

Justin:                   Yeah. So we got eight crew here in the Philippines. We’ve got our marketing director Vincent, we’ve got our new apprentice out here. We’ve got a couple of contractors. So yeah, it’s much smaller. It’s so crazy. We can get everyone in the same room and it’s just, I’m digging it man and our revenue and profit per employee has just shot through the roof. So as we track that we’ll be pretty happy with that number.

                                All right man. Time to move into our listener shouts section also called the ego boosting or social proof segment. All right, first up, we’ve got [Nichat 00:34:08] over on Twitter regarding our lawsuit in the Philippines blog posts that he loved. He said, I was always a silent reader. By the way, the article is superb. We’ve got, James said, thanks for all the great info and encouragement you’ve given me through the podcast over the years. Been listening for years, man. That’s pretty cool. We’ve got Shana. Shana says, do you guys have a post or a podcast on making your very first website purchase. Couldn’t find an archive on your website. Thanks.

                                That’s actually something we should look at doing Joe for like you know, first timers looking to buy a website. Some things they should look for, try to like help prep them a bit better. Some of our stuff is like advanced or intermediate stuff and I think it’d be better to do kind of a walkthrough for a beginner buyer.

Joe:                        Yeah, budget stuff too. I think that’s always a big question.

Justin:                   All right, we got Blue Sheep Dog says crap, Itunes just downloaded 52 back episodes of the Empire Flippers podcast. Thanks Apple. But I’ve already listened to them. Blue Sheep Dog is a listening fool, he listened to all 52, so that’s good. It was actually a problem that we had. It comes from our second or our next Twitter mention is Taylor. [Why it 00:00:35:15] said my pleasure, Justin, you put on over a hundred podcast episodes free. I’m just helping you get them indexed. It seems like a fair trade. We had a problem. Where only the previous 50 podcasts episodes were in iTunes. So people were going, hey, how do I get the other ones? And they had to go to our site and we were trying to fix that. Anyway, Taylor helped me out a ton by showing me how to make sure that we can have up to 300 podcasts in iTunes.

                                So big shout out to Taylor. I really appreciate it.

Joe:                        Yeah. Thank you.

Justin:                   The last thing I’ll mention is we were actually mentioned over at Profit Blitz.com, we had a great mention, it was a long detailed article about selling sites and the mention was that we’re kind of a cross between a marketplace and a broker, Joe.

                                I thought that was pretty interesting. So you know, we do have aspects of a marketplace, we call it the marketplace, but really we’re I think a curated broker. So we don’t accept every listing. We do charge a listing fee. We vett and check every site that we list, so I don’t know, we are kind of a crossover. I thought that was pretty cool.

Joe:                        Yeah, no, I think that’s an interesting point and it’ll be interesting to see where we go from here. How do we scale that as a curated marketplace? Does it become an exchange [crosstalk 00:00:36:19].

Justin:                   Joe’s got the mysterious face going on. What do we do? Stay tuned for next week’s episode.

                                All right. All right, I gotcha. I gotcha on that on… he’s just looking at me, you son of a bitch.

Joe:                        But Profit Blitz.com another domain name I love, I would love to be Joe at Profit Blitz, so.

Justin:                   All right, man. Well that’s it for episode 104, the Empire Flippers podcast. Thanks for sticking with us. We’ll be back next week with another show. You can find the show notes for this episode and more at Empire Flippers.com/sacred. And make sure to follow us on Twitter at Empire Flippers. We’ll see you next week.

Joe:                        Bye Bye everybody.

Speaker 2:           You’ve been listening to the Empire Flippers podcast with Justin and Joe. Be sure to hit up Empire Flippers.com for more. That’s Empire Flippers.com Thanks for listening.

 

Discussion
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  1. Just a few thoughts on the dropship site I sold through Joe and Justin (I was who they were referring to with the site making $3,000p/m sales with $70 profit).

    Consistency: By selling high priced marine electronics, repeat customers were hard to come by. Profits fluctuated greatly month to month, from over $500 p/m to less than $50. It is difficult to get a good idea of the value of a business that has such large swings. Which IMO is why it was sold for such a low price.

    Preparing for the sale: Cutting costs while attempting to increase sales in anticipation of selling is something I did not do, I totally agree with Joe and Justin here.

    Profit Margins: Be very aware of the profit margins in the industry you want to get in, especially in dropshipping, they can be a killer. The next product I sell will be something that can eventually be branded, white labeled, made overseas, etc so the business has an avenue to grow.

    Selling my site with Justin and Joe was a great experience and I would recommend it to anyone. Based on their teams due diligence, I would feel comfortable turning right back around and buying a website from Empire Flippers.

    Thanks guys.

    Jeff

    • Hey Jeff, hope you didn’t mind us calling you out there. Not our intention at all. I’m glad we were able to at least sell the site quickly for you. Perhaps the new owner can expand the business and profits.

      Glad you had a good experience though and I am looking forward to selling your next site (approval comings soon!).

  2. JakubH says:

    The “labor of love” websites are the best to buy :) but for sure much harder to find. I was lucky to buy one last year for $3500 and only the content is worth imo $20000++ … I just wish I would get more than $500 a month (0 minutes work though) out of the 40000 monthly uv, unfortunately it’s niche that I know nothing about (specific kind of diet)

    I’m looking forward to see your new design, hope if won’t be too “corporate”

    • Don’t worry, we’re definitely not going corporate. We’re still working out the kinks and trying to finalize things, but we’re working hard to get it out as soon as possible!

  3. Quite some smackdown on little old me! :)

    • Hey don’t take it too hard, when I was your age I didn’t even have the ability to write a blog never mind monetize it! We should sit down later in August and review possible ways to effectively monetize your blog. After the launch and travel when things die down a bit. ;-)

      • Heh, I don’t mind. Justin and I were brainstorming before the show and he came up with the idea to use my site as an example. Thought it was a good one so I couldn’t complain too much.

        That’d be fun man!

  4. Karl says:

    Great episode yet again!

    I think the most overlooked thing about the ones you mentioned is profit vs revenue.

    It can be hard to really put the whole picture together and look at how much you’re really spending.

    Little things like hosting, domains and services add up REALLY quickly.. Eating up your profit.

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