August 15, 2014
We’ve covered the different types of website buyers before and we’re a bit late on covering the sellers, but here we are!
People ask us all the time, “If the site is so good, why is he selling?”
Today, Joe and I talk about the different types of website sellers and their motivations for selling. There could be hundreds of reasons why someone’s selling their golden egg and often it’s not for the reasons you’d expect.
This episode’s got tips for buyers and sellers to balance it out.
“Be willing to take a lower multiple to sell your site. Holding out costs you money and time.” – Justin – Tweet This!
“Look at overall ROI. Don’t be scared to sell a site and break-even (or at a slight loss) if it’s the right time.” – Justin – Tweet This!
“If you’re looking for distractions then you’ll always find them.” – Justin – Tweet This!
Whether you’re a buyer or a seller, we hope this episode helped. If you’re a website seller, what profile fits you best? Leave a message on SpeakPipe or let us know in the comments below.
Justin: Welcome to the Empire podcast episode 106.
As a follow up to our podcast about buyer profiles, today we will be looking at seller profiles and the behind the scenes reasoning behind selling their sites. You can find the show notes for this episode and more at empireflippers.com/sellerprofiles
Alright, let’s do this.
Speaker 2: Welcome to the Empire Flippers podcast. 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? 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: AdSence is dead. Affiliate sites are dead. There are no good niches left. Joe you probably heard this before right?
Joe: Definitely heard these ones before.
Justin: Once or twice right? Yeah, it’s something that people have been saying for years. And they’ve been saying it about AdSense they’ve been saying it about affiliate marketing. And you know, the same time, we keep seeing these sites come in that are making money, that are profitable, that are working for the people who built them or bought them.
Joe: And don’t use magic either. I mean they’re not using some like some SEO trick or anything like that, they’re adding content, they’re building on solid link building sort of well known practices and they’re getting things done.
Justin: And these sites are selling for big money. I mean anywhere from you know, your six to eight thousand dollar sites up to 80, 100 thousand dollars. And you know these sites are good.
And so you know, the follow up question that buyers ask us, they say “if they are really that good, why are the guy, why are these people selling them? Why are they selling these amazing sites that are you know, earning money every month?” and you know ’cause I think the problem is they start viewing these as like “why are they selling the golden goose?” That’s the, their question, that’s their issue.
And the truth is, they’re selling the eggs. They’ve got the skills to do this over and over again. But there are different reasons and motivations for sellers to sell sites.
Joe: Yeah, I think that’s the best answer right. Is you really just have to know the seller. There’s a million reasons why people sell, there’s a million reasons why people sell property. So you really have to look at it that way.
Justin: So we’re gonna cover some of the seller profiles we’ve come across and try to explain their motivations. We’re gonna look at this through a couple of different lenses. The first one, we’ll just kinda describe what the, you know the persona or profile is. We’re gonna talk about their motivation, the types of process and sites that they sell.
And then we are gonna give tips to both buyers and sellers. If you are that profile or if you are dealing with someone as a buyer who’s that profile, ways you can capitalize on that as well.
Alright, before we get into this episode, we gotta pay the bills with Hot Money’s featured website listing of the week. Whatcha got man?
Joe: Yeah so we got this eCommerce store available, it’s making a little over $3000.00 a month net. We got it listed for $60,000.00 so it’s a little bit less than 20x actually and that’s because there is some work to run it. A little tip for our podcast listeners out there, it sells domains.
Justin: It’s a domain eCommerce sales, pretty interesting. So it’s actually doing about $4200.00 a month in revenue and expenses are just over a thousand bucks a month. So yeah, $3200.00 a month in net profit, and that’s average over the last seven months.
I like this site, It’s relatively new but it’s been doing really well from you know the get go. So it started in October 2013, majority of the stores traffic is through organic search results and email blasts.
Joe: Yeah they have a great email marketing system all set up and ready to go. Great open rates, they’ve been doing really well that way.
And the space is kinda hot. I mean people are very interested in that kind of thing.
Justin: It’s connected to us, I mean all the niche sites builders, their email list is getting like a 50% open rate, they’ve got a 15% click through rate, so yeah, they’ve got some, some traction there.
Joe: Yeah. So I mean, negatives, definitely there is some work involved. You have to find some of the domains, you have to list the domains, do a little customer service and sales, or you could outsource that. But that’s how it’s run right now. So yeah, I think there is great opportunity in this space, definitely to either to partner with people, to expand, to set up some paid advertising to bring in more traffic. A lot of this kind of stuff I think could be used to expand the site into a bigger business.
Justin: So if you want to check out that listing, make sure to check out EmpireFlippers.com/marketplace. You can check out that listing and more.
Alright man, enough about that. Let’s dig into the heart of this week’s episode.
Speaker 2: This is the Empire Flippers Podcast
Justin: Alright so we’ve got six and a half website seller profiles today. The first one we’re gonna talk about is Loser Lawrence.
Speaker 2: Yeah, and by the way, if your name is Lawrence, you’re not a loser. Any of these names we just happen to come up with them. So, we just did some rhyming here that’s the only reason why.
Justin: Joe was talking before the show, he’s like “you can’t use any common names man, someone’s gonna get offended, they’re gonna think we’re like talking about them.” I was like “I don’t think so man. I don’t think so.”
So Loser Lawrence is actually not a loser. What Loser Lawrence does is he’s looking to build and hold his sites. But he’s looking to do that with his larger sites. So what he does is he sells off some of the smaller sites, some of the sites that didn’t quite hit as well as the larger sites he’s looking to hold. And then he basically is re focusing his energy, his effort on those larger sites that have more opportunity long term, that he can really expand out and grow into monsters.
Speaker 2: Yeah, he probably has a library of sites and he just needs to unload some of the dead weight.
Justin: He has a failure percentage, I mean some of his sites he tries to create them, get them off the ground and they just fail miserably. Others are kind of in that you know, not quite enough but valuable mode and that’s where Loser Lawrence is.
His motivation is that he realizes that his time is better spent improving the bigger winners. He is looking for an ROI on his time. And that’s something that I think buyers need to be aware of when they’re buying a site that let’s say earns two hundred bucks a month. That’s great, and they can tinker with it, and that’s something you can kind of like sink your teeth into as a first purchase. But you have to understand that even if you improve that site you know, by 50% you’ve only made an extra hundred dollars a month and that’s only you know let’s say in a sale, $2000.00 worth of value. So if you spent three months of your time working to get that 50%, eh…
Speaker 2: Yeah.
Justin: Not great value for your time. Now maybe you’re tinkering. Maybe you’re you know, it’s a hobby of yours, you’re trying to get into it and I get that. But as like, you can’t do that, that’s not sustainable long term as like a job replacement process.
Speaker 2: Yeah, we definitely see that a lot, people spending money and time to only build a little bit of value per month. And you know, I think it’s a little bit of a passive income dream, they have this dream, and so they spend all this time and effort and energy and even money, and they do get a passive income earner but it doesn’t earn that much.
Justin: You see that a lot too. I see it. Well most people don’t talk about it but the people that do, you’ll see it on some income reports that guys are you know, making three hundred bucks a month, and they may get to $350.00. But you know a lot of times, that turns into considerably more it’s just like the early phases, your pay for your hours is pretty crappy.
Talking about the sites and the process that Loser Lawrence is looking for, he’s looking for repeatable processes, he’s looking for sites in similar or parallel industries. Let’s say that he you know gets sites working really well in the dental niche, he’ll then try to apply those same rules to the chiropractor niche.
Loser Lawrence will have, will have a wider range of sites, but he won’t usually focus on like sourced eCommerce sites, probably not like SaaS businesses, that probably wouldn’t be his thing.
Joe: Yeah, because it’s too much commitment to one site right?
Justin: Yep. Yep. Because he’s looking to, he knows that he’s got some losers, he’s throwing things against the wall. The ones that stick he keeps the other ones he sells off.
So a seller tip: If you find yourself in the Loser Lawrence position, one of the things you can do is actually package sites in the same or similar niche. What this does, is it will get you know, potential buyers they’ll have multiple sites and they can kind of like work together. It also keeps you from you know, selling off sites that are now in competition to multiple buyers, that can be problematic and build you a bad reputation.
Joe: And people will pay extra for sites in the same niche right? They will pay high or multiple, cause some people really like golf and they want 20 sites about golf even if they only make a couple hundred bucks a month.
Justin: You also want to be careful not to sell to early. So sometimes you know
Joe: We’ve been guilty of this.
Justin: Yeah, six months in, nine months in and the site isn’t really where it was gonna be, you might have sold off a winner that you would have held if you would have just held it a bit longer. So, you got the time, you might as well hang on to those sites a bit longer, really them flesh themselves out. And when they start to stabilize, you’ve tweaked them a little bit, and it’s just not working, that’s a good time to sell them off.
You don’t want to sell too late though either right? The problem is that if you are selling them off too late and the sites you know on a decline or it’s just not working out, you gave up interest or something on the site, and now it’s like it’s a lot less valuable than it was to someone who could’ve bought it, taken it over, and ran with it.
Justin: Twitart man, that was, that was our problem. But, you know it’s really all about timing I think for Loser Lawrence, like selling at the right time. Not too early, not too late, just right. The other thing is you know for a buyer tip, if you actually find yourself like working with a Loser Lawrence, you know these are actually pretty good sites for like a Newbie Norm or a Do It Yourself Dave over on the buyer profiles. Someone’s that’s brand new, they’re probably gonna be less expensive, they’re gonna be great for tinker with, because you know Loser Lawrence didn’t do too much with them because they were you know, smaller.
One think you need to look out for as a buyer with a Loser Lawrence, is you need to watch for penalized sites, sites that have been hit, tanked, whatever, de indexed, that kind of thing because they just don’t have the growth opportunities. So if you are a Do It Yourself David, and you are planning to tinker with this site, I mean unless you want to play with the idea of fixing penalized sites, I know Joe has done this, we’ve done this you know across our team, with mixed success, some worked, some didn’t.
Joe: Same process, which I never understood.
Justin: Yeah. So if you want to test through that, that’s cool. But just know that if you really are looking for the growth with this one, it probably, it may not be there unless you are able to fix that problem. You also need to make you know, make sure that you’re not gonna be competing with the seller in the same niche. So Loser Lawrence will create you know, sites in parallel niches, and similar niches and sometimes even the same niche so you want to make sure that Loser Lawrence isn’t going to be competing with you or already have a monster site in there. I mean it’s really not the worst thing in the world if he’s already got one in there but you want to at least have that disclosed, you want to have that conversation with the seller.
Joe: Yeah. That’s the big thing for me. If it’s disclosed up front and he says “look I’m at number one already, this one is number three, I was never able to get it past number three and I just don’t want it anymore.” at least you know.
Justin: Yeah done right. They’ll tell you straight up and be forthcoming about it and at least you know.
Second profile I want to talk about today is Scaling Sarah. So here is Sarah’s situation, she needs cash flow up front, she is looking to reinvest and scaling her business and creating more sites, and really just kind of building a bit of a monster.
Joe: Sounds like somebody we know.
Justin: Yeah. I ah, pretty familiar with this profile, this is something that we did when were you know just getting started building niche ads and sites. The real motivation behind this is just leveraging the sale of this site to get to a point of sale that matters. So get to a point where you have enough sites to where it’s you know, paying for your business, it’s profitable, and it’s meaningful right? Like you don’t want to scale, you’re make three hundred bucks a month, and then you go to four, and it takes forever to get there, you want to do this quickly and get up to thousands dollars a month where it’s you know, something substantial.
Joe: Yeah. And without having to come out of pocket.
Justin: Without coming out of pocket, that’s true. So, you know the types of sites and the process that Scaling Sarah would use, she’s really looking to perfect and iterate on her process right, she’s really looking for growth, so she wants to get better at you know, keyword research, she wants to improve sites over time. She maybe some thing like a wide rage of sites, but these generally won’t be like service based sites, or really time intensive site. So it’s not something where you know, she’s having to service the work herself, it’s probably not even VAs because that just doesn’t work as well with you know, you need to scale really big to make that work.
Joe: Yeah. When we were scaling up, I can’t imagine. I mean, I remember we had all these email messages coming in and we were trying to build lists out of them, to do something with and it was just impossible. I mean it’s just too much.
Justin: The thing about that Joe if we were, let’s say we were the scaring, the scaring… the Scaling Sarah profile and we were trying to you know, build this out and we’re doing it with service based businesses, our hiring process would be ridiculous. We’d be like those big ass call centers where they like bring people in and they first they put them in this tank with the trainers and then they put them in the second tank with the trainers and their like, a whole process for hiring people would be scaling somewhat so yeah, I think that might be difficult. Someone might be out there doing it but that’s I think a pretty rare scenario.
So you know, our tip for Scaling Sarah I mean the big thing is process, process, process right. Get that down.
Joe: Really. You gotta keep the costs low and you gotta look for high multiples to scale quickly. So any sort of little expenses can really eat you up.
Justin: Yeah. So you know, the higher multiple you get, the more sites you’re going to be able to sell off. If I can get 15x or 20x or 22x, how many more sites can I build? How much bigger can I grow my empire by reinvesting and building out more sites? And like you said, cutting costs, you can squeak out a little bit extra and scale that much more quickly.
Joe: Yeah, and then early on right, it’s sell sooner to push that cash flow. I think that’s really important. Because cash in the door will mean more sites out the other end of the factory.
Justin: Yeah so Scaling Sarah is looking to sell quicker right? Because if she has an 18 month or 24 month turn time, that really hurts her scalability. Whereas if she can get that down to a six month, nine months, or 12 month turn time, I mean she is going to grow significantly faster. So that’s really what she’s looking to do is to sell earlier rather than later.
Joe: And this last tip here I think is really awesome. Get recurring buyers. I mean this was huge for us. When we had a couple of those recurring buyers, that would regularly come to us privately, and buy a bunch of sites it made it so much easier on the cash flow.
Justin: Yeah because we weren’t even really worried about buyers because we had these people coming to us saying they were looking to more and more sites, and it wasn’t really a problem. So we could continually sell those sites and continually reinvest the cash.
If you’re a buyer that’s looking to work with someone that’s a Scaling Sarah in that position, got a tip for you to. You’re going to basically be forced to look at some newer sites. So these might be sites that are six months at a minimum probably nine months, 12 months, 18 month sites, they’re not gonna be five year old sites if you are dealing with Scaling Sarah. And you’re gonna want to negotiate the multiple. So try to get the multiple down.
For Scaling Sarah, you know, obviously buyers and sellers they’re gonna want to you know I want a higher multiple, I want a lower multiple, but Scaling Sarah will be more likely to give you a lower multiple to get them out the door. Kind of like the … you know, the car sales situation where they need to move inventory. If they have inventory sitting on the lot, it costs Sarah money.
Joe: Especially if you’re coming back for more. So, if you’re a recurring buyer, you may be able to get those discounts.
Justin: As a buyer with a Scaling Sarah too, the other thing is you become a regular buyer and then get those discounts regularly. So you know, Sarah’s more willing to give you discounts, give you repeat discounts if you’re a repeat customer or buyer because it really just makes it easy for her. Like she may not be looking to set up this whole website selling business, she just wants the cash. So you know, putting yourself in a position where you’re giving discounts, you buy quickly, you don’t waste her time can save you some money.
So our third profile we’re going to talk about today is Consolidating Clinton. And here is Clinton’s position, he is looking to drop all side projects, anything that’s a distraction. So that he can focus on one big or major opportunity.
Joe: I like Clinton. I like where he’s going, I like where he’s headed.
Justin: Well this is right now, right? Scaling Sarah is us before, we’re now consolidating Clinton. You know Clinton doesn’t have time for distraction sites. Doesn’t have time for time wasting sites, time intensive sites, just can’t do it anymore, wants to dump, dump, dump. So you know, Clinton’s motivation is he’s just done with it right? He’s done with it. It’s time to move on, he sees the writing on the wall with this crazy opportunity. If he doesn’t get on it, he knows that he’s missing out.
Joe: Yeah, I would also say the singles and doubles don’t appeal to him anymore right? I mean, he just doesn’t need that. He can do that easily, and he is really looking for the home runs, and he’s done the singles and doubles, he’s over it. He wants to move on to the bigger sites and he doesn’t even want to spend any time on those smaller distractions.
Justin: Clinton’s actually interested in a quick sale. He’s okay with a quick sale, in fact he’s looking for it. And he’s also probably going to want a shorter turn over or hand over period. So he’s going to want this long drawn out process, you know which will take him a long time to kinda get the buyer up to speed. That is not what he’s looking for.
The types of sites that Clinton has is, you know, sometimes they’ll be you know smaller content based ads or amazon sites. And they may include any type of site that has like a heavy time requirement, or any kind of mind share behind the site. So, let’s say that it you know, it takes Clinton you know going out there and expanding the brand and doing some handshaking, doing some connections in forums, that kind of thing that just takes up time and energy and effort, he may want to just get rid of those. So you’ll see some opportunities there especially if that’s something you’re familiar with or you’re good at.
Joe: An info product launch site. Perfect example.
Justin: Yeah. Or that like you know has like regular launch cycles and he has to prep and prep the affiliates and stuff, and `he just, it’s doing well, maybe it’s gone through four or five cycles, continues to do well, it’s not like one of those like, you know one time earners and dies out. But he just can’t do the launches anymore, can’t go through the launch cycle.
Joe: Yeah, it’s reproduce able, but he just doesn’t want to go through it right.
Justin: Alright so a seller tip for a Consolidating Clinton, the first thing is, take a lower multiple for a quick sale. So be willing to take a lower multiple to get it off your plate. The reason for that is because the extra month, or two months, or four months or what however long it’s going to take for you to get like a for a hold out for like a higher multiple or for a slightly better deal, that costs you money. So you gotta think of it in terms of you know, what are you losing on the new business by hanging around for another two or three months. What does that cost you a year from now in the new business, two years from now.
Joe: Not only that, if you’re not focused on the old business at all and it starting to dwindle because you’re not running launches, or you’re not running customer service or sales correctly, than you know the sales multiple, the salability of that property gets to be lower
Justin: The other thing I think you need to do Clinton is to be crystal clear about earn outs and limiting your post sale trading. So you wanna be, you want to spell that out very clearly. Here’s the amount of time I am willing to offer. You know, I’ll take maybe paid consulting above and beyond that, but even that shuts off at certain period. So you could actually say you know, I’m done with it, this is all the time I have to commit to it, this is the only kind of earn out I’ll take simply because I don’t want a long commitment.
Joe: Yeah, and I think you can mitigate that long commitment by looking for experienced buyers right? You get someone experienced in there, especially someone in the space, so that this way you don’t have to deal with a lot of those follow up questions.
Justin: No newbies. That’s the thing. No newbies. Because you know, newbies they’re gonna take a bit more hand holding, they’re gonna you know, need a bit more of your time and kind of walk through the process. And I think we provide value there as brokers and like helping you find the right type of buyer. Because a newbie, you know, isn’t gonna get you where you want to go and it’s still gonna have those you know, longer time commitments. They’re gonna try and negotiate longer trading period and that’s probably not something that you want.
A buyer tip if you are dealing with a Consolidating Clinton is to offer discounts. Right, clearly if you can get it for less money, that’s a benefit. But the thing is you can make the process smooth for the seller as possible. You know like, cut down any long time commitments, any extra time they have, really try to cut that down. You know, take that and take that off the table. And say look I am gonna take your time out completely. I understand these type of sites, you give it to me I can run with it, I’m done. But I’m gonna give you a slightly lower valuation then you’re looking for.
Joe: Yeah, that’s your leverage right? If you have the ability to take over the site right away and you don’t have to need a lot of time commitment from him that’s great. But, at the same time, you better make sure that any training you get in writing or you have those processes documented because you gotta figure that the seller her you know, Clinton is not gonna have a lot of time to give you.
Justin: Yeah, so get it in writing, and you can actually do like a hold over. So, if there is a bit of training required, you know, 20, 30% of the sale or whatever it turns out to be don’t actually release that until the training is completed.
So anyway, I actually relate to Consolidating Clinton right now. It’s something that you know, we’re going through ourselves, and we’re in that position so I thought that was pretty cool.
Alright man let’s move on to number four.
We’re looking at Scheming Stuart Joe.
Joe: Oh boy.
Justin: Your favorite one. Scheming Stuart. Now lets talk about Stuart for a bit. Sometimes, it’s an outright scam, somebody’s just a scammer looking to make some money, doesn’t care who he hurts.
Sometimes, it’s just someone who like built around the short term, not the long term.
Joe: Yeah, I think that’s probably more often, is they just didn’t really think about the long term viability of this project. Like we see kind of people that come in and they’re working a whole bunch of hours, and they’re you know it’s just not really a viable business, doesn’t make a whole lot of profit, that kind of thing.
Justin: Yeah, or the single launch right, they get a whole bunch of traction. They’re like look our launch was like two months ago look at how much money I made. Like can’t I sell based on like an average of three months? Nope.
Justin: Doesn’t work that way. Unfortunately. So, that’s you know, Scheming Stuart. So sometimes it’s a scam, sometimes it’s just you know, they have some kind of short term model that just not down to last.
So the motivation for Stuart is you know, he’s looking for maximum cash, doesn’t really care what happens to the buyer after, that’s not really his concern. Probably you know, doesn’t view the pie getting any bigger, doesn’t come from an abundance mindset and says “look I’m gonna take what I can get.”
Joe: And he’s a hustler, not really an entrepreneur right? I mean he’s just that kind of guy, he doesn’t want a job but he doesn’t really want to build a business either.
Justin: Yeah, look in short term, you know chasing the buck kind of hustler. We know some of these guys for sure.
Joe: We do.
Justin: So the types of sites or process that Scheming Stuart will use, sometimes these sites will have like fake traffic, so try to boost up the traffic and then along with that they’ll also have some fake earnings. So, a lot of times buyers are savvy enough to look at you know, earnings per visitor, earnings per session, or earnings per page view or whatever metric is they’re looking at. And so, they’re faking earnings, they gotta fake the traffic too, so they’ll use like bot traffic, that kind of thing. They also often use you know, the scammers will try to use you know, fake seller name. They’ll use fake social profiles with fake friends.
Joe: Yeah, that’s the big one. Red flag right there right? If they don’t wanna share their real personal details with you that’s when you should get worried.
Justin: And in terms of their process, they don’t really put any real work or value into the site. Either the site itself is not that valuable or their process itself is not that valuable. And I think it just comes down to laziness right? It comes down to not wanting to put a lot of value in there, just looking to cash out in a short term manner. You know, that’s what they’re looking for.
Now for a seller, you know, if you find yourself in this position I hope you’re not listening to our show and finding yourself as a Scheming Stuart. But, all the same, all the effort you’re putting in could’ve better spent on actually building long term value. Because, there’s a whole bunch, first off you’re gonna try and get past our vetting process, it’s very likely we’re gonna catch you based on one of the many things that we look at right? So you’d have to go pretty far lengths to fool us and if you’re gonna do that, why not just build something you know, useful, why not build something valuable to people?
Joe: Yeah, I just don’t get it. You know I mean, you probably have learned enough skills that you could reproduce this once or twice a year at least. And you could probably make a good consistent income on that. So if you just were honest and upfront about the risks and about what you did and didn’t try to exaggerate just to make a quick buck, you could make a consistent business out of it.
Justin: And think about this more as like asset building, real empire building and not these short term payouts right. So don’t look for the quick buck, look to build you know, the castles that are going to pay you over and over and over again.
For a buyer tip, I mean generally across the board you should probably avoid Scheming Stuart. Not always the case so there are some exceptions. So we will mention that but generally you’re gonna want to avoid these types of sellers.
Where you might find some value is like a strategic purchase opportunity. So, there is actually a product, or you know that you could take that traffic. The traffics real but you know, the earnings are a bit sketch and you think you can monetize that traffic better with the current suite of products you’re currently offering. Maybe they have you know, something built into the back end that is useful, you can take your products and kind of port them into their platform. But you better dig into it pretty well. I mean, you gonna , you can’t rely too heavily on a stated numbers from a Scheming Stuart, you can’t rely too heavily on anything they’re providing you so.
Joe: Yeah, I don’t know. You know how I feel about liars. I don’t want to give them any money.
Justin: Yeah, I know, it’s like so we had a deal not that long ago we were looking at, it was a flip a deal. There were earnings that were claimed that were a little sketch, you know, we were a little unsure about it but the back end I thought was really interesting, I think what they were offering was really interesting, we ended up not doing the deal because the seller never got back to us basically. But, I thought that guy was a Scheming Stuart but it was, it probably fit what we were trying to do. I know Joe’s looking at me like happy that we didn’t actually buy it because he didn’t want the hassle. Plus, you know, he doesn’t want to give Scheming Stuart a dime so.
Joe: Yeah, I really don’t. I don’t think they should be rewarded for their schemes in any way shape or form. There is plenty of people out there that are real upfront and honest that should be rewarded for their approach to business.
Justin: Alright man, our fifth seller profile is Cash Out Carlos. So, here’s Carlos’s position. He’s looking for a cash injection for you know, personal reasons, for you know, an offline purchase. This can come in many forms. You know, we had a guy that did this you know, for an adoption. He was looking to pay, you know adoptions are not cheap.
Justin: Yeah, so he was looking to sell his site so he could you know, move forward with adoption. We’ve also seen like ah, people that want to you know, either put a deposit or actually deposit on a house or just buy a house outright with a sale. Maybe other real estate investments. Sometimes it’s jet skis, or they want to take a vacation, take some time off. I mean a lot of times, the motivation for this comes from you know, being life style focused. They have something in their life that’s really important to them and they the cash for it.
Joe: A lot of our sellers fit into this category I think and it’s nothing to be afraid of. I mean as long as they’re honest and upfront about it and say “look, I have this asset that’s been earning quite well for the last two years. But, I want to sell it all upfront and move to Thailand.” I think that’s a valid excuse.
Justin: That’s cool. You know, they want to move on, they want to do something else with their business.
So the types of sites that Cash Out Carlos will sell, they’re really across the board. It could be anything from you know, AdSense, or a lead generation site, all the way up to full on eCommerce businesses. The only thing is, these sites are generally the Cash Out Carlos, they’re larger transactions. So these will, I mean large is all relative, and so I think it’s relative to the seller too what they consider large. But we’ve seen a lot of sites in the 50 thousand plus range to be a you know, a Cash Out Carlos situation. Yeah.
Joe: Yeah. I mean, it’s just basically people that are gonna have some sort of life changing event. You’re not gonna have a life changing event in the United States for probably less then $50,000.00. Now we have some foreigners who definitely, from the third world nations who have sold to us, and you know, gotten back to us and told us about the changes in their life, on the five or ten, of $15,000.00 that we sent them.
Justin: Yeah, they can live for six months to a year like a boss right on the sale, which is pretty cool so.
You know a seller tip for Cash Out Carlos is to give yourself as much time as you can so you can get maximum value or maximum multiples. So, if you know you have something coming up, don’t try last minute, don’t wait till the last minute. Get started with the process early. So if you know you want to sell in three or four months, you should start looking now as opposed to a month out because you’re gonna be cutting yourself a bit short on the cash you get if you wait.
Joe: Yeah definitely start planning for that sale in any way you can. We did a whole podcast about what to do before the sale, and I think that six month to 12 month plans would really help you have the extra cash when it comes to the sale.
Justin: The other thing is, I think you should explain that deadline to your broker. Tell them you know, kind of your timeline and you know, what you’re looking for so that they can you know, make an honest recommendation to you on kind of what that looks like, you know what you can expect, whether that’s really doable or not. I think that’s gonna them too kind of like push the deal along. Now, tell your broker, not necessarily your buyer right. So if you tell your buyer what your deadline is, you know that can cause some problems, which we’re actually gonna recommend to the buyers dealing with a Cash Out Carlos.
Joe: But before we get to that, please be realistic about your closing. We definitely see this sometimes from sellers that didn’t realize it was gonna take a little while to get the money. Whatever that might take, you know, from just the transfer period through the get the wire getting it to you in a [crosstalk 00:28:56] foreign country.
Justin: Sometimes earn outs, or like you know I don’t get paid, I don’t finish getting paid until the trainings over, these types of things so that’s something I think you should discuss with a broker. Just be aware of you know if they are selling privately or on their own or through a strategic deal or something.
For a buyer tip if you are working with a Cash Out Carlos, you need to find out the timeline. So what is this guys drop date, when is Carlos taking that trip to Thailand, when does Carlos need the money for the adoption? You know, that kind of thing.
Joe: Yeah, and you want them to drag out the negotiations but man I cringe at that sort of tactic.
Justin: Yeah, I mentioned this before the show, I was telling Joe, “Yeah look, If I’m buying from Cash Out Carlos, I want to drag out negotiations right? If I have an idea about the timeline I want to drag that out, because I know I can get a sweeter deal when it gets toward the end.”
Joe: You sound like a landlord with all the stuff you’re selling.
Justin: I know right. He’s trying to drag it out on me, I’m like oh no way buddy! I’m putting a deadline on that. But yeah no, I think, I think trying to drag it out well there’s some value there even if it does end up screwing poor Carlos.
The other thing I want to do is make sure you double check due diligence. So, you know, this is something Scheming Stuart could pull saying “Oh I want the cash for this that or the other and have a deadline.” And then really he’s just trying to get you to you know to shorten your due diligence so make sure that his stuffs legit and everything checks out.
Our sixth profile, we got him back, he’s back baby Flipper Fred. So flipper Fred is back in the house. He bought a site, found a winner, turned it around, is now looking to sell off the site because that’s what he does, he’s a flipper.
Joe: Probably my favorite profile.
Justin: So, he’s back again. He’s buying, he’s looking to profit on the flip. The other thing is too is that Flipper Fred might just be looking to cut his loses on a dud. He might have bought a site, did some work on it, you know went down a little bit, he’s just looking to off load this site. So it’s not always a win. It could be wins and you know, breaking even or even slight loses. The motivation for Fred is you know, this is what he does, this is business. He’s not really emotional or attached to his business. It’s just business for him.
Joe: Yeah, some buyers have a hard time understanding this. Why someone would get into the business of just flipping websites. And, you know, it’s a valid business model. I buy at x, I invest y, and then I sell at z or hopefully at z which is higher then x right. And I don’t see why it’s that hard to comprehend I mean people do it in
Justin: It’s arbitrosh.
Joe: Yeah it’s arbitrosh. And people do it in other businesses all the time. So, just be aware that, that’s out there and there are a lot of people doing that.
Justin: So, you know, the type of sites that Fred will use, you know, he’ll generally stick to sites that need improvement in areas he’s good at. Maybe they are poorly coded, he knows that he can clean up the code, clean up the site, make it faster, it has really bad design, or it needs some changes that he’s particular good at. He’ll look for these sites on a regular basis. So, it needs additional content, boom, I’ve got a content team, I can go on there, add hundred two hundred pages of content, you know within three months, six months, it’s again ready to seel I can flip it.
He’s not really so great at you know, day to day maintenance sites, sites that require a lot of his work because you know, cuts into his ROI right on a flip, so you know, most of that is either out sourced, or he’s taken over a site and now out source that to his team. So, he’s not doing much of the day to day maintenance himself generally.
Joe: yeah, when I’ve talked to these guys on the phone, they’re definitely not interested in sites that require almost any of their time.
Justin: So if you’re Fred, a great tip for you is to look at overall ROI. Don’t be scared to sell a site and break even or even a slight loss if it’s the right time. You know, obviously you want to make cash, you’re gonna wanna really maximize your wins, so if can actually you know, put a bit more of time into those and make them big winners that’s great.
You’re gonna wanna minimize your loses, so try to you now, cut those to a minimum. You’re gonna sell sites at a loss most likely. Just try to keep that a minimal loos.
Joe: Yeah, I mean, I still think that there’s gonna be sites that you probably invest money in, and that made money while you had them but that maybe didn’t increase. And so
Justin: Money, or time or whatever.
Joe: Yeah, I think the gain loss there was kind of break even, but you just want to get out of that and move on to the next one and learn the next skill and try your hand at the next flip.
Justin: I think new Flipper Fred’s what happens a lot is they end up making money right? So they make money, they’re buying sites, they’re making money but they are doing it at like three dollars an hour. So they’re like “This is a bit rough.” Cause maybe they lost a little bit on one site, they made more money on another site, but they start looking at the time involved and they’re like “Ahh, I’m not doing great.” And I think, that’s just kind of the growing pains of being or starting off as a Flipper Fred. I think you get better with that over time.
Joe: Yeah, I agree and I think that’s another good suggestion for as a seller tip. Make sure you’re tracking stuff very well so you know what you’re getting an ROI on and what you’re not, what you’re flat on.
Justin: Yeah. You don’t want to go a year and be like “wow, okay I made a little bit of money but I’m busting my balls for nothing.” that would suck. Or if you are, it’s at least good to know that so you can start to figure out areas you can improve.
Alright buyer tips for dealing with a Flipper Fred, again this is a good situation for you to become a recurring customer and for to get discounts for being a recurring customer.
Joe: Absolutely cause Flipping Fred definitely is gonna want to look for that guy that’s just constantly looking for sites. I see two Flipper Fred’s matching up together almost, and they maybe do good deals together.
Justin: Done. I love that Joe. Absolutely. So, you know, the buyer Flipper Fred is seeing this and going “oh my God, I can’t believe he didn’t do this” and the sellers like “Ah… that’s not really my area” or what ever, hands it off to him he takes it over and the cycle continues.
A good thing if you’re a buyer, if you’re a buyer from Flipper Fred is to find out what this guy optimized. What did he work on? What were the improvements he made? And what was the effect? You want to look to see if there is still room for expansion in areas that you are capable right. So, is this something I can still scale? Is all the content that could be added to this niche added? You know, did they maximize the speed of the site or were conversion rates really optimized, is it optimal as possible? And that’s an area I do, then maybe that’s something they’d buy from me. You know, Flipper Fred already took care of that.
Joe: And the next point is, is he making or losing money? I think that’s a really good thing just like we were saying as a seller to be able to track. As a buyer, did he track that stuff? Does he way to determine if he’s making or losing money? And I think that if he doesn’t know that it may be an opportunity you have to pass on.
Justin: So we’ve got another one here I’m not gonna actually call it a profile because this could fit to any of the six above and there is definitely crossover. Sometimes you’re one and you want to be the other or you’re working towards the other or what ever.
But this seventh one it’s something that could apply to any of them and we’re gonna call him First Flip Francis.
Joe: That’s a lot of Fs in there.
Justin: First Flip Francis. I know I am gonna say a bad word in this one I can’t help myself right?
But I no, so he, so this is the first real successful site or business this guy has built or sold or you know what ever. So he’s brand new to this and he’s a bit nervous about getting scammed, he really wants to make sure he’s protecting himself. He wants to make sure he’s able to find the right buyer. Wants to you know, he’s worried about how to transfer a site because he’s never done any of that. He’s worried about selling his baby.
Joe: Yeah I can’t tell you how many times we get this on Empire Flippers. We get the guy, it’s his first time selling, and he literally messages me like twice a day, “When is the money coming?” “Is the money coming?” “Do you have all my account number correct??”
Justin: “Do you have a buyer?” “How many deposits we have, where we at?” Yeah. Yeah. Yeah.
Joe: He’s really, really nervous. And then once they go through the process, they’re cool, they understand.
Justin: They’re like “Okay, got paid, all worked out, that’s nice.”
But yeah, I mean, the motivation for First Flip Francis I mean, he’s really just kind of looking to test the process and he’s looking forward to a payday kind of nervous and excited about the process, and but really kind of like needs a bit more hand holding, you know, a bit more questions answered.
This is actually a great person I think to sell through us, toot our own horn here a bit, go into sales, put the sales hat on. But you know this is a great person with us because I think it is very streamlined and very smooth and they can get regular updates, there are people they can check in with. So we’re really good with these people.
I think the types of sites or process they use, I mean really they’ll sell any or all sites, this could be across the board, any of them can be their first time. What we do find though is that often the processes aren’t as well documented as they would be as with some of the other profiles. It’s their first time it’s not as well documented. They may not have their financials in good order for a sale, so we have to actually kind of guide them tr\hrough the process and show them what’s needed and what buyers are looking for.
Joe: We’ve had several of these guys come to us and I’ve had to say “Look man, you need to get x, y, and z straightened out and then come back to me in three months.” And they do it. They’ve come back to me and they’ve said look, “I got it all fixed, I got google [inaudible 00:37:50] installed.”
Justin: Because they weren’t tracking it right? Like they have some of their stuff there but they just weren’t tracking other things so there’s just no way to see it or to actually
Joe: There’s no way to prove it. Right.
Justin: So if you’re a First Flip Francis, this is gonna be your first time selling a site, make sure you get your ducks in a row. And don’t get too attached to your site, you know this isn’t your baby. This is something you plan on doing regularly you know, in business. So, this isn’t you know, forget about the blood sweat and tears you put into this it’s just business.
Joe: Yeah. Be realistic with that valuation and that sales process because we see these guys all the time, we’ve talked about this before, you know, just because you put your blood sweat and tears into developing it, and …
Justin: Doesn’t mean it’s worth anything.
Joe: Doesn’t mean it’s worth it.
Justin: Yeah. Doesn’t mean it’s worth your time. It’s not ” Well I put $20,000.00 worth of my hours into it.” Doesn’t mean anything. Doesn’t mean anything unfortunately. Right.
If that was the case, I’d just put a bunch of time into sites and try to sell them for whatever. Doesn’t work.
Joe: It’s the some cost fallacy right?
Justin: Yep. So buyer tips, be patient. Basically. So you know, don’t, kind of step through the process, make sure that you know you’re dealing with someone who, you know, is maybe selling their baby. And I think this is why it’s okay to give lower offers, but be careful with your low ball offers, especially if you’re dealing with you know, First Flip Francis. He might get offended. Right. Because, he’s like “I put all this time in it, how dare you offer me such a low value for my site! It’s worth so much more than that.”
Joe: Yeah. What I see the best way to do this is to really explain your offer. The reasoning behind [crosstalk 00:39:20]
Justin: Why it’s worth, why it’s worth this to me. I am sure that you know, the work you put into it, you know, you put in so much work, I’m sure to you it’s worth just a ton of money but from a buyer’s perspective and just from a business perspective here is where I am coming from.
Joe: Yeah, a lot of times I ask buyers to do that on our platform when they offer, make offers to sellers, I say “Well why is that?” So not just getting a number [crosstalk 00:39:43]
Justin: You’ve told, I’ve seen this too our team’s like toned down some of their requests too and like kind of been a little sweeter with the new sellers then maybe the depositors or the buyer was actually in his message so that’s just doing the deal making right there.
You know you have to expect to put a bit more work into due diligence if you’re a buyer working with a First Flip Francis. Simply because, and not because he’s Scheming Stuart or anything, just because he probably doesn’t have it all together in a nice pretty little package for you.
Joe: Yeah and I think you know, on larger sites definitely a Centurica report would be in order.
Justin: Alright man so that’s our six profile, six and a half seller profiles. Let’s move into news and updates.
Speaker 2: You’re listening to the Empire Flippers podcast with Justin and Joe.
Justin: So the first bit of news we got Joe, we held our first Empire workshop in Ho Chi Mihn last week right?
Joe: Yeah, it went pretty well. I think we need to clean it up a little bit, tighten it up a little bit and make a couple of adjustments based on the feedback we got. But I was very excited. You know, I think we had a good thing going me and you. I mean obviously we do it almost every week so it was pretty much an extension of that. We know the material very well so, pretty knowledgeable in the field.
Justin: I love the fact we heard back like “Okay, this was so valuable, how can we pay you back for this?” Like [crosstalk 00:41:01]
Joe: Yeah that was pretty cool.
Justin: That was pretty cool so we’re like “Just tell people! We’re out there, we help them buy and sell sites. People who are interested, they can check us out, that’s payment enough.”
Anyway, I’m really looking forward to doing more of those. I know we’re going to do it in early October in Ching Mai and that’ll be really fun. Plus it’ll be great to get you in Ching Mai.
Another thing is Joe was fired up. Fired up in Ho Chi Minh. He was like “Yeah man, I could…” you were shopping, you kept saying things like “Well this is I think better than the Philippines. This, I don’t know if it’s better than the Philippines.” So I could tell you were kind of like sizing the town up.
Joe: Yeah I like it. It’s a good place. it reminds me well, at least that one little section definitely reminds me of a Manhattan kind of lifestyle which I love. You know walking around the city, good restaurants, good things to do. So yeah it definitely had some good lifestyle additions.
Justin: I’ve been there since we went there but we both first went there like four years ago or whatever and you got sick and like we were in the best part of town. And we were both just like “I don’t know man, Ho Chi Minh, not my kind of place.” But I had a blast this trip, it was really good.
The other thing, we’ve got a new Flippa interface and layout going on. We’ve actually got a Flippa auction going right now, and so we were kind of digging through it. And we’ve been playing Flippa a little bit. I like it man. I really like the layout. I’m a little frustrated too because we have this you know, re design going on and we’ve got some kind of cool little charts and graphs and stuff going on and they beat us to the punch man.
Joe: Yeah, I mean they started this little Flippa re design a couple of months ago and now they’ve really implemented it. And you guys should check out our auction. But you know I think that it’s a little bit of information you overlook.
Justin: Yeah, I think Vincent said that too. He thought it was a little kind of a little too much. I dig it though. I kind of like digging through the data. I think they present a lot of it. A lot of it is just re packaged analytics, but then I kind of like the tables they have and the little charts so let us know what you think about Flippa’s new layout. I’d be interested. If you want to check out our listing that we have up right now, it’s at EmpireFlippers.com/sellerprofiles for the show notes for this episode.
Joe: Yeah it’s actually our penny auction site. So it’s a site that sells penny auction software. It’s not an actual penny auction site. It just sells the software for it. It’s a pretty good little business.
Justin: Someone tweeted me today, they said “Aren’t penny auctions, they’re kind of scammy aren’t they?” I was like “Yeah, some of them are but this isn’t a penny auction, this is the software for penny auctions. Like how people use it, maybe that’s debatable but…”
Joe: One dollar no reserve, it will sell for what it sells for.
Justin: Yeah it makes about three grand a month in net profit so definitely worth checking out. I think it’s like $500.00 right now. [crosstalk 00:43:32]
Justin: You can get a pretty good deal.
The other thing, Joe you’re heading to Macau for a quick long weekend buddy, gonna go gamble it up or what?
Joe: Yeah, I am gonna play some poker, it’s my buddy’s birthday, he’s coming in from the U.K. so I’m gonna meet him there before coming back to the Philippines. Yeah, looking forward to playing some roulette as well.
Justin: You’ve never been to Hong Kong man, I was really trying to get you. You should go. Take the ferry, go to Hong Kong, dude it’s your kind of city. You’re a New York guy, you would love Hong Kong.
Joe: Hong Kong is it’s own trip. I’m flying direct into Macau and then right back to the Philippines
Justin: Alright man, speaking of travel, there’s a guy, this guy, his name’s Eric and he runs a website called abroaders.com. And my buddy Mark uses their service. Basically what they do is they help you figure out the best credit cards and sign up for airline miles. And then they actually offer a service where they’ll go out and buy tickets for your flights, whatever travel you’re doing and buy them for you and kind of set everything up for you. Because, honestly that shit confuses me. I have no idea, I’m not really into that scene but I want to learn it’s cool.
Joe: Now do I have to already sign up for the things or can they just do it all for me?
Justin: So here’s the thing, you can have your VA sign up for credit cards and stuff but they won’t, they won’t sing up for the cards for you and the reason for that is like some legal requirements. Like you have to accept the charges, you have to accept the interest rates and all that stuff so I get that. But, basically they just give you the links, you go there sign up and then you put it all in something that’s called auction wallet or something like that, which stores all your miles.
Anyway, I heard about, I was listening to this guy, he was on a interview with Dan over at Tropical MBA, the latest podcast they have and I don’t know man, I’m gonna try it out. So I know you’re just kind of like hands up, I don’t know about this stuff. But I’m gonna, I think I’m gonna dig into it because I think there’s some value. I mean, I used to think it was like you had to spend you know, a million dollars a year in expenses to even get any kind of value out of that. But I’m finding out that’s not the case. My buddy Mark doesn’t do that and he’s, he’s taken worldwide trips, business class, balling yeah.
Joe: You can make it easy for mel I’ll follow on your coat tails then.
Justin: I’m gonna check it out man at abroaders.com.
Alright buddy let’s get into our listener shout section. This is our indulgent, ego boosting, social proof segment. We’ve got twitter, we’ve got justusbloomer said “another awesome podcast episode by the Empire Flippers about the over valuation of certain aspects of one’s business.” It’s just something that I think we all do. We hold things sacred that maybe aren’t. We over value pieces of our businesses that aren’t. So I’m really glad we put that episode out.
We’ve got Kevin, our buddy Kevin whose been in Ching Mai. He’s actually in Siem Reap right now and he said they’re constantly using the line “the VA isn’t weak, you are” in the office at the moment in relation to our new hires. So that’s pretty funny. You’ll get people that are kind of complaining “Ahh this VA is doing that, or they’re doing that” so they’re kind of beating them up telling them that they’re weak.
Joe: Yeah, it’s not their fault, it’s your fault.
Justin: Most, often, often your fault.
Nick Loper said “fastest side hustle? Buying a cash cow from Empire Flippers Marketplace.” Gave us a link. Thanks Nick. Gave us a shout on the marketplace.
We’ve got some customer feedback buddy from Zendesk.
Joe: Hit me up buddy.
Justin: Yeah. So I’ve got one from Volmack, not liking this one. So he said “I was gonna give you a few more hours to contact me with requested info, since your survey about customer service just came in my inbox, I might as well let you know that I haven’t received any info about the site id 10076. It’s been 24 hours since I paid the deposit.” Ouch man! Paid the deposit, 24 hours, we did not send him the information about the site, that’s not good. We’re normally pretty good about that. Very few people wait over 24 hours, but they must have hit some kind of bad period, that’s not good, we gotta get better at that.
Joe: Yeah, I apologize. I have to look into the details of why exactly that happened. I imagine it’s a weekend thing, and it’s something our new Marketplace manager needs to get right [crosstalk 00:47:24] on top of.
Justin: Will be fixing for us. Yeah it just sucks. I mean someone pays thousands of dollars in a deposit, you kinda gotta get them that information sooner so, sorry about that man we’re working on it.
Davey, the, this is a guy that actually bought a site from us, the outdoor sports equipment site. Said, “Vincent was polite, responsive, and very helpful during the entire process. This is my first website purchase and I was very impressed with the controls and safeguards that Empire Flippers have in place to protect both the buyer and the seller. I have aspirations to continue to purchase profitable websites in the future and Empire Flippers will be the first place I look. I could not have asked for a better experience.” Thanks Davey so much and you know, I’m sure Vincent thanks you for the shout as well.
Joe: Yeah, thank you Davey because a lot of thought went into that whole process so I’m glade you respect it.
Justin: We’ve got Brian the actual seller for outdoor sports equipment site says “Very good experience. Thanks again guys.” Glad we were able to get it done for you Brian. I was worried, We actually, we thought we had that deal done, we thought it was all locked up and then it got pretty close and fell through. I was like AHH… I really like that site to so.
Joe: I love that site too. [crosstalk 00:48:24]
Justin: It wasn’t a huge earner but it was a cool site. It was well branded, it looks good. And I was like this, I can see myself taking this over and running it and feeling good about it.
Joe: Yeah it took us a little bit longer to sell than normal but I think I you know, it went for close to list so that’s always good.