WES S02E09: Website Migration & Turnover
One of the scariest steps for buyers (and sellers) can be migrating the business from the old owner to the new.
What if you make a mistake and lose traffic/rankings/earnings? What if you put yourself at risk and end up getting scammed?
In this episode, Ace and I sit down to look at the various steps involved with migrating an online business from the seller to the buyer. We cover issues from transferring the money, domain, and assets to verifying you actually received what you purchased. We even take a look at the horrible situations where a buyer might be forced to back out of the deal.
If you’re looking to make a purchase and wondering about the steps and process in the final stages, this is the episode for you.
Digging this podcast? Please stop by iTunes and leave us a review! We love to read the comments and will give you a shout on a future episode!
Listen To The Full Interview:
What You’ll Learn From This Episode:
- First Phase: Transfer Period
- Money Transfer
- Domain Transfer
- Website Transfer
- Other Accounts
- Second Phase: Inspection Period
- Goal 1: Did You Get Everything?
- Goal 2: Verify Quality and Metrics
- Third Phase: Signing Off
- What To Do If Things Go Bad? (Backing Out)
Featured On The Show:
Ace Chapman: You really never want either party to hold both the business and the website.
Announcer: Buying and selling businesses just got a lot easier. Welcome to the Web Equity Show where thousands of successful entrepreneurs go to learn about buying, growing, and selling online businesses. Your hosts, Justin Cooke and Ace Chapman, share their real-life advice, examples, and expert interviews to help you build and grow your own online portfolio. Now, to your hosts, Justin and Ace.
Justin Cooke: Welcome to Web Equity Show. I’m your host, Justin Cooke. I’m here with my co-host, Ace Chapman. Today, we are talking website migrations and turnovers. Buddy, how you doing?
Ace Chapman: I am good, man. This is where we get into the nitty-gritty of making sure that you get the website, all the assets, that it’s actually yours, and you don’t have any of those headaches at this last crucial point that could kill the deal.
Justin Cooke: Yeah. For the most part, the deal is done. Your contracts might be signed, you might be moving forward. But, sometimes, deals drop out in this phase and if they do, it can be a disaster for both sides.
Ace Chapman: When it comes to getting the deal done, everybody’s happy and we’re going to close, and it’s looking good. But, if you’re unsure that something that was supposed to be transferred isn’t, or an employee, or traffic isn’t looking good, Justin and I have both been in those situations where there’s a final inspection and there’s something that doesn’t quite look right. Emotions can be high at this point because you’re so close to the finish line.
Justin Cooke: It’s funny, man. We’ve lost bigger deals, we’ve lost probably more important deals earlier in the process. But, it’s the ones we’ve lost here or that didn’t go through here that are the most painful, right?
Ace Chapman: Yeah, yeah. It’s easy when you’re in negotiations, both people can walk away from the deal. We’ve had plenty of deals where we’re in negotiations and we realize we can’t really see eye to eye. We walk away. Then, we come back and do deals with those same people. At the beginning of the deal, it’s really easy. It’s when you’re about to close, especially when a few things have been transferred, that it can become pretty sticky. This is a crucial point. Everybody focuses on how do I find the best deal, and how do I do due diligence on the best deal. But, when you get to this transfer part, this is where rubber meets the road and you’re about the become the owner of this thing. This is an important place to focus.
Justin Cooke: Absolutely, man. Before we get into it, we do have three phases we’re gonna cover in this episode. Before we get into that, though, we do have our listener love section. We do have a bunch of questions, actually, from [Laora 00:02:36], she left a couple of messages on Speak Pipe, so we’re going to go ahead and play those messages and have people listen, then we’ll go ahead and respond to those.
Laora: Hi Justin and Ace. This is [Laora 00:02:45]. Love your show, thanks so much. I left a review on iTunes. This is on March 31st, so hopefully it will post soon. First for Justin, [inaudible 00:02:54] sellers cannot collect affiliate commission on their own products. You mentioned the ideal of double dipping if you an Amazon FBA and affiliate site and it’s not allowed. Terms of service says not only can you not collect affiliate commissions on your own purchases, but neither can your family and friends use your affiliate code supposedly for you to get commissions on those. I’m sure they can’t track all of that, but basically, that model that’s not a part, an option of that model.
Onto questions, I have four and I’ll see if I can say them quickly, hopefully you can get to some of them on upcoming shows. My question is what averages are you seeing on ads since RPMs? I know that it will depend on the industry, but I’m wondering how radically they typically vacillate. This is for PH views, RPM for PH views, basically the payment rates. Ours vacillate considerably and I’m just wondering if that’s normal and how you can work to improve that, or how we can work to improve it.
Question two, for building site when you’re starting from scratch, what is your recommendation on the best source for learning the basics of building a WordPress site? Example, like a total WordPress newbie.
Question three, have you seen sites that do well monetizing using one or more of the major affiliate networks, such as Rakuten, formerly LinkShare or ShareASale? These are harder to implement than Amazon, but for certain niche sites could be more profitable with higher payouts. I’m wondering if you guys have done any sites, any of those affiliate links embedded, and if so, if you’ve used the API model which seems to allow for the ads to rotate through the affiliate-approved companies. I’m really interested in learning about that, if you know more, please share.
Number four, last question for now, is do you see successful sites monetizing via direct ads from brands? It seems a highly trafficked site, for instance, could do better in direct advertising by relevant brands as far as establishing a steady contract or a steady monthly rate. It does seem to be a harder road as far as making lots of calls and doing leg work in that way. But I’m wondering if you guys have seen this model at work and if so, if it’s been successful. I don’t think that would preclude using AdSense or even Amazon as well, but for instance, if you were an auto parts affiliate site, an auto parts niche site, then to have an auto dealer advertise directly, whether you see any of those kinds of things happen.
Okay, that’s it, thanks so much.
Justin Cooke: Wow okay, that’s a lot.
Ace Chapman: Yeah, yeah, but we’re going to get to not just some of your questions, we’re going to answer all of your questions on this episode.
Justin Cooke: All right, so let’s get into the first one where she was saying that you can’t buy from your own affiliate site. Absolutely you can’t buy from your own affiliate site, neither can your friends or family. I think the idea or the strategy though is to have people outside of yourself, you’re not buying from your own affiliate site, I know that’s definitely against terms of service. If you’re setting it up and other people are buying from the affiliate site and then ultimately buying the FBA product why can you not earn the affiliate commission on that affiliate site. Even if there was some miscommunication there, it doesn’t make any sense to me that you can’t set up a separate legal entity, like an LLC or an S corp, whatever, and have that S corp run the FBA and another run the affiliate site. I think there are probably legal structures that are around that even if you’re saying that even still you can’t do an affiliate site to FBA. I wasn’t saying you buy your own or your family buys product from your affiliate site to get a discount or anything like that, other parties. Even if that were a problem, I think you could get around it with LLCs.
Ace Chapman: I remember the episode where we mentioned this and we were talking about a lot of different strategies. I’m sure we glossed over it and that could have been misunderstood. But definitely try to scam the system. You can’t try to buy stuff yourself, same with AdSense, you’re not going through and clicking the ads yourself, just all that stuff. As these companies are getting better and better they’re really tracking everything on a pretty deep level as far as where the person’s located and connections to you, and just all those things, so you want to be extra careful when it comes to anything like that. But in my experience, and we both know a guy who’s doing some things where he’s taking an affiliate site and switching over to FBA and using the strategy that we mentioned. That part is something that right now is working.
Justin Cooke: That’s right. Then the second point was how much does AdSense RPM vacillate. She was saying that hers changes quite a bit and it changes often. For anyone that’s new to this, RPM is a combined metric that includes both CPC, or cost-per-click and click-through-rate, or CTR. If one of those changes the RPM is going to change. If both of them change drastically in one direction it could change drastically. I think what she needs to do is take a look at both CPC and CTR, see which one is changing more and that will help narrow down the problem. If it’s CPC it could be that competitive advertising coming in driving the price of the cost-per-click up and then bouncing out, or maybe they only operate on weekdays, something like that. With CTR there might be a big variance in the competitor ads and how clickable they are, so some ads are more clickable than others. Depending on how large your site is you can actually remove certain ads from being shown there. If that’s the case, then you can have those removed. You wouldn’t do it on a small site, but a much larger site it would make sense.
Ace Chapman: This is something that it’s interesting she brings it up. The deals that are in our portfolio that are generating income from AdSense here in the last probably four months have been going up and down quite a bit, which is really something new. I’m sure our deals aren’t in the same niche, so it could also be that Google’s always testing and changing things, and trying to improve things from their perspective. But I’ve seen one month it’s really, really crazy income for the site compared to historical income. Then other months it goes down below and then the very next month it’s back up again. I’ve got sites that I’ve had for six years, so there could be something that they’re doing some testing or some things on their end that are causing temporary unsteadiness in the income.
Justin Cooke: Yeah maybe something behind the scenes with Google AdSense or something.
The next question she had was what are the best sites or what are the best course for learning how to build WordPress sites for a total newbie. I can saw if you’re looking to build monetized sites, authority sites, [inaudible 00:09:29] sites, that kind of thing, you can really check out nichepursuits.com or Long Tail Pro, it’s actually a tool that can check out, Long Tail University, it’s by the same guy, Spencer Haws. Long Tail Pro University will take you step by step on building a monetized site from scratch. That will give you the whole kit and caboodle of the monetized site.
Now if you’re looking for the really basic WordPress stuff, someone who’s a total beginner, I’m not sure honestly. What I would do is I would go check out Udemy and then look at the reviews, and then the level of skill, look for something I felt comfortable with, and program I felt comfortable with and start there.
Ace Chapman: Yeah, I think that’s the best place to start.
Justin Cooke: The other question was is there a variance between the different affiliate companies. Yes, there are definitely variance in terms of the affiliate companies, but I’d say even more so it’s between the offers. You could have one offer at an affiliate company and another offer from a different company through the same affiliate and have wildly different results in terms of your earnings. That has to do with just a whole bunch of things, the product, the product match to your content, how well they’re converting the client to go over their product. There’s a ton of things that go into that.
Now, ultimately, you just need to test through this. You’re going to need to test different products. It’s not like you can say this affiliate is better or this offer is necessarily better, each site is going to have an individual offer that will be better. Some of the larger sites that I’ve seen are very complicated in their multi-variant testing. They do have APIs and they have automated testing and they’ll do round robins through different products. For most sites, for most people that are building, that’s not really something you’re going to deal with for the really aggressive niches, like weight loss pills and stuff like that can get really, really tough.
Ace Chapman: When it comes to these things I’ve found that there’s a lot more variance, like you mentioned, in the actual companies then there is in the networks. The offers a lot of times are going to be the same. Obviously, you’re going to very similar landing pages, conversion, all those are going to be the same. The network really just has the technology, so you may have a variance in percentage that you’re getting, but I would pay a lot more attention in the company that you’re sending traffic to and their conversion rate, and their payouts than the particular network.
Justin Cooke: The last question she had, do successful sites do well be advertising directly with brands. The idea here would be to skip AdSense, skip affiliates, and go directly to the source, go directly to the products, the manufacturers, the advertisers and see if they’re work out a deal directly. Now yes, you can definitely make more money this way but as she mentioned, it’s a lot harder to implement. You have to get on the phone and call them up, and basically sell them on advertising with you if they haven’t reached out to you directly.
This makes zero sense for smaller, newer sites. If you’re just starting out it’s way easier to just use the third party and their affiliate program. A good example would be let’s say I have a lead generation site in the education niche. It’s much easier for me to use QuinStreet than to reach out to all these different vocational schools and tech schools, and try to get them to advertise with me and pay me directly. I’d rather just use a QuinStreet who is taking a cut, but it makes it a hell of a lot easier for me to just do it.
As you grow and as you get bigger, yeah I think you should explore direct advertising with the brands directly. The reason is, is that a lot of times they’re going to be less worried about the ROI than they are about just getting their brand in front of the right audience. An example, we have some mobile apps for sale on our site right now that they make their money through the direct advertising and the direct advertisers are just small local businesses, that apps are like sports in a particular market, a small local market. The advertisers are fans anyway that are happy to just get their company out there on something that they use and are involved in. They’re willing to pay whatever, $50 a month or $80 a month or whatever just for the brand opportunity, not necessarily for the direct leads they get from it. From your perspective as a publisher, yeah, that makes a lot of sense. That’s a great deal for you, especially if you can sell them on branding. It’s just a bit more complicated, so you want to wait until it actually makes sense to do it.
Ace Chapman: One of the other examples, we had a site that was in the P2P, kind of crowdfunding real estate space. It was basically just a blog that reviewed the different options and went into some detail about how those businesses operated. Truthfully, the amount of traffic coming to the site wasn’t a huge amount. The business that they would have been getting wouldn’t have made money on an advertising basis or even affiliate basis, but those companies felt like this is a place that we need to be if we’re getting into this space. With that site it was a little bit easier because if you can get into the right niche, and I’m sure [inaudible 00:14:31], they’re coming to you because they feel like we need to be there. I would really hesitate if I bought a deal and my plan was to go out and try to sell the advertising myself.
Justin Cooke: You’re buying into an unknown. I don’t know how well I’m going to be able to sell it. I don’t [inaudible 00:14:49] advertisers. If I was basing my business plan on doing that on a purchase yeah, no I wouldn’t do that, unless that model had been proven to some degree. Even then, I’d be a little skeptical. I’m not sure I’d buy based on that model.
Anyway, I hope that was helpful. I hope you got some value out of that. If you have any follow-up questions, feel free to ask.
We’ve got another question Ace from Dave O. and he had a question about strategic acquisitions. I’m not going to read the whole thing but he basically said I understand strategic acquisitions, we’re talking physical property. If I owned a dry cleaner and I buy another one I have two locations, they can share expenses and back end processes, that makes sense. But how does it work in the online space. He was wondering if I own catfood.com and I buy cattoy.com I have related content, that’s clear, but how do I execute on a plan to really bring this … I hate the word, the synergies together on this. He was wondering do you centralize content on one domain, do you link across all sites, do you put guests posts across sites, these types of things.
I’d say, first off, I would not try to centralize the content under a single domain. I think linking across sites and guest posts, maybe even not that subtle, but putting guest posts across the sites I think is important. I think other ways you can do it is they both have email lists, you can cross-sell products from one to another, I think that makes a lot of sense. I think you could upsell, someone gets to the cart and you’re able to upsell them a toy on the cat food site or you’re able to upsell food on the cat toy site, I think that makes a lot of sense too. There are cross-sell and upsell opportunities there that I think make a lot of sense.
Ace Chapman: I think the difference between where he was coming from and where we were focused on the deal is just it’s not as much about content and really the guest post thing is good, but where you’re going to get the most transactions is what you mentioned Justin, like having that upsell at the end. Really, we would focus a lot just on the emails like promoting this other product, you bought this, now buy this.
The other thing that I would add to that is doing some retargeting, putting up the retargeting pixel, you know that both people are interested in cats in general. You’re able to upsell across brands, and promote other affiliate offers and all kinds of elite things. That would be the other thing I would do.
Justin Cooke: Retargeted pixel, I like that. I like that Ace, that’s a good one. You can target them on Facebook and that kind of thing. That’s great. Another thing too, let’s just say that these are e-commerce businesses. Let’s say I own catfood.com, it’s a million dollar business and I bought cattoy.com, which is a $100,000 business. Well my million dollar business, I’ve already got shelf space for my e-commerce with Shipwire or something, or wherever I have all of my products. It doesn’t cost much more to share that shelf. Basically, I can bring in inventory, I’ve already got the customer service in place, the people handling chat, or email, or voice support, so it’s a lot easier to buy a product business that’s in the same niche because I’ve already got all the back end processes, the back end people in place as well. That’s very similar to, I think an offline business, but I think there are some unique differences that I hope make sense now that we’ve answered this. Anyway Dave, I hope that was really helpful.
All right buddy, let’s get into the website migration and turnover. As we said before, there are really three phases in this process. The first phase we’re going to call the transfer period. This is when the money is sent from the buyer and the seller and buyer transfer all assets to the accounts, et cetera. The second phase is when the buyer acknowledges receipt and performs the final inspections. The third phase is when the buyer signs off and the funds are transferred to the seller.
We’re going to go through each phase and then we’re going to talk about what happens when things go to hell in any process during the sale.
Ace Chapman: Great. Well let’s get into the first phase. This is where you’re in that transfer period and the very first thing is the money transfer. The biggest rule in all of this is you really never want either party to hold both the business and the website. I encourage people if you’re not using a broker you want to use some kind of escrow type of entity. Now, on really small deals that may not be necessary, but it’s really your comfortability because small is relative. 5,000 [inaudible 00:19:28] may not be a very big deal to many, but for somebody else it’s their life savings and it’s hey, we got to go figure out some kind of escrow because I can’t take a risk of you having the site and my money at the same time.
Justin Cooke: That’s right. I can’t stress your point hard enough. Neither party should end up with both the money and control over the site or business at any point. That’s a horrible idea. That’s where the leverage is lost. We’ve come across a couple of deals where one party refused to give up their piece until they receive the other and as brokers we would never let that happen. We had to kick deals that we thought were done but then one party was just being outrageous about it and putting the other party at too much risk. I think that’s really, really important. You can use a broker, like we do it for our customers, but you can also use an attorney. Most attorneys are bonded and licensed, and can hold money in escrow. You can also use a third party escrow service that’s out there.
One thing I hear sometimes Ace is someone’s like, “Look, I’ll give you 30% and then you give me this piece and I’ll give you another 30% and you give me this piece.” The problem is that giving part of the money and having partial control doesn’t matter. If I control the domain I basically can control everything. That’s not terribly helpful, it could be recreated. You can still get screwed pretty badly that way, so I wouldn’t do the partial ever because that’s just putting you at a bad position, always use someone else holding the money and doing a transfer for you.
Ace Chapman: When we say partial payment here, we’re not saying it’s some kind of hold back or anything like that. What happens in some of these deals is you’ll get a buyer and they may not have all the money yet or they’re trying, they realize at the very end I don’t feel very comfortable or very protected. They may so, “Oh, I know I’m supposed to pay $50,000, but what if I just pay you $15,000 and I get a part of the site, or I get access to the WordPress,” or whatever. Like you mentioned Justin, at the end of the day there’s one day that matters and it’s the domain and who has ownership of it. You didn’t throw up a WordPress site or even an e-commerce or whatever and start to send that traffic to the new site. If you’re in control of the domain you control that business.
That brings us to the domain transfer. The very first thing you want to do as the buyer is find out where the domain is registered. Personally, I’ve got a lot of different accounts. Instead of trying to transfer all of the domains into a particular registrar, I like to just get the domain from the registrar that they’re already using because it makes the process a lot easier, so you can find out where they have the domain registered, you can set up a free account. Every one of the registrars allows you to create your own free account. Then they give you your user ID, your customer number, all that stuff, you get that to the seller and you can begin that domain transfer process. I’d love to get your opinion on that Justin, just do you really encourage people to just use the same registrar or does it not really matter to you guys?
Justin Cooke: 100% yes, same registrar man, so much easier. You don’t want any delays, you don’t want any problems and there can be a lock on transferring the domain from registrar to registrar, so if you’re using the same registrar, just for example, GoDaddy to GoDaddy, it’s instant, it’s really easy. They make that a really easy process. They don’t like you going to their competitor. Setting up the free account by doing that, it’s the much better route to take. We absolutely prefer it, it’s easy. Later on, if you want to transfer it somewhere else or do whatever you want there that’s fine, but just to get the deal done go with whoever they’re using.
Ace Chapman: Once you get that it becomes really easy. I think a lot of people feel like oh man, buying a website is really complicated. But bottom line, you make the domain transfer easy by using the same company. Then once you get that transferred it’s kind of a matter of pointing the web hosting in the right direction with the name servers and voila, you are the owner if you own that posting as well.
Justin Cooke: Once they’ve transferred the domain to your account, again, if it’s GoDaddy to GoDaddy it’s instant. If it’s Namecheap to Namecheap it’s instant. You’ll own the domain, you now have control of the domain and you can start to get everything set up once the name servers are pointed in the right direction.
By the way, I am not a tech guy. I know the basics here, so you want more details I am not your guy. I’m guessing Ace you’re not the guy here either, but you do it-
Ace Chapman: No.
Justin Cooke: … so you force yourself to know it I bet, right?
Ace Chapman: Exactly, exactly. I’ve got my web guys and that’s why I can’t say voila because they just say, “Hey, everything looks good. We’re the owners now and we’re good to go.”
Justin Cooke: Yeah [crosstalk 00:24:18].
Ace Chapman: So for me, it is like magic.
Justin Cooke: This whole time the money is held, right? It’s not like you’re at the risk, or the seller has it, or something and you’re hoping that they don’t screw you, which I think is the most important piece.
All right, let’s talk about the website transfer process a bit.
Ace Chapman: When it comes to the website, the other side of this, like I mentioned with the domain, is where that website is sitting. That’s going to be with the web hosting company. You can set up your own web hosting company. Personally, this is something to keep in mind for sellers out there, if you’re using some random off the wall domain registrar or hosting, that can be a little bit of a pain just for the person to have to keep up with that. When it comes to web hosting, I know this is a place that people don’t necessarily use the same web hosting as the seller, but I try as much as possible to use the same company. It’s kind of a pain if it’s some random web hosting company. We try to open up an account at the same company and then we transfer the website to our hosting account which can be instant if you’re using the same company.
Justin Cooke: But another thing you can do too is sign up for the web hosting account there, it’s the same company, it makes it easy. Or you can just actually take it over, especially if it’s one of those rare, odd accounts. If they have no other sites there then you can just take over their account. You own the account from now, you change the password, change all the information and you’re now the owner. That’s another way to go about it. We’ve seen that done with some e-commerce sites and stuff.
Ace Chapman: Yeah, absolutely.
Justin Cooke: All right, then you’re going to want to copy to your web host account, the website files, website database and any other settings, create an email address in your web host if you’re using that. Make sure that the name servers in your domain point to the ones provided by the web host, and then create backups on your server. That’s all the tech stuff that the tech guys tell us.
Ace Chapman: Yeah, yeah. I think creating the backups is one of the things that you do want to pay attention to. We had a site that we had to go back and you get [inaudible 00:26:23] recently and it’s good to have those. Outside of this process, this is where you’re looking at the other accounts as well. You’re getting the access to any social sites that they have, the log ins, transferring that. If there’s supplier accounts, sometimes they’re actual accounts that they use, merchant accounts, mail lists, AWeber, MailChimp, GetResponse, all of that stuff you want to start to get access to, either creating your own accounts or getting access to the seller’s user name and password.
Justin Cooke: A lot of times it’s easier to just take the accounts over and then change all the information, but that’s only possible when they only have one account in there. For example, if they have an AWeber account but they have five different businesses that are using that same AWeber account they’re not going to be able to that. It’s easier to set up your own, you’re going to have to transfer all the data over.
It’s the same thing for inventory too and for any businesses that require inventory, you’re going to have to transfer that inventory beforehand. I think this is an interesting point is that during this transfer process you’re going to want to make sure that the transfer goes smoothly. While they’re transferring inventory to you or to your fulfillment center, or whatever, you’re going to want to make sure orders are still shipped. You’re going to want to make sure that you have enough to get on your fit while you get this e-commerce business so you’re not immediately having to make another order or that you’re not running out of stock, and that’s something you’re going to need to determine before you actually begin this transfer process or begin the actual … You’re going to want to have that figured out beforehand.
Ace Chapman: Yes, absolutely. With all of this, the reason we go through this process with you is so you know what’s coming and you can be prepared.
Justin Cooke: All right man, the second phase is also known as the inspection period. You’ve already agreed to buy the website, the deal’s already done in terms of both parties agreeing and then there are two goals here in the inspection period. Number one, you want to verify that you received everything that was agreed, everything you talked about you’ve got access to it, you’ve got control over, it is yours, it is in your hands and not theirs.
The second goal is to verify that everything is substantially as advertised, as they said it would be. They said it was going to come with this, that, or the other, make sure it came with this, that, or the other. Normally, this is a relatively short period of time, but it’s really important that you take your time to methodically dig through all this. It may be that you have to drop your focus on other things for a couple days and really dig into this to make sure you got everything.
Ace Chapman: When it comes to being sure before you release funds it’s smart business. Sometimes the seller wants their money, they’re going to rush you through this stuff, but you have to be the person to step back and say, “Okay, well let me make sure and take your time.” Some of this is just finessing the relationship with the seller, keeping them happy.
Justin Cooke: You don’t want this to drag out, but you don’t want to get short-changed either, which is why this is important. The first thing, goal number one, did you get everything? You can list and check off everything the seller agreed to provide either in the purchase agreement or in the emails, the communication you guys had back and forth. This would obviously, where applicable, include the domain, the website, the content, all the accounts that you need access to that would include supplier introductions and contact info. It would include the employee introductions, freelance introductions, virtual assistant introductions and their contact info. Any SOPs or documentation that comes along, guides, manuals, instructions, any digital products, any physical products, user IDs, passwords, and you should have all this documented so you know exactly what you need access to when you take over the business.
Ace Chapman: Really, most of these deals is not extremely complicated. If you have a list, you’re taking notes even from this call and you’re checking off each one of these things, that’s a big part of it. Outside of just making sure you have all the accounts, all that stuff is transferred, the other thing is verifying the metrics. You want to go in now that you have access to everything, you’re going to verify the sales [crosstalk 00:30:29].
Justin Cooke: This is the second goal. You want to verify all the information, the metrics, the quality of everything, make sure everything is as agreed.
Ace Chapman: Yeah, yeah. One thing to understand with this is that things may not be exactly the same. I know you and I Justin we’ve worked on deals where the buyer gets in they’re like, “Oh, well sales are 10% less than they were when you had it.” It’s like okay, there could be a million reasons why. That does not mean that it’s a scam or anything like that. You have to understand that it’s not going to be exactly the same, but you might get concerned if it’s 50%, 75% [crosstalk 00:31:11].
Justin Cooke: We just a week or two ago had one where it was like 90% off or 95% off. Now that’s a problem.
Ace Chapman: That’s a problem.
Justin Cooke: It wouldn’t be a problem if maybe they sold three items a month and you could say, “Okay, well clearly it’s off because not one item is sold. We’re still waiting for one item to sell.” But that wasn’t the case. This was a deal where the affiliate was having a problem. I think the actual product creator they were having trouble, they weren’t getting the stuff through the affiliate. The links were in place, they were set up but there was some kind of problem in the affiliate side. They didn’t admit blame or anything, but we started hammering about it, they figured it out and all of a sudden it magically started working. There were a couple of days where nothing was going through and all parties were like … everyone was pro about it, but it was like what’s going on here. You want to check for these things. It is important. 90-95% off, yeah there’s something wrong that needs to be looked into quickly.
Ace Chapman: A lot of the time it ends up being some tech thing or something like that and not necessarily that the business just changed within a couple days.
Justin Cooke: Yep. Then sometimes it could be off too because of seasonality, it could be a holiday, or it could be a positive holiday where your numbers are way up and you may be heading into, like I said, the summer months which are very, very big for the business, so your numbers are up. You’re like, “Oh, I’m going to crush it.” Well no, you’re just going to do okay and then it’s going to go down in the winter, so expect that. It could be sporadic sales. I mentioned before if you’re doing three sales a month you may go a few days during the transfer process where you don’t get any sales, but that should be expected. You still want to make sure everything’s up and working, and working correctly.
The other thing you want to do is verify traffic. By now you’ve had your analytics code and not the old analytics code on there. There’s actually two lines of thinking. I’m interested in what your thoughts on here Ace. Do you have the seller keep Google Analytics and get added to that Google Analytics account so that you have the history, or do you prefer to start fresh with a new Google Analytics idea and then just keep that account open for as long as the seller does so you still have the old data?
Ace Chapman: It depends on the site. When it’s more of an organic type site and we’re really tracking where all the traffic is coming from and trying to improve the SEO, I love to have the history. If it’s let’s say an e-commerce site and the traffic’s coming in from CPC, we’re paying for the traffic, we may be doing pixels and that kind of thing to check out the conversion rate and those kinds of things. It’s not as crucial to have access to that so I may for a little while and then eventually put my tracking code on there.
Justin Cooke: The worst is when you keep the Google Analytics as is so you have the whole history in the same account and then eight months later SAR deletes it. They’re not usually thinking about. They’re all, “Yeah, I’m done with that.” No, no, I lost all my information. I think probably putting your own Google Analytics code even though you’ll have to look at separate accounts, you’ll have the history but it just won’t be in the same analytics account. I guess that’s better though because at least you’ll control it moving forward.
There are other metrics, there are other indicators. Whatever was agreed on and generally understood you’re going to want to make sure that’s happening. You’re going to want to make sure that someone can go through the e-commerce product, that someone can actually through the process of say a digital goods delivery. They can go through it, actually purchase it, so you might as well go through yourself and actually purchase it to make sure it’s working. Sometimes, as you said, things get screwed up on the tech side, due to no one’s intentional fault it’s not working and that would be bad for you to go six weeks and realize you’re not making any money.
Ace Chapman: Now for the final stage, stage three, this is when you sign off on the deal.
Justin Cooke: Yeah, you’re going to notify escrow, or the attorney, or your broker. You’re going to say, “Look, everything looks good. Let’s move forward with this. Let’s go ahead and get this deal done.” Then that will allow the broker or the entrepreneur or whatever to pay out the seller and the deal is finally complete for all parties.
One of the things you’re going to want to do too is just make sure that if you have an agreement with the seller to do some kind of training or turnover that you get in contact with them, that you hold in that agreement, especially if you need it, if you’re new and they agreed you to walk you through this and that. Get in contact with them, make sure that they’re willing to do that. You’ve really lost your leverage at that point and so that’s why sometimes people will do a hold back, they’ll wait 30 days to pay them the rest of the money or whatever. But on a smaller content side it’s generally not that big of a deal. For the most part Ace, most of us want to help. They’re not [crosstalk 00:35:49] jerks. They’ll give you some phone support, they give you some email support, they want you to get up to speed.
Ace Chapman: The thing about this stage is the work that you do before this point to make sure that they’re clear on what to expect. The times where you have a seller that’s not very happy it’s when you don’t say, “Hey, I need a 10-day inspection period. I’m expecting for this whole process to close in the next two weeks.” If you expect them to just understand that and don’t negotiate that from the beginning, then there will be a lot of annoyance and they’re not going to want to give you the support because they don’t feel like you kept your end of the bargain. The key to getting support and help is really at the beginning of the process more than at the end.
Justin Cooke: Some of these it depends. We said the content sites or whatever, just like an Amazon affiliate site, there’s not that much to it, it’s not that complicated. But we said throughout this season we’ve talked about how important it is that you’re cool with the seller, that there is some kind of at least working relationship, you guys understand each other. This is especially true for businesses that require some work. Let’s say it’s some type of service-based business and you need SOPs, you’re going to need training, you need to train your team. You need their team to talk to your new team. It can get pretty complicated and you’re going to have to have a pretty good working relationship. Being cool even after this whole deal is done so that everything can continue running smoothly is really important, especially we think inventory, you think of making sure that all the orders are still being delivered, and that kind of thing.
All right man, we’ve done the deal, everything’s smooth, everyone’s paid, everyone’s got their new business and they’re ready to move forward. Let’s talk what happens when things aren’t so smooth, when things go bad, when deals are backed out of or should be backed out of. Let’s talk about these odd situations with that.
Ace Chapman: As we do deals long enough you’re going to end up in these situations where you’re getting to the end, maybe the sales aren’t the way they’re supposed. Maybe you get to the end and sales are down 90%, you check everything out and nobody can figure out why just because you clicked [inaudible 00:38:02] or whatever it takes to make it work, or traffic’s down in a huge way. When you get to that situation, as a buyer, the first thing to understand is it is totally fair to walk away if you haven’t released the funds. You do have that inspection period and you get to the end. I always tell people the deal isn’t done. Just because you get a contract on a deal, just because you even put money into escrow on the deal, the deal is definitely not done. You still, as a buyer, have the right to check those things out. That’s why we do that.
Justin Cooke: That’s right. Once a seller gets paid, the deal is done.
Ace Chapman: Yes.
Justin Cooke: That’s it, the seller’s paid. Now I’ve talked to sellers where there were still problems. The sellers totally paid out really no contractual agreement to help out with it but even three weeks later still helping the buyer out because they’re being cool, they had a cool relationship. Once the seller paid you’re out. If you have any issues this all has to happen before the seller gets paid. Some of the things that can go bad, the sales of the traffic are significantly different than what the seller was claiming. Like we said, if it’s 10%, 20%, whatever, above or below, that’s not a big deal. We’re talking 40% off, 60% off, 80% off, no. It’s interesting, you’re going to have to take a closer look at that and say, “Hey, look, I think something’s wrong.” The earlier you speak up, the better. If you wait a week or something and the seller’s hounding you that’s bad. If you’re telling them as you go along exactly where it’s out they’re going to be there to help you, as will the broker if you use a broker.
Ace Chapman: It’s so huge just to be in communication. A lot of people disappear after they buy a site. Three months later it has issues and then they come back to the seller. The truth is, from that seller’s perspective, you have taken full responsibility, they haven’t talked to you, you are the owner of that site. If you have that problem three months down the line it’s like dude, you can’t come back to me at this point. I tried to keep in touch with the sellers that we do deals with.
Some of the other things that once you get in and you start to have issues with is the seller doesn’t continue to keep their end of the bargain as far as operations go. On some of these websites they’re not affiliate sites, they’re not AdSense sites. You get in and they really are supposed to help you operate for a certain period of time outside of just support and training. That can be a really big issue. What I tell buyers is you have to be prepared to take on full responsibility once you release those funds. If you don’t have a hold back then you need to negotiate a longer inspection period. You’ve got the inspection period, which is for the site itself. We tackled in the other episode just about having to hold back and that’s where you get into making sure that they do the training and the support just so that there is some monetary encouragement outside of just having a great relationship with them.
Justin Cooke: Here’s the situation, owner is selling the business, the developer works part-time for the business. Seller doesn’t want to tell the developer that he’s selling the business, so you’re in an awkward position as a buyer. Generally it’s worked out in a contract like I will take less or this is determined by making sure the developer comes on board, and here’s what happens if it doesn’t. If it doesn’t, you need to be able to fall through with whatever the contract states or at least make sure you have another developer on board to get started, otherwise, you’re not going to be able to take over the deal and the deal’s dead. These are things you really want to work out beforehand. These things with employees and contractors generally is, but if it isn’t, you need to quickly look for a backup plan or you’re going to lose the deal.
Ace Chapman: The other thing that I’ll tell you is just you got to check out every part of the deal. We had a deal recently where the quality in the product from the company that was drop shipping the product just was going down. What our client ended up doing was just switching to a new supplier, but that was a lot more work that could have been avoided and really pushed onto the seller during the inspection period, but it didn’t come out until a little bit later. Fortunately, he was able to get that seller to help him with the transfer and do a lot of that leg work because there was that hold back. Some things you just aren’t going to be able to get in an inspection period to make sure that everything is lining up. There was just no way to know what was going on with that product and what was going to be happening a month, two months, three months down the line with that supplier.
Justin Cooke: That’s right man. All right, let’s do a quick wrap up on this website migration turnover episode. Number one, you need to make sure that both parties are very clear on the process before proceeding. Make sure that you understand the steps and what’s going to happen and what’s going to happen, and when. You’re going to want to make sure that neither you or the seller ever have both the domains of the site and the money. Obviously, if you had to choose one you should have both rather than the seller, but honestly, neither party should have both the money and the site, or the domain, that’s a really bad idea. Number three, you don’t want to let the business go dark for any significant period of time, so the seller needs to keep it running smoothly. They also need to turn it over to you smoothly so you can continue running it smoothly. That means making sure you have enough inventory, making sure you have the staff that are coming on board, and make sure everything’s good to go there so you could take it over and run it, keep a smooth transition.
Ace Chapman: You want to make sure that you have the time. This is a tough one even for me and I do these deals full-time. It takes time to really properly inspect a site. Before you release those funds you want to make sure you’re going through this process, but it does take time. Make sure that you clear your schedule, that you block out some time to focus on this, and you can get really comfortable that everything that you agreed on with the seller is being delivered and has been delivered, and you can be comfortable once you release those funds.
Justin Cooke: Awesome man. Just a quick note for listeners, this is the second to our last episode for season two.
Ace Chapman: Yeah.
Justin Cooke: We’ll be back with our final episode next week. We’re going to be talking about what to do with the site now that you’ve migrated, now that you own it, you’ve had the seller paid out. Now what the hell do you do? We’re going to talk about that. We’re going to talk about different plans and approaches you can take to really grow out and expand the business beyond the purchase.
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