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Hosted by mike jackness
Hosted by mike jackness
14 episodes with mike jackness
19 episodes with mike jackness
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9 episodes with mike jackness
2 episodes with mike jackness
2 episodes with mike jackness
Mike is back on the podcast to finally reveal what he's been up to in the past year. He shares his journey from e-commerce to going full-time content creation on launching a YouTube channel while also talking about the importance of video content in promoting e-commerce brands and the potential for YouTube as a business opportunity. Struggling with tariffs? Unsure about upcoming changes? Let's talk! With Portless, you only pay tariffs after your customers pay you – so your cash always moves faster than your costs. Schedule a risk assessment and leverage tariff deferment today. All new customers get $1,000 to reinvest in their business. Timestamps 00:00 – The Journey of Mike Jackness 02:32 – Transitioning from E-commerce to New Ventures 04:03 – The Impact of Amazon and Tariffs on E-commerce 12:01 – The Future of E-commerce and Emerging Opportunities As always, if you have any questions or anything that you need help with, leave a comment down below if you're interested. Don't forget to leave us a review on iTunes if you enjoy our content. Thanks for listening! Until next time, happy selling!
If you've been listening to the podcast recently, you must have asked yourself, "where did Mike Jackness go?". Today, he's on the podcast to talk about his journey from running multiple e-commerce brands to transitioning out of the industry. Struggling with tariffs? Unsure about upcoming changes? Let's talk! With Portless, you only pay tariffs after your customers pay you – so your cash always moves faster than your costs. Schedule a risk assessment and leverage tariff deferment today. All new customers get $1,000 to reinvest in their business. Timestamps 00:00 - The Journey of Mike Jackness 02:32 - Transitioning from E-commerce to New Ventures 04:03 - The Impact of Amazon and Tariffs on E-commerce 12:01 - The Future of E-commerce and Emerging Opportunities As always, if you have any questions or anything that you need help with, leave a comment down below if you're interested. Don't forget to leave us a review on iTunes if you enjoy our content. Thanks for listening! Until next time, happy selling!
Mike Jackness and Aymeric catch up on their e-commerce journey as friends and talk about how timing and luck are so important in entrepreneurial success. Success is always a mix of luck, tenacity, and grit. It takes a bit of luck to be in the right place at the right time and some grit to keep going when things aren't as profitable as they used to. At the same time, success also involves balancing between trying new things and focusing on what works. Knowing when to zone in on the one thing or when to test the waters only comes with experience and time. My good buddy Aymeric who's been a friend of mine is on the podcast today to talk exactly about what it takes to be successful as an entrepreneur. We've both had our fair share of successful and failed ventures, but that didn't stop us from trying and moving forward. If you're a business owner looking at the tariffs right now and thinking about moving out of e-commerce, this episode might be eye opening for you. In the end, the choice is yours to make. Aymeric, thanks for joining us on the podcast today! If you'd like to outsource some work and get your social life back together, check out the VA Placement service he offers here.
In this episode, Mike Jackness interviews Michael Kaufman – the CEO of ProTuff Products. We talk about Kaufman's journey in the e-commerce industry, how he differentiates his products by offering an extended warranty and how lifetime warranties guarantees 5 star reviews. How to Find a Profitable Product Course Open Now Still struggling to find your next great product? The EcomCrew How to Find a Profitable Course is open now and is just $499 for one week only. We'll cover everything from using the ‘Cockroach approach' to developing large and bulky products, avoiding placement fees, and more. Check it out now. How Do You Use Lifetime Warranties To Guarantee 5 Star Reviews? As a shopper on Amazon, you've probably bought something that have warranty cards as a part of the products' insert. But most companies don't stand behind their warranty policy, or they just straight up have flimsy policies. Having a lifetime warranty means that you'll have to approve every warranty that comes in, no matter what. However, the bright side to this is that this almost always guarantees a 5-star review since you will actually be standing behind your own warranty policy. The Big Takeaways of Today's Episode Offering a lifetime warranty can help differentiate your products and build a solid review profile. Automating the warranty registration and claim process can save time and money, since you don't have to hire someone to approve warranties. Selling seasonal products can be challenging, but offering incentives for early registration and extending the product's use for other purposes can help mitigate the seasonality. Building a list through warranty registration is a TOS-compliant way to communicate with customers on Amazon. Choosing the right warranty duration and offering additional benefits can encourage customers to register and leave positive reviews. Lifetime Warranties Episode Timestamps: 00:00 - Introduction and Small Talk 03:14 - ProTuff Products and the Pool Tools Niche 11:29 - Differentiating Products with a Lifetime Warranty 18:10 - Building a List through Lifetime Warranty Registration 21:03 - Incentivizing Lifetime Warranty Registration and Positive Reviews 26:57 - Streamlining Warranty Management As always, if you have any questions or anything that you need help with, reach out to us at support@ecomcrew.com if you're interested. Don't forget to leave us a review on iTunes if you enjoy our content. If you have any questions, send us an email at support@ecomcrew.com. We'd love to help you in any way we can. Thanks for listening! Until next time, happy selling!
Adam Craft, founder of Elevated Craft, joins Mike Jackness on the EcomCrew podcast to discuss his personal journey in building a brand. Adam shares his approach to product differentiation in a saturated market, and how building a strong brand was the first priority for Adam. This meant that learning the basics of Amazon wasn't his priority. It was all in the hands of agencies. Eventually, Adam learned about the challenges of relying on agencies and how much better it would be to learn and implement marketing strategies yourself. Adam also shares his experience with using Kickstarter, and how his upbringing impacted his business mindset.
Embark on an enlightening journey with Mike Jackness, a titan in the e-commerce domain, as he recounts his transformation from affiliate marketing maestro to Amazon brand-building virtuoso. Through heart-to-heart conversation, Mike dismantles the overnight success myth, revealing the true grit and perseverance behind entrepreneurial achievements. Ecom Crew, his brainchild, emerges as a beacon of transparency, providing fellow adventurers in online sales with the camaraderie and navigational tools needed to weather the industry's unpredictable tides.Considering Amazon's colossal presence in the e-commerce arena, we probe into the possible ripples caused by rising platforms like TikTok Shop and their impact on the e-commerce behemoth. With strategic business insights, Mike advocates for the diversification of sales channels, underscoring the importance of a singular brand focus. As he shares stories of grueling work hours and the quest for work-life harmony, we're reminded of the delicate balance that entrepreneurs must strike between ambition and personal fulfillment.Closing with a heartfelt discussion on the essence of relationships within the e-commerce community, Mike underscores the irreplaceable connections he's forged. These bonds, often cemented in the trenches of business challenges, reflect the resilient spirit of those navigating the e-commerce world. Join us for an episode drenched in hard-earned wisdom, profound insights, and actionable advice for business owners and dreamers alike, with Mike Jackness guiding us through the complexities of a life woven into the fabric of online entrepreneurship.LINKS & RESOURCES:Learn more about Terran: https://www.terran.com/Follow Mike on Social Media:LinkedIn: https://www.linkedin.com/in/mikejackness/X: https://twitter.com/mjackness➡️ Ready to go deeper into your Amazon FBA journey to accelerate your success? Get your hands on ALL of the Brand Fortress HQ resources, mentorship, and knowledge base by visiting us at BrandFortressHQ.com
Mike Jackness and Ecomcrew's brand manager, Ben Iballa, review the episodes that made the top 10 list of the year and share their thoughts on each one. 2023 was a wild ride. I let go of most of his brands, while costs on Amazon increased by a LOT. Here's a roundup of the top 10 episodes of the year. Some of the best of the year includes when I sold most of his e-commerce business, the rising costs of selling on Amazon, and my perspective on retiring. Here's some timestamps to help you along: 0:00 - Introduction 0:43 - Top 10 Episodes of 2023 3:25 - Year in Review 4:02 - Episode 10 7:08 - Episode 9 8:30 - Episode 8 9:43 - Episode 7 11:39 - Episode 6 13:25 - Episode 5 15:27 - Episode 4 17:25 - Episode 3 20:57 - Episode 2 23:14 - Episode 1 I want to thank everyone for supporting the EcomCrew Podcast. Whether you've been with us from the start or are just tuning in, I appreciate your time and feedback. I'm sure 2024 will be another year of insightful podcast episodes, and I can't wait to unpack which ones top the charts next time around. As always, if you have any questions or anything that you need help with, reach out to us at support@ecomcrew.com if you're interested. Don't forget to leave us a review on iTunes if you enjoy our content. If you have any questions, send us an email at support@ecomcrew.com. We'd love to help you in any way we can. Happy selling!
After dropping a few hints here and there, Dave finally asks Mike the big question: what are you looking for in your next business? After getting into the mindset of selling all of my brands and getting back to the part of Amazon FBA that I really enjoy, I realized that it's not as fun as it used to be with my current business. I am trying to build it for the eventual sale, and after start a new business that's still within e-commerce. As most of you have probably noticed, I've dropped a few hints here and there about starting a new brand, and what better way to do so than discuss it with Dave on today's podcast! In this episode, we'll discuss a few criteria on what I would want my next venture to be, and whether Dave thinks they're unrealistic, or downright wishful thinking. Here's some timestamps to get you started: Introduction - 0:00 How was BFCM for you, Mike? - 0:53 The next project for Mike - 3:56 Struggles that Mike's trying to avoid in the future - 5:24 Mike's checklist for his next business - 12:17 Priorities with higher margins - 12:56 Increasing repeat business - 18:27 Products that work multi-platform - 24:47 A defensible moat around the business - 30:31 Making complexity an opportunity - 34:30 When is the new business getting started? - 36:39 I hope this is super helpful for those out there who are thinking of expanding their brand portfolio or starting a new business. If you are, leave a comment below on what you think your next business would ideally look like! As always, if you have any questions or anything that you need help with, reach out to us at support@ecomcrew.com if you're interested. Don't forget to leave us a review on iTunes if you enjoy our content. If you have any questions, send us an email at support@ecomcrew.com. We'd love to help you in any way we can. Full Audio Transcript Mike Jackness: This is Mike and welcome to this edition of the Ecom Crew podcast. How's it going, Dave? Doing good. We're doing some recordings here after American Thanksgiving. So I feel I feel full and thankful, I guess. And yeah, we're doing some podcasts today. DJ: This is Dave. DJ: I'm doing well, how about you? DJ: How was your Amazon balance though? Is that full and thankful after Black Friday? Mike Jackness (00:28.134) Not really. It was not a real great Black Friday, Summer Monday for us, but it never really is with the brand that I kept. I didn't really expect to have a huge Black Friday, Summer Monday. In fact, I didn't even open up my app over the weekend because I was like, I don't want to see it. Just because we didn't run any Black Friday deals. I mean, we talked a little bit about this on the podcast over this year. And so, I mean, hot and cold therapy packs are not giftable items. They're not the type of thing that people buy and gift them. There were lots of people in my space running Black Friday, Supper Monday deals. I imagine they just got crushed in terms of paying a lot of fees and giving up margin. I don't even remotely see how it's feasible. I mean, I see all these deals running. I mean, they're paying $300, $500 or more per deal, giving up a bunch of margin. DJ (01:10.195) Yep. DJ (01:15.27) No, I don't either. Mike Jackness (01:23.182) I can barely make it without even doing that. I just assume that they're losing money just to have an ego boost and that isn't interesting to me. We just go in a little bit of hibernation for this part of the year for this business. From late November to early January is just a dead zone for us. Early January things have to really pick back up. Going into the spring becomes our best months. Just roll in with what we have. When we had other businesses, we focused a lot on Black Friday and Summer Monday. We sold our baby brand this year. I'm sure they had a really great Black Friday, Summer Monday. We've sold color. That was always my favorite time of the year, although it was stressful. Black Friday, Summer Monday, huge for that. But for a hot and cold therapy brand, it's like, oh, you got me a ice pack for my back. Thank you so much. Maybe there is someone out there looking for that, but I don't think it's exactly the giftable thing. DJ (02:21.985) Yeah. DJ (02:26.573) Well, it is kind of a scenario of rising tide raises all boats and sure people aren't on there to buy hot and cold therapy pack, but they're on there to buy a toy for their daughter and hey, oh, by the way, I need to that ache on my back. I need to get something for that too. So you do get that. So I know for like our off-roading brand, it was up, I guess, about 30 or 40% over a typical Friday. So nothing crazy, but it was up. And I think that's just a case again of that rising tide. The craft brand that we have, that looked like it was up about Mike Jackness (02:40.098) Right. DJ (02:56.209) two and a half X, which I guess was kind of within my realm of expectations. And this is my first time really running a brand that is heavily dependent on Christmas. And that was one of my motivations for actually wanting to start this in the first place was to get a little taste of that Black Friday and Christmas madness. And yeah, it seemed like Friday was up about two and a half X. It seems like Monday's going to end about that too. So it was nice. I don't know how that compares to a typical Black Friday and Cyber Monday though. I really have almost no reference point because like you, Mike, most of my brands have always been, uh, not very dependent on Christmas on the holidays. Mike Jackness (03:34.474) Yeah, I mean, I think that sounds about right. You know, two and a half X seems to be what we've seen in the past. I think that that's a pretty good, pretty good result. DJ (03:44.017) Yeah. So on to today's topic, I guess, uh, as we're talking about our brands, uh, I think today's topic is what you're looking for in your next project and your next business. And I, I'm not sure if we're going into this totally as a blank slate. I'm not sure if that is actually e-commerce related, or you're looking at starting a coffee shop. Uh, so I'll let you take it away. And what exactly that next business, Hey, you're doing some competitor research. Mike Jackness (04:05.576) I've got my coffee right here. Yeah, I don't think it'll be a coffee shop. And I do think it'll be an e-commerce. I really do enjoy e-commerce. There's a lot of really good benefits to it. I also think that no matter, I've learned my lesson in terms of like the grass is greener type of thing, right? And so it's easy to start daydreaming about some other thing that's out there that can potentially make you more money. But the reality is you often forget about all the work and effort you put into what you're already doing And oftentimes that even though you know, there is a potential It's just potential and something else and the chances of success aren't as high And so I don't know. I think that I've got my ten thousand hours and then some into Indie ecommerce, so it's something that I would definitely like to stick with but yeah, I mean I I think everything's an evolution and I think it'll look wildly different than that what I'm doing right now. It'll just still be sewing things online. DJ (05:10.625) Okay. So that's, uh, that's Clara's mud e-commerce business. It's going to look different. All right, guys, that's a wrap. So what are the qualities in all seriousness? What are the qualities that you're looking for in that e-comm business? Mike Jackness (05:14.978) Hahaha Mike Jackness (05:19.435) Well, let's. Mike Jackness (05:24.918) Maybe we should look at from the other perspective of where we're at now and what the struggle is right now and what I'm trying to mitigate against, which is that we're in this situation right now selling the same thing that everybody else sells. There's really just absolutely no differentiation to our product versus the next guy. And the gap continues to close between where we've been able to have success and where we're heading to, which is that we've had success because we've had really high quality listings with good copy, good images, good customer service, lots of reviews, et cetera. But what I see is that the competition is accelerating quicker than the platform. Maybe at one point, the platform, you know, being Amazon. DJ (06:16.765) Mm-hmm. Mike Jackness (06:18.442) was growing quicker than there was competition. So even when there was competition coming into the market, your sales would still grow because there were so many new people coming onto the Amazon marketplace. But I just, by the raw numbers, I actually don't know how many prime members there are in the United States. I probably should know that number off the top of my head, but 100 million, 150 million, whatever it might be, it's let's say 30% to 50% of people in the United States. you're never going to get 100% saturation. And at some point, you're kind of hitting peak saturation of just potential shoppers on Amazon. And you know. DJ (06:54.361) Yeah. And I think the way to look at it actually, objectively, you're right. Like there's only, you can't have 400 million prime shoppers in America. There's not enough people. But all you have to do is look at Amazon's P&L and you can see that their retail sales last year were basically flat. They had revenue gains from advertising and other services, but their retail sales were essentially flat. Mike Jackness (07:04.839) Right, there's not enough people. Mike Jackness (07:11.635) Yeah, exactly. Mike Jackness (07:18.31) Exactly. And so when you look at the dynamics of that, where Amazon's, let's just say their revenue is flat in the United States, I do think that expanding out of the United States is an opportunity. We're also still pigeonholed a little bit again, because the types of products are selling. We're FDA registered in the US, trying to get other nationalities to approve these products and go through that process. I just don't think it makes sense for us right now. where we have done that in the past for other brands. And so, you know, if Amazon is hitting peak saturation in the United States, and competition continues to grow, and margins continue to erode, because when you have more competition, there's always somebody there that's willing to sell it for less. They're doing it for whatever reason, right? They're breaking into the market, and so they're stowing at a low price to try to get traction. They are... living in a lower rent, lower cost of living jurisdiction around the world, and they don't need to make as much money as I do to pay for my lavish Vegas lifestyle. There's always someone willing to do it for less. When there's more people that are in that category, it makes it more difficult for me to price my products and make the margins that I need to. to justify the risk that I'm taking by running these businesses because there is a risk, right? I mean, at any point your account could get shut down or you could get sued or Amazon could tumble and fall. There could be a recession. There's always things that happen in business. Over 19 years, I've experienced a lot of them. And so I think that you need to make enough money to justify the risk. You're holding hundreds of thousands of dollars in inventory at any one time. It feels like a hot potato. And so... Just trying to think through all these different things makes me want to shift into a very different environment where we're making products that are maybe a one of a kind or certainly much more difficult for somebody to just grab off of Alibaba or at the Canton Fair or through a sourcing agent from someplace in the world. DJ (09:35.525) Yeah. So I guess your first two points, if you want to boil it down, number one is you're looking for a product that has opportunity for international expansion. And with the products you're selling right now, they're basically a health product. And that makes expanding internationally a bit of a barrier and a bit of a difficulty. So looking for a product that is a little bit more easily expanded internationally. So running shoes don't have any international regulation around them into expanding into Australia or the UK or Canada or wherever. Mike Jackness (09:57.888) Yup. Mike Jackness (10:04.354) Yep, exactly. So, yeah, so I think, you know, shift and, okay, go ahead. DJ (10:07.425) So on that note, just before you go there, so our products are, most of our brands and most of our products don't face any international regulation in terms of import restrictions. The barrier that we've always had is, you know, you wanna expand to Luxembourg, but how do you justify getting that inventory in to serve the 12 people that live in Luxembourg? And that's always been the big barrier for us is that you need to hit a certain scale before you can warrant that international expansion. Mike Jackness (10:28.938) Right, right. DJ (10:36.253) And for us, Canada is about 25% of our sales. It works out well because, you know, I'm Canadian and geographically Canada and the United States are close, but expanding to a lot of these other countries, it is a big logistical issue. So, do you think that will be an issue? Do you think that you can overcome that, especially as you're starting up with a brand that's, you know, doing low thousands of dollars a month in sales in the very beginning? Mike Jackness (10:36.31) Yeah. Mike Jackness (10:40.994) Yep. Mike Jackness (11:01.898) Yeah, I mean, I think it all depends on how you're getting your sales and the size and weight of the product. Are you shipping individual orders from here to overseas via some of these lower cross programs or are you having to land inventory in an NOAA jurisdiction first? So I think that there's still quite a bit that remains to be kind of figured out because I think there are certain criteria which we're going to go over here next that I am looking for. Being able to expand internationally, I look at as a long-term thing. I don't look at that as month six, I need to go expand internationally. I look at that as in year six maybe, after I've hit saturation in the US and now I have enough of a war chest or my logistics and manufacturing has spun up to a point where it makes sense to where I can efficiently break into another country. logical choice, as you said, is geographically close. It's same language. There's a whole bunch of huge benefits. You can even get started by just shipping stuff across the border, onesie twosies at a time to customers versus having to get inventory landed to test things. It's much easier. And so, yeah, I think of that as a longer term thing. It's just one of those things where I think it's a natural thing for a business to hit a point where... your business or your SKUs have hit saturation in the US and you'd be looking to expand internationally. DJ (12:34.333) Yeah, interesting. I am totally with you where I think that is where the profit centers are in smaller markets and smaller marketplaces, even though the bulk of the sales may come from the United States and that justifies the orders. Ultimately, it's the smaller marketplaces and smaller markets, which really move the profit needle. So, okay, you talked about customization too, and I know you're talking about a few other things. I don't know if you want to riff on that for a minute Mike Jackness (12:55.806) Yeah. Mike Jackness (13:03.85) Well, let's go through criteria because I have a list. I'm prepared with a list of things. So my number one thing at the top of the list is margin. Right? It just the idea of buying something for $10 and selling it for 30. We've discussed this many times on the podcast. I think that those days are just completely like way long gone in the rearview mirror. DJ (13:06.081) Sure. Okay. Mike Jackness (13:29.262) And so I'm thinking in terms of buying for 10 and selling for 50 as like the absolute bottom line floor. And so, you know, what qualities and criteria of a product do you have to have to be in that ballpark are the things that I'm looking at. Yeah, go ahead. DJ (13:44.821) So before you move on to that, why are you looking for margin? Because I know it sounds like a silly question, but I am totally with you. And I think perhaps my revelation for why I'm looking for margin is my reason is probably one of your reasons too, but I bet you it's probably not your number one reason. So what's the number one reason why you're looking for margin? Mike Jackness (14:04.694) Well, I mean, for me, it's really just the ability to be able to advertise. You know, it's, uh, this, this is not a new thing just because I, I'm going to tell you the story from last week, but, uh, cause I've been talking about this for quite a while, but I was with a buddy of mine in Los Angeles, uh, last week. And I went to a wedding in Los Angeles. It was a great time. And I had to pick one person that I, uh, that I can go see cause I only had like a very limited time. I flew in and flew right back out. Uh, and so I just kind of. went down my list of who I hadn't seen the longest and went to go see him. And after we had lunch, he asked me to look at his Facebook ads account and just kind of give him some recommendations. I'm like, holy crap, dude, like you're spending so much on these ads. Like you can't, he was getting like a two X row as I'm like, you're getting just slaughtered. He's like, no, I'm not like I'm actually still making money with this. And I was like, holy crap, like what do you, you know, we still we got into like, what are you buying this for and blah, blah. God, what a refreshing change of mindset, right? Where you're just like, I can afford to spend this money on these ads in a world where that's gonna be more and more prominent. Like you think about where things came from when you and I first got started a decade ago to where they are now, to where they're gonna be going another decade from now. It isn't like less and less people are gonna be involved in e-commerce and there's gonna be... less and less social platforms or whatever other platforms are out there that we can't even imagine 10 years from now, ads are going to continue to be more and more competitive. It's all going to be moving electronic. Just can't imagine a world where that goes any different. We're not going to go back to print. We're not going back to newspapers or national television programs to be advertising. It's all going to be these micro-advertising experiences. having the ability to have a product that you can spend that much money on that appeals to a certain segment of the population because again, now you have to be having a high-end product, something that people emotionally fall in love with and are making a purchase based off of that versus just they've typed in something into a search bar in Amazon and just want to buy and solve a problem. And so... Mike Jackness (16:27.694) I think that margin really comes down to all that. It also, there's a bunch of ancillary things that I think are important. I mean, besides just letting you spend money on advertising, it allows you to have a longer, more longevity in your business, right? Like as costs continue to go up, which is always going to be the case. Like there's never been a year I'm like, ah, prices went down this year from my cost of goods or from my ad cost or from my platform cost or for shipping cost or... for my anything, right? Like insurance and electric, whatever. Like every year, everything goes up. There's inflation plus, you know, just platforms get better at extracting fees and Amazon's really good at that. You know, and so I think that you start with kind of the end in mind. It isn't like, oh, because I, obviously I'd love to have a product that I can buy for a dollar and sell for five years ago or whatever. But like. where things are going, I think that we're going to be talking about like, I'm going to buy something for a dollar and sell it for seven longer term. This is going to become a more and more difficult thing to overcome. I want to set the bar high now to allow me to have a business that three to five years from now, when I'm thinking about potentially selling it, there's still a healthy margin as things do erode. DJ (17:33.36) Yeah. DJ (17:54.097) Yeah, 100% agree with both of those. And I'll tell you why the other reason that has been my kind of epiphany over the last couple of years, when it comes to margin. Uh, so we have historically sold a lot of really expensive products. Let's say a thousand dollar rooftop tent. Uh, we'll buy it for 500. We sell it for a thousand. Let's say we make 10% on it and we make a hundred bucks on it. However, all our money is in that cogs and paying that six months before we actually sell it. We have to place the order and then. six months later, we sell the product and we get the money. However, if you're putting all your money into advertising, that's where your costs are, is that you're dependent on advertising. You pay that net 30, you don't pay it six months in advance. So the problem is when all of your costs are in cogs, instead of advertising and marketing, you're paying that six months in advance and it's a huge cashflow issue. And that's why almost all these companies that scale really quick, e-commerce brands that scale really quick, they have high margins, not because at the end of the mine where I have all my money tied up in cogs, it's because they're able to utilize their cash a lot more efficiently than I am because they're paying for their advertising marketing costs 30 days after they incur them, not six months before. And having all your money tied up in cogs and having this really tiny gross margin, even though your net margin might be the same as Mike's watch brand, it is just a total hindrance to being able to scale that company. It's one of the things I've realized. over the last couple of years is why all these companies that have these massive gross margins where they're buying for a dollar and selling for a hundred, while they're able to scale, even though at the end of the day, their marketing and advertising costs mean that their net margins are still the same as me. So that's been my big revelation on why I'm now looking like you might mention five X, but you know, even six and seven X. Mike Jackness (19:40.522) Yeah, and there's lots of things out there, shockingly, that do fall in that category. But you have to do more work. Right? I mean, there's nothing in that bucket that's easy, right? In terms of just sourcing it off of Alibaba and then turning it around. Not that I'm aware of, at least. It's things that require a little more work, which we'll talk about here in a minute, because that isn't the... The second biggest thing for me in terms of when I'm going down my list of things that like are must haves, if margin is number one, number two is the ability to sell more to the same customer. Like I find this to be incredibly high up the list and really, really important factor into whatever business I'm into next. Because again, as we just talked about, as ad costs continue to go up. and competition is going up, the ability to recover your sunk cost from getting that first sale needs to be able to be divided eventually across two, three, four, 10 plus sales. And so this is a very important factor for me. We do have repeat business for ice wraps. It isn't like it's zero, but I don't spend a lot of time email marketing or doing Again, Black Friday, Summer Monday sales or the types of things that a brand that has the ability to sell inherently more to the same customer does. Because if we do our job right, someone's buying our product once and never buying it again. And it's pretty rare for you to buy a health related product again for a friend or family. It's just not normal to like, you know, for Christmas or. for a birthday or whatever to give somebody an ankle ice wrap because you heard that their ankle was hurting because if their ankle is hurting, they're going to buy the thing right then and there. And so it does happen. And so the reason we have repeat business is that we're selling to other businesses. And we see this on our Amazon dashboard. We see this from our Shopify sales. It's the chiropractor office. It's the dentist office. It's the physical therapy office. We also sell customized packs. We're like literally it's those customers that are getting their name printed on these Mike Jackness (22:04.494) products that they then hand out almost as like a business card to have their repeat business of people coming back to the chiropractor or the dentist or the physical therapist. And so we do have repeat business there, but there's only so many of those companies out there and we're never going to get into hiring a salesperson and calling on these types of offices and trying to convince them to buy our products. It just isn't where my expertise is. And I don't think that… It makes tons of sense to try to do that. But what I'm thinking of is more in terms of what we have with Color It, where someone's using up a page or a gel pen or a pencil and they're actually consuming our products similar to a can of shaving cream or a razor blade every single time they use the product. And so, or if it is something that's giftable. So like they buy one. They... maybe it isn't consumable, but they might buy another one from themselves or another two or three from themselves, or they'll find themselves really liking the product. When it comes time for the holidays or for a gift, they're like, man, I enjoy this product so much I want to give it to somebody else. Whatever element that is, I don't really care exactly what the product is necessarily as long as it hits that criteria of I can get somebody to buy my products more than once. DJ (23:31.985) So high repeat rate. I hear two things that either means A on Amazon, subscribe and save or B off Amazon. Mike Jackness (23:40.37) Right. And it even can't be on Amazon. Like, I mean, Color products weren't subscribe and save, and people were buying them off Amazon more than once. Right? It's like they're looking, they're seeking out our brand or our other products, because they weren't buying the same exact product. But subscribe and save certainly would be great, you know, if you think about a food product or other products or whatever that makes sense in terms of subscribe and save. That certainly is, it certainly is an angle. All the other things that come with your building a brand, sinking money into building an email list, sinking money into YouTube or SEO, building out your Amazon store, brand story, talking to Amazon influencers, just having your stuff out there to where once you have a customer, they're going to love your products and type in your stuff and seek it out. Color it was and is a search term on Amazon. You'd be shocked at how many people were actually searching our brand name. Uh, and that's something that I think is, is really important because again, they, they might buy color at Mondalas version one and then go out and look for volume two or go look like, man, I really love this, this product. I'm going to go type in color at coloring book and go look for other titles that are, that are out there. And so while it might not fit in the subscribe and save thing, it's still fit in the, uh, the repeat business category. And so certainly, however, However that is, whether it's subscribe and save or they're seeking us out, I think is an important component. DJ (25:12.837) Yeah, I would have agreed with you two or three years ago. I think if you're not subscribed and saved now, the chances of any repeat customer on Amazon occurring is very, very small. So first off, even outside of on Amazon, somebody finding your product on Amazon and then going and buying through your website, like they might have a few years ago, I don't think that really happens anymore. Amazon has complete monopoly over people's purchase behavior where they're not going to buy from another website. It's just. You know, even when we ran anchoring.com and anchoring.com or 80% of our sales, that just can't exist today just because there's so much loyalty to Amazon. So the idea of that, somebody finding the product on Amazon, going to your website and buying probably unlikely. I also think. Mike Jackness (25:56.662) Well, I'm not suggesting they come that they I'm not trying to drive them off Amazon to our website I'm just trying to get them to buy more from Amazon DJ (26:02.529) Yeah. And I think even that trying to get people to buy more on Amazon, that is relying on branded search, even if you get it to occur, there's so much advertising noise on Amazon, that somebody filtering through all that and making their way to your Mike Jackness, uh, sweater page, really, really hard to do a lot harder to do nowadays than it was before. However, my mindset, again, maybe I'm completely wrong, but my mindset is that those two don't work, but the one area that does work incredibly well is subscribe and save because. You get that repeat purchase behavior happening over and over again. It's automatically added to the cart every three to four weeks or whatever interval they set and it's there basically forever. So that's my way of looking at it. If you can do subscribe and save for an item, man, you are golden. But other than that, it's tough on Amazon. I could be wrong. I'd love again, on the comments, if anybody has a business on Amazon that has a high repeat purchase rate, not in subscribing, say I'd love to hear about it. But that's my opinion, really hard, a lot harder now on Amazon than it used to be. Mike Jackness (27:04.106) Yeah, I think that one of the qualities that would exist here, it wasn't actually on my list, but it's certainly up there. It's actually funny that you brought this up, but something that would work well multi-platform, which is a unicorn in itself as well, because it's typically a product that's really well suited for Amazon or it's really well suited for DDC off Amazon via Shopify and Instagram or Facebook ads or whatever. There's a small subset of products that... DJ (27:17.249) Mm-hmm. Mike Jackness (27:33.27) that the Venn diagram overlaps. That would be another quality that I'm looking for as well. I mean, it wasn't specifically on my list, but it is an important quality, because then you have an ability to go after particular keywords in search on Amazon and have that business, and then also have an ability to do SEO. and have it go directly to your Shopify store, having the ability to do DTC ads, Facebook, Instagram, TikTok, et cetera, all the things that I find to be really fun. Maybe that has a lot to do with it. It's like, I want to have fun and enjoy what I'm doing, which is certainly an important component for me to be able to do that is really important. And so I think, it's an interesting way to articulate it different than what I was thinking, but certainly that would be another component that would be important to me where I sit down and go, man, like this product, will never do well on Amazon, I think that doesn't make a lot of sense. Or you get, you look at a product, this is only something that's going to do well on Amazon, it'd be very difficult to, like right now, that's kind of where we're at. We have a product that's difficult to sell off Amazon. They do sell, we sell them on our website, but SEO, et cetera, is not really a great long-term strategy. I mean, the brand that we just sold back this summer worked well on both platforms. We had expanded to Shopify. being almost a quarter of our business from starting at almost zero when we bought it. So I think that that's an important thing. So you're not platform handcuffed. I only picked three things to talk about today because I know we have a limited amount of time. And so that was not on my list, but very interesting nonetheless. DJ (29:17.221) Yeah. And I know it's not on your list, but actually you brought up a really good point there. More fun, more enjoyable to run. Not necessarily more profitable. So this is kind of for me too, is like I'm trying to imagine, okay, what's a business that I'm going to be really excited to run and tinker on a day-to-day basis. And the truth of it is, you know, a Shopify site, we can debate the pros and the cons of it from a profitability standpoint compared to Amazon all day long. Mike Jackness (29:38.688) Yep. DJ (29:46.173) The truth of it is, at least for me and probably for you too, Mike, it's a lot more fun to run. It's a lot more fun to tinker with your funnels and your landing pages. I'm like, how can I increase my conversion rate? Uh, 0.001% by, you know, affecting this email campaign. Um, it just allows you to scratch that marketer itching you a little bit more because Amazon is really product based and, uh, you know, uh, me and you are probably more marketing based and product based and Having a Shopify site is just a lot more fun for scratching that marketing itch that we get than Amazon profitability aside. Mike Jackness (30:22.686) Yeah, I mean, absolutely no doubt. I mean, I don't know. Like, I think a lot of it comes down to being able to interact with your customers, right? With Amazon, it really feels so isolated. They've made it more and more isolated. And I love when they put these polls up in their back end that we have to look at every day, because it just shows you how disconnected management and Amazon is every single day. We should make that the way that we open the podcast every week is just to make fun of the poll. in the back end of Amazon. Today's poll is when I appeal a listing suspension, Amazon responds in a timely manner. If they actually think that that's what happens, if they're expecting everybody to be like, I agree, strongly agree, they're fooling themselves. One of the questions that came up recently was like, I have the ability to interact with my customer. I was like, what do you mean my customer? You guys explicitly say that it's not my customer, it's your customer. Do not contact them under any uncertain circumstances. I don't know, I think that that's pretty funny and I do feel isolated from it. DJ (31:23.073) Well, I'm sure they do it because they know the answer is either going to be 1% or 5%. Like that actually grew that answer and they're looking at, yeah, we got 5% this week. So I'm sure that they're completely aware that those questions are going to result in overwhelmingly negative responses. So there must be some strategy behind why they do it, but it does feel a little toned every time you log into Amazon, you see these questions, which are just infuriating. And I know that data is probably valuable to them and they understand what kind of Mike Jackness (31:44.116) Yeah. DJ (31:53.141) Like it really is infuriating and that's totally an aside, but I'm with you Mike. Every time I log in there and I see these questions, it's like, dude, like just be a little bit more sensitive. Mike Jackness (31:55.083) Yeah. Mike Jackness (32:02.707) Yeah, yeah, I mean, I don't know. It's funny, but yeah, that definitely is a very, I don't know, I really got a lot of joy out of being able to interact and do that and feel connected to my customers, my tribe, my people, seeing how that was affecting them in a positive way. And that really is infectious and makes you want to go design and do more things. And so yeah, it's certainly something I would be looking for as well. DJ (32:28.449) Well, it's a good thing that customers never complain and never find your cell phone number on a six o'clock on a Saturday night by calling your three PL and then calling UPS to see if they can give you the phone number to the owner of EcomCrew LLC. But yeah, I think back to that. I totally agree with you, dealing with customers on a day-to-day basis. It's really nice when you get... Mike Jackness (32:40.648) Yeah. Yeah, well that's you, so. DJ (32:56.969) than 95% of them who have a positive experience, but there's always going to be somebody that gets their product that arrives late and it was like a Christmas gift and it shows up on December 26th, uh, completely out of your control. But still they find that number, your phone, personal phone number somehow if they're with the repel or some other mechanism. Um, and so definitely that part, I don't know if I'm with you on that one. Uh, looking forward to dealing with all customers cause I know the bag go with the good. Mike Jackness (32:59.682) Yeah. Mike Jackness (33:24.138) Yep. All right, so let me get my third thing out of the way here because we're already, we go over time every single time, but it's a fun conversation. And my list is quite a bit long on this, but these are just the top three things I had on my list. The last one here is some sort of a moat, right? And so, you know, whether I'm building a, depends on the size of the castle, the size of the moat or whatever, but you're just thinking through things of how difficult is it. to duplicate my business. And I want it to be as hard as possible for somebody to recreate what I do. And now that doesn't mean impossible because that's just ignorant. Everything can be copied. But I want it to be more difficult than the average person is willing to do. And more difficult than nine out of 10 people in fact are willing to do, right? And so... I know there will be other people that will be willing to do it, but I want it to be something that requires a sizable capital investment to get started, and so people stay away because of that. Maybe it's something that requires signing a lease or getting a warehouse for and having employees here and doing something, and that's the thing. Maybe it's something that has intellectual property or a patent, and that becomes the defense. Maybe it's something that has all three of those things, which would be... even more exciting. But certainly again, what I'm trying to prevent is the 7 billion people around the world that have access to these platforms from being able to do the exact same thing I'm doing with relative ease, which is the exact spot that I'm in right this second. Again, we have a brand that I bought in 2015 that luckily has had tremendous success and I bought this brand for $50,000. It will be a huge success story the day that we sell it. It's been our cash cow. But again, it doesn't mean that I want to continue to do this indefinitely, because the last year has been a struggle. It hasn't been a cash cow this last year. It's certainly getting more and more difficult. And so looking at what we have here, which is, again, zero defensibility. Anywhere in the world can go get these products and sell them against us. And Mike Jackness (35:49.238) They will struggle to start with because just making a nice listing and selling it for less doesn't really get you a whole lot of traction or get you anywhere. But over time, there will be people and things that stick. And we certainly have a lot of competitors out there now selling the exact same product. And realistically, it's just as good. You put it in the freezer, it gets cold. You throw it in the microwave, it gets hot. I don't have the same excitement about it as color. stand in traffic defending those products all day long because they were truly better. They were really great products that people really love and they were defensible. And so I had everything was a little extra property, it took a big investment. And so you mentioned customization earlier. That's certainly one of the things I've been looking at because if you're doing customization and being able to ship and get it there quickly, inherently you probably need to do that in the United States. There are some things that can be. DJ (36:46.094) Mm-hmm. Mike Jackness (36:47.746) customized abroad and then ship because there are some huge leaks in our system. It's crazy. You can ship stuff from China to the United States cheaper than just shipping from Nevada to Nevada. I was just at my buddy's house today. He does e-commerce stuff and he printed me out a label because it's cheaper than going to the post office. But a medium flat rate box is up to $14.75 now. It's crazy. I mean, and you can literally ship something from China to here. DJ (37:10.439) Yep. Mike Jackness (37:14.782) In something like five to seven days, we've had people on the podcast talking about this for less than that. There are customized things that you can ship from around the world, but I'm not talking about like trade show pens here or something that's just your run of the mill commodity customized stuff. I'm talking about something that has a little bit more uniqueness to it than that. There's a lot of things I've been looking at in that regard. Again, something that has some sort of emote where the complexity becomes the opportunity. And I am, you know, I've always been willing to work hard. I've been a hard worker my whole life. I feel like, you know, I've had a pretty easy the last few months. And so certainly it'd be easy to go back into, and we're settled here now, which is the other cool thing. I mean, we're just not going anywhere. And so having a warehouse and having people here to do that stuff would be, it'd be a good timing for us. And if that's what it took. And so, It'll make it more difficult for other people out there that are just getting started, the people that are listening to this that don't want to make those steps. But for me, again, I'm willing to do it. I think that it seems crazy to not do e-commerce. All the skills, again, are very applicable. I still want to be able to sell whatever these products are on Amazon. I still want to be able to launch that Shopify store and sell. sell on Shopify, I still want to be able to run Facebook ads, TikTok ads, Instagram ads, Google ads, do some SEO, do email marketing, and work with influencers and have all this ecosystem and things that I've worked really hard on to learn all these skill sets. It seems like nothing to me because you're learning a little bit at a time and it makes it feel like you haven't learned a whole lot. I never went to college for psychology, but there's like a term for this of where... You know, something seems easy because you're learning it one day at a time. But if you try to tell somebody that is just getting started, how to sell their products online, and you had to like verbally tell them this, you know, almost like you had a podcast telling people about this. I mean, you'd be there for weeks and months and years, like verbally trying to exhaust what you have in your head to somebody. DJ (39:17.17) Almost like you had a podcast. DJ (39:28.469) you would be on episode 525. Mike Jackness (39:31.466) which I think this might be exactly episode 525, or it's very close to it. And so, you know, I think there's a lot to be said for that. I mean, we have 10,000 hours in podcasting. So, yeah, I mean, it's something that I've definitely put a lot of thought into, and I want to be able to kind of have my magnum opus e-commerce brand, which will... Now, here's the hard part is that I'm kind of committed to this one thing strategy right now. And so... I cannot start doing that until this current thing is complete. And it has been tough. It's been tougher to get out of bed than it has been in a long time and work on the stuff I have to work on because it's not exciting. I mean, it really is not the fun stuff, but it has to get done. DJ (40:22.697) Amen. All right. So that's your idea for a business. Not going to happen for until you can finish this one thing. And then you're going to find this unicorn of a high margin, high repeat customer, big moat business. And then you're going to partner with me on it. Mike Jackness (40:37.01) I don't think it's a unicorn. Yeah, well, I mean, I need someone to help me sell in Canada. I don't think it's a unicorn. You know, I really don't. There's a lot of things that I've been looking at. I don't necessarily know that I want to mention them all here on the podcast right this second, but there's a lot of things. I mean, there really is a lot of… There are hundreds of different types of products and ideas. DJ (40:44.481) Sorry. Mike Jackness (41:06.518) that can be done. Now, I guess it is a unicorn when you figure that there's probably a billion freaking products online. Like literally, I think that's probably not an exaggerated number. And so we're talking about hundreds or thousands into a billion, okay, maybe it is a unicorn from that perspective. But it's not like the true unicorn of like, there's only one. Like I think that there's a lot of things that fit this criteria. What doesn't fit this criteria is just the, I'm going to again, DJ (41:12.904) Yep. Mike Jackness (41:37.034) just be a faceless, mindless reseller of products on the internet, which is getting close to max saturation. DJ (41:45.949) Yeah. And I poke fun at you because it sounds like you've described a unicorn, but the truth of it is basically what you're saying is that you want a business with, uh, more margins to support higher advertising costs, uh, and more margin probably to support a little bit of customization, a manual input locally. Uh, and that kind of leads back to your higher margin part, not because necessarily your net margins at the end of the day are going to be any higher than the business that you have now. It's just going to be a little bit more of a, uh, of a different rejiggering of where those costs occur, which Ultimately, we'll give you more defense build. Mike Jackness (42:20.002) Cool, well we have hit the 42 minute mark of this podcast so we're already way over our target as I mentioned but hopefully this gives people some things to think about as we're ending 2023 heading into 2024 which is crazy. It's another year it's gone by. quickly so it's getting close time for our top episodes, episodes and what we're thinking about doing in 2024. It's crazy this is all happening and time to take the year end break and vacation. So we will probably not have an episode here that last week of the year just to because most people are out in some outer space spot. But yeah, getting close to wrapping up another year. It's crazy. DJ (43:01.089) Cool, well, we will chat in the next one whenever that is. Mike Jackness (43:04.342) Whenever that is. All right, until that one everybody, happy selling. We'll talk to you soon.
Today, I’m thrilled to have a regular back on the show, Mike Jackness. Mike is the founder of Ecom Crew and he owns many e-commerce brands. But out of all his companies, we just happen to own one together. In this episode, we give you all the details about our recent exit and sale. What You’ll Learn The details of our recent company exit The future of e commerce and AI Why Mike sold a number of his brands and laid off his team Other Resources And Books EcomCrew Sponsors SellersSummit.com – The Sellers Summit is the ecommerce conference that […] The post 506: Insider Details About Our Recent Company Exit With Mike Jackness appeared first on MyWifeQuitHerJob.com.
I just returned from Las Vegas where I got to speak in front of 1300 people at the Alibaba CoCreate Conference. And what’s cool is that I was able to meet up in person with my good friend Mike Jackness and my business partner, Toni Herrbach. In this episode, we discuss the future of e-commerce in the face of AI and other changes in the industry. What You’ll Learn Where the cheese is moving in the ecommerce industry How artificial intelligence will fundamentally change ecommerce How the sourcing landscape is changing Other Resources And Books Ecom Crew Sponsors EmergeCounsel.com – […] The post 491: The Future Of Ecommerce In The Face Of AI And Other Changes With Mike Jackness And Toni Herrbach appeared first on MyWifeQuitHerJob.com.
Welcome to another insightful episode of the Sellernomics Podcast! In this edition, we are joined by the brilliant Mike Jackness, co-founder of EcomCrew, as he delves into the world of mastering email marketing to supercharge your external traffic. Are you an e-commerce enthusiast looking to skyrocket your business growth? Mike Jackness is here to unravel the secrets of leveraging email marketing to boost your external traffic like never before. From building a responsive email list to crafting compelling campaigns, Mike shares invaluable strategies honed from years of experience. Tune in as we explore the power of email marketing in driving more potential customers to your online store. Don't miss out on this opportunity to learn from the best in the e-commerce game. #MikeJackness #EcomCrew
With the recent sale in the rear view mirror, Mike talks about the plans he has for the future and what business he's thinking of getting into next to focus 100% of his attention on. Today, Dave and I are diving into some events this year that have led to me ultimately choosing to let go of all my brands. We discussed a little bit on the last podcast episode, but Dave and I also discuss the rest of my plans for the future and moving towards embodying The One Thing. Here's a few specific questions that Dave tossed out: Were your other businesses being negatively impacted while you were a CEO for this previous project? What's the maximum amount of businesses should a person have while giving a reasonable amount of attention to? What's the next business for Mike? Timestamps: 00:00 - Introduction 01:35 - Reflecting on the recent sale of our business 03:09 - Lessons learned and evaluating decisions 09:21 - Balancing multiple projects and finding focus 20:54 - The Benefits and Challenges of Multiple E-commerce Brands 22:19 - Focusing on a Single E-commerce Brand 25:44 - The Decision to Sell Off Brands and Find the One Thing to Focus On 27:24 - Vision for the Future and Buying a Business 33:04 - Reflecting on the Frustration of Selling the Previous Business 36:44 - Changing Business Landscape 39:11 - Excitement for a New Business Venture So stay tuned, as we continue to explore this ever-evolving industry together! I hope you took away some valuable insights from this episode that you can use to sort out your business goals for this year. Don't forget to leave us a review on iTunes if you enjoy our content. Happy selling and I'll see you on the next one!
Mike Jackness talks to Chris Duty of Quiet Light Brokerage to dive into the challenges that they faced when trying to sell one of Mike's most recent business acquisitions, and the string of bad luck that Mike faced along the way. After 3 years, I'm glad to announce that I've sold one of my businesses. Joining me today is the broker that helped me with the transition, Chris Duty from Quiet Light Brokerage. Chris and I explore the process of selling a business that I, alongside investors from ECF Capital, acquired in late 2020, and what transpired along the way (which includes some unfortunate events). One of the key takeaways from this episode is that the process isn't over until it's over. Some roadblocks might pop up along the way, but it's always important to move onto the next step until the whole process is complete. If you're considering on selling your business, or if you want to hear the fun (or unlucky) details of my journey in trying to sell this business, today's episode is definitely one to save. Here's today's main points 00:00 - Introduction 01:50 - Ground rules of today's discussion 03:04 - The backstory of our sale 08:39 - Today's main takeaway: It's not done until it's done. 14:41 - How Chris approaches a business sale 16:28 - Building trust and credibility with buyers 24:18 - Tax returns and SBA pre-qualification 31:05 -The impact of having your priorities in order 33:43 - Finding the right buyer who recognizes the long-term value of the business 42:38 - The importance of early preparation for selling your business We hope today's episode was useful to you. If you want to get in touch with Chris you can find him at Linkedin or you can check out the company at QuietLight.com. If you want to check out how Mike planned to grow this ecommerce business back in 2021, you can check it out here. If you have any questions or anything you'd like us to discuss on the podcast, you can now email us directly at support@ecomcrew.com! Also, we would really appreciate it if you would leave us a review on iTunes. Thanks for listening!
Nirav Sheth and Mike Jackness dive into Conversion Rate Optimization (CRO) strategies. Our guest, the founder and CEO of Anata, sheds light on the significance of CRO and its optimal timing for business enhancement. We focus on often overlooked aspects of e-commerce management, highlighting the importance of a user-friendly checkout experience, the influence of distractions on mobile users, and the role of data-driven decision-making in e-commerce. Additionally, the episode uncovers the power of influencer-led channels, effective landing page optimization, and the psychology behind podcast advertising. Nirav provides his expert take on traditional CRO and why more impactful, focused testing could yield better results than a high volume of minor ones. Timestamps: 00:25 - Introduction 01:41 - Embracing Best Practices for CRO 07:50 - Ensuring a User-friendly Checkout System 09:56 - Comprehending Mobile User Behavior 11:22 - The Role of Usability Testing 14:47 - Understanding E-commerce Benchmarks 19:18 - Exploring Conversion Rates in E-commerce 20:31 - Harnessing the Potential of Influencer-led Channels 27:41 - The Limitations of Traditional CRO 31:49 - The Impact of AI and Personalization on CRO I wanna thank Nirav for the value-packed conversation today, and we'll definitely employ the tactics learned in our own businesses. If you want to get featured on an Under the Hood segment, be sure to head over to ecomcrew.com/underthehood to sign up. We're excited to hear about your ecommerce journey! Speaking of ecommerce journey, Dave and I would not have gotten this far without all the help from the amazing people we met along the way. Don't forget to leave us a review over on iTunes if you enjoyed this episode. Until the next one, happy selling!
With Seller Summit 2023 coming up in May, Mike and Steve Chou reflect on the value of events, revisit some of their favorite memories, and how its impacted their lives in more ways than one. Masterminds are one of my favorite segments of a live event. Whether it be EcommerceFuel, Seller Summit, or whatever event that takes place, Masterminds give everyone an opportunity to voice out their problems and get actionable advice from a like-minded group of people. Steve and I first met during Andrew Youderian's event, at a Mastermind where Steve asked the table for a critique of his website, and we've been friends ever since then. This episode is more of a fun recap rather than an actionable advisory, but there's a few takeaways to learn from this episode. You'll learn about The costs of cranking up, and keeping your work burner as high as possible. How opening up and trusting like-minded individuals can be more valuable than you think. Why it's good to have a group of friends that can't relate to your entrepreneurial lifestyle. Timestamps: Intro - 00:00 An overview of what Seller Summit is, and how it's different - 2:42 How Mike and Steve Chou met for the first time - 5:06 TAKEAWAY #1: Masterminds give you the advice you need to hear, without the fluff - 7:33 How Steve Chou got into selling on Amazon - 9:58 How Steve Chou got marital advice at a Mastermind - 12:22 How Steve Chou saved Mike's marriage - 14:08 How Steve Chou made $60k in 90 minutes - 18:03 How Mike deals with old friends who aren't in eCommerce - 20:51 Why venture backed businesses are a different gamble - 23:40 Steve and Mike's experience investing on an eCommerce business together - 25:15 Why it's important to surround yourselves around those who trust you - 27:55 How events during the pandemic weren't the same - 33:55 Seller Summit 2023 details - 36:08 Lots of thanks to Steve for doing this episode with me. If you're thinking about going to Seller Summit, here's a link with a special discount code for Ecomcrew listeners. You can check out all of Steve's other awesome stuff over on mywifequitherjob.com. If you enjoyed this episode, don't forget to leave us a review on iTunes. Until the next one. Happy selling!
Join Kevin and Mike as he shares key lessons and experiences from his successful businesses, his journey in e-commerce, and his life outside of entrepreneurship.
Today I have my friend Mike Jackness back on the show to talk about a sensitive topic that is rarely discussed. Can successful entrepreneurs live a balanced life? Do you have to make sacrifices in order to make money in business? In this episode, we discuss the brutal truth about success and the curse that all entrepreneurs have. Enjoy! What You’ll Learn The brutal truth about success in business The secret weapon for entrepreneurs to live a balanced life The curse that all of the successful entrepreneurs have Other Resources And Books EcomCrew Sponsors Postscript.io – Postscript.io is the SMS […] The post 432: The Curse That All Successful Entrepreneurs Have With Mike Jackness appeared first on MyWifeQuitHerJob.com.
Fabricio Miranda is the CEO & Co-Founder of Flieber, Inc. He has been an entrepreneur since he was 26 years old. Flieber is the 7th company that he founded or joined in the very early stage. Fabricio loves building businesses from the ground up. He is obsessed with the revolution that retail is undergoing, especially in the supply-chain space. He is an eternal optimist and I can't wait for the amazing future ahead! Here's a glimpse of what you'll learn:Fabricio Miranda talks about relocating to the US as a business decisionFabricio explains how he entered the online retail industry as an entrepreneurThe preset and future vision of Fabricio for the Ecomm spaceFabricio shares the lesson he learned from his biggest mistakeTool versus people to operate, grow and scale a businessIn this episode…Fabricio Miranda shares his journey as an entrepreneur since age 26. He talks about the difference of a business that is boostrapped from one where he had to consider his investors. Her further shares some views on your persona as an entrepreneur and his take on technology helping people focus on what matters instead of them replacing their jobs.Join Martin Zerrudo on this episode of What Do You Do Next?, as he sits down with Fabricio Miranda, Founder and CEO of Flieber to discuss how they were able to make available the sophisticated tools big companies are using to small and medium sized businesses. Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedInFabricio Miranda on LinkedInFlieberDarron Burke on What Do You Do Next? Misha Beatty on What Do You Do Next?Mike Jackness on What Do You Do Next? Sponsor for this episode:This episode is brought to you by Seller Universe Ecommerce Group. We provide essential Amazon and NetSuite service solutions for brand growth. Seller Universe Ecommerce Group provides essential service solutions for brand growth and scale. We position brands for success through cost-effective growth initiatives and operational efficiencies. Our synchronized approach allows brands to dominate in today's complex, multiplatform ecommerce marketplace and ecosystem.Our team at Seller Universe not only helps your brand on Amazon but we also do Netsuite implementation and anything that gives you a headache around inventory management.To learn more about what we can do for you and your brand, visit At HireTeam, we understand the enormous amount of time it takes to place job ads, respond to applicants, and complete the tedious screening process. That's why we created this unique Hiring and Recruiting Platform. It is designed to completely change the applicant experience and give your team their precious time back to focus on daily operations.Email: ronnie@hireteam.coWebsite: https://hireteam.co/
James Dihardjo is a hands-on entrepreneur who personally connects and onboards clients for Merchant Spring. A living example that there are no prerequisite to success but hardwork, determination, focus and planning. His passion for their tool springs from his passion to give back to the customers who has been so supportive of their tool even early on. Here's a glimpse of what you'll learn:James Dihadjo talks about the life of a Saas founderScaling the Saas business over the service provider businessJame explains the process over turning a concept into an actual viable productInsights on combating attrition James talks about what Merchant Spring can help business owners with What makes Merchant Spring standoutJames acknowledges the role customers played to Merhcant Springs continuous growth In this episode…If you have the idea and a good partner then nothing is impossible. James Dihardjo has always been fascinated by softwares. Being in a service industry opened his eyes to the opportunity of a Saas venture that will help Ecommerce business owners manage their stores without hassle. Join Martin Zerrudo on this episode of What Do You Do Next?, as he sits down with James Dihardjo, Co-founder of Merchant Spring, to discuss how a tool can grant you access to multiple Ecommerce business in the easiest way possible. Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedIn James Dihardjo on LinkedInMerchant SpringCory Pinegar of LinkedInTeemReachMisha Beatty on What Do You Do Next?Mike Jackness on What Do You Do Next? Darron Burke on What Do You Do Next?Sponsor for this episode:This episode is brought to you by Seller Universe Ecommerce Group. We provide essential Amazon and NetSuite service solutions for brand growth. Seller Universe Ecommerce Group provides essential service solutions for brand growth and scale. We position brands for success through cost-effective growth initiatives and operational efficiencies. Our synchronized approach allows brands to dominate in today's complex, multiplatform ecommerce marketplace and ecosystem.Our team at Seller Universe not only helps your brand on AmAt HireTeam, we understand the enormous amount of time it takes to place job ads, respond to applicants, and complete the tedious screening process. That's why we created this unique Hiring and Recruiting Platform. It is designed to completely change the applicant experience and give your team their precious time back to focus on daily operations.Email: ronnie@hireteam.coWebsite: https://hireteam.co/
His exposure to the world of business and enterpreneurship at a very young age helped Cory see and cease business opportunities presented to him.Taking his chance on a $1 business despite his dad's unfavorable forecast of it's success led to the growth of two businesses, both believing in the power of giving chances and evolution to remain current and relevant. A degree from BYU, his dad's entrepreneurial expertise and his natural hunger to find something to grow and meet a current need made the man Cory is now. Here's a glimpse of what you'll learn:Cory Pinegar shares his journey as a solopreneur and what he learned along the wayWhat does it mean to lead from the frontWhy is empathy an important skill to have as an entrepreneurCory explains Call Force and Teem What are the top 3 industries his company servicesCory believes that location is not the basis of someone's efficiencyIn this episode…Is there a one size fits all kind of leadership that will scale a brand to success? Cory Pinegar was inspired by his dad's emphasis on empathy in leading people. Though he was not directly taught by him, Cory picked up on his style and made it his own. Though there were some tough decisions to make in order to pursue growing a business, Cory kept at it and never once forgot that it takes a team.Join Martin Zerrudo on this episode of What Do You Do Next?, as he sits down with Cory Pinegar, Founder of Teem, to discuss how authenticity will drive the growth of a company and how it can open new perspectives in deciding for the right hire to fill a seat.Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedIn Cory Pinegar on LinkedInBrett Pinegar on LinkedInConner Ludlow on LinkedInPam Keys on LinkedInTeemReach Darron Burke on What Do You Do Next? Misha Beatty on What Do You Do Next?Darron Burke on What Do You Do Next?Mike Jackness on What Do You Do Next? Sponsor for this episode:This episode is brought to you by Seller Universe Ecommerce Group. We provide essential Amazon and NetSuite serviAt HireTeam, we understand the enormous amount of time it takes to place job ads, respond to applicants, and complete the tedious screening process. That's why we created this unique Hiring and Recruiting Platform. It is designed to completely change the applicant experience and give your team their precious time back to focus on daily operations.Email: ronnie@hireteam.coWebsite: https://hireteam.co/
Emmet was influenced by his dad to get into the numbers and data industry. His experience in banking, tech and startup helped in building the Fortia Group.He moved to become Eagle Alpha's executive chairman to focus on Fortia Group's growth.His refreshing view on the M&A industry is will help a lot of buyer and sellers alike have the best possible exit on the the eCommerce space.Here's a glimpse of what you'll learn:Emmet Kilduff shares what made him passionate in pursuing his carreer.He compares the difference in perspective between North America and Europe when it comes to business failureThe origin and growth of Fortia GroupEmmet gives an advice to help brands position themselves for acquisition in the current market conditionWhat makes Fortia different and where it is headed in the future In this episode…Preparation is the key to have a successful exit.Emmet Kilduff as someone who has seen failure in one of his ventures, the wisdom he has gained helped in his view on the challenges in the Ecommerce and the M&A industry. He also gives some outstanding advise on how to thrive despite the market conditions.Join Martin Zerrudo on this episode of What Do You Do Next?, as he sits down with Emmet Kilduff, Co-Founder & CEO at The Fortia Group, to discuss how to increases the chances of being acquired as a brand. Along with this he will explain Fortia Group's exit strategy that allows them to be a step ahead from their competitors. He will also try to give a forecast of the economy and how it will relate to brands. Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedIn Emmet Kilduff on LinkedInPaul Hanley on LinkedInFortia GroupExit Guide for Amazon FBAsEagle AlphaThe single biggest reason why start-ups succeed (Bill Gross)Misha Beatty on What Do You Do Next?Mike Jackness on What Do You Do Next? Darron Burke on What Do You Do Next?Sponsor for this episode:This episode is brought to you by Seller Universe Ecommerce Group. We provide essential Amazon and NetSuite service solutions for brand growth. Seller Universe EAt HireTeam, we understand the enormous amount of time it takes to place job ads, respond to applicants, and complete the tedious screening process. That's why we created this unique Hiring and Recruiting Platform. It is designed to completely change the applicant experience and give your team their precious time back to focus on daily operations.Email: ronnie@hireteam.coWebsite: https://hireteam.co/
Jon is a successful entrepreneur, Amazon thought leader and also a realist. Before starting his own business, he spent 15 years working as an account director & strategist for some of the top digital agencies in ohannesburg, London, and Los Angeles.He began his entrepreneurial journey in 2014 when he launched multiple private label brands on Amazon--all successfully. Inspired by this success and the new flexible, restriction-free, and limitless lifestyle that came with it, he co-founded ZonGuru with Adam Hudson of Reliable Education. ZonGuru is an Amazon FBA tool suite to help more sellers achieve the same.Here's a glimpse of what you'll learn:Jon talks about his introduction to the world of advertising, marketing, and eCommerceJon explains what Zonguru's originHow to create a scalable business on Amazon The turning point of Zonguru that lead to its growth Jon shares how he onboarded Stefan Strong belief on incentivizing employeesLightning round with Jon on some of Zonguru's key featuresJon shares his biggest mistake and proudest moments as an entrepreneurIn this episode…Are you trying to find some inspiration to scale your Amazon business or get your start up on it's legs? Jon Tilley started out in the advertising world, but with the right connections found himself being drawn to the world of Amazon. In an industry where leading softwares has been utilized by Amazon sellers to scale their business Jon pushed forward and found Zonguru a spot to shine in the sun.Join Martin Zerrudo on this episode of What Do You Do Next?, as he sits down with Jon Tilley, CEO of Zonguru, to discuss scaling an Amazon business and learning from mistakes to give their brand a better leverage for brand awareness and how being positive will always lead you to achieve your goals. Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedIn Jon Tilley on LinkedInZonguruAmazon Seller Insight PodcastMisha Beatty on What Do You Do Next?Mike Jackness on What Do You Do Next? Darron Burke on What Do You Do Next?Sponsor for this episode:This episode is brought to you by Seller Universe Ecommerce Group. We provide essential Amazon and NetSuite service solutions for brand growth. Seller Universe Ecommerce Group provides essential service solutions for brand growth and scale. We position brands for success through cost-At HireTeam, we understand the enormous amount of time it takes to place job ads, respond to applicants, and complete the tedious screening process. That's why we created this unique Hiring and Recruiting Platform. It is designed to completely change the applicant experience and give your team their precious time back to focus on daily operations.Email: ronnie@hireteam.coWebsite: https://hireteam.co/
Oleh Pylyp is an excellent business development manager at Inverita. He understands the needs of software development and works very well. He joined the Eprenz.com conference for entrepreneurs and asked good questions that led to one of the best solutions possible. Oleh lived in Ukraine for 22 years and helped people who are in need, especially during the war in Ukraine. Now he is in the US with his fiance whom he dated for two years, to pursue education and become a good businessman, as he believes that when you build a good company, you share a big impact in the society. Here's a glimpse of what you'll learn:Oleh Pylyp talks about how communication in a company is very importantWhat are the options when you want to develop software?Oleh explained the things people did not consider when developing an appHow long does it take to develop an app and what are the costs that are involved and when can you typically start seeing a return on your investment?How fulfilling to create a software that will help for betterment of the world, especially helping child obesityOleh shared his testimony on how he overcame the struggles during the war of UkraineHow Oleh established a connection even with start up companiesIn this episode…Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedIn InveritaInverita on LinkedInOleh Pylyp on LinkedInBook FaceNick Penev on LinkedInHello TaxGrant Cardone Grant Cardone on YouTubeMisha Beatty on What Do You Do Next?Brian Nwokedi on What Do You Do Next? Mike Jackness on What Do You Do Next? Sponsor for this episode:This episode is brought to you by Seller Universe Ecommerce Group. The Future Is FreelanceThis show is for freelancers, sole traders, solopreneurs, digital nomads, consultants,...Listen on: Apple Podcasts SpotifyAt HireTeam, we understand the enormous amount of time it takes to place job ads, respond to applicants, and complete the tedious screening process. That's why we created this unique Hiring and Recruiting Platform. It is designed to completely change the applicant experience and give your team their precious time back to focus on daily operations.Email: ronnie@hireteam.coWebsite: https://hireteam.co/
Perhaps there's no more important aspect of sourcing than communication with your suppliers. Good or even great communication can not only lead to great opportunities but also increase the efficiency of your sourcing process. On this episode, host Mike Jackness speaks with Jordan West, CEO at Keep Nature Wild, Founder and CEO of upGrowth Commerce, and Co-Owner of Little and Lively Clothing. They discuss:- 3:27 Why high customer lifetime value matters. - 6:54 Why sourcing from Alibaba.com is safe. - 12:21 Why you should always consider communicating with suppliers on the Alibaba.com platform. - 16:24 Why it's important to always have a backup plan. You'll also hear Jordan share the particular challenges of sourcing for his business in Canada.If you enjoyed today's show, please leave a 5-star review. For more information visit Alibaba.com buyer central at https://buyer.alibaba.com/
The new world of post-pandemic work offers businesses all sorts of options to expand and grow. On this episode, host Mike Jackness speaks with , Serial Entrepreneur. They discuss: - 8:55 Values and skills of great employees.- 17:39 How...
The new world of post-pandemic work offers businesses all sorts of options to expand and grow. On this episode, host Mike Jackness speaks with Dave Kerpen, Serial Entrepreneur. They discuss: - 8:55 Values and skills of great employees.- 17:39 How the new world of work is shaping up.- 28:13 The role of courage in innovating.- 32:57 The competitive advantage of mastering fear when it comes to embracing change.- 34:34 Why you shouldn't only choose price when picking a supplier. You'll also hear Mike jump in and share his perspective on the pricing question.If you enjoyed today's show, please leave a 5-star review. For more information visit Alibaba.com buyer central at https://buyer.alibaba.com/
California-based cognitive scientist Leo Trottier is a unique blend of cognitive scientist, software engineer, product designer, and entrepreneur. His knowledge and connection led to creating a software that helps dogs and cats communicate through sound buttons to express themselves.He is founder and CEO of CleverPet, that launched Fluent Pet, a now becoming popular pet kit in the marketplace.Here's a glimpse of what you'll learn:Leo shares his background that stirred his interest to the pet tech space Tips on how to launch a brand from a great ideaLeo explains how he was able to bring FluentPet into the marketCOVID's positive effect to the brand's growthBranching out and joining the Amazon game for brand awareness and governanceLeo advises to follow your gut to avoid any issues in the futureInsight into the pet tech industry from a pioneerIn this episode…Your expertise in a certain subject matter can lead you to innovate something that will make a difference in a space not yet explored by a lot of people.Leo Trottier began got his interest when a speech pathologist trained her dog to talk. Though he wasn't able to collaborate with her, TikTok and Facebook helped him connect to the right people that skyrocketed the popularity and success of his automated mass produced, dog and cat interaction and training software. Join Martin Zerrudo on this episode of What Do You Do Next?, as he sits down with Leo Trottieer, Founder of CleverPet/FluentPet, to discuss how to become a successful start up in the pet tech space and their new program that aims to train kids in become junior teachers for dogs and cats.Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedIn Leo Trottier on LinkedInChristina Hunger on LinkedInAn Interview with Alexis DevineFluentPet Junior Teacher ProgramMisha Beatty on What Do You Do Next?Brian Nwokedi on What Do You Do Next? Mike Jackness on What Do You Do Next? This Is The DayA podcast about moving forward with your dreams, being brave and making big things...Listen on: Apple Podcasts Spotify The Personal Finance PodcastSubscribe now and Master Your Money in Less than 30 Minutes Per Week! Listen on: Apple Podcasts Spotify
The pandemic accelerated changes that were already happening across buying channels and supply chains. More and more buyers are expecting a seamless experience when dealing with suppliers and, increasingly, companies are taking a customer-centric approach to their ecommerce strategy. On this episode, host Mike Jackness speaks with Brian Beck, B2B Ecommerce Expert Advisor & Author at Beck Ecommerce. Brian has been in ecommerce since 1999, both as a business owner and executive. He has also gone on to be an influential thought leader and author in the space. Mike and Brian discuss some interesting topics on the subject, including: - 5:02 Why a B2C experience is now expected even in B2B situations- 7:57 Are physical sales relationships dead?- 17:58 Why 65% of consumers trust a marketplace enough to buy from an unknown brand- 20:14 How efficiency is most important for B2B buying You'll also hear Brian talk about why it's important for companies to use digital tools to streamline their workflow. If you enjoyed today's show, please leave a 5-Star review. For more information visit Alibaba.com buyer central at https://buyer.alibaba.com/
We speak with two Amazon experts, Mike Jackness and Mina Elias, to share all their latest hacks and strategies that have helped them and others to sell millions on Amazon.
Should you build a brand from scratch? Or buy an existing brand and apply your genius to scale or improve it? Mike Jackness is one of my favorite eCommerce pros to talk to. He's a podcast host. He's built, bought, and sold multiple brands. And he has a heart to teach.He's currently running a successful eComm brand that I'm an investor in, and it's in the process of selling. We wanted to hop on the podcast and talk about the process plus the pros and cons of buying vs. selling. Here's a look at what we cover: What you're actually buying when you buy an existing business. How Mike looks at brands, he wants to buy or invest in. How to approach due diligence as a buyer or a seller. Surprises to look for in the due diligence process as a buyer or a seller. How getting your business ready to sell now will make your business better regardless of if you sell it or not. The good, the bad, and the ugly of M&A. Plus more!
Rachel Lambo is a Toronto native who was motivated to start Sade Baron because of her mother and having a passion to be an entrepreneur.Rachel is extremely knowledgeable, versatile and detail-oriented, always coming up with out-of-the-box ideas that help her client's businesses stand out. Having worked for various small and medium sized companies, she took all that she learned and improved her skill set to establish her mom's dream business. Here's a glimpse of what you'll learn:Rachel Lambo talks about how she started with her marketing career and the work she did for Shoppers Drug Mart, Subaru and KellogsRachel shares how Sade Baron was birthed through her momWhat are the three things to do in starting your own brandRachel explains the milestones and pitfalls in scaling a skin care businessRachel shares how her mentors helped the progress of Sade BaronTo rebrand, the right angel investor is essentialIn this episode…Are you a skincare brand wanting to find your spot in the Amazon marketplace? Or Have you been running your business as a one man show lately? Rachel Lambo, started Sade Baron to encourage the entrepreneurial fire in her mom. In a world were race and color can be a factor for your business' success, Sade Baron pushed through. With the desire to come up with a d to c brand that will give customers nothing but the best, Sade Baron has niched down to target skin conditions to let people know it's okay to not have sexy skin while going through these conditions and Sade Baron is here to help.. Join Martin Zerrudo on this episode of What Do You Do Next?, as he sits down with Rachel Lambo, Co-founder of Sade Baron, to discuss producing and scaling a brand with a quality product. Sade talks about her mom's passion and how it led to the birth of the brand. Resources mentioned in this episode:Seller Universe Ecommerce GroupMartin Zerrudo on LinkedIn Rachel Lambo on LinkedInSade Baron Shoppers Drug MartScott Sassa on LinkedInMisha Beatty on What Do You Do Next?Brian Nwokedi on What Do You Do Next? Mike Jackness on What Do You Do Next? This Is The DayA podcast about moving forward with your dreams, being brave and making big things...Listen on: Apple Podcasts Spotify The Personal Finance PodcastSubscribe now and Master Your Money in Less than 30 Minutes Per Week! Listen on: Apple Podcasts Spotify
In part 2, we meet again with Mike Jackness , Mike has been in the e-commerce space for over a decade and has a wealth of experience in e-commerce, marketing, search engine optimization, and much more. Mike currently owns and operates several businesses in the e-commerce space and has been a featured speaker and presenter for countless events over the past several years. You might have also heard Mike on his own podcast, The Ecomcrew Ecommerce Podcast, where he and Dave Bryant have created a unique and transparent environment where they open the hood and share everything that's working for them, and what's not.Listen to Mike and learn from an e-commerce superstar![00:01 - 09:52] Buying InventoryWhat e-commerce sellers should know about storage feesMike was once against taking debt to buy inventoryWhat changed his mind?[09:53 - 19:38] Risk Profiles of EntrepreneursPersonal risk profiles also matter in e-commerce businessesIs there a business that is worth the stress?Listen to our conversationThe different kinds of entrepreneurs according to Mike[19:39 - 27:07] Community-Building in E-CommerceMike talks about his podcast, The Ecomcrew Ecommerce PodcastWhat is it like to build a community of likeminded e-commerce entrepreneurs?Mike gives us a sneak peek into their paid subscription service[27:08 - 33:11] Closing Segment Know more about Mike in the Fire Round!Connect with Mike!Links belowFinal wordsTweetable Quote/s:“There will be dark days of entrepreneurship. That is guaranteed, and if you aren't willing to stay the course and deal with it, then you probably just shouldn't get started at all.” - Mike JacknessResources mentioned:Jungle Scout™SplitlyHelium 10Book: TractionEmail michael@protosmarketing.com to connect with Mike or follow him on LinkedIn. Visit Protos Marketing now for your Amazon-related marketing needs!------------------------------------------------------------------------------------------Send us a voice message and let us know how we can help you fire the man! FacebookYouTubeInstagramEmail us --> support@firingtheman.comLEAVE US A REVIEW!
Episode 119Mike Jackness has been in the e-commerce space for over a decade and has a wealth of experience in e-commerce, marketing, search engine optimization, and much more. Mike currently owns and operates several businesses in the e-commerce space and has been a featured speaker and presenter for countless events over the past several years. Listen to Mike and learn from an e-commerce superstar![00:01 - 06:07] Opening SegmentWhy Mike Jackness chose a career in e-commerce[06:08 - 16:16] Transition from Corporate America to E-CommerceAre you working in corporate America but planning to jump to e-commerce?Here's an important tip about profit margins that you should hearIf the cost of acquiring a product has increased, this is what you should do[16:17 - 26:19] Pay-Per-Click Advertising ModelWhat e-commerce sellers should know about pay-per-click advertisingHow adding a lot of negative keywords made Mike's business profitable[26:20 - 36:39] E-Commerce InventoryThe Total Advertising Cost of Sale or TACOS is another major considerationWe have an interesting conversation about inventory that you should not miss[36:40 - 46:33] Buying InventoryWant some Amazon refunds? Check out GetidaPromo code: FTM400What e-commerce sellers should know about storage feesMike was once against taking debt to buy inventory[46:34 - 56:12] Risk Profiles of EntrepreneursPersonal risk profiles also matter in e-commerce businessesThe different kinds of entrepreneurs according to Mike[56:13 - 01:03:17] Community-Building in E-CommerceMike talks about his podcast, The Ecomcrew Ecommerce PodcastWhat is it like to build a community of likeminded e-commerce entrepreneurs?[01:03:18 - 01:08:38] Closing Segment Know more about Mike in the Fire Round!Connect with Mike!Links belowFinal words Tweetable Quotes:“I think there's also a personal risk profile overlay that you should [consider]…some people are inherently very risk-averse and some people are inherently willing to take huge chances, and sometimes that could be the same person, depending on what time in their life it is.” - Mike Jackness“There will be dark days of entrepreneurship. That is guaranteed, and if you aren't willing to stay the course and deal with it, then you probably just shouldn't get started at all.” - Mike JacknessResources mentioned:Jungle Scout™Helium 10Book: TractionEmail michael@protosmarketing.com to connect with Mike or follow him on LinkedIn. Visit Protos Marketing now for your Amazon-related marketing needs!------------------------------------------------------------------------------------------Send us a voice message and let us know how we can help you fire the man! FacebookYouTubeInstagramEmail us --> support@firingtheman.comLEAVE US A REVIEW!
Learn the basics of content-first approach from Mike Jackness. In this episode, he shares in a no holds barred talk a walkthrough of his latest soon-to- aunch project that is content-first approached. Listen in and decide for yourself if this approach is right for you and would probably help you have more efficient direction for your new PL. In This Episode: [00:25] Welcoming Mike Jackness on the show. [05:20] The QR code [09:05] What does Content First Approach mean? [13:10] Timeline you should be looking at before getting the result. [21:30] Buying a domain for 80K, is it worth it? [29:00] Why needing.com [31:00] Market for domain names. [34:40] Additional content. [41:49] Choosing the type of content. Guest Links and References: Ecomcrew Podcast: https://www.ecomcrew.com/category/ecom-crew-podcast/ Ecomcrew Secret Sauce : https://my.ecomcrew.com/secret-sauce-bundle Book References: Traction by Gino Wickman Links and References: Wizards of Amazon: https://www.wizardsofecom.com/ Wizards of Amazon Courses: https://wizardsofamazon.mykajabi.com/a/27566/x6Kwkz6p Wizards of Amazon Meetup: https://www.meetup.com/South-Florida-FBA/ Wizards of Amazon on Facebook: https://www.facebook.com/groups/WizardsofAmazon/ Wizards of Amazon on Instagram: https://www.instagram.com/wizardsofecom/
On today's lunch with Norm, we look at how to launch on Amazon WITHOUT rebates & giveaways with Michael Jackness. In this episode, learn how to set up a product launch in 2022 and how much time & money is required. Also learn what common mistakes people make when launching their products. Mike Jackness is a serial entrepreneur who quit his day job in 2004 to do content and affiliate marketing. Mike jumped into eCommerce in 2012 when he purchased treadmill.com as a parked domain and developed it into a 7-figure eCommerce property. Since then Mike has purchased or started 4 new eCommerce brands and sold 2 of them for 7-figures each. He blogs and podcasts about the entire journey at EcomCrew along the way. This episode is brought to you by Startup Club Startup Club is the largest club on Clubhouse supporting the Startup ecosystem. Startup Club offers an exciting sense of belonging to established and aspiring entrepreneurs, startup businesses, and companies wanting to Learn, Connect, and Grow. Join us for conversations with founders, entrepreneurs, angel investors, venture capitalists, subject matter experts, and more.For More information visit https://Startup.club This episode is also brought to you by Sellerise. Take a deep dive into your business processes to make data-driven decisions and outperform the competition in an innovative way. Sellerise is a comprehensive solution for your everyday business needs with innovative tools like the PPC Dashboard, Smart Alerts, Review Requester, and Keyword Tracker. Everything you need to grow and scale your business is just one click away. Stand out from the crowd and conduct business whenever, wherever. Innovate your effort and work smarter, not harder. The difference is amazing. Sellerise is for professionals at every level of the business journey. Simply select the capabilities that best fit your needs. Visit https://www.sellerise.com This episode is brought to you by Zee Are you a private label seller looking to expand into larger markets internationally or need an experienced import partner to keep growing? Zee makes selling your Amazon products abroad easy with excellent import knowledge, door-to-door solutions, customer service and scalability. Streamline your import process with Zee today to increase profit margins and continue to scale. Ready to expand your eComm empire and take your Amazon FBA Business global? Visit https://zee.co to learn more! In this episode, host of EcomCrew Michael Jackness is here to discuss how to launch on Amazon WITHOUT rebates & giveaways. In this episode, learn what common mistakes people make when launching their products, and how much time & money is required. This episode is brought to you by Startup Club, Sellerise and Zee
The global supply chain model has increased the affordability and accessibility of products manufactured all over the world. Sourcing products in this environment has become a much more complex task than before, and having a handle on the logistics of international trade has never been more vital. On this episode of the Alibaba.com Sourcing Insights podcast, host Kunle Campbell, Co-Founder of Octillion Capital Partners, speaks with Mike Jackness, President and CEO at Terran LLC, about some tips and tools for staying on top of increasing supply chain complexity. Some valuable insights from their conversation include: - 7:15 Coordinating logistics to make the most of suppliers' geographical locations- 17:26 Ways to secure lasting relationships with suppliers through clear communication- 26:15 Coordinating pricing to maximize profit, despite global market volatility- 29:10 Diversifying sourcing to create built-in resiliency- 32:33 Ensuring quality control at the supplier level Beyond managing complex logistics, there are other important takeaways, such as: - 5:41 The ways that perceived value can impact manufacturing decisions- 14:15 How to protect intellectual property from competitors seeking to copy design concept - 31:15 Taking the time to create quality products with noticeable market differentiation - 32:24 Taking advantage of Alibaba.com's RFQ feature for pro buyers Coordinating international complexity is key to maximizing profit and creating a sustainable sourcing model.
To attract repeat customers, businesses should source their products according to changing trends. Tom Samiljan, Editor in Chief of Dealerscope, joined host Mike Jackness, President and CEO of Terran.com, on Alibaba.com Sourcing Insights. They...
To attract repeat customers, businesses should source their products according to changing trends. Tom Samiljan, Editor in Chief of Dealerscope, joined host Mike Jackness, President and CEO of Terran.com, on Alibaba.com Sourcing Insights. They discuss some of the trending electronics products Tom has written about, and how important it is for ecommerce businesses to pay attention to these trends. A few products gaining popularity, and sourceable through Alibaba.com, include: - 3:04 - The increasing affordability of true wireless earbuds - 6:01 - Ebikes and escooters, which are becoming far more accessible and available in urban areas- 11:39 - Outdoor appliances and tech, as hosting and entertaining outside is gaining popularity- 15:18 - Wearable tech, whose uses are expanding for both health and entertainment purposes- 19:12 - HDMI 2.1 cables, keeping in step with better high fidelity TVs and game consoles - 22:47 - Cell phones, with ever-expanding options and better affordability- 29:16 - Virtual Reality systems, which have gained immense popularity in the last year Tom also explains some ways business can take advantage of the latest technology: - 37:55 - Website optimization and making use of digital optimization tools- 41:59 - Sourcing the latest tech through Alibaba.com- 43:27 - Attending consumer technology trade shows, such as the Alibaba.com's Online Trade Shows By sourcing the most popular new tech, businesses can turn one-time purchases into repeat business. Note: All mentions of ‘CTA' in the episode refer to the Consumer Technology Association
It's one thing to get a sourcing business up and running. It's another thing entirely to optimize and scale your business across multiple markets and suppliers. Suuchi Ramesh, Founder and CEO of Suu.chi, Inc. comes from a data analytics, supply chain, and venture tech background, with a Masters in Computer Science driving her eye for optimization. As the guest for this episode of Alibaba.com Sourcing Insights, Suuchi gives thoughtful insights into how the best sourcing businesses grow and scale. She joins host Mike Jackness, who has worked with Alibaba.com for many years and who also has extensive knowledge and expertise in creating and launching e-commerce brands. Suuchi and Mike discuss: - 00:04:32 The importance of spreading execution risks- 00:09:34 Not being short-sighted about costs- 00:12:00 Understanding that supplier relationships can change over time- 00:13:05 Considering having different sources for successful products- 00:14:08 Digitizing as you grow- 00:28:22 How Alibaba.com can help you onboard your suppliers- 00:31:06 How to get suppliers to be more compliant with your systems There's plenty more to hear in the episode. Enjoy!
Mike Jackness, a lifelong entrepreneur with a wealth of knowledge shares valuable insights into the tactics he uses to fuel his 5 businesses while making sure he has time with family, friends, and health.
Mike Jackness is an entrepreneur and e-commerce expert. He is the President and CEO of Terran, a leading e-commerce conglomerate that owns and builds top brands like IceWraps and Wild Baby. He also co-hosts the company's podcast, EcomCrew, where he discusses all things e-commerce. Mike started his first business straight out of high school before joining Lee Technologies as the IT Director. During his time there, he helped grow the company from 40 employees to over 200. More recently, Mike served as the President and CEO of Protos Marketing, which he founded with two business partners. In this episode… Everyone has an idea for a new e-commerce product, but what does it take to successfully launch one? Anyone who has tried to build a successful e-commerce brand will tell you how difficult the process can be. You must have an innovative idea, strategic marketing, and countless hours of hard work to bring it all together. Additionally, there are plenty of pitfalls along the way that can hinder even the best businesses. Every successful entrepreneur has a list of things they wish they had done differently — and that's why advice from those who've walked the path before is so important. Fortunately, that's exactly what Mike Jackness is here to do. In this episode of the Ecommerce Wizards Podcast, Guillaume Le Tual interviews Mike Jackness, the CEO and President of Terran, to discuss his perspective on starting and running a new e-commerce brand. They go over Mike's storied experience as an entrepreneur and how he manages his current companies through Terran. They also talk about the difficulties of duplicating success, what to know about your margins, and how to construct effective funnels. Stay tuned to hear it all for yourself!
In this episode of The Opportunity Podcast, we will be speaking with Mike Jackness, co-founder of EcomCrew, a community, podcast, and resource for ecommerce entrepreneurs. Mike's a 7-figure ecommerce expert here to share everything in the ecom world and how he makes acquisitions. Mike takes a deep dive in his interview on the challenges, wins, and businesses that have shaped his ecommerce knowledge. He takes us step by step through his process of acquiring a new ecommerce business, from raising capital, due diligence, negotiations, to a successful close. Mike's calling for a breakout year for ecommerce sales and goes over how to navigate the changes in ecommerce and still build a future proof business. As a trusted voice in the ecommerce community with a powerful portfolio to back him up, Mike's interview is one you won't want to miss if you're an ecommerce entrepreneur. Sit back, grab a coffee, and get ready to learn the building blocks of acquiring and succeeding in the ecommerce space.
Mike Jackness from EcomCrew talks about how to build your Amazon brand outside of Amazon. Mike Jackness also talks about creating an information and review site, finding and developing a domain for your brand, the content that should be on the brand site. How to Build Your Amazon Brand Outside of Amazon. Creating an information site to build traffic. How to find a quality domain name to build your information site? How many domain names do Mike Jackness have? Does Mike Jackness buy domains to develop sales? How to hire or find people to help with the site content? Using your own site to build up an outside review. How did you come about buying Tredmill.com? What did you do with the site? Tell us more about EcomCrew? Mike Jackness - https://www.ecomcrew.com Mike Jackness is a serial entrepreneur who quit his day job in 2004 to do content and affiliate marketing. Mike jumped into eCommerce in 2012 when he purchased treadmill.com as a parked domain and developed it into a 7-figure eCommerce property. Since then Mike has purchased or started 4 new eCommerce brands and sold 2 of them for 7-figures each. He blogs and podcasts about the entire journey at EcomCrew along the way. About FeedbackWhiz - https://www.feedbackwhiz.com FeedbackWhiz helps Amazon sellers monitor, manage, and automate emails, product reviews, orders, and feedback. Build professional email templates. Send or exclude emails based on triggers such as refunds, shipment, delivery, feedback, and repeat buyers. Track and manage all product reviews. Instant notifications whenever a review is posted. Monitor all product listings and get alerts when critical events such as hijackers, buy-box loss, and listing changes occur.
Mike Jackness is the President and CEO of Terran, an ecommerce conglomerate that owns and builds brands and content sites. Terran also runs a blog, podcast, and training site called EcomCrew, which specializes in helping entrepreneurs grow ecommerce businesses. Mike has worked for tech companies since he was 18-years-old, when he started his own tech business, Discount Computer Consultants. His specialties include search engine marketing, relationship building, and adopting change. In this episode… Do you want to know how to build a successful, sustainable business model while maintaining a healthy work/life balance? If so, this episode of the Amazing Exits Podcast is for you! Today, Kellianne Fedio and Paul Miller sit down with Mike Jackness of Terran and EcomCrew to discuss their personal exit strategy stories, how to time your exit perfectly, and how to build a sustainable business. Planning the timing of your exit can be tricky and stressful. How can you plan a lucrative and well-timed exit while maintaining your relationships, hobbies, and sanity? In this episode of the Amazing Exits Podcast with Kellianne Fedio and Paul Miller, Mike Jackness of Terran and EcomCrew offers listeners practical tips about prioritizing and maintaining a healthy work/life balance, even while planning your exit. Stay tuned to hear actionable ecommerce advice that secures favorable results!
Joe Cochran had a rough start in life, but eventually came out on top. Through perseverance and a hard struggle, he finally has a success story. Tune in to hear our chat with Joe and learn about his process, his early struggles, and why he finally decided to sell his company. Topics: The emotional rollercoaster of being an entrepreneur. His early struggles. Launching his business with $5000 in credit. Sacrifices Joe had to make to keep his business afloat. Siphoning vs. reinvesting. How he ran his initial campaign. Which accounting resources he used on a tight budget. His competitive nature and how it drives him. Making the decision to sell. Transcription: Mark: Joe, we've had the opportunity to work with some pretty amazing entrepreneurs over the years and I never get tired of hearing about these success stories, especially for people that have gone through some of the dark periods of life that come out through the end. And often we get to be a part of the process when that reclamation, that coming back from some difficult times in their life comes to a head and comes to that real big victory point of an incredible exit. Joe Cochran is one of these stories. Joe: Yeah, he had his first child two days after his 17th birthday. I think that changes somebody's life forever. He didn't quit. He stayed in high school and he says his girlfriend at the time does his homework, helped him cheat to graduate. Mark: His girlfriend helped him cheat? Joe: Doing his homework, yeah, she did his homework. He helped in graduate high school. Mark: True love, I love it. Joe: Yeah, he worked full time. He just got out and hustled and went through some dark times after that in terms of business with his father, major debts, substance abuse, and came out the other end of just fighting and launched an Amazon business in 2016 when he had about $40,000 in debt. He thought through it and came out the other side in January of 2020 with a seven-figure exit. And as he said at the beginning the podcast interview, he said he felt like an incredible burden was lifted off his shoulders. So it's a great story; great success story. A lot of golden nuggets in there throughout the whole interview that I did with him and just one of these inspiring people that you just got to listen to the whole thing. Joe V.: Hey, folks. Joe Valley, here from Quiet Light Brokerage, and today we've got another episode of Incredible Exits. This one is with Joe Cochran. Joe and I've been working together for I think I want to say, a couple of years Joe, in the process of planning your eventual exit or as I like to call it, training. You came to me as a referral from our good friend Mike Jackness in EcomCrew and I think you were living in one state when we first chatted and eventually moved to another. And then I think we closed the transaction in January of 2020 is that right? Joe C.: That's correct. Joe V.: All right. Well, welcome to the Quiet Light Podcast. The first question I have for you; normally, by the way, I ask people to introduce themselves and give a little background but I want to actually just know how you felt when you finally closed this transaction. I shouldn't say finally because you weren't under LOI by the time we listed it to the time we sold it was 45, 60 days something like that. How did it feel? I don't want to know about the money and that kind of zeroes and this is a seven-figure exit but how did it feel when you finally had the money hit your account and you knew that this was real and the transaction was closing and assets were transferred? Joe C.: Yeah. So, I mean, that was kind of a roller coaster, to be honest. I think since I started the business all through the business to selling the business and even shortly after selling the business, emotional roller coaster. I just think as an entrepreneur, it's probably one of the hardest things to do is manage your own feelings and emotions around your business and what's going on. I would say the second that I signed the paperwork, it felt like the weight of the world kind of lifted off my shoulders because a big part of my why was always to be able to provide for my family and kind of have a security if you will. That was something that is always very important to my wife and I as far as something that we strive for. It's just having financial security and things like that so it was definitely that life-changing feeling. But shortly after, other fears and worries crept in. It was short-lived, but it did feel great. Joe V.: Yeah, life of an entrepreneur, it's not necessarily just because you sold the business and you've got some money in the bank that you don't stressing about other things. It is what it is. So your big why was to be able to provide for your family; we didn't talk about this. You haven't given me permission and cut if we have to but your story is interesting. You ended up becoming a dad while in high school if I recall correctly. Is that right? Joe C.: Yeah, I got my high school sweetheart pregnant when I was 16 and had my son a couple of days after my 17th birthday. Joe V.: Wow. And you finished high school, kept working, provided for your newborn family at the age of 17. You were working and going high school at the same time, right? Joe C.: Yeah. I basically cheated my way through high school at that point because I was working 30 to 40 hours a week going to school as little as possible. My girlfriend at the time was doing my homework for me, helping me through. And it was important to my family that I finished school and it wasn't as important to me that I do, but just felt like I needed to finish that. That was my junior year when my son was born. Joe V.: How many years ago was that, Joe? Joe C.: Well, I was 17 when he was born. I'm 41 now. Joe V.: Okay. Joe C.: I don't try to do math in public. Joe V.: When I do I usually get around but I would say 23, 24 years-ish. Joe C.: Yeah. Joe V.: So you went from… Joe C.: It's a bit easier this way, how old is my son? He's 24. Joe V.: I was hoping you were going to just go there. Yeah. We're doing math instead. So you've gone from a situation that is the worst fear of parents that you're becoming a dad a couple of days after your 17th birthday to 23, 24 years later, you're having a seven-figure exit of your own business. The weight of the world lifted off your shoulders. You're able to provide for your family, which is very, very important; a great success story. Let's talk about your path to it. I'm going to shorten it a little bit because we just talked about that and I know that you went to work into sales and eventually with your dad in the hot tub parts business, pool parts business, and eventually exited that. But then you started this brand that you built primarily as an Amazon business. Talk about how you came up with the idea of selling on Amazon and building your brand and what that path was like a little bit. Joe C.: So when I was working for my dad, we started to get into the Amazon business model in his business probably around 2009, 2010. Somewhere in there we dabbled, didn't really jump into it seriously until closer to the end of that business cycle. But we had kind of been playing with ideas. We started our own brand at one point in the fireplace and arts niche. And so I had some experience there, but I just wasn't ever passionate about any of the products my dad and I were selling. I was passionate about business. I was just a student of business. I studied all the time at marketing, sales, e-commerce in general and so when I realized that he was going to sell the business and I was essentially going to be out of work and need to define and figure out an income, I started really focusing on what kind of business would be right for me? If I was going to start my own thing what would be the best model? How can I get into it inexpensive, because I didn't have much money, matter of fact I have a pile of debt. And it just ticked all the boxes for being I want to work from home, start small and scale and potentially exit in a large exit. So I wanted kind of all those things; I needed all of those things and it just ticked all the boxes for me. Joe V.: And you're 41 now, how old were you when you started the business? I'm going to make you do math again. Joe C.: So I started a business in 2016 so it's been like four years ago. Joe V.: Four years ago. Okay, and how much money did you have when you launched the business in terms of cash? I know that you had a pile of debt at the time, but how much money did you pull together to make your first order? Joe C.: So I had about $5,000 on credit card that was available. Joe V.: You did it with $5,000, you had a pile of debt and you took $5,000 on a credit card to launch this business and four years later, you got a seven-figure exit. Am I doing this right? Joe C.: Yeah. Joe V.: Wow, incredible. Joe C.: I've had about $40,000 in debt personally. We have just started making progress with paying off credit cards and stuff because we started doing Air B&B and kind of renting out bedrooms in a house that we were renting. And so by doing that, we had started to make some progress in paying off our debt and like any good entrepreneur person as soon as I saw the light at the end of the tunnel I decided I'd took on more debt and started our business. Joe V.: Was it a success out of the gate; did you immediately start selling and say oh boy now I've got an inventory problem, I've got to buy more and keep up? Joe C.: Yeah, so I have the; I don't know what to call it, good luck also good sense that I did develop a product that really spoke to my target market. That was kind of easy for me at the time because I was my target market. And so I simply created the solution that I thought was amazing. When I showed it to my friends and family, they all kind of agreed that it was amazing. And so it was kind of like I knew the product was great and I knew how to create the offer because, again, I was the target market. So I literally was able to craft a story that really hit home with my ideal customer. And so when I launched, it was hockey stick growth. I mean, in the first six months we broke a million dollars in revenue. Joe V.: In the first six months, incredible. For those listening on audio, we decided not to mention the brand or the buyer and things of this nature just for confidentiality purposes. But if you want a hint, go to YouTube and watch the video or go to I think it's Quiet Light Academy on YouTube or go to the Quiet Light website ant take a look at our podcast. There's a hint in the background; a big giant silver one way back there somewhere in the video at Joe's home office there. Let's talk about the how; okay, you had hockey puck growth, you said in the first six months you did a million dollars in revenue by creating a product that solves your own problem in a niche that you knew very, very well. How did you get to know and learn about Amazon; what resources did you utilize to become that person that knew how to create the right photos or videos or ads and things of that nature? Joe C.: I basically do what I've always done, which is tried to cheat. And at first, I bought several courses, which kind of worked. Yeah, so the first course I really bought was the Amazing Selling Machine. And then for a short time, I decided I was going to create an information product and I started thinking about doing uninvolved course on e-commerce because of course, that's what I had experience in for the previous 12 years. I came across guys like Andrew Youderian from eComFuel. I came across as Ezra Firestone from Smart Marketer, and somewhere in there, I think in eComFuel I was put in a Mastermind with Mike Jackness and a couple of other guys. And so that was sort of my network and I bought all their products and I just dug in and followed and studied everything I could. Joe V.: So for those listening a lot of times from the thousands of entrepreneurs I've talked to that sell physical products in e-commerce, they're part of a Mastermind group. And I think it's critically important that you connect with peers either on the free Facebook groups to start off with and understand that free means free and the quality of information that's shared there is not going to be as deep as a Mastermind group like eCommerceFuel or Ecom Crew or Smart Marketer or Ezra's Blue Ribbon Mastermind group but there's a lot of podcasts that you can listen to as well. Mike, at the time, did he have Ecom Crew podcast, or is that something new since you met him in 2016 and connected with him in ECF, which is eComFuel? Joe C.: Yeah, so that was new for him. He was starting to work on the project but didn't have the podcast yet and it was just kind of an idea in the background that they're working on. Mike was still very involved in his e-commerce business or businesses at the time. Joe V.: Okay, cash flow; what I see is when you've got a hockey puck growth, there's always a cash flow problem. How did you manage to keep up with the inventory needs, which is a cash flow drain on the business? Joe C.: Yeah. So my first order I think was $1,500. I placed that order. Well, when I received that order and launched the product, I did a really dumb thing and went on vacation to my parent's house here in Florida, which I now own and in right now. But so I came here and within the first couple of days of launch, I could see that I was going to run out of inventory very quickly. So I placed my second order for $1,500 now the vacation was five days and that happened on day one when I got here. So like I literally launched the product day two or day three after launch I came here. I stayed here for five days and by the end of that week I had to place a second; a third order. So like I was here on day one when I realized I was going to have to place another order and by day five I realized that wasn't going to cover it and I'm going to have to place another order and I didn't have any money. The first call to my wife for that first follow up order was like hey dear I know we just opened this new credit card for this business and we just spent 1,500 bucks but I think it's going to work. We need to place another order, send me another 1,500 bucks. And she was like yeah do whatever you think. Joe V.: Awesome. Joe C.: And I'm behind you, so cool. So then by Friday when it was time to come home and I realized this isn't going to be enough, I had to make that call again. And I said, hey, you know… Joe V.: Wait a minute; hold on, for all those people listening in the audience I want to just ask a question that they're asking. You're on vacation in Florida without your wife. Joe C.: Yeah. Joe V.: Why? Joe C.: Well, it was just to see my family. My mom and dad were here and we were both working and we've had this kind of Air B&B business at the house. We have two dogs and it's just difficult for us to both leave at the same time. She couldn't get the time off work. I wasn't working at the time. Essentially I have my own business so it was just yeah say hi to Mom and Dad, hangout for a few days, go fishing the whole time. Joe V.: Fair enough. Joe C.: She wasn't that into it anyway. Joe V.: All right so that third order, what did you do? Joe C.: That third order I was like, hey, the last order is not going to be enough. We've got to place another order and we're going to have to like triple down. We're going to need to spend like five grand on this next order and we don't have it. So can you call the credit card company and see if you can get our limit raised? And she did. And she got it raised to like 10,000 and so I was able to place that third order; so really having no money coming back in yet. I mean, we're starting to make sales. I don't think I ever got my first payout at this point, though because it's bi-weekly from Amazon. So I went from 1,500 to 7,000, $8,000 in and now I'm thinking, well, I don't know how I'm going to place the next order. And so by this point, I had been communicating a lot with my manufacturer. I placed three orders now and they could see that my orders were growing and so I just called them and I said, look I need to place bigger orders but I'm going to need some sort of terms. I can't operate without terms. You told me that I had to place a few orders before we could talk about that and I will say I planted that seed from day one. So I planned on the product being successful. I didn't just hold and not do anything. So from the very first interaction with the supplier, I asked for terms and they said no. And I said, okay, that's fair but what do I have to do to get terms? And they said, well, you need to place a few more orders, we need to be comfortable with each other and I said, perfect, fine, no problem. So it was a natural process at that point. I placed three orders. Yeah, it was a short period but I placed three orders. I showed that I was serious and so I said, look, I'm going to need new terms or I'm going to have to find another supplier and it really was kind of that. I don't want to be threatening but it was kind of like hey if you're not going to give me terms, I'm going to go somewhere else. And so they came back and gave me 30-day terms. Joe V.: So you were able to actually… Joe C.: Yeah, so it was kind of ridiculous, actually. What they are giving me was 30-day terms and I was able to renegotiate and say, yes, 30 days from the day I received the product. Joe V.: That solves a big cash flow problem right there. Joe C.: Huge. Because most places will give you 30-day terms, but it's from when they shipped the product. Joe V.: Right. Joe C.: So I wanted it from when I received it. And I wanted it from when I received the product in full. And I say that because I was doing air shipping so I would receive shipments in bunches. So I might place one big order and I might receive 10 shipments over two weeks before I get the complete order. So I kind of knew that I was working the system a little bit, but they were happy. I was paying on time and so we were able to kind of grow using that structure. But it was only about a month later before we got into another big cash crunch because the size of the orders were growing, the volume was growing, all the money was going back and inventory as you know and it was to a point where 30 days wasn't enough. I needed to buy more than 30 days' supply to cover everything and it was like round two of the next challenge as the business grew… Joe V.: How did you solve that? Was it just living off your wife's paycheck, doing Air B&B, and scraping dollars together and living a conservative financial life at home? How did you do it? Joe C.: Yeah so I have reached out to friends and family. I asked for money. Everybody told me no. I start reaching out to other investors, people that I knew that would maybe do hard money loans. All of them that agreed, which was I think, one or two said they'd do it but they wanted 50% of the business which I wasn't willing to give up any percentage of the business. And so I just kind of scrambled. I think at one point I sold my car and we just continued to scrounge and scrape. Joe V.: I love that. I love that you sold your car; that you got to do whatever you got to do to feed the business and feed that cash flow problem. That is brilliant. How long was it, Joe, before you were able to take any money out of the business for yourself or did you in that three or four year period? Joe C.: I did and probably looking back, it was one of the biggest mistakes I made. It was siphoning money from this company versus reinvesting. I think we could have been talking about a much larger exit had I reinvested versus taking the money but the bottom line is I needed the money. And my goal still was the hardest thing. So hindsight in 2020 that's fine but at the time my goal was financial security and not to get too far into the story but when my dad sold his business and when we had to basically move on from there, we sort of lost everything. We built our dream home. We had all the toys. Of course like good Americans we had overextended ourselves as well and gone into a bunch of debt to have all of that stuff. But when he said he was selling his business, there were no job opportunities in that area that we lived. We lived at a small northern Michigan town, there were no jobs, and I knew we were going to have to move. So we sold the house. We sold everything we had essentially. We packed up what was left into a moving van and we moved to Raleigh, North Carolina, without having any clue what was in Raleigh other than my wife had lined up a job with one of those suppliers that we had bought from the last business. So we were sort of starting over, but we had sort of lost everything and to be completely honest it wasn't the first time I lost everything. It was the second time that I completely lost everything and went into pretty significant debt so it was a big driver for me; it was to get financially free. And to me at that point, I was also following a guy named Dave Ramsey, I was following his debt snowball and so my number one focus was get out of debt. And so I was pulling money out of the business to pay off cars. I didn't buy myself another car until I could pay cash for one. I didn't buy a house until I could a big down payment down because we were renting at the time. When we bought a house, we bought a five-bedroom house for me and my wife and we rented out three bedrooms. And so we just kind of continued that path of doing whatever we have to do and it was super uncomfortable living with people really sucks and it's really tough on a marriage. And running a business is tough but you just keep working and finding your way through it. Joe V.: Now I understand why the feeling; and this is why I ask about how it felt when you sold the business when it's finally done and you said the weight of the world was lifted off your shoulder because you've gone into debt, the wrong way two times and you've got Air B&B to strangers coming to your house and taking up three bedrooms while trying to run a business and survive a marriage as well. So congratulations on fighting through it all and doing whatever it takes to succeed because that's the bottom line. You know I'm mentoring a couple of entrepreneurs from a local college now and they're 21 and 22 years old. And one of the conversations I had recently was that they need to file for a business and incorporate and one said it's $300 and they don't actually have the money for that and I'm like suck it up. Look around your run and sell something. You can scrape together $300. You're not going to ever become an entrepreneur if you can't do what you did, which is anything you have to do to survive and sell your car and credit card loans and whatever it takes to do it. And you did smart; you had a business that was already taking off so that's good. I want to talk about two things. I want to talk about the first few days of how you put together a launch and how you learned to do that and launched the business but I also want to talk about your goal. So let's talk about the launch first. What marketing techniques did you use or put together and what would you recommend to others in order to put that initial campaign together? Did you spend money on advertising, did you just do organic traffic, did you do outside traffic; what did you do? Joe C.: Yeah. So it wasn't what I would consider very sophisticated. I was, again, kind of fortunate that the market that I went into was not highly competitive. The listings that I was competing against were very poorly created in Amazon so my listing from day one just crushed everybody. And it was just before this particular market got a lot of competition. As a matter of fact, my product is what launched the competition in this category and now there are thousands of competitors that are highly optimized and it's very challenging to get in to. But when I first started it was very easy to beat all of the competitors in that space. And so all I really did was run ads. I ran some Facebook ads, but mostly it was just Amazon ads. Joe V.: Facebook ads to the Amazon store or to a specific keyword or something like that? Joe C.: Yeah, mostly Facebook ads went to my own website. I did have a Shopify store and I had some Google ads that were going directly to my Amazon page and I had the Amazon ad platform and Amazon ad platform was the big driver. The Google ads did a little bit. Number one, what they really did, though, is they helped the page get a ranking for the keywords that I was targeting. Joe V.: Get ranked on Amazon or in Google? Joe C.: In Google. So after we launched that product, it was maybe two months until our Amazon listing was the number one listing for our target keyword. Joe V.: I got you. Joe C.: So there were strategies like that that I learned so that was conscious. I didn't do anything super sophisticated with the launch, though. I didn't have an audience. I didn't build an audience beforehand. All things that I think are necessities now with the competition being so much higher than it was then. Joe V.: Yeah. Joe C.: But yeah, at the time it was not a super sophisticated launch. Essentially what drove the revenue was the Amazon ads in their network just going direct to my page. Joe V.: And in a not necessarily highly competitive space at the time; it is now because you created the niche or the better niche as you will. All right, let's talk about your goal. You and I, I want to say we first chatted in 2018 and you were living not in Raleigh at that time, but you were living on the coast of North Carolina. How important is it in your opinion for an entrepreneur to learn about again, get trained on what it takes to sell your business; that exit path, and to set goals? How important was it for you and how important is it on the priority list of things to do for entrepreneurs, in your opinion? Joe C.: Yeah, so I think the best time to think about when you're going to sell your business is the day you start planning to launch a business. And the second-best time to do that is right now if you haven't done that. So the earlier you can start the better. And a lot of people, in the beginning, it's difficult because you have so many other fears; fears that the business isn't going to be successful, I'm going to launch it, and I'm going to get traffic and so many other things in your mind that's taking up space. It's hard to think about how I am going to sell this business down the road but you don't have to put a lot of time in the beginning, you just have to know that eventually, that's where you want to go. And so when you know that and if you know how to structure that business for sale then you're just going to be starting off on a much better place. So I got the privilege of watching my dad go through a sale and I did get to listen to him complain about all the things that were going on with the sale like oh we had to clean up the books. And that took three months to get the books cleaned before they can even move forward with the due diligence properly. And there were so many aspects that were kind of snags for him to actually get that exit. So I kind of have the benefit of watching what he went through and realized day one, I need a CPA. I need somebody who's going to watch this money because I know I'm not organized enough to do it. So literally, I launched the business within the first couple of weeks when I saw I was going to be a successful product I hired a CPA. Could I afford to? Not really but I knew I had to do and I know I really couldn't afford much. Joe V.: What did the CPA do for you? Because I always say the bookkeeper manages your books on a monthly basis, the CPA files your taxes. In this situation what did the CPA do for you? Joe C.: Yes, so the CPA did a combination. My wife ended up eventually taking over the books when she was able to leave her job. Joe V.: Did you use QuickBooks or Xero? Joe C.: QuickBooks. Joe V.: Okay. Joe C.: Yeah, and we kept pretty simple. So it was the CPA was more important of just setting up QuickBooks for me so when they charged the fee it was ridiculously cheap, really. They charged a fee to just set up QuickBooks and then once it was set up, my wife could do the bookkeeping. So they weren't expensive in the beginning. I still couldn't afford them but it wasn't expensive. And so I remember like literally at that time I was like whoa they're going to charge me 50 bucks a month or something. I don't know if this is a good idea we can't afford that. We have to go elsewhere when I say we can't afford it. That was my mindset, my frame of mind. But I was happy I did it. It helped us get started on the right foot. The QuickBooks was really pretty clean from day one. The business was not complex anyways so it was I think a good move. But the more complex you are the more important that is. And just those small things like planning to be successful is hard when you're not successful yet. But it certainly, I think in my case, paid off to start that way. So a CPA or a bookkeeper or somebody that can help you if you're not good with it was important. If you're great with it, you can do it all yourself. That's fine. But you're going to be doing many other things you got to figure out where it makes sense to spend your time. Joe V.: Yeah, I think it's really important to do that bookkeeping part because like you say it snags at the end. If you wake up one day and decide, okay I'm ready I want to sell my business but you haven't done your bookkeeping, guess what? You're not ready to sell your business. You've got to do that bookkeeping and get it done right in order to exit the business. Joe C.: You might be ready to sell but your business isn't. Joe V.: Right. Yeah, so if you've got a seven-figure business, even if it's six figures, if it's only $100,000, there's someone out there in the world that has worked very hard to save $100,000 and they are going to buy your business. They're not simply going to look at your merchant processing account or your seller account and say okay, yeah, here's the money. You really need to have your financials together; vendor invoices, cost of goods sold, all of this stuff, cost of goods sold on an accrual basis people, really, really important stuff that has to be done in order to exit without those snags. You can always sell, but you're going to be able to sell for more if you do what you did which is 18, 24 months in advance we started having conversations. And each time the value kept going up that we had conversations. Let's talk about that for a minute because I always say let's reverse engineer your path to success. Set a financial goal and a happiness goal; happiness goals and setting financial goals. Thank you, David Wood, for the happiness goal. I think it's really important. Yours, Joe, was a huge burden off your back that made you happy and you go fishing now and enjoy it without thinking about the debt that you had because you don't have any. So happiness goal, financial goal, and then reverse engineer a path to that. Sometimes it's 12 months, sometimes it's 24. You can't do that successfully without knowing the value of your business today. You can't do that without having good financials. So it all is interwoven together. But your financial goal, if I recall, moved. You set that goal and then you moved that goalpost a little higher or further down the road. Can you talk about that path? Because you had I think you said $40,000 in debt when you started this business and then you took more debt out eventually. Did you pay off your debt while the business is growing and that's the money maybe you shouldn't have taken out because you followed Dave Ramsey's program, which I think is brilliant too, by the way, and then what was your mental process for setting that exit financial goal and once the value of the business was there did we list it or did you move that goalpost further down the road? I honestly don't recall the details. Joe C.: Yeah. So starting the business, the goal was man this would be cool if I could pay a car payment or something like that and we got to that part pretty quickly. And then, of course, again, you move the goalposts constantly, right? So, man, it'd be cool if we could make a house payment. And then it became, man, it'd be cool if we could pay these cars off and pay off our credit cards and boy it'd be really cool if we could pay off our mortgage and over that first two-year span, we accomplished that. And so when I started talking to you, I don't think we can quite pay off our mortgage yet but we were debt-free otherwise. We were just working on our mortgage and that is the money that I was pulling out of the business. And so when I started talking to you and started talking about exit, it was actually during the time that we had had a big hiccup in the business, a big stumbling point and I was frustrated and I just wanted to be done and I didn't know how I was going to do it. But after speaking with Mike first, he recommended I speak with you. And so that was kind of our first introduction and you stomped on my heart. You said you're not ready. Your business is in a very bad position right now. Joe V.: It must have been trending down at the time. Joe C.: It was trending way down. This was essentially right when the mass competition came on board. I went from having no competitors to one or two to hundreds. And I've come to find out a big part of the reason for that is that Amazing Selling Machine used my product as an example in their course. Joe V.: Oh wow. Joe C.: And I reached out to them and said, hey, what the hell, guys? You know I'm one of your students, right? And they were like, oh, we didn't have any idea you were a student of ours, sorry, we won't do that in future releases but what's done is done, you know. And so they're like the biggest Amazon selling training course out there. Joe V.: Yeah. Joe C.: Literally overnight we just had hundreds of people copy our product and hit Amazon. And the business started to tank as far as our revenues it really started to go down. I was burned out at this point. I was frustrated. And I was hopeful for whatever reason, I was going to be able to still sell for some big number. And you were like no, it's not going to happen. If you sell right now, you're going to give it to somebody. Joe V.: Yeah. Joe C.: What you told me was you'd be better running it into the ground then you're just not going to get what you want for yourself. Joe V.: That's right. Take as much money out as you can and let it inaudible[00:38:34.4] Yeah, those are hard conversations when I'm telling you that, being relentlessly honest as we say at Quiet Light and not tell you what you want to hear. Joe C.: But you know what if someone was my, I guess, drive that was what I needed to hear because I realized again if I wanted to hit my goals of having that financial security, I couldn't just give up. And so that turned me around. That turned me from being down and being depressed to being pissed off and realizing you know what, you've gotten this far, you can beat these guys that are just starting and you've got two years off. Figure it out, quit worrying about what everybody else is doing, and figure out how you can win. And so, I mean, it was literally I think we hung up the phone and that shift in my mindset happened and I just went right to work on how am I going to fix this, how am I going to beat these guys? I'm very competitive. I played hockey my whole life growing up. I'm just super competitive. So when that shift happened from kind of loser to, hey figure it out; yeah, we were able to turn it around. And so it took about six months to get back to that number one position and back to where the revenue was decent. That took about another six months before we were where I felt we should be in terms of the revenue. And to your credit, you reached out every quarter or so to check in on me and that was always super helpful because it just reminded me of the goal. And so sometimes it's just so easy to get caught up in everything that's going on in your business that it was great to feel like I had some people in my core. Mike was another one that I could reach out to at any time and he would jump on a call and talk me off a ledge or give me some input. So having those resources to be able to reach out to when things aren't going well is just; I don't know how else to put it, it's just super valuable. Yeah, so it took about a full year to really; it took six months to basically turn things around, it took another six months to gain back what we had lost in sales and get back to where it felt like we could potentially exit. Then we had another call and you said okay, good, now you need to run it for another year. Because I was like oh great, we're back, now we can sell it and you're like hey man, you need a trailing 12 months at this level if you really want to sell it. So you crushed my heart again. Joe V.: I am sorry about that. Joe C.: But the reality was; no, it's fine because things were good. And so I was up and I was just like oh yeah okay, fine. I can run it for another year. Maybe I can even grow it a little bit. So that's what we really focused on and pushed through. And so you started that question really with what kind of got you there and what made the decision to actually sell? And that was literally hitting like the 10 month part period where for 10 months nothing went well. That's literally what made me realize we need to list this in because you told me, hey, you need a trailing 12 months of solid numbers and then you're good. At 10 months I was like, holy crap we're two months away from that. There's nothing in the forefront that makes me believe that we won't hit that. Let's call Joe. So I reached out to you and boy, what an interesting time to make that decision, right? Because look what happened just a few months later. Joe V.: Yeah, we closed; we're recording today on April 13th, 2020 folks and we ended up listing the business in mid-November, headed under LOI within two or three weeks, chose to close in January for tax purposes. Good for you, Joe, because you had moved to Florida, partial tax year down there, no taxes on state level and then, a grace period of another 15 months before you had to pay your taxes for the sale. Yeah, and then COVID hit. So I think in your niche sales probably went up though but still, the world is incredibly unstable and maybe better of peace of mind that you sold versus holding on. There are a lot of folks that waited and now have to wait even longer to see relatives come back. It's a tough situation all around. Joe C.: And you know it doesn't matter that your business does well in these times because if you can't get inventory or you can't get inventory on Amazon, you're still not making sales so there are so many challenges. And the other challenge is that I lived with; lived and breathed every day, day and night I mean, so that decision to sell was based on a lot of things. But yeah, it was definitely the right time and it worked out well for me and it gave me the freedom to now look back and say okay, what did I do, what made that successful, how can I repeat that in my next business, and how can I do it even better maybe? For me better means a better lifestyle. I don't want to do it again and work the way that I worked and worry the way that I worried before. And surprisingly when you have some money in the bank, a lot of those worries do go away. A lot of things do get easier and so now the big thing is make sure you don't make a big, stupid mistake because you've got money to spend and go about it like a clean start up again and remember what it takes to do that and then start from that. Joe V.: Great advice all around, I love your story, Joe. What is your next adventure, any clues or hints that you can give us? Because if anybody out there is in the audience that might have an interest in it or can contribute to it in any way maybe they'll reach out. Joe C.: Yeah. So what I kind of took away from my last business is that being passionate about the products for me is important. Some people are just passionate about business and so they don't have to really be passionate about the product so much. In my last business, I was passionate about the business, but I was also passionate about the product. And even more importantly, and this is just through self-reflection that I kind of realized recently I was passionate about my customer and I was passionate about that customer getting success. And so for me, it was realizing that it's not just the business, it's not just the product, and it's not just the customer. It was kind of a combination of those three things that I think helped push me through the hard times. Because there were so many more ups and downs that we didn't even get into that if you're not passionate about something within that, you're going to struggle. And for me, if I wasn't passionate about all three of those things, I might have faltered. So as you said I'm a fisherman and I'm looking in that market and seeing where I can contribute my value. And so I just registered a new trademark last week and we're starting on working on those offers and seeing where we can beat the competition. Joe V.: Excellent. Well, I look forward to having you back on the podcast and telling that story of your next exit although you've just started; you've just begun. Thanks for sharing your story, Joe. It's amazing going from being a dad at the age of 17, 17 in two days, if you will, to a seven-figure exit 24 years later, supporting your family and getting a big burden off your back and living debt-free. Congratulations. It's been a privilege working with you and an honor to know you. I look forward to getting out of Florida and maybe go fishing with you someday personally. Joe C.: Absolutely. Well, I appreciate all your help as well and I look forward to being back. Joe V.: All right man, talk to you soon. Resources:Quiet Light Podcast@quietlightbrokerage.com
Today's episode is going to be a little different than previous ones: We're not going to interview anyone. In lieu of a guest, Joe will be discussing three different levels of add-backs. The three levels of add-backs are various ways to add value to your business. Most of these suggestions are fairly easy to enact, but may not have been things you've previously thought of doing. Tune in to hear about calculating a seller's discretionary earnings, where you will make the majority of your money, and much more. Episode Highlights: Where you make 50% of all your money. Calculating Seller's Discretionary Earnings. Valuation multiples. Making sure the acquirer understands the value of your business. Breaking down expenses. Pros and cons of certain business credit cards. The pitfalls of hiring family and friends. How current tariffs may affect your bottom line. Illegitimate add-backs. Being careful not to erode trust. Transcription: Joe: Hey everyone thanks for joining the Quiet Light Podcast. This is going to be a little bit of a different podcast than some of the others we've done. I'm not interviewing anyone on the podcast with Mark. It's just me. It's just me talking about something that's critically important. As many of you know, I've been doing this for over eight years now, tracking towards personally 100 million in total closed transactions. I've talked to thousands of entrepreneurs over the last eight years. And what I hear more often than not is so the multiple is still around three times and [inaudible 00:01:54.5] is asking me from New England always wants to say it depends upon your definition of three times of what. Most people don't get the "what" correct so I want to focus on that right now; that "what", three times of what. It is a three times multiple or four times or five times or two times depending upon the financial key metrics that Mark and I talked about; the four pillars that have been created, and then these three levels of add-backs. It's a multiple of Seller's Discretionary Earnings and calculating it correctly and getting it right is one of the most important things you can do for your business. So I'm going to talk about it here. I'm also recording a video for those that want to go to the Quiet Light YouTube channel and look at the video as well. From the video there'll be a set of slides that you can download from the show notes from this podcast as well. So on to the three levels of add-backs. First, what we want to do is actually define the reality that if you've got a physical product e-commerce business, more than 50% of all the money you'll ever make from your business comes the day that you actually sell it. That's pretty substantial. And you think about it, we're all trying to drive revenue and make a living as entrepreneurs but in a physical products e-commerce business and many others as well, most of the money you'll ever make comes the day you sell it. So you want to prepare to sell all along the way. I know it makes your eyes bleed but if you do the right thing and focus on running the business like a professional and creating a great opportunity for your buyer; and there's many buyers in this audience that are listening, if you create a great business to hand over to somebody that wants to take it to the next level and do the things that you may not want to because the business has outgrown you, you're going to get more than 50% of all the money you've ever made from the business. Odds are as well that your business is your most valuable asset. And I'd venture to guess that, you know the value of your house within 5 or 10% and your investment portfolio, and your retirement fund, and your car, and your condo, and your townhome, or how much you have in your bank account but you are 30, 40, 50% off in terms of the value of your business. And some of you are running businesses that are completely unsellable even though you're doing great things with driving revenue. And they're unsellable because you're co-mingling too many things with one brand. You've got seven brands in an account, you want to sell off one and you don't use proper accounting software like QuickBooks or Xero. I've seen this too many times. Too many people say, oh, okay three times I've got this. I've got an 18 year old and 16 year old; I hear I got this all the time. Please don't say I've got this. Go through this. Listen to the full podcast. Get these three levels of add-backs right and you will get the real value for your business along with all the other things that you need to do for the four pillars. The real value of your business is important to understand here. We're not talking about maxing out the value of your business and jacking up your Seller's Discretionary Earnings; we're talking about you getting paid for what you've created. It's not boosting or jacking anything, its legitimate black and white add-backs that are owner benefits or one-time expenses. And I'll go through the whole list that you deserve for the value of your business. If you're a buyer out there listening and you're looking at businesses for sale, you can look at some of the add-backs that have been missed by the broker or the individual that's selling the business and calculate your own instant equity when you buy the business. Okay, so in terms of the valuation and the way that it works, it's hard to understand, but simple at the same time. The calculation for the list price of a business; it's the earnings base multiplier approach and you've all heard the term at this point Seller's Discretionary Earnings. Well, the math is simple. The formula is simple but it's hard to remember. Its Seller's Discretionary Earnings times the multiple equals the list price. Again, calculating the Seller's Discretionary Earnings accurately is important and it's hard and then determining the multiple and what range you're going to fall in depending upon the four pillars and financial key metrics is hard. But when you get the two of those right and you've got the right data, it equals the list price. Plus, in a physical products business, the landed cost of goods sellable inventory on hand at the time of closing. Almost everyone does it that way with the exception of one broker in the sub 20 million dollar range. Some of the larger investment banking firms may be doing something totally different in the 50 to 250 million dollar range. Okay, so to calculate Seller's Discretionary Earnings first you have to have a Profit & Loss statement. And that's why I always preach QuickBooks and Xero. I had an email from somebody yesterday and he wrote he doesn't use QuickBooks or Xero and he's using other stuff and he says I don't trust QuickBooks. Well, he doesn't trust himself then or a bookkeeper that he would hire because QuickBooks is just information that's entered or imported from the person doing the work. But you've got to calculate Seller's Discretionary Earnings properly. As I said to get the list price, Seller's Discretionary Earnings times the multiple equals your list price. How do you calculate Seller's Discretionary Earnings? It's your net income on your Profit & Loss statement, plus your add-backs. And again, we've coined the three levels of add-backs here at Quiet Light Brokerage. And under each level there are six different levels. So there's a total of 18 points that we focused on for add-backs. So, net income plus add-backs equals your Seller's Discretionary Earnings or SDE. Now valuation multiples; I'm going to cover them real quickly here because everybody wants to know what multiple ranges are. But that person says so you know the ballpark, multiple ranges three times. Is that right? First question is a multiple of what? Second thing to say is without accurate Seller's Discretionary Earnings your multiple means nothing; absolutely nothing. So you've got to get the discretionary earnings right in order to get the multiple right. Important thing to understand is that the size of the business does impact value. Also, multiple channel revenue versus a single channel of revenue impacts the value. So if you've got a business that is less than $100,000 in Seller's Discretionary Earnings and you are 100% direct consumer brand not selling on third party platforms, let's say you're 100% Shopify. If you've got a business that's got all the four pillars that we talked about and good financial key metrics, you're probably going to be in that three to four time multiple range. That's a pretty good number. But if you are a 100% Amazon brand and by 100%, I really mean 85 to 90%, you are going to be in a drastically different range. You're going to be in two to three times. And this is at sub $100,000 in discretionary earnings. And this is all subject to change. It floats and changes depending upon the economy, the type of business, the recurring revenue aspect of it, B2C versus B2B; all sorts of different variables. So this is just general information. So again sub 100,000 three to four times if you're selling direct to consumers, if you're a 100% third party platform, two to three times; a pretty dramatic difference in value. As low as 200,000 if you're 100% Amazon brand and as high as 400,000 if you're 100% your own you are all selling to the customers. In the $100,000 to $500,000 range, you're pure B2C brand jumps from three to five times multiple of Seller's Discretionary Earnings. The Amazon brand jumps as well, but it's only two to three and a half times. We started at the same floor of two, and then got bumped up to three and a half times. There are exceptions to every rule and it's a very broad range depending upon trends of the business, how much you're spending on advertising as a percent of total revenue, how clean your books are, growth opportunities in the business, the transferability of the business; all these different things. But the multiples will overlap as I go through this. Jumping up to discretionary earnings of 500 to a million, you're looking pure B2C at four to six times Seller's Discretionary Earnings and on 100% Amazon brand you're at three to five times. The five times here has to be really, really solid. It's going to be a great business. But the three times is as low as that sub hundred thousand dollar business because it's just a broad, broad range. If you've got a hero SKU that's doing 70% of your revenue, that's going to bring your multiple down; as simple as that. There's a lot of competition on single channel third party platforms like Amazon that could change your revenue trends overnight. I've seen it many, many times. Okay, so Seller's Discretionary Earnings last level north of a million dollars, you're looking at a pure B2C, you're looking at six times plus. Amazon brand you're at four times plus; a lot of overlap there. Again, because no two businesses are alike and you can't just make the assumption that you're going to be at X if you're doing Y in Seller's Discretionary Earnings. Again, though, size does impact risk. That's what we're talking about here in terms of the multiple ranges and where they go. Okay, so the three different levels of add-backs will be defined clearly; detailed clearly but let's just define what the heck an add-back is. If you think about it as simple as an owner benefit; something that you personally get from the business, they're also one-time accounting expenses, they're one time legal expenses and expenses that don't recur or carry forward to the new owner of the business. That's broad, but very specific. The goal of identifying add-backs again, it's to identify the true baseline earnings for potential acquirers of your business and also for you so you'll understand the value of your most valuable asset. It's not to jack up the price. That's not the point. The point is to make sure you get the true value for your business and so that the acquirer of the business understands the real value of it as well. There are three different levels that we've developed here at Quiet Light. The first one, Level 1, they should be pretty obvious. They're obvious benefits that I think almost anyone could identify. Level 2 are one time and accounting expenses. They get a little bit more complex there. But it's Level 3 that an inexperienced broker or if you are someone that is selling your business directly to a buyer yourself, you could be losing hundreds of thousands of dollars in the overall value of your business if you're not focused on Level 3; if you're not digging deep and I always say using math and logic, it's not magic. It's not gray. It's black and white math and logic in that third level. And we'll go through some of them right now. But there's six different points to each level. So let's talk about this Level 1. I had somebody approach me at a Mastermind event recently and asked me what I thought was a pretty obvious question; Level 1. He said, hey, I don't make a whole lot of net income in the business, but I do take a $250,000 salary, is that an add-back? Yes, that's an add-back, that's an owner benefit; crystal clear owner benefit. So if you're only making your businesses $10,000 net income a year, but you're taking a $250,000 salary, your total owner benefit there with those two things alone would be; or Seller's Discretionary Earnings would be $260,000. The exception here is unless there are two partners that are working well over 40 hours a week combined. We can only add-back one owner payroll in that situation and have to do an adjustment for the second. If you've got two owners that are generalist in terms of their skills working less than 40 hours a week combined, then we could add-back both of them. The second one in Level 1; and by the way, with owner salaries, again, there's little asterisks that I put all over these things. There are exceptions to every rule. You have to talk through each and every one. Estimated income taxes; if you've been in business a long time as an entrepreneur probably making quarterly estimated income taxes payments, that's an obvious owner benefit that goes into the add-backs schedule that your broker or adviser or you if you're selling your business on your own would create. Owner health benefits; pretty obvious, if I sell my business today, I'm not going to pay for the new owners health insurance. They would have their own. Charitable contribution is number three, pretty obvious. Interest expenses, we see a lot of businesses come through for sale that were purchased years ago with an SBA loan and there's expenses there that do not carry forward to the new owner. Or if you were a 100% Amazon business owner and you've taken advantage of the Amazon Lending Program, there are interest expenses in your P&L as well, those do not carry forward and those are an add-back. Retirement contributions are number five; pretty obvious there. And number six has got a lot of them, it's little things that are owner benefits, like your personal meals and entertainment that you run through the business, travel that you run through the business. And we'll get into Level 3, we'll talk about some travel with mastermind groups and events and things of that nature. Vehicles or miles that you write off on the vehicles. This one should be pretty obvious, but it's mobile phones. No one is going to buy your online business that doesn't already have a mobile phone. So if you write off your mobile phone through the business, it is an add-back because it's not an expense that carries forward because the new owner already has a mobile phone. If they don't, they shouldn't be buying an online business. And yes, I've had a conversation with people before, a lot less in recent years than seven or eight years ago. If you've got a home office and you choose to write off tax for tax reduction that expense does not carry forward, nor do the utilities. So those are the first six in Level 1. Those are the more obvious owner benefits. In Level 2 they're a little less obvious so let's go through them again. There are six different levels there. The first one is trademarks, copyrights, patents, logo designs; things of that nature, it's all centered around intellectual property. These are mostly onetime expenses that do not carry forward to the new owner of the business. And I've sold businesses, as many of us have here at Quiet Light where somebody had just gotten a utility patent in the 12 months prior to selling the business and there's 20,000 dollars' worth of legal fees there. That's an amazing thing to have in terms of selling your business; that's defense ability; part of the risk pillar but it's also an add-back. So you can put that $20,000 back into your Profit & Loss statement below the [inaudible 00:17:27.5]. Same with logo design, copyrights, things of that nature. The second point here is these other types of legal expenses like a lawsuit. It happens now and then, but it generally doesn't happen every year so you could do an add-back of that as well. Unless you've got a P&L and you've been sued every year because of the type of business that you have. We may not sell that. Sorry, no one might buy it. Sorry. But if you try to sell it on your own, it would be an add-back. Enforcement letters that someone would write for you, those are generally one time and don't carry forward same with incorporation documents. The third point here in Level 2 is the new bookkeeper setting up books and arrears. You guys have always heard me talk about our book keeper referral list. We don't get paid referral fees from bookkeepers. We keep a list of good qualified bookkeepers because we want you to run a better business and have cleaner books because it's going to help us help you get a better value for your business. It's going to help the buyer take something over that is clean and documented well. So sometimes people will come to me and they need to have their books cleaned up. They would hire an e-commerce bookkeeper that would go through the last 24, 36 months of data and pull it into QuickBooks or Xero. There's generally a one-time fee for that. That expense does not carry forward to the new owner because you've already done it. There is a monthly fee that you would pay a bookkeeper that might charge you $500 a month to do your bookkeeping for you but if they charge you two or three or $4,000 to do your book in arrears, that is absolutely an add-back and its money well spent; well invested. It's fuzzy math to calculate the return on investment on that but you would, in my opinion, get well over 100% ROI if you spent money on hiring a bookkeeper to do your books in arrears. Equipment purchases are generally one-time expenses and often buried in the P&L under office supplies and they're very often personal in nature. Most of these businesses that are run remotely from a solopreneur that has VAs or even if you've got people that work closely and you all go to an office, there's not a lot of physical equipment that is purchased. So personal computers, we often see the office supplies get bumped up a little bit in the fall or in the late summer when kids are going back to school or during the holidays when people are spending money on gifts or just before the New Year when they're getting new products for themselves to reduce their taxes in a sense. Those are buried in the P&L; these are definitely add-backs when they're personal in nature. The last two points here in Level 2, they're kind of obvious as well but sometimes people don't catch them. It's depreciation. It's an accounting expense, it's not an actual cash out expense. And the same goes for amortization. Okay, so Level 3, again, thanks for hanging in here, this is the dig deep most important use math and logic part of the three levels of add-backs. This is where you're going to get the most bang for your buck by taking your time and digging deep and keeping good records so that you can go through these different things. First one is a website redesign. Several years ago, I sold a business that had just spent $20,000 on a website redesign. That business was listed at a 3.5 multiple and the website redesign; the business was maybe seven years old at the time and it had not done a website redesign since the inception of the business. So it's not going to recur every year. In this case, it's not going to recur every five years. So we chose to do a 100% add-back of that. So at three and a half times, that added $70,000 to the Seller's Discretionary Earnings at a 3.5 multiple. It sold at full price and the person that bought that business has been running it since then and is now listing the business for sale in the next few months at a great return on investment. But it's absolutely an add-back. If in the P&L, it shows that you've done this every two and a half years then at the very least, it's a partial add-back. Point number two on Level 3 is something that most people in the e-commerce world are involved with in some way, shape, or form and that's Masterminds, events, and related travel expenses to Mastermind. Sometimes there's a pretty hefty joining fee as well. So if you are part of a Mastermind whether it's; should I name them all? I'm not going to name any today. You've heard me name some of them before. If you're a Mastermind member, you're the member, not your business. When you sell your business, that expense does not carry forward. It helps you personally grow your business and gain business knowledge and the new owner of the business may or may not join that Mastermind as well. They may actually be in their own Mastermind and have their own expense because they're bolting on new businesses to it. So this one is an add-back and it's missed by most people. The same goes for those events that you may go to. You choose to go to those events that are Mastermind related and odds are you checked out a lot of personal benefits there and travel and sightseeing and things of that nature. The exception to this rule is if your business is similar to Quiet Light Brokerage. We sponsor Masterminds, we sponsor events and we go to them to build our network of relationships therefore, it's not an add-back. It's an integral part of our marketing campaign. The other exception is if you brought your CMO; somebody that's on staff. If you the owner of the business goes it's an add-back but if you the owner of your business goes and you choose to bring your CMO, that's a business expense. That CMO is going to move forward and carry forward with the business and would go to that Mastermind every year, so to speak if the new owner of the business joins the Mastermind or has their own CMO because it's a great way to learn new marketing techniques. That part wouldn't be an add-back. So there are again exceptions to almost every single rule. Point number three here is pretty important. Most people listening to this podcast that own any kind of online business or doing some form of advertising. The biggest mistake I see people make is with, let's say, an Amazon FBA businesses, they're allowing Amazon to simply deduct the ad cost from their deposits every couple of weeks. That means that you are not getting the benefit on your spending. You're not getting that cash back and you're not getting the rewards. American Express Gold Card will give you four times the points on advertising spend up to $150,000 and then the levels change. There are cash back cards that you can get 1½, 2% cash back. The IRS hasn't figured out how to tax this. It's really; these are discounts, there's no method for tracking it. So I see a lot of people; it never shows up on their P&L, some people with bookkeeper's do; that's an exception rather than the rule. They do an adjustment in the Profit & Loss statement. They've got the total advertising expense and then they've got an adjustment for it there. But when it's not there at all; and let's talk cash back only for now, people just slide it into their personal income and bank account and they use the money for perks. It's an owner benefit so therefore, if it's an owner benefit, it is an add-back. The key here is to track it and find a way to convey it to your adviser if they don't ask; everybody at Quiet Light will but if they don't ask, convey to them that it is an owner benefit. You do have the data. It's math. It's logic. And your buyer will accept it. I've had situations where we've had $24,000 a year in cash back and tracked it and the business sold for a three time multiple, for instance. So it's almost $75,000 in value to the business when it's being sold; a huge benefit there. When it comes to rewards; this is the tricky part, a lot of people use the rewards instead of the cash back, which is really smart because you can get a lot more bang for your buck with the rewards. But you cannot convert that bang for your buck into actual dollars at that high level. So if you are going to travel internationally and use your points that you've accumulated to buy a $10,000 first class ticket somewhere around the world, you don't then get a $10,000 add-back. What you get instead is a percentage of your points. Most of the cards say you can convert them at 1%, so you would simply take the points that month times 1% and that is you add-back amount. That's a huge one that most people miss and it can add a tremendous value to your business. Now, as entrepreneurs, we first often seek employees that we know and we trust. Those employees are often friends and relatives. First point of advice I'd give you is don't hire somebody that you cannot comfortably fire and those are usually friends or relatives. Second point is, if you go ahead and do that, try not to overpay them. Because if you're overpaying them, you're getting some loyalty there, yes, but when you go to sell your business, you will lose 2, 3, 4, 5 times the value of how much you're overpaying them. But you don't have to fire them. My bad, advocated firing people before for this very situation. But you don't have to be the Grinch if it's around the holidays. Here's what I did in a particular situation. I had a business that was for sale, three and a half time multiple, really strong business, ended up getting multiple full price offers and sold at that level. But the owner of the business paid his brother who he loved dearly $20 an hour to do customer service work. Who wouldn't want to do remote customer services work at $20 an hour? It's a great deal. His brother loved it. It turned out the brother was really working about five hours a week because he was really good at creating canned responses, most of these; 99% of the communications from customers were via email so he just had a canned response. He was open about it, talked about it. There's a lot of logic to saying this brother is loved and overpaid excessively so we did a negative add-back, meaning we adjusted his income and dropped down to the add-back schedule and put an expense in for a virtual assistant to do the customer service work. We bumped the customer service work from what the brother said he worked from five hours to 10 hours. And instead of paying that VA the standard maybe $5 an hour if they're working remotely in the Philippines, for instance, we actually doubled it and made it 10. So we overpaid the VA. We paid them for more hours and this is all on paper, of course, and did an adjustment. We were conservative in our adjustment, but basically it was about a $10,000 add-back at a three and a half time multiple. It boosted the value of business by $35,000. So you've got to think through some of those things when you're making hiring decisions and firing decisions and plan in advance when you're selling your business. We don't want you to wake up some day and just be so tired and frustrated and fearful that you're too overleveraged in your business and decide to sell. We want you to plan it out so we can help you get maximum value for your business, but also have a better business for the buyer so that they can take it on with less risk that they're willing to pay more and they can grow it someday and eventually exit their business. Okay, point number five, most people miss this. If partway through the year, your cost of goods sold go up by $2 a unit and you're selling a thousand units a month, do you think your buyer is going to ask for an adjustment in due diligence? Yes is the only answer. They're smart. They're going to stroke a check for half a million, a million, to five million dollars. They're going to hire somebody to do their due diligence. They're going to pay attention and they're going to dig deep. You need to do the same thing. So last year, I sold Mike Jackness' business. Many of you have heard me talk about it with Mike on this podcast. We've done many presentations together. Halfway through the year Mike renegotiated his cost of goods sold on his one primary SKU. It was doing about; let's just call it a thousand units a month for simple math, he's doing many more than that. And it was more than $2 and a unit that was adjusted, but it happened in the last six months; the most recent six months of his P&L. That savings carries forward to the new owner of the business. So what we did is in the first six months of that year, we took the total number of units that were sold, multiplied it times let's say $2 a unit. That's two thousand dollars a month if a thousand units were sold a month or it's $12,000. And then you multiply that $12,000 times your multiple and you see what added value there is to your business. It's a legitimate black and white add-back. In Mike's situation off the top of my head; I'm guessing at this point, I'm going from memory but I think it was about $54,000 that was added to the list price of this business; true, legitimate black and white value. It's sold. Obviously we know that. The buyer has bought five businesses from Quiet Light Brokerage and multiple others. He's very, very well educated. He's very smart. It's a legitimate add-back. 99% of people that sell the business on their own missed that and I'm sure a lot more with other firms. At Quiet Light Brokerage; and here I am preaching Quiet Light, I'm telling you that you got to dig deep. All right, reduced cost of goods sold. That's what that is, that definitely carry forward. The other part here is that most people that are listening to this that are entrepreneurs bootstrapped their business and they listened to an influencer, an expert in the space, and they gave it a try. And it turns out all the stars were aligned. They worked hard, they got lucky. And they've got a business that is generating revenue for them. And you're just working like crazy on that treadmill, trying to keep up with growth, and inventory, and cash flow management; things of this nature. You didn't slow down yet or haven't had the opportunity to slow down and look at your packaging and maybe working with somebody like Inventus or Gembah to work on repackaging your products and your SKUs. When you do that, if the weight comes down, the pick pack and ship fees at your 3PL or at the FBA comes down and that will carry forward just like reduced cost of goods sold. So think about those aspects of it. They're all really important. When those savings carry forward to the new owner of the business, it's an adjustment or an add-back. We've all heard of the tariff wars in recent years, months, depending upon when you're listening to this. We've had tariffs that have been; first they were doubled; now they've been cut in half. If you're in the middle of this and your tariffs have been reduced by 50%, that savings will carry forward and you can do an adjustment on that as well. But you've got to have the data in order to do it. You can't ballpark these numbers. You've got to have the details and the data and the numbers. You've got to dig deep. You've got to use all of the math and logic that's at your fingertips if you're running your business really well and really focused with data to drive the value where it should be so the buyer can take it over again and do the right thing for the buyer. And that buyer takes it over and again does something great with the business. That's the third point; I'm sorry, sixth point of Level 3. Let's talk briefly about an add-back schedule and what it looks like and what it does for this business. For those that have planned in to jump over to video, they can see this in a P&L format, for those that are listening, I'm going to talk through it. The example I've got here is it's got a lot of add-backs in it. Let me make it crystal clear that this list I've got up in front of me, not every one of them is on every P&L add-back schedule. It's kind of excessive. But the point here is to show you how many there are and what the possibilities are. In this example though, the net income, we've got $297,000 in this add-back example. The Level 1 add-backs between payroll, payroll taxes, health insurance, charitable donation, meals and entertainment added almost $75,000 back to the net income. At a four time multiple that's $299,000 added to the list price. The Level 2 add-backs one time legal and professional fees, depreciation, and interest expenses added almost $21,000 back to the Seller's Discretionary Earnings. At a four time multiple that's $82,000. Level 3, we've got reduced cost of goods sold. You replaced an in-house bookkeeper, you've got a new e-com bookkeeper; a negative adjustment there, Mastermind joining fees, travel to events and Masterminds, and then adjustment on cost of the goods sold, cash back there; oh no this one is a cash back on your credit card. All of those total about $62,000. At a four time multiple it's adding $247,000 to the list price of the business. Between the three different levels of add-backs; $157,000 in add-backs, we started at almost $300,000 in net income and now we're at 157 in total add-backs, it's $455,000. All in at a four time multiple, these add-backs; these three different level of add-backs are adding $629,000 to the list price of the business. The bottom line is when you pay more attention to the details of the business your value is going to be much, much higher. Now, what is not a legitimate add-back? These are things that people have come to the table saying, hey, can I add this back? Hey, this is a one-time expense. It's not going to carry forward or things of this nature. And in most cases, they do carry forward or the math is really fuzzy and we can't do an add-back. The first one is inventory stock outs; lost revenue because of it. I've had people that have tried to talk me into this and in one case he did talk me into it. He was an investment banker, an attorney, an MBA; a really, really bright guy. He showed me the math and the logic behind being out of stock for a particular time in the trailing 12 months and wanted to do an add-back. The reality is that with a rapidly growing business, most people are going to be out of stock at one time or another until we get better at cash flow management. And then you're not going to be and you're going to be able to buy more inventory and you're not going be out of stock. But it occurs in most e-commerce businesses. So it's not an add-back, mostly because it does happen again and because the math is speculative at least. Okay, failed advertising campaign, point number two here, new advertising is something we all do in businesses. It's recurring and it's simply part of doing business and it's definitely not an add-back. The second owner salary that I talked about at level one in this case, it's not an add-back. If combined you're working more than 40 hours or that second owner if you're working less than 40 combined. If they've got some kind of non-transferable skill, let's say that they've developed the backend to your website and that's their primary role and they're only doing it 20 hours a week, but they're really skilled at it. Odds are the generalist buyer is not going to have that skill set. So it's not an add-back. And in fact, that payroll, you can do an adjustment on payroll if they're grossly overpaid, but you're going to have to do an adjustment in an add-back schedule showing the true cost of hiring somebody for that role after the business is sold. Recently fired essential staff is point number five. You want to let 9 to 12 months before adding back essential staff to prove that the business can be operated without them and that the trends and all the work has been separated out between new people that took over their roles. The last is I see this from some people and it's just not the right thing to do. Recent cost cutting is not a legitimate add-back. Cost cutting critical costs to increase your Seller's Discretionary Earnings, it's obvious and it erodes trust. So if you've traditionally spent $10,000 a month on advertising over the last 24 months but in the last three, you've cut it to $2,000 a month and the logic for you is because you got to boost Seller's Discretionary Earnings it's just going to hurt the new owner of the business and that's going to come back and bite them. And it's not the right thing to do but these types of things; other cost cutting is critical costs, just cut them to boost your Seller's Discretionary Earnings is definitely not an add-back. We always talk about black and white math and logic here with add-backs. There's no magic and there's no gray. Pushing too hard on add-backs is going to erode trust. We always talk about, again, the four pillars; the risk, growth, transferability, and documentation. Those are the Quiet Light four pillars. There's a fifth invisible one here and maybe it's the motor that keeps these pillars together, not a fifth pillar and that is you. That's the person behind the business that is running it. And if you push too hard on add-backs it's going to erode trust. And if you erode trust buyers are not going to give you the same value for the business or the deal structure is not going to be one that it could be if they trusted you. The more they trust you, the more they're going to pay for the business and the better deal structure you're going to get. So be a good person. Do the right thing. Run a great business. And you're going to get more value for it. Okay, so just to wrap this up for those that are stuck with me this long, I appreciate it, know your business' value. It's likely your most valuable asset. More than 50% of the money you'll ever make from your business is going to come the day that you sell it. So if you're a buyer of a business and you're on the hunt, these things are really, really important. You haven't bootstrapped, you haven't scrambled, you're coming into the business, it's already established, you could do some of these things and make these things a priority so that when you eventually exit your business; and everybody exits at one time or another, they don't think they will and they say no, I'm never going to sell. You're going to die someday; I'm sorry to tell you. So you're going to exit your business or it's going to exit you, outgrow you and not be sellable because of downward trend. So number one, know your business's value. Number two, know your numbers. Review your P&L monthly; Profit & Loss statement monthly. Get the details. The best thing you can do is outsource to an e-commerce bookkeeper or let them just give you that report every month. It takes two minutes to run the report yourself. Your cost of goods sold must be on an accrual basis. If you can get freight in on an accrual basis as well, please do because the businesses are sold on an accrual basis, not a cash basis. When you spend money on inventory and you do it on a cash basis your COGS will go up and down like a seesaw and the timing of the sale of your business will hurt you or hurt the buyer. And if you're going like crazy and you're putting all sorts of money into inventory, it's depressing your Seller's Discretionary Earnings and that's simply not the right way to do it. Review your key metrics, your churn rate, your average order value, ACOS or TACOS, your monthly recurring revenue, revenue by SKU, your inaudible [00:41:56.5]; all of these are important. Buyers are going to ask about them. The more detail you have about them, the more that knowledge is going to be conveyed, the more confidence you're going to instill in them, and the more value you're going to get for your business. Lastly, number three, track your perks. Personal expenses that are buried in the P&L owner benefits and we want to be able to pull those out of them. It's important because they are legitimate owner benefits and therefore they are add-backs. Track your cash back and travel points. Travel points can be converted. These owner benefits overall can add hundreds, if not thousands of dollars of value to your business. And you've earned it. Get paid for it. Don't take any shortcuts. There are no shortcuts to getting the true value for your business. Take the time and effort to review these and dig deep and by that, it's not an hour phone call with somebody that's trying to sell you on their ability to sell your business. I've got the perfect buyer for you. They just made an offer on another business. And I think they're going to buy your business. Please don't fall for that. You're smarter than that. We're here to help you understand the value of your business first and foremost. If you don't ever sell, that's okay. You're getting benefit from Quiet Light Brokerage, you're building a valuable business, you need to tell other people about it. Someday you will exit. Someday you will have somebody else that will exit and hopefully you'll think of us. But the key here is that you'll have a more valuable business that's better operated. And better for who? Somebody else; the buyer, and they're going to pay you more value for that. And someday oddly enough, I know it all comes back to selfishly Quiet Light Brokerage. Someday that buyer is going to sell their business as well. Maybe they'll think of us. That's our model. We want to help you first. Please take advantage of it and ask for a valuation. It's what we do. Don't say yeah, I'm not ready to sell. We do want to talk to you when you're ready to sell. We want to talk to you 12 to 24 months before you're ready to sell. Even if when you hit your target financial goal and you say you know what, I'm having fun. I want to hold on another year. Hold on to your business. You sell it when you're ready, but plan in advance. The best thing you can do is say, I want to exit; I want to change your mindset here and then I'm going to wrap this up. Change your mindset. Instead of going, how much can I get for my business? Say I want to get X for my business and then reverse engineer your pathway to that number. And the way to do that is a business valuation with a qualified expert at Quiet Light Brokerage. Now I'm pitching, right? I got to stop it. Everything we do is online. Everything we do is in the podcast. It's on YouTube. It's on our website. You could do a lot of this on your own. Go to the website, go to the show notes for this and download this PDF that matches this podcast presentation. And you're going to be able to do a lot of this on your own. If you can't do it and you don't want to do it, we're here to help. There's no cost to it. We're going to help you with it no matter what. So reach out. And don't forget, the most valuable asset is your business and you should pay very, very close attention to it. All right everybody thanks for listening. That wraps up this episode of the Quiet Light Podcast. Resources: Quiet Light Brokerage
One of the biggest challenges we face as business brokers is getting sellers to understand that we too are entrepreneurs. Getting people to do a valuation is one of the biggest hurdles because many think that just staying afloat is the goal, and the rest will come later. Sometimes later is too late. Today Joe and Mark are back sharing how to get valuation right. At Quiet Light we work hard to educate and help people find the growth paths that will get them the most value for their business in the event of a sale. We have a ton of experience in giving valuations and can guide current and future sellers to profit. When you build a great business with buyers in mind it will make the transfer so much easier. Episode Highlights: Why a business owner should plan an exit strategy early in the business building process. The benefits and tradeoffs of entrepreneurship. How long in advance someone should plan their valuation. How much it costs to do a valuation. The threefold beneficiaries of the valuation. The importance of the end goal while building. How the valuation process benefits the potential buyer. Ways selling a cohesively built business creates valuable relationships. The level of detail that is essential to a full valuation. Accounting tips for a better valuation as you go. How the valuation process gives owners paths hidden profits. The other three of a successful business How the invisible fifth pillar makes a difference in the overall value of your business. Mark's quick wrap-up of the importance of a valuation. Transcription: Joe: Mark, one of the biggest challenges that we have as business brokers is conveying to people that we're entrepreneurs first. We've all been in their shoes. We're technically still entrepreneurs, right? We run Quiet Light Brokerage. And getting people to get beyond the mindset of running their business and saying I'm not ready to sell I don't to have a conversation about exiting to actually thinking well in advance of an exit is one of the biggest challenges and honestly, it's frustrating. It's frustrating for me and that's why we work so hard to educate and help and we do this podcast so we can get more people thinking well in advance of their exit. But I want to ask you as the original founder of Quiet Light Brokerage, the man with so many stories to tell, why in your opinion should somebody even plan their exit and give it thought well in advance of selling their business; what are the benefits? Mark: Boy that's a big question and I could actually give you a number of benefits and since you put me on the spot I don't have them in order in terms of what I would think would be the most important. But I'll start with this one which I think might not be the most important reason but I think it might be the most applicable for most people. It will resonate with most people and that's this, having a business that is valuable in an exit usually means you have a very valuable business to own. That's the number one reason in my opinion. So let me explain that and flesh that out a little bit. Obviously, if somebody is willing to buy your business for quite a bit of money; let's say they're willing to pay a four-time or five-time multiple, what they're seeing there as a business that is desirable to own, it is going to grow, and it's going to kick off a lot of cash in the future which obviously if you come to me or come to any entrepreneur and say do you want to own a business that doesn't require a ton of work has a lot of upsides and is consistently throwing off money most people would say yes, right? If we talk about the four pillars which we do so often here, do you want to own a business that has a low-risk profile and good growth prospects as the two first pillars? Yes, most of us want to. So the first reason I would say is when you go through the process of planning to sell even if you decide not to sell your business the result of it is that you have a business which is more stable, you know the growth paths available to your business, and you have great documentation in place for the business. So that'll be my number one reason right out the gate. And I don't know if you want to discuss that or I can give you a couple of others if you want. Joe: Yeah well let's first tell the folks listening that there is no special guest today it's you and me and we're going to talk through… Mark: I'm special Joe. You're special. I am special. Joe: Actually, I just gave you hosting privileges on this. Mark: So we're special. Joe: Technically I'm the guest and then I'm not special. Hey, we're not having anybody on today because Mark and I have a ton of experience at this. We do valuations every day so we want to talk about the reason to have one done and then what we do. We'll talk about what goes into it, and what we discovered, and what we learned along the way. So yes Mark if you want to talk first about that first example that you gave an elaborate on it a little bit we can do that and then go into some details on what it's like to get a valuation and what we do here at Quiet Light Brokerage when we put someone through the process. Mark: Oh sure. Actually, I do want to get to the other reason because these are the two that were kind of vying for my attention when you first asked that question. The second reason is that you just really don't know what the future holds. In the 14 years of doing this; at the time of this podcast almost 14 and a half years that I'm doing this, the number of clients that I've run into that are unprepared for the sale is exceedingly high and the number of clients that are unprepared who wish they had planned in advance is almost universal. So if you find that you're unprepared to sell you you've reached that point where you want to and you realize you aren't there yet there's often some sort of regret. It's kind of like thinking about the person who goes into the dentist for a root canal wishing that they had visited the dentist more frequently before. That inconvenience at the time would have paid off. Or for the person reaching retirement age wishing they had done more to plan their retirement. There are so many of these examples where especially entrepreneurs would get focused on the here and now today which is important. Obviously, we need to take care of that without the eye towards tomorrow that when tomorrow comes it often takes you by surprise. For entrepreneurs, we're in such a really cool spot. We have an opportunity to generate income that frankly people in the regular business world or regular careers don't have the opportunity to make. The tradeoff is some of that stability that you would get in the corporate office world and maybe some of the benefits and everything else that goes along with that. But for us, the benefit; the gain is the income potential but also what most people fail to see is the value of the asset that they are building in and of its own right and that alone can lead to early retirement, that can lead to being able to invest in much larger projects, that can be catapulted into something significantly bigger. But it does not happen if you build an asset which can't be sold. And so not only is it good to own a business like this because it follows basic business principles of having a low-risk profile and high growth opportunities and is usually very well documented which is a good thing; it ties into those two elements but it also gives you financial flexibility for the future and also career flexibility for the future as well. And if you don't do it the flip side is you can build yourself a prison which I'm sure you've seen a few people build prisons for themselves and their businesses. Joe: That's very, very hard. You want the independence and life of an entrepreneur and you've built yourself a business prison that you can't get out of and you just can't get ahead. But let's ask this; people ask me these questions all the time, we have a conversation about exits and valuations all the time so I mean I'd just grow you with a few here. Number one how long in advance should somebody do evaluation and plan their exit? We always hear I'm not ready to sell, why should I talk to you now? Mark: At least 12 months, right? I'm working with a client right now and they wanted to do evaluations, see where they're at financially and I said that's great send me your P&Ls and your balance sheets and they did which is awesome. I had a chance to review them and I had some further questions for them. Nothing came back so I bugged them about it and nothing came back. I finally bugged them again and they said well you know what we're doing is we're actually going through and we're eliminating some of these discretionary expenses, we're going to be doing this, that, the other thing and alarms are going off of my head because I see them taking some tax that they probably shouldn't be, right? Okay, I understand where you're going. For example one of the things that they're doing is they're cutting back on advertising spending in order to grow their bottom-line earnings. Well, let me ask you, Joe, what happens when you cut back on advertising? Joe: That's a big no-no. It's convergent graph lines, right? Discretionary earnings go up and your total revenue goes down. Mark: Right. Yeah. Nobody likes that alligator going to the left. Because if you see a graph where the revenue is going down or earning is going up we know that earning is going to go down in the future or to regain the momentum you have to outspend on advertising in most cases. To make it a more efficient one thing but that's on another. So how long; sorry, you asked me a question and you know me, I won't shut up. 12 months at a minimum? I would recommend 24, even 36 if you can just because if there's big changes that you want to make; let's say that you really want to explore that new product line, give yourself some runway to be able to plan that out. Joe: Okay, how much does it cost to do a valuation? Mark: Well it doesn't cost anything. Joe: Why? If it's free what's it worth. I don't understand. What's the business model? You're doing valuations for nothing. Mark: Oh you convinced me. If somebody wants to do a valuation of myself you're going to be paying a lot of money. So for us, it makes sense, right? I mean the number of times when I've started Quiet Light and was working with clients in the early days so many clients were being turned away because; not in saying I won't work with you but I would do the valuation. They say I'm ready to sell my business and I take a look at it and Joe you know the conversation. You and I had this conversation. And I looked at your business and I said okay right now it's worth X but Joe if you wait a little bit time, do some of the things that you're doing right now, actually, you're doing a lot of good things, just wait a little bit you're going to add this much value to your business. Other people it's a little bit different, right? It's hey you know what you have your name, you are a doctor and you are selling an information guide about how to take care of athlete's foot. And your name is plastered all over this. Well, guess what? That's not a transferable business because everyone's buying it based on your name. So I'm going to have trouble selling your business and if we do sell it it's going to come at a discount. But Mr. Doctor athlete's foot if you take your name off of this and show us that it can run for 12 months just as well if not better than it is right now without your name plastered all over it instead of getting maybe a 1½ multiple you're going to get like a 3.2 or 3.3. Joe: And who does that benefit? Mark: That benefits the client. Joe: There are three parties that it benefits. Mark: I'm being quizzed here. Joe: You are being quizzed. So it benefits the guy who's running the business, it benefits Quiet Light Brokerage which is a weird model, right? We do it for free folks but in the long run, it benefits us because you're going to have a more valuable business. But there's this third party that benefits as well and that third party… Mark: Is the buyer. Joe: Right. They might eventually become our clients as well too. So it's an odd model. As my mentor said, Joe, it seems like you guys are giving things away for free on a hope and a prayer that they'll come back to you someday. And I said exactly Walter that's what we're doing and it works very well. We're building relationships and building trust and we're helping first. And strangely the more people we help the more our business grows and the more valuable their businesses become and the more buyers buy great businesses. And it's an endless positive cycle and works very well. With that said I remember being at eCommerceFuel a few years ago and I came back; I sat at the bar with one of the presenters, I cannot pronounce his name. All I know is he swore a lot on stage but he was really good. He was really good and I had a beer with him afterwards and he said something like well I'd have a valuation done but honestly it's free I'd feel like I'm committed to you. I'm obligated to you because I didn't pay you. If I pay you I can just walk away. And it's an interesting viewpoint but we are all about relationships and we want to help. We want to get it done. And the more conversations we can have well in advance of a sale selfishly it makes it a lot easier for us when it comes to the time to list your business. I'm in the middle of a valuation right now where there are two brands in one seller account and there's a royalty arrangement and they have a coaching business and different LLCs. It's just a mess and the add-back schedule is getting deep and long. It's almost as long as the P&L itself which raises the antenna of the buyers. We don't want that. We want to have this clean business presentation as possible. So I'm with you 12, 24, 36 months in advance. Have the conversation. Get an education on the value and the process of maximizing the value of what is likely your most valuable asset. I was having a conversation with Mike Jackness a few weeks ago and we're doing a presentation it was actually at eCommerceFuel and he said the problem is you can't talk too much about exits and planning with these guys. They're doing all they can just to keep the wheels on the bus, to keep revenue going, and not run out of inventory, and do all these different things. I'm like yes, yes, yes, but when they have a clear vision of the value of the business and the view of an eventual exit when the wheel falls off and they've got to put it back on it's a lot easier because they still know where they're going. Otherwise, they're just wandering aimlessly trying not to run out of inventory; solving problems without an end goal in mind which is it's exhausting sometimes. Mark: Yeah and I want to comment on one aspect here about the idea of benefiting the buyer because if you're a business owner you might be thinking well I don't really care about the buyer at the end of the day. I mean I care but when you talk to entrepreneurs and sellers sometimes the approach they take is yeah I hope that the buyer does well with it but that's definitely a footnote compared to what they get out of the sale and understandably so. I'm not criticizing anyone who has that sort of attitude. But in your opinion, Joe why should the seller care about whether or not the buyer gets a good deal? Not a good deal as far as discounted but a good business that they can make a good return on investment on. Joe: Yeah that's actually not very complicated. It's when you do the right thing you will be rewarded. If you build a great business that checks all of the four pillar boxes, that really highlights all of the financial key metrics in a very, very positive way; and these are things that we do in the valuation folks when all of those things are you know 8s, 9s, 10s or a really solid green light guess what? That buyer is going to pay you more for the business. They're going to pay a higher multiple with better terms and it's going to be an easier transaction for you. Most people that are selling their businesses sometimes it comes down to okay like Quiet Light Brokerage we had 2½ offers for every listing that we put out there in 2019. So buyers are liking our listings, they're liking the way the packages are put together because we work with our clients for a long time and sellers sometimes have a choice. And sometimes they want to choose who is going to be easier in the transition afterwards. When you build a great business and you think of your eventual buyer in mind that transition is going to be easy because you've got SOPs in place, you've got a long communication with your broker advisor here at Quiet Light that's going to talk to you about all of those different things and making that transition easier because that's one of the four pillars; the transferability of the business and all the things that generate revenue for it. So now you're asking a short question and I'm giving you a long answer, it's the buyer will pay you more, as simple as that. Mark: The buyer will pay you more. I would also add on there that I think we are quick to dismiss the power of relationships and the people that you're going to meet when you go to sell your business. These are really important things. I had a situation; as you know I have another business besides Quiet Light Brokerage that doesn't take up a lot of my time but I ran into an issue the other day. It was a really complex difficult issue but the seller and I are friends at this point. We know each other pretty well and I hadn't run into this before. So I sent him an e-mail and said hey how have we dealt with this before he came back with a nice long response and insightful and everything else. It was a really good resource for me to have and he and I are on good terms because he's treated me fairly all along and built a business that was worth buying, to begin with. He's a valuable asset and if I ever want to do new things in this space he would be somebody that I would look to partner with because he's already skilled in this area. And when you're selling your business you're typically selling to somebody who is highly skilled and a successful entrepreneur in their own right. Isn't that a good person to have you in your Rolodex? I don't want to overemphasize this point and say this is the only reason you want to do it. I think what you listed Joe what you explained I think that is really where you want to put the focus and emphasis. But there's a whole host of ancillary benefits to creating a transaction that benefits yourself first, the broker who is going to be working with you and your team your partner with you, and also that buyer making sure that they have a business that they're going to be able to succeed with. Joe: Let's talk about what we actually do in evaluation. Mark: Sure. Joe: I'm going to kick this off. One of the first things that; I've got a call this afternoon at 4:00 today I'm doing an initial valuation call with a couple of very experienced entrepreneurs. The first thing we need are financials. So as an entrepreneur, as a business owner, if you're not able to run a profit loss statement with a monthly view going back more than 12 months we're not going to be able to do a full valuation because the full valuation does a year over year comparison. I'm going to look at January of 2020 versus January of 2019 and hopefully '18 and so on. And that's part of the financial key metrics in terms of where the top-line growth trends are, where the advertising cost as a percentage of revenue is, and where it's trending. Is it seasonal? We're going to talk about the timing of listing a business sale. Even if you're looking three or four years out we're going to talk about some of those things and we're going to see all of that with the detailed financials. Now today Walker wrapped up a long email chain between all of us where he had a client trying to do a valuation and get his business listed for sale and all he had were quarterly P&Ls. What's the problem in your view Mark with quarterly P&Ls versus monthly P&Ls? Mark: It's just the level of detail, right? I mean I can go backwards. I can take monthly P&Ls and go over to quarterly and I didn't comment; we had a discussion about this within the company and I didn't comment on it before everything resolved themselves. There are some businesses frankly that I think quarterlies worked really well for and probably better for; businesses with lumpy income benefit from having a little bit larger of a lens that we're looking through to even that out so we can see what the real trends are. But it's good to have that option to be able to go to monthly because you have more detail. What you pointed out Joe and I think it's a very good point is that when you get into the transaction and let's say a buyer places an offer we get past a quarter and let's say that we're month one into the quarter, most buyers before they close on a transaction want to know what the business has done over the past month and that time that they're doing their due diligence. Did it completely blow up while they were doing that final piece of due diligence? So they're going to ask for these updated numbers along the way as they're going through the process. Well if you have to wait two more months in order to close to be able to get reliable updated numbers that's just going to extend your timeline, introduce further risk that something happens and the buyer has to pull out and will disadvantage you in that way. And again the lack of detail when I'm doing analysis on a business for a valuation I love looking at the trends I like looking at year over year trends and really I start to look at the different months. And it's surprising the number of businesses that obviously November December get a spike are pretty high but let's say like home and garden stores often get a bump right around April or May so that'll be a second quarter. Maybe it spans two different quarters and you really get a sense for how does this business breathe over the course of a year. Right? Joe: So we're going to look in great detail at the financials. So we want you to run a profit and loss statement for me to Quick Books or Xero with a monthly view going back as far as you can up through the most recently reconciled month. If it's an e-commerce business we definitely want to get those P&Ls on an accrual basis. If we can't get them on accrual basis because you do cash accounting at some point we're going to have to find a way to flip the land cost of goods sold to accrual. Why? Because if a business is growing like crazy you're taking a lot of cash flow from the business and putting it right back into more and more inventory and that's going to depress your seller's discretionary earnings. And your business is a multiple of seller's discretionary earnings which is net income plus add-backs equals SDE. Mark: Yeah I want to talk about this accrual basis because I'm seeing this more and more. People are hearing us, they're hearing this message, and I'm seeing more and more books delivered to us on a false accrual basis is what I would call it. So here's the problem, bookkeepers don't like to do accrual basis accounting because it's hard. It takes more work. It takes more reporting on a monthly basis. They need to dig in, see what you sold, tie that back to the cost of goods sold, and record that. What I'm seeing pretty commonly here is accountants who make a year-end adjustments for the cost of goods sold. And so what you end up seeing is cost of goods sold seems kind of flat or kind of lumpy all throughout the year and then in December all of a sudden everythings out of whack. It doesn't match up. Speaking about the monthly one of the elements that a buyer is going to evaluate when looking at your business if you're selling physical products business or even if you're selling; you can do this if you're SaaS business as well it's just a cost of sales numbers out of the cost of goods sold. One of the key metrics we want to look at is your business getting more expensive to run; in other words, if you're consistently bringing in 5 million dollars of revenue what does it cost to generate that 5 million dollars of revenue? Are your products getting more expensive? Have you had a discount on those products over time? Are there periods during the year where you have to do one or the other? If you are in SaaS business are the cost of sales going up; your commissions that you're paying out the salespeople if you're on a commission sales basis. You can't get these numbers unless you're on accrual basis accounting. And a buyer, a smart buyer, if you want to sell to a smart buyer will want to see this information to see is this trending in the right direction and if not then we need to work this into the valuation; so monthly accrual. Joe: When this false accrual practice is done it's generally done by a CPA not a bookkeeper because they're doing some adjustments for the end of the year. Although just to be clear everyone if you've got an e-commerce business with physical products you are going to file your taxes on a cash basis. But when you're looking at the value of your business we need it on an accrual basis. You should have a CPA for your taxes. You should have an e-commerce bookkeeper for your daily, monthly, quarterly profit and loss statements. You should not in my opinion or view do that work yourself anymore if it takes you three or four hours a month you're worth more than the $400, $500, or $600 a month that a really highly qualified e-commerce bookkeeper is going to charge you. Mark: Yeah and we've made this point before but I'll make it again. It all depends on how you enter the information or your bookkeeper how they enter the information into whatever accounting software you're using. If you enter the information as an accrual basis you can flip to cash with a click of a button. It's very easy to do. Joe: Very easy, yeah. Mark: If you enter your information into your books on a cash basis you can't flip it to accrual. I mean you can, you're just going to get the wrong numbers, right? The software is stupid in that way. It's going to try and it's going to calculate it but you've entered the data wrong. So if you entered it in as accrual you can file in cash, that's totally fine. But for the sake of accuracy, you should be entering it or having your bookkeeper enter it in as accrual. And ask your bookkeeper this too, when I hired our bookkeeper I asked them; I sent them an interview, a written interview and I asked them to explain what accrual accounting was. I know what it is but I wanted to see could they explain it. And I was shocked at the number of foot keepers that couldn't explain it in a clear, concise way. Joe: It's not hard guys. Just we'll move beyond this make your eye bleed accounting part of the conversation. Look up cost of goods sold accrual formula. That's all it is. It's beginning inventory plus purchases minus ending inventory on a monthly basis. That's ideal. But the point; one last point is that if you spend a million bucks a year on inventory and you're just doing adjustment or a guess we have to flip things sometimes to accrual. If you're off by 1½%, that's $15,000. If you're spending a million bucks on inventory, you're spending a lot of money; you may be doing 4 million 5 million dollars a year in revenue which probably means you're doing $750,000 in discretionary earnings. You might be at a four-time multiple at that point; four times the $15,000 that you got wrong on the inventory is $60,000 that you're not putting in your pocket in the sale of your business because you wouldn't spend $500 a month on an e-commerce bookkeeper. Or you're overcharging your buyer by that 15,000 times four because you guessed on the wrong side and things are going to fall apart or go off the rails in due diligence. So get it right, build trust, and move on. Okay, so first thing we need is a clean professionally done profit and loss statement with a monthly view. We're going to import that into the Quiet Light Brokerage import system. We're going to normalize the P&L. If you've ever looked at our listings folks you can see they look pretty much the same; our profit and loss statements. We do that because we see them in every shape, size, quantity, format, PDF, Excel. I mean it's crazy I'm surprised somebody hasn't mailed in a napkin at one point or another to Quiet Light. Mark: I had a notepad document once on a 20 million-plus business. Joe: We don't want our buyers to see that so we import it. We have an importing process where we're going to pull it in and we're going to analyze the key metrics; the financial key metrics that buyers over the last 14 years have told us this is what we look at. They're looking at top-line revenue trends. They're looking at gross profit, trends, shrinking or growing, and then they're looking at advertising cost as a percentage of total revenue and how it's trending. As Mark said earlier you could be spending a lot of money on advertising in the last six months to drive top-line revenue or the reverse and it all weaves together in a web, right? I've had a listing for sale last year and the seller said I handed my advertising off to a VA in late spring last year and I let him run it and five months in I realize things got out of hand and I pulled it back and took it over myself. We do a recorded interview just like we're doing right now on Zoom. We do it on video, we do it on audio, that's part of the package when a business is for sale. And that question may come up then it also may come up in the written client interview and then guess what it all weaves into the profit and loss statements and the financial key metrics when then you can go and look at the advertising trends going yeah look at that Joe was right in July, and August and September the numbers were up and advertising was 17% instead of the normalized 12% that it's been for the last three years. So you can see those different types of things. I had a situation just last week where I was looking at a profit loss statement where the ad spend went through the roof in December but revenue went down. That tells a story that he's struggling against competition and it's not really working out. He's spending a lot more money but sales are going down and lo and behold January and February are down as well. The numbers tell a story so the first thing we've got to get are the numbers, right Mark? Mark: Yeah. And I'm going to share something here Joe that I think was last week or maybe the week before, you actually did a valuation on Quiet Light brokerage. Joe: I did. Mark: Which was done not because we're looking for a buyer although if somebody wants to offer us 30 million dollars let's have a conversation. More importantly you wanted to look for areas of wasteful spending on our part and also key trends for the business as well. So let's think about this in terms of not selling our business, let's think about this in terms of business owners who want to run their business efficiently. Let's say you take the last three years' worth of your P&Ls and they're done on a true accrual basis and you take a look and you see that your gross profit margins have gone from 60% and they're dropping down to 52%. Now you might know why that's happening, you might know what's going on there but you can also identify that as a trend that if you were to correct that trend it's going to help the business. I worked with a client; I'm actually in the middle of doing a valuation for them and they keyed in on this on their own. They were very proud of this. They said look our gross profit margins are 42% right now but what we did over the course of the past year our revenue is down because of a very explainable reason but what we did is we found a product line. We found a method here to increase our gross margins from 42% upwards to 54%, 55%. We were able to test this on a singular product and it worked well and we plan to expand this. Well look what happened by looking at their margins and understanding the margins and understanding that's an area of opportunity they've uncovered a huge avenue to growth which is replicable and from a valuation standpoint it's great but from a business ownership standpoint, it's even better for them because now they can charge a charge more, pay less. Who doesn't want that, right? So let's exercise; again you asked why should we do a valuation beyond being prepared to sell should that they arise? It's a valuable exercise to do as business owners. Joe: I got an email the other day and it was from somebody named Anthony; let's leave it at that. And he wrote Joe this is really, really insightful. I had certain financial goals in the business and now I realize I'm that much closer to them than I ever was. This is making it so much more exciting to run my business every day which is exactly what it truly is. In that situation we determined, he determined; he came to the table with they've decided to charge shipping on items over a certain dollar value and that was going to add their estimate was $180,000 in additional discretionary earnings over a 12 month period. And then they had renegotiated cost of goods sold, they were going to save about $2 a unit and that was going to add $200,000 in total discretionary earnings over the next 12 months. That's $380,000 right there and with another $400,000 now they're at $680,000 they expect to be adding 2020. It's getting that much closer to their exit goal and it just defogs their window put your high beams on you can really see that much better when you're running your business it makes it that much more exciting. A lot of the things that we do talk about beyond the financials, Mark; it's not just about the numbers folks, it really starts with them. It's funny that it starts with them but that's pillar number four, documentation. Let's talk about the other three pillars briefly, Mark. Go ahead and tell me what the other three are. Mark: Risk, growth, transferability. Joe: It took me a while to remember what all four those are and I'm going to hold this up everybody; anybody that's on YouTube. I still have this on my desk after eight years. It says what they all are right there. Mark: I didn't make it memorable enough. Joe: Risk, growth, transferability, and documentation. Mark: How are you as a student in school? I'm just curious. Joe: Oh I fell asleep in accounting class I tell that story all the time. And the bottom part of that; oh look at that I forgot to turn my phone off you're hearing my Twitter. Mark: I heard a bird. Joe: The bottom part of that note there was that our business is relational, not transactional. I need reminders every day. Anyway, risk, growth, transferability, and documentation; we've talked about number four, risk. I've got a business that should be closing in the next few days and 70% of their revenue is from one SKU. What is that called? Mark: That's product concentration or a single point of failure. Joe: Or a hero SKU or a bad idea or a unicorn; all sorts of trouble. I had a conversation with somebody; a couple three years ago… Mark: Bad idea. Joe: Actually it's a bad idea. Mark: It's not a bad idea if it's sustainable just to be clear but yeah I get where you're going. Joe: Well here's the sustainable part, so there was a gentleman that I was working on a valuation for and he had one SKU that generated 90% of his revenue. And I'm like this is a bad idea. He's like well it's a lot less work Joe, it's very defensible, look at our reviews. I mean he had me convinced that it was actually a good idea. And then guess what happened? Facebook changed an algorithm and they're their ads that were working with no longer allowed and they never recovered. Their business was worth two million dollars one month and the next month it was worth like one maybe; two million, 50% cut just like that and I haven't heard from him so I'm sure it's gotten worse and worse and worse. It's a single point of failure. It's a hero SKU. It's a risk. So, therefore, buyers are going to decrease the value when it comes to the valuation. We're going to do it for you and we're going to tell you what buyers think but it's a decimal point or two or three. So instead of at a 3.2 multiple; I'm going to do some math for everybody, simple numbers at 3.2 if you've got $100,000 in discretionary earning you're at 320,000 in terms of list price. Two-tenths of a decimal point off because of a risk point you go from 320 down to 300 or 300 down to 280. It changes that quickly because of a single point of failure or because of risk in disregard. So that's part of the risk, it's the hero SKU; things of that nature. But there's also age, there are trends, right? So generally we want to have a business that's about 24 months old at a minimum. We sold them for less. There are exceptions to every single rule we talked about here. But 24 months is when buyers start to have confidence and they don't discount the value of the business because of age. The other thing to talk about is the trends, Mark, right? I just had a valuation call last night with somebody I've been talking to for six months. And I can't seem to get updated financials on a monthly basis. That's the challenge. And finally, I get them and we have a conversation. We're recording this on March 3rd. I don't have January and February's numbers. I finally have Q4 and top-line revenues down 25%, bottom line discretionary earnings down 30%. So the value of that business just went from three-point something based upon the numbers down to easily 2.5 on the top side. So it's risk because it's trending down and somebody has to jump in and fix that downward trend, right? Mark: Mm-hmm that's right; yeah, absolutely. And one thing with these downward trends you talked about how quickly the discount, just an observation multiples go down much more easily than they go up. It's hard to prop the value and that multiple upwards but people would discount much more aggressively when they start to see problems such as the concentration or as you said the bad idea. Joe: So it is a bad idea when somebody calls and says hey I'd like to sell, I'd say hey you really can't nobody else will buy it. Bad idea. So we touch risk, we touched on growth; these are the first two, let's talk about the transferability of the business. What are the key components to this pillar? Mark: Yeah, the transferability; the easiest way in my world to think about this is just can somebody step into your shoes today and run the business without having a significant decline. Or maybe another way to think about it would be what's the learning curve of the business, or do you have documentation in place that will allow people to be replaced if needed? The transferability is just that and it can encompass a number of things first of all that affects all businesses would be procedures. The procedures that you have within your company to run it on a day to day basis; how do you handle returns if you have that sort of business, what are some common customer complaints or concerns or questions and how do you handle those; do you have a process set up for that. If you're an inventory-based business what is your inventory ordering process and your forecasting process? That's something that should be in a standard operating procedure. So there's all sorts of SOPs. Outside of those elements, transferability can come into your customer acquisition process and I brought this example up before during this call. If you're a doctor and your name is all over the website for your great athlete's foot cure now you've set up a barrier to transferability because you're selling off your own personal reputation. And unless you're willing to give your name and reputation to somebody else which most people aren't and understandably so you need to get that off there and no longer be the key method for customer acquisition. And the last thing would be licensing issues or other requirements to run your business. We've seen this before. Joe you had a valuation I remember this clear as day at Rhodium Weekend when they were doing live valuations up onstage and somebody came with a business we were supposed to be working quiet with other advisors, everyone was going to do valuations so we could see what it looked like live on stage and what was the result; it was an e-commerce business, what was the result of that valuation? Joe: It wasn't transferrable because they were sourcing product from the old; it was the old school, they were required to have a retail space so the business was going to be very, very hard to transfer. And I want to comment on that. Mark: It used to very common where wholesalers would require that you have a brick and mortar store because a lot of the legacy brick and mortar stores were telling their suppliers don't let these internet people come in and just start selling this and so they would require that storefront but it still exists out there. The other issues that I've seen with these licensing issues would be not only the storefront issue but maybe if you actually have to have a license to run the business. And you see this like; we had this with somebody that was selling high-end hair products. And you think well, what's the problem there? Well in order to sell these hair products you need to have a cosmetology license. And so that's a transferability issue. It cuts both ways though. Transferability when it comes to licensing and then these hurdles does set you up with some defense ability that can actually help your risk profile be lowered; anytime that there's a hurdle to jump over a business if you jump over it you're leaving some of your competitors on the other side of that hurdle, so that's a good thing. But the element that we started off with the SOPs and the documentation of your procedures, it's something that everybody should be able to do and should have in place. What are your common procedures, how do you do it, let's make it easy? I know you have something to say here on this, the last thing that I would recommend people do and I actually just did this with Quiet Light Brokerage for your sake and for other people within the company, diagram your business. Write out everybody who works for your business. Write it out; you can draw it if you like to draw, you can use a graphing software. I used Lucid Chart; very easy to use Lucid Chart for this or just write it out and see who has what roles within your business and how does that look. I'll tell you what it's an eye-opening experience because what you find especially in small businesses is you have people who wear multiple hats. You might find some crossover there as well. So that's where I would put transferability. Joe: Too many people are focused on the top line and very proud of the total revenues that they're doing. But ultimately we're running these businesses to make money and to be profitable and we can help you hone in on that profitability and what your business is truly worth. So we've touched on what we do when we import and normalize a P&L and look at financial key metrics. We've touched on the four pillars which are risk, growth, transferability, and documentation. Within each pillar, there's five to six different points that we touched on in a valuation process and we really get to know this invisible; I call it a fifth pillar. Mark corrects me every time. You don't need to Mark, people know this. The person behind the business; the trust and credibility that they have is that invisible fifth pillar. It's the mortar holding it all together. Are you a good human? Do people trust you? Do people like you? Believe it or not, if you are people are going to pay more for your business. You do make a difference in the overall value of your business. So we do all of these things and then we create a profit and loss statement with a detailed add-backs schedule. We go through that with you and we firm up your seller's discretionary earnings and apply a multiple range to it. This is where it gets into the weeds and we won't do it today on this podcast. I'm actually going to go ahead and record a podcast following this one on the three levels of add-backs. There are six different points to each level and it's very eye-opening. A lot of people don't understand the importance of detailing the add-backs. A few folks are like why do I need a broker for I'm just going to sell to this consumer group that's buying up FBA businesses. You need to understand the add-back schedules so that if you choose to sell directly to them you're getting maximum value for your business or even better the real value for your business; not maximum, the real value. It's okay, you can choose to sell to whomever you want however you want but make sure you're getting your own numbers right and that's what I'm going to share on the next podcast. Mark: Fantastic. Joe: Okay, one more final thing. Mark: I was going to say we're getting close to time here. People are like my drive is done. I'm at the office. Joe: We are. You're so eloquent Mark with your words and your e-mails and all this. I say this all the time and people hear you speak. You speak very, very well so why don't you do one final wrap up on why you think someone should have a business evaluation done through Quiet Light Brokerage and how it's going to help them in the future and then I'll give my two cents as well. Mark: Flattery is not going to get you anywhere Joe. Joe: Tell them what I want you to tell them. Mark: Well that I don't exactly know, I'll tell them what I think. So the question is why should people get a valuation done to kind of wrap this up. Your business is most likely your most valuable asset and if it isn't yet hopefully it will be someday and you should know what the value of it is. More importantly, you should understand what drives the value of your business and also what's holding it back. My favorite part of evaluation when I'm doing one; and actually I've got a call here in seven minutes to do a valuation, it's going to be coming up soon, somebody is taking us up on this. My favorite part of a valuation isn't telling somebody what their business is worth right now because that's usually somewhat predictable. It's being able to tell them what I love about this business and what buyers are going to salivate over is fill in the blank, and this part you've done a great job here, the areas where you're going to have some friction in your sale and it's going to cause a discount on the business are these elements. Now what I'm doing there is I'm really giving some insight into where the business is today but I'm also laying out a roadmap for everybody that I'm doing that for to say if you want to grow the value of this asset work on these elements and you know what if there's an element of your business that's really good double down on it. One of the areas that we've talked about in the past is this pillar of growth, we want them to have lots of growth potential for the business; lots of growth prospects for that business and they need to be real. However, if you have easy obvious growth within your business take advantage of it because I would rather multiply a larger earnings number and get that going up because it's a lot easier to grow your value that way. Doing a valuation will help identify those aspects of your business; where is it valuable right now, what's holding it back, and what's the plan to be able to make it more valuable. You don't have to sell the business. If you do these things you will have a business that is more valuable and you're going to gain insights that you never really thought about. I will challenge everybody if you don't do anything else on this call we've talked a lot about finances so I'm going to change it up. Diagram your business and then feel free to email me if you thought it was a complete waste of time. Joe: Or you can go at Mark@QuietLightBrokerage.com. Mark: Tell me it's a complete waste of time. Joe: Mark with a K. Mark: Mark with a K. The only way it would be a complete waste of time is if you have like two people in your company. But then you know what? Joe: Send him an email. Mark: Yeah, right. But then if you're going to do that diagram out the other people that are supporting you. Your contractors, the vendors, the people that are key for your business to run and take a look at that and you might not gain a whole lot of new insights but you're going to see your business in a way that you've never seen it before. Joe: What you're hearing here from Mark is that we're here to help. We're sharing information with you and giving you tools to make a better decision for your business and for the future when you are ready. If you are ever ready to sell. In no way shape or form are we ever here to talk you into anything. We're going to share the information with you. And that was the reason I chose Quiet Light Brokerage back in 2010 to sell my own business. I talked to three different firms. Two were trying to get me to sign a contract. The third was giving me helpful information to build a more valuable business to sell when I was ready to sell. And that conversation was with Mark. Lastly, don't be embarrassed by the size of your business. Sometimes we'll go to Mastermind groups and someone will; I can tell they're uncomfortable talking to us because they're only doing $100,000 in profit. Are you kidding me? You're an entrepreneur, you've built your own business, you're doing $100,000 in profit which is 40% higher than the national average; I don't know the numbers, I'm going to get a correction on that Joe@QuietLightBrokerage.com. It's huge compared to the national average. Don't ever be embarrassed by the size of your business. The smallest one we sold in 2019 was $28,000. Yes, it was a pocket deal because Brad had a larger listing and the gentleman had two smaller sites he wanted to sell off. They're all shapes and sizes. Our average transaction size in 2019 was 1.1 million. It grows every single year but we go through all different sizes. We want to help you get from that hundred thousand dollar valuation to a million-dollar valuation. We've had clients where they first sold their business at 7,000 then 20,000 then 220,000 and now nine million and the next exit that that particular individual has set is 100 million. We want you guys to achieve your goals and we're going to help you along the way. But we're not going to talk you into a single thing. So reach out go to the website. It's the valuation form or sell form I think it is or it shoot us an email at inquiries@QuietLightBrokerage.com and we'll hook you up with one of the qualified advisors here who are all entrepreneurs themselves. Links and Resources: Quiet Light Brokerage
What is one of the surest paths to substantial wealth? Grow and sell a business. Today's episode is all about Joe's book project, "The Exitpreneurs Playbook." Joe has over 8000 stories to tell about what it's like to buy, what it is like to sell, and ways to outsmart the typical entrepreneur process. Mark is interviewing Joe about this upcoming project, his motivations behind creating it, and how getting to the writing process carried its share of challenges. Joe believes that an exitpreneur should have the tools in hand to start, run, and grow their business for better decision making later on. He is not telling anyone to sell, he is offering them the strategies they need in order to be ready if they do. Episode Highlights: Joe's idea and the process of putting it into book format. Why he wanted to write the book. Reasons exit planning can be challenging for the business owner. The differences between an entrepreneur who is considering a sale versus one who has actually prepared an exit. How businesses often outgrow the founder and smart moves to make before that happens. The importance of reverse engineering to the goal for a better exit strategy. The difference between the entrepreneur and an exitpreneur. How Joe came up with the book title. Transcription: Mark: So Joe I was at an event recently in Salt Lake City and it was in just general kind of a conference meeting room for about 50 people or so and they had a lot of books in this place. And I was intrigued to just kind of look around and see what was there and you'll never guess what book was up on the shelf. Actually, do you want to guess? Joe: Yeah I want to guess. I'm looking around my office, Tools of Titans by Tim Ferriss? Mark: You know what? It actually was in there. Joe: It was in there. Mark: Not the one I'm referring to. Joe: The ONE Thing by John Keller? Now, wait let's call out one of our friends; Superfans by Pat Flynn? Mark: You know I don't know. There were a lot of entrepreneurial focused books so maybe that one was there; I don't know. Joe: Okay. Buy Then Build by Walker Deibel? Mark: Buy Then Build by Walker Deibel; yeah absolutely, that was on the shelf. In fact, they had multiple copies of it. They were giving that book away. And today; what is it? It's February 11th so we're a little bit past a year since Walker launched that book and it spent a year as number one on Amazon Bestseller in this category which is pretty fantastic. I mean obviously, we're super happy for Walker. He won an award for being the thought leader of the year through a major alliance of mergers and acquisition advisors. Joe: Huge. Mark: That is huge. He's had professors from Ivy League colleges come up and talk to him about the book. All of this leads me to something beyond just the accolades and that is the information that's out there in this space about what it's like to sell, what it's like to buy. Walker is talking on specifically which is the buy-side and how to use this as an investment vehicle, how to outsmart the Startup Game as he says and reduce some of that risk. But there's also a whole on the sell-side as well where people don't really know that their business is sellable or they don't think about it. But just yesterday I was reading something on the fastest way to build wealth; what is the fastest way to build wealth? And the conclusion that they had is the fastest way to build wealth is through building a business and selling it. This is one of the quickest ways to actually building wealth. And I know you've had guests on the podcast here who have talked about this process or you call it your Incredible Exits series. I'm really, really excited that you're writing a book on this and you're not calling it Incredible Exits despite everybody else's opinions that you should but it's these stories behind the scenes. Joe: Yeah I'm excited to be writing it finally. I sat down with some friends a year ago probably around a fire pit; maybe a year and a half ago because it was summertime. We're recording this in February of 2020 and I said look I'm making an announcement, I'm writing a book, I'm telling you guys to call me out on it and then I didn't do anything but I tried. I tried to write it. I tried to outline chapters. I tried to follow up… Mark: Hold on one second. You made this promise right on a fire pit with friends? Joe: Yes. Mark: How much did you consume before you made this promise? Joe: I'm a 2-drink maximum kind of guy, that's just the way I am. Mark: Okay. Joe: It's like giving myself an injection of the flu when I have more so it wasn't much. But I didn't get it done. It's a lot of work. So I followed the original book in a box method and didn't get it done at the scheduled time. I was at Brand Accelerator Live with our friend Scott Voelker last September and one of big Scott's announcements was that he actually wrote a book. And it is also here on my desk somewhere; where is it Scott? It's the Take Action Effect. I just turned my head away from the microphone, sorry folks. And I met his scribe; a young lady by the name of Brennan and I connected with her during the event and talked with her and said okay this is it I'm done. I'm hiring a scribe and I'm going to write the book. And I've talked to a number of people about it and let me just cover the process and then answer the question as to why the heck I'm doing this because it's a massive undertaking. The process is instead of actually writing a book myself with written words and a keyboard I get interviewed for I think it was 8 2-hour sessions; so 16 hours in interviews. First, we outlined the chapters and go through the whole process and instead of talking about; I mean writing an article or a chapter on seller's discretionary earnings and add-backs and the three levels of add-backs and all the different things that we talk about on a regular basis Brennan interviewed me. She transcribes the entire interview through UberConference and Rev.com for those that really want great transcription services. And now we're in the sort of lull between all of those interviews and me getting my first draft. They're going to give it to me in thirds. So the first one I will get will probably be I want to say mid to late March and then they'll drip it out in thirds every week for 3 weeks. They want to overwhelm me in terms of reviewing and editing. I still have a lot of technical stuff to add to it but it's really kicked the process into high gear. It's not cheap, let me tell you that. It's an expensive undertaking but I think given what we do for a living and how many people we're trying to help I think it's well worth it. Why am I writing a book? Walker's been an inspiration, very successful with Buy Then Build and the amount of people that he's been able to reach and help on the buy-side. We work with sell-side brokers or sell-side clients for the most part and I've done the math Mark, does it sound inconceivable that I've talked to 8,000 entrepreneurs over the last 8 years? Mark: Not at all. Joe: Yeah and that's probably a conservative number. I'm not saying I've had an in-depth evaluation with 8,000 of them but I have without a doubt talked to 8,000 and that does not count standing in front of a room with 3, 4, 500 people. And the challenge has been we've got to reach them one by one and I know that Walker's book has been as you said best seller. I think it's probably sold over 10,000 copies at this point. Mark: It's over 15 at least. Joe: 15,000 copies? Mark: Yeah, I actually talked to Walker about it a while ago. Joe: I think he told me something like 99% of books sells less than a hundred copies that are published. Now Walker, correct me if I'm wrong but it's pretty impressive. So to get what we share on those valuation calls into somebodies hands before, during, and after they have a valuation call and when they're in an audience that will give them every possible detail that we've developed over the last 8 plus years of doing what we do and sharing that in writing so that they can essentially change their mindset. And that's the goal of the book, it's to change their mindset from reaching out to us when they're sick and tired of running their business or they've had a bump where things get tougher and they say Gosh how can I sell this business? A buddy of mine told me I can get X multiple. I'm going to call Mark and say Mark how much can I sell my business for? I want to change people's mindsets. Instead of saying how much can I sell my business or more often they say how much is my business worth, I want them to say I want to build wealth like you said at the beginning and I want to sell my business for X dollars. I want to do that in 4 years. In order to do that, they need to understand where they are today. And the book is going to help them reverse engineer the path from where they are today to that exit so that they can do a partial valuation, get comfortable with brokers, and drive that path. I had a conversation with Mike Jackness recently and Mike talked about the fact that about what we do sometimes entrepreneurs just don't want to hear it because the idea of exit planning is so beyond what they're trying to do when they're just trying to keep the wheels on the bus, right? They're running out of inventory, they've got competitors coming at them from every angle, they're trying to do cash flow planning and it's just so hard that they can't see out the front window. The objective of the book is to sort of clear that window, have a clear path to an exit that they understand and it's a much better ride. I've been through it myself personally. You did it for me back in 2010. I could see nothing, understood nothing, we had a call, we had several calls and the light bulbs went off and I knew exactly the path to take and I'll tell you what operating my business became a lot more fun and exciting even though I was sick and tired of it after 5 years. Mark: You know the more I experience the business and grow as an entrepreneur the more I'm learning. With anything dealing with a goal really the best way to achieve these things is what you've said, reverse engineer it. Rather than just kind of impulsively decide that I'm going to do something figure out where you want to be and then reverse engineer. But in order to reverse engineer it, you need to understand the mechanisms that are going on to create that value. You're trying with this book to create a shift in the mindset of entrepreneurs, right? By the way, folks if you haven't figured this out we don't have a guest; Joe is the guest. I'm going to interview Joe about the book and maybe we'll talk a little bit about what it is like to do what Joe and I've been doing and everyone else at Quiet Light. Joe: Right, we're co-guests. We're co-hosts and co-guests today because I want to grill you too. Mark: Very good. Alright, I want to start out by saying okay let's talk about your experience. You've been doing this for 8 years. You've done literally tens of millions of dollars of transactions on your own within Quiet Light Brokerage. Joe: I'm fastly closing in on 100 million. Mark: That's right you are. You are; absolutely. Joe: Inaudible[0:11:17.8] 12 to 18 months; pretty shocking. That's amazing. Mark: Absolutely amazing. Talk to me about the mindset that you often see or most naturally see in an entrepreneur that comes to us to sell versus those rare cases of somebody who has planned to sell and what is the difference in the actual process value and stress levels I would say for everyone involved. Joe: Yeah. Look all the success stories that you guys hear about on the Incredible Exits for the most part those are people that had the mindset that they wanted to determine and plan out their exit. They got an education, they figured out what their exit goal was and they called Mark, myself, Jason, Amanda, Chuck, anyone of us and reverse engineer the path to that. They didn't call and say what's your fee, okay I want to list. It was this how does this whole thing work and then we worked with them over a 6, 12, or 18 month period sometimes even more. Those are the success stories that you're hearing about. The people you're not hearing about never sell their business because they call. They might have a call like this or I was just at eCommerceFuel last week as an event and kudos to Andrew Youderian and all the guests and all the people that are there; brilliant, so many smart folks. But even with that high level of entrepreneurial success and drive I still get e-mails like I've gotten this week which is a great chat last week, great presentation. I did a presentation with Mike about the sales of ColorIt. You've really inspired me to sort of try this path to an exit. And then I said okay well this is what I need. Yeah, I don't know I'm so busy with adding SKUs and I'm not really there yet. I'm not ready to sell yet. I'm not ready to think about selling yet. Whereas the yet it should be now regardless of where you are in the business. These people are already doing; the 2 that I'm thinking about where I got the e-mails like the one I don't know his growth. Well, I could do the math on his growth but the discretionary stands out that he's close to 600,000 in discretionary earnings and it is 5 to 6 times more than he ever made in his prior day job. And so he's trying to work towards an exit and retirement. The other was doing nearly 10 million in revenue and had a 25% decline. He's young, he's under 30 years old. And neither of these guys are really ready to exit. Of course, they're not ready to exit but I want them to set a financial goal. I don't care if it's 3 to 5 years from now. Set that goal. I need to exit for X in order to exit. And then figure out where they are, get the education, and work towards that. In 5 years if they're not ready to sell then move the goal post, move it 6 years down the road or 7 years down the road. That is as you said at the beginning the surest way to real financial wealth. But we're not talking about them yet because they're pausing, they're hesitating, they're not going to do it. Those are the stories that I talk about a little bit in the book. There's somebody that was my first million-dollar listing back in the day at Quiet Light. I remember it well. I'm not going to name names. We'll call him Big Mike. That's not his name but we'll call him Big Mike. He had no financials; none whatsoever. And I remember sitting over Christmas break taking all of his bank statements and I actually created the profit and loss statement myself. That is a no-no. We do not do that anymore. No. But I did it. I got it all detailed and accurate and listed the business for 1.1 million. I got an offer for 800 from the gentleman that you sold his business once upon a time. It was actually a good offer because the revenue trends were in decline. And Big Mike said to me well why would I accept it all I have to do is XYZ over the next 12 months and I'll make a quarter of a million dollars and then we can sell the business for 1.2, 1.3 million. And I had a great deal of experience in paid advertising at the time as you know because I just sold my business. This was probably 2012 or early '13. And so we walked through all the possibilities, what to do and how to do it and off he went. The problem was that Big Mike's heart was not in it anymore. He had run up all of his personal debt and personal expenses; his overhead was very high. He lived the life of a very, very successful entrepreneur and his business was no longer trending that way so money was getting tight. He didn't have the ability to pull money from the business and put it into the ad spend that he needed to to reverse it. And so every year for the following 3 years I got any mail from Big Mike that said something along the lines of hey my revenue and profit is at XYZ, can we sell the business for this? And each year it went from that offer from Tony of 800 to the value really was in about 600 the next year. And then the next year he sent me an e-mail it was really based upon what he had given me, about 500. The last time he sent me an e-mail it was about 400. Every single time I replied with based upon what you've given me which is just an email with numbers and I'd say your business value was probably X. Please run a profit and loss statement out of Quickbooks or Xero and export it to Excel with a monthly view. Silence, nothing for 12 more months because he didn't take the necessary steps to do what you have to do in protecting your most valuable asset, in his case his business. And so he's probably got a job, unfortunately. And that's the path unfortunately too many people go down or they learn from the mistakes and they hang up their hat on this particular business. They can't sell it and they move on to another one and hopefully learn from that mistake but it's a painful one. I just want to see people learn from that and therefore the painful process of writing a book. Mark: You know it's great to focus on the success stories. We like success stories. I like talking about success stories that make me happy. But for all these success stories that you have shared so far through the podcast that you'll be sharing through this book we also have the stories like that. And I could probably rattle off a number as well. Maybe I'll start a new podcast or write a book called Unincredible Exits or Nasty Exits or something like that. It will be real depressing and no one will ever want to read it. But you're absolutely right in; that example is really good. That example shows what we see so often from entrepreneurs where they're running; they're used to the hustle, they're used to the grind, they're used to being able to pull themselves up by their bootstraps to be able to correct something but sometimes when a business gets mature especially after you've run it for a while doing that can be really, really difficult. I also think it's; I want to re-emphasize something you said which is the picking number, reverse engineering, and getting to that number doesn't mean that you have to sell at that point. We've been pretty public and I will continue to be public by saying that the best scenario for you is to create a business that you can own for your life, right? Because it's difficult to start a business; the cash flow that they build is great, the value that is in them as assets is also fantastic. So I'm a big believer in building and holding or buying and holding and growing but that doesn't mean that exiting shouldn't be an option. And so when you hit that number, if you're not ready to sell you can always move the goalposts as you suggested or create a new goal. But something that I know you've told me in an email where we were discussing this book is you said one of the goals is to not allow the business to outgrow its founder. And boy this is an issue that comes up time and time again that we see and that is business owners were really good at starting, really good at founding something and even growing it to a certain extent getting to a point where making that next shift is difficult. I always describe that the growth path of a business is a series of climbs and plateaus. You climb to a point and it starts to plateau and then you have to change the business a little bit. Maybe you have to add new people; maybe you have to add a different structure to the business. And once you do then hopefully you start climbing again and then you hit another plateau and then it's another shift or another restructuring of the company or maybe a new initiative. What point and is there any examples that you've seen where somebody has hit that point where business is just about to outgrow them and they were smart enough to be able to not let it do that? Joe: Yeah the climbing the plateaus, by the way, let's not forget the valleys, right? Yes, my name is Joe Valley but… Mark: Don't forget the valley. Joe: There are two valleys here, right? It's a climb, it's a plateau, and then boom there's a really nasty valley right there and you're in it. You got to climb out of it. That's why I think it's important to actually do something that you like; something that you enjoy a little bit. It could be something that you're passionate about because when those tough times come and as an entrepreneur they will unless I'm unique and nobody else has tough times. I don't think I'm unique. You're going to have to fight and climb back out of that valley and on the other side there's a mountain, a peak; not a plateau hopefully. And those are great success stories to tell and very sellable businesses. But the idea of a business outgrowing the founder is not original, right? I mean this is something I've seen throughout my own entrepreneurial life where I used to do radio advertising. I owned a radio direct response media buying agency back when there were 800 numbers associated with 60-second spot ads. I could have held that business and grown it but it would have required more and more overhead in terms of people. I don't like managing a lot of people. I tell you what your job is and how to do it and I expect that you're going to work hard and do the best you can. If you don't I'm kind of blunt unfortunately and fortunately in some ways. So if you're in a situation and I see this a lot where buyers sometimes naively say well if it's so great why are they selling it? And it is because the business more often than not has outgrown them. They wanted to live the 4-hour workweek. It turned into 30 and that's okay. And they've got 5 VA's and that's okay. But in order to take it beyond just a SaaS business that's doing 2 million in revenue, they need to hire 3 more developers. They don't want to go through the headache and hassle of that. Or to take it off of Amazon they need to learn SEO offline or email marketing or whatever it might be and that's not their skill set. Or it's hiring people and that's not their skill set. And they learned that one of the greatest ways to earn wealth is to sell a business. Now people that buy Walker's book have learned that they can; a different breed, a different mentality of an entrepreneur comes in. They're not the startup entrepreneurs. They come in and they take over where that startup entrepreneur left off. The business has outgrown them and they hand it off to somebody like Matt Howeth who can. He comes from the corporate world. He's always had lots of travel, lots of staff, and lots of hours. He gets it. He can take it and bring that business in and have a team of employees, a team of VA's and manage it and take it up to the next level because that's his passion. That's what he does. He gets it. The startup is not his passion. It's not his skill set. So one of the things that I think is critically important and sometimes this only comes with age and mistakes and failures and successes and that is to figure out who the hell you are. What kind of entrepreneur are you? Mark: That brings in mind 2 clients I've worked with in the past 14 years now. And one of them; I've quoted this story before but he came to me with a business, I've never talked to him about sharing his story so I won't say what he was selling. But he was selling a physical product. He had initially acquired this business for 5 figures, like a mid-5 figure level and immediately grew the business significantly to the point where it was doing 7 figures in top-line revenue, mid-6 figures in discretionary earnings and so when he gave it to me to sell one of my very first questions was why are you selling? You've been growing year over year, you're only adding value to the business, this looks like a fantastic business, you've got great rankings, great positioning great pricing; all these things working in your favor and he said well right now I store all of the inventory in an external garage on my property. On Tuesdays and Thursdays, my son and I go out and we fill orders. It's really nice. It's like I don't have any more room for inventory and if I wanted to get another space I'm going to have to hire somebody and then I'm going to have to hire more people to handle the marketing. I just don't want to do that. I would rather cash out and move on. Meanwhile, another entrepreneur that I've dealt with, he was a CPA by trade and loved being on the buy-side and what he really, really enjoyed was taking a business that was somewhat complex, somewhat messy, somewhat inefficient in the way it was run and simplifying it. And I love; I've sold a couple of businesses for him, I love taking a look at where his businesses started. Their P&Ls were these super long crazy messes and by the time that he was ready to sell they were consolidated down into less than 30 lines because he simplified these businesses, really focused on this principle of 80:20 and said I'm going to just focus on what really makes sense and I'm going to get rid of all the rest of it. For him the act of cleaning it up was great but he would; unlike with Walker's book which is a lot of buy, build, and grow, his was I'm going to buy make more efficient and then I'm going to sell. And he did this several times and it was really fun to watch because he knew who he was. That first seller that I had, he knew who he was. He knew he didn't want to have a staff he had done that and didn't want to do it again. He loved running the business with his son. The second entrepreneur, he was a buyer, he knew what he liked, he also didn't want to have a large staff. There are other people out there that do want to build that team. There are people out there that say I want to have 100 million dollar exit so I'm going to buy a bunch of these businesses and build something or I'm going to acquire 15. They're all different types of entrepreneurs and everyone has different skill sets. Knowing who you are I think that right there is a great bit of advice but going back to what you were saying earlier Joe if you're so busy and in the weeds constantly and just running and hustling and hustling and hustling and never taking a moment to step back and to think about either the exit or about maybe this topic here of what type of entrepreneur are you, where do you want to see yourself in the next 5 years, what type of business operation do you want to have it's really hard to know where you're going and then your business drives you instead of driving your business and your career drives you instead of you driving your career. Joe: Yeah. Walker's book takes the mystery out of buying a business and the how-to and building it beyond that hence the title Buy Then Build or what he coined as acquisition entrepreneurship. My book The Exitpreneurs Playbook is going to take the mystery out of selling your business and setting those goals on what your exit is and reverse engineering a path to that. Now that I've said the title can we make fun of me in terms of predicting I don't know the future doom and gloom of this title because I did the opposite of what everybody told me to do? Mark: You know what? I like it. I remember doing this when I picked the Quiet Light Brokerage logo. I did 99 designs and I had everyone vote on different types and I hated what everybody chose. So I'm like well it's my business so I'm going to do my own thing. Joe: And you know it's a check, check, send something; I don't know, it must've been fall of last year and email out something about the Quiet Light logo and how it has stood the test of time so kudos to you. Yeah so I sent an e-mail out to a couple of dozen past clients that I sold their businesses and they're going to be part of the book. So part of the book is education and part inspiration; inspiration with them sharing some golden nuggets, wisdom, experience things that they wish they did differently. So I sent it out to them and then another say dozen of influencers that are in the space. People that we know well like Mike Jackness, Greg Mercer, Andrew Youderian, Ezra Firestone, things of that nature; people of that nature. And I think out of roughly 25 people Jason Yellowitz is the only one who said he liked Exitpreneur. Everyone else said Incredible Exits, Joe, it just rings, it rings. And there's been something about the term Exitpreneur that has stuck with me during the interview process and the more I said it out loud the more Brennan and I, and again she's my scribe, the more it just felt natural. Because that's what people are becoming when they sell their business, they're exitpreneurs. The difference between an entrepreneur and an exitpreneur is an entrepreneur is somebody that runs their own business but an exitpreneur is somebody that runs their own business and they have the knowledge and a plan. And I want to give them that knowledge in order to devise a plan and become one of those people that generate most of their wealth from an exit. So fingers crossed on that. Can I do a shameless plug right now for the Quiet Light Podcast where I think we're about 25 minutes in and just a little bit of a shameless plug? I have to tell you… Mark: I felt like this whole thing was a shameless plug for your upcoming book. Joe: I know but I don't even; I haven't even put up a website yet. There's no Facebook group. Really what it is, is a plug for education because part; in truth, I've said the same thing 8,000 times over and over. Maybe I'm just tired of saying it so I'm… Mark: With that Joe when I was on this trip recently I was in the airport and thinking about Mission, Vision, Values for Quiet Light Brokerage and I don't have the vision statement out yet but this component of education, if it's not part of our main vision it's definitely one of our core values and really something that I've built up. I was speaking to somebody just this morning before we recorded this about one of the goals or one of the mission; I'm sorry one of the core values of Quiet Light is to give entrepreneurs the right education and the right set of tools to be able to make good informed decisions. Because when I sold my business I didn't feel like I had that. I felt like I was misled. I felt like I was put in a position where somebody wanted to get me in an exclusive contract, promised me big bucks, and then when I went to go sell I was completely unprepared. I didn't know what was happening and so when I started Quiet Light the goal has been from day one not to tell anyone to sell but to give them the tools so that they know what their business is worth today, what it could be worth in the future, what's driving its value so that you can just make a good decision. That's your decision. So the education piece and I joke about this being a shameless plug; the reason that I'm excited about this, and I genuinely am excited that you're writing this book is because that education piece needs to be out there. And I love the idea; more than the idea, love the opportunity that we have to educate entrepreneurs of what's available to them if they transition from an entrepreneur to exitpreneur, understanding that, the bulk of the wealth that you build in your lifetime for most entrepreneurs will be at that exit. That might be 2 years from now, that might be 20 years from now, either case it's fine but having that plan to maximize that value and keeping the process smooth is important. Sorry, I totally cut you off of that but I want to emphasize that the education piece is really what I'm super excited about. Joe: Now we were going to do 2 parts of this podcast, a little bit on the book and a little bit about the philosophy behind Quiet Light's foundation and how you built the company and the entrepreneurial approach. So let's do a; I think we should do an entire podcast on this business and how it's built with entrepreneurs helping entrepreneurs just to educate people more about who we are, what we do, and why we do it because I think it's necessary and you've done an incredible job with the model. But in terms of the education, I got a voicemail yesterday and this is the type of thing I want everybody out there that thinks they don't have time to do it and they're just keeping the wheels on the bus so to speak, take the time to make time for planning your exit using the educational tools that we provide whether it's this podcast or articles or Walker's book on my eventual book or having a conversation because that's an education tool. Have a conversation with an adviser at Quiet Light. Really do it. But I got a voicemail from somebody who I sold businesses for, very, very well off financially, runs a family office now, bought a business from Walker for around 8 million dollars in 2019. And he heard the podcast on product innovation, product development with Zack at Gembah. And he just left a voicemail yesterday saying hey man I just want to let you know on the way back home from Austin I got a chance to meet with Zack and we're going to go ahead and do some product innovation, product expansion, adding a number of new SKUs and accessories to the brand. I really appreciate it. I don't know if enough people tell you that we actually use the tools that you share so thank you. It's great to hear that. So thank you sir; I'm not going to say your first name, for reaching out and letting us know. For the rest of us this is the shameless plug part and I've said this, I said this at Blue Ribbon Mastermind and I said it in eCommerceFuel, Mark you and I have done now I think it was 114; I checked this morning, podcasts. So that's how many are up on iTunes. We've got a total of 31 reviews. They're all huge close to 5-star reviews. Thank you, everyone, who has given us reviews. I wasn't aware that we had any at all because we hardly ever plug it. And so I was at Blue Ribbon Mastermind talking to David Wood who will be a guest on the podcast in a few weeks. He's a personal coach and a good friend of Ezra's and he said something about he was on 70 podcasts last year and he chose which ones to go on based upon the number of reviews. So I checked ours. We have 31; pleasantly surprised. I checked the EcomCrew, Mike Jackness and he's got 81. So I stood on stage at Blue Ribbon Mastermind and I said everybody come on now Mike's not here, I want one more reviews than Mike has. He's been doing; I think he's done 3 times as many podcasts as us so we're doing okay. But please if you enjoy the podcast, if you like the podcast take a minute and go to iTunes or Stitcher or wherever you're listening and pop in a review. We greatly appreciate it and share the information and wealth with all the others that need it. Mark: Yeah. There's a video out there and I don't know if we're going to be posting it on our YouTube channel but there's a video out there of you making this plug at Blue Ribbon Mastermind and Ezra is standing there with you and he's thinking this is what you're using the stage time for? Like you have the opportunity to talk about what Quiet Light does and all you're doing is trying to beat Mike Jackness and like absolutely I'm trying to beat Mike Jackness that's it. Joe: We won't be sharing that video. That's not ours to share but I shared it with the team and had a good laugh at myself because of it so no doubt about it. Mike's a great guy. Ezra is a great guy. We don't mention people that we don't like obviously so if we've never mentioned you oh boy that's a long list; oh no, I can't say that. Let's just say thanks; final thanks, Mike Nuñez. Thank you, Mike. Mark: Yeah, Mike Nuñez, absolutely. I think that's a great way to end up this episode here. Let's do one in the future about the building of Quiet Light Brokerage and I'd also love to get feedback from people that have listened this far through this episode and are listening right now. Are there topics that you'd like to hear us talk about outside of bringing guests in? And we can bring on people within Quiet Light Brokerage, bring in Walker on the podcast again or Chuck or Brad or any of the many entrepreneurs that are working with Quiet Light Brokerage. Anything you want us to talk about specifically when it comes to buying or selling? We'd love to know, we want to produce content that you guys wanted to hear so feel free to hit me up Mark@QuietLightBrokerage or Inquiries@QuietLightBrokerage as well. Joe: Awesome. Thanks, everyone. Links and Resources: Quiet Light Brokerage
We have sold over 120 businesses here at Quiet Light but this is the first time we've employed the term text list. Does texting make your business blow up? The young entrepreneur we are talking with today is at the forefront of mobile marketing with his company, Conversmart. When done right, mobile marketing gives customers using smartphones personalized information so that they can get what they need exactly when they need it. SMS subscriptions have begun to bypass email subscriptions with their elevated engagement and conversion rates. Arri Bagah was a computer science major who learned coding to make money as a side hustle in college. After college, he got into messenger marketing with Facebook messenger at an ad agency. He started Conversmart and began to explore looking outside traditional marketing channels for his clients. Arris has quickly become an expert in the mobile messaging space, helping his customers generate millions in additional revenue. Episode Highlights: The difference between message marketing and email marketing by numbers. The advantages of message marketing. How the tool allows for easy customer opt-in. Specific examples of the client conversion rates. Growth opportunities for potential buyers. Categories or spaces where message marketing works best. Ways to collect subscribers. Average return on ad spend. Messaging frequency of a successful text messaging campaign. Costs to get started in message marketing. The ins and outs of opt-in compliance. Advice for all types of eCommerce businesses looking to use message marketing. Transcription: Mark: Joe recently you asked me to make a change to our site; a pretty simple change. And that was to give some of our buyers, the people that want to know when we release a new listing and put it back up a little bit, anyone that's out there wanting to buy they want to know when we release a new listing and they want to know first, right? Everyone wants to be first in line for that. So you made a suggestion which we're going to implement here in the coming months which is to add text messaging; SMS alerts when we release a new listing. And I know this didn't just come from you sitting around and saying hey… Joe: Yes it did. I come up with all these great ideas in my head. I don't get any help from anybody else; just a clarification. Mark: You know I'm not sure I want to; okay fine, this was 100% your idea based on somebody that you talked to on the podcast. Joe: Alright, that's true. Mark: Alright who did you talk to and why are we talking about SMS texting? It sounds invasive to me. It sounds like something I wouldn't necessarily want but the data doesn't really agree with me at all as it often doesn't. Joe: Yeah, it doesn't agree with you at all or me. Talk to teenagers this is what they do. And actually, they don't even text now it's just a snap. But in Seattle… Mark: You have to get on the TikTok train, that's where it is now; Tiktok. Joe: Actually that's true. Mark: Yeah so there you go. Joe: I'm hearing about that as well. You have a teenage girl so you know. Should we be talking about our kids? No, they don't want to hear about our kids. Mark: So we talk about my kids will be on here forever. And like it's two minutes each that's like 15 minutes. Alright, SMS text messaging let's get back on that. Joe: I was at a Blue Ribbon Mastermind in Seattle with Brad and Chris and this young kid gets up on stage and he presents on SMS text messaging and how it impacts engagement with customers and he starts talking about 98% open rates and much, much higher conversion rates. And the average order value in all of this stuff and somebody we know, somebody we've sold a business to engaged with him afterwards and hired him afterwards and his business has blown up. I don't want to give his name because people want to talk to him and we keep referring people to him and he's just trying to make a living and people want to talk to him about how he's doing it. So I'm not going to give his name but his business has absolutely blown up. So I ended up connecting with Arri; Arri Bagah, he's a kid guys. Yeah, he's a kid to me. I got gray on my chin. He's like 24 or 25 years old but he's at the forefront of the next evolution of e-mail marketing which is SMS marketing. It's capturing mobile phone numbers, doing specific marketing directly to that mobile number, and it's amazing. When you're online shopping now; this is how he describes it now, if you're online shopping on your mobile phone and someone says subscribe and you click on it and it's the old school way to subscribe it's your email address and then you've got to go confirm in your inbox and then all these multiple steps. Now with SMS and if it's done right and you subscribe you can confirm it right there on your phone and then you get that coupon code right there on your phone and then you could place the order right there on your phone. It's like so quick; 15 seconds versus multiple steps in multiple places. So there is a little bit of that and a whole lot of you want to help your customers, you want to get good information in front of them. They want information to get to them in a way in which they live now which is on their mobile devices SMS is the way to go. You don't have to check your e-mail. It just pops up. There's a blue dot. I'm looking at my phone right now. There's a blue dot on my phone right now. I think it's probably from you Mark. Somebody texted me and if I want to make it go away I have to click it. I have to do that. Same with Messenger and Facebook; it shows up on my phone. I could get rid of it. So the engagement is much higher, conversion rate is much higher; gosh if I could just give a statistic here. He gave me something like a 25 time ROAS, return on ad spend. So if you spend a dollar you're getting $25 back. That's amazing. I think they guarantee a 15-time ROAS. It's incredible. That's all I have to say about it. Mark: That's amazing. I think the emphasis here because we; let's bring this back to what we talk about on this podcast all the time, we're talking about buying and selling internet-based businesses and for somebody buying we're looking at how can we grow what we're acquiring here. And look we know Facebook we know Google but let's face it Mark Zuckerberg has gotten greedy. It's really, really difficult to make Facebook pay well. And if you had a 25 ROAS on Facebook you'd be selling a course next because that's what people do. You're usually happy if you have that 3 ROAS on Facebook. Google is the same sort of thing. And I think it's important for us to look outside of what we think are the most profitable marketing channels. Look all the data does actually point the same direction. The most profitable marketing channels are the ones that you own; email and email we know is cluttered so SMS text makes a lot of sense if you have permission to be able to send SMS texting because no one else is doing it. So it's going to be a really great channel. I'm excited to listen to this because you asked me to add this as an option. I'd like to hear from buyers as well would you want to have text alerts when we release a new list and I think it's a great idea to do. Obviously, it would be opt-in only but it would be a great way to be right at the forefront of that. I'm excited to listen to this and also learn how to implement this as a system within Quiet Light Brokerage. It's fantastic. Joe: Yeah. You just said opt-in only; you can opt-in, you can opt-out. All of that is right there. So you just invited all of the buyers in the audience to reach out to you and let you know so why don't you give out your cell number so you can have them all text you and say yeah man implement this. Mark: Yeah. Joe: No, don't do that. Mark: Or just e-mail me, Mark@QuietLightBrokerage.com and then when I reply they'll have my cell phone number because it's right there at the signature. Joe: I want you all to harass Mark and stay on top of him on this one because I think it's going to be a game-changer for you the buyers to be notified on your phone that there's a new listing that's launching. Right now we're launching one in four hours. Wouldn't you love to be notified two hours in advance of the e-mail launch? It would be great. I think it's a great service that we can do for you and I think it's a great service that all the e-commerce SAS content owners can do out there for their audience as well. So let's stop talking and go to it. Here we go. Joe: Hey folks Joe Valley here from Quiet Light Brokerage and today we're going to talk about something I'm pretty clueless on which is text marketing, SMS marketing, we've got an expert in the area. I met him at Blue Ribbon Mastermind one Ezra Firestone's Mastermind groups. His name is Arri Bagah. Ari welcome to the Quiet Light Podcast. Arri: Thanks so much for having me, Joe. Joe: I'm so glad you're here and I'm going to call out where you are actually because Ramone Van Miller has been on the podcast as well. He's a good friend of Quiet Light. We're actually out filming in California now telling his story and you're sitting in his kitchen because you're working with him on one of his businesses, correct? Arri: Yeah. That's exactly why I'm here. Joe: So folks those that actually go to the YouTube page and get to see this, you'll get to see a Ramone's kitchen in the background; at least his guest house at the very least. Alright, Arri tell us about what the heck is text message marketing and tell us a little bit about yourself and how you got into it. Arri: So I went to Roosevelt University in downtown Chicago for computer science and before I started I met a friend who had like a really nice apartment in downtown Chicago and I just asked hey how did you get that apartment? And then he was like hey I code and build websites. I was like cool I want that apartment. That's how he got this and that's probably what I should do too; to code web sites for people and make money. So fast forward I learned how to code throughout like the first semester. And then it will be like do a lot of the homework just like to learn how to do it myself. And then I decided if I can learn how to code myself then I can just like keep doing it. And that's where like my entrepreneurship journey started. I built a couple of web sites and then got into Facebook marketing. So I decided to move to LA. I got a job at an agency and before that's when I got into Messenger marketing which is a way for brands to leverage Facebook Messenger to market. So at Facebook Messenger marketing, we're seeing really good results. And at this agency, I was running Messenger marketing for like 15 different e-commerce brands at once and it was pretty, pretty crazy. I learned a lot. I got a lot of experience doing it. And I decided to do it for myself. And that's when I left that agency and started Conversmart. And we've grown pretty much since and then got into text messaging this year. And I'm super excited about text messaging because it's a whole different way for brands to be able to reach their customers. It's more direct. And a lot of the brands that we work with have seen really great results. So that's kind of like how everything started. Joe: So we've had you know guys like Mike Jackness who we're friends with, I sold one of Mike's businesses for him. He's an expert in e-commerce space. He runs EcomCrew. He talks all around the world on e-mail marketing with Klaviyo. Talk to; for those that are new to the space and text message marketing, talk to us about the difference in terms of the open rates and conversion rates and how you're able to reach people and things of that nature. Arri: Yeah that's a great question. I think email marketing is great. It still works. Billions of dollars generated each year through email. But the problem with email is that everybody is doing it. Especially with this season; the Black Friday holiday season, people are sending like 3 to 5 emails per day so as you can see the open rates and performance just completely drops when everybody is sending that much volume in emails. So the difference is that with text there are not a lot of people doing it. And if people are; people are super-specific to like which text or which brands they subscribe to so there's not a lot of competition when you're able to reach that customer directly. And one of the things that we've seen is that if you look at the traffic split for your e-commerce store the majority of the traffic is probably mobile already. So if somebody is like on their cell phone browsing your web site and you want to get them on your list right now brands have pop-ups and really if you give somebody a coupon and they have to leave your web site and go to their email check that email, get that coupon and hopefully come back to site and you can see how many distractions there are in the e-mail inbox. Joe: True. Arri: So there is friction right there already. Whereas with text you get that customer, they're already browsing on your mobile, you get them to opt-in through text, you send them a text, they get the coupon, they click and they're right back to your site. So it's a more direct way to reach customers exactly where they are. And really what we found is that we're not asking people to stop doing email marketing, we just want people to supplement the email marketing with text. Because with text you get 99% open rates, 10 to 20% click-through rates and usually double or triple the conversion rate over convert to like email. I'm working with Ramone like you mentioned on his brands. Really like he was telling me hey like our texts always like performs four times better than our emails let's do more text. So he's sending more text messages now which is something that we help with. We can talk more about what type of content people like. So we come up with really good content that people like and we're able to send it directly to them. They come back to site. They make [inaudible 00:13:29.5] just so that's like I think the big difference between email whereas email has gotten really overused and then text is just like this new channel that allows people to reach their customers directly. Joe: Let's talk about some of the steps that someone would take if they were going to move into text message marketing. With emails there's opt-in and unsubscribe and things of that nature, what's the equivalent of that with text message marketing? Arri: Yeah, so you can't talk text marketing without compliance. So with text messaging, we have to get people to double opt-in. I think the reason why people have these misconceptions about text messaging is because they've probably subscribed to a list before and people are just like spamming them. Or they didn't even subscribe and then they got messages. So one of the things that we do today is that we make sure that people are double opting in and that's one of the reasons why we see these high open rates and click-through rates because people are actually expecting you to text them rather than somebody is going through like a form and then you get their phone number and by surprise they receive a text and they're like why is this brand or business texting me. So we make sure that people are consenting to receiving those texts and that's the reason why we see really good results with it because people are now expecting you to go. Joe: So it starts with the double opt-in just like e-mail and you're capturing then those customers where currently either on someone's website on a laptop, PC, Mac, or whatever it might be or on the mobile device where you've got that pop up asking them to enter their phone number I assume obviously to get a discount or a coupon or to get information in the future. I see pop-ups all day long when I'm on websites. That's what it would be on the mobile phone or mobile device when you're asking for a phone number is that right? Arri: Yes. So basically we mostly only do it on mobile and the experience is really great because we don't even have people typing in their phone number. All they do is they tap the pop up twice and it opens up they tap to pop up the first time it opens up their messaging app they send the message and they get opt-in and we get the phone number through that. That is all powered by our platform partner called Pop Script. So yeah you know… Joe: It sounds like a breeze. Arri: Yeah like when you ask someone to put in their e-mail for a discount a lot of people put in their fake emails and especially with phone number you can expect people to put in like 222 and then whatever to get that discount, right? Now we've bypassed that by getting them to like actually send a text. So that's another compliance step that makes sure that your brand is fully compliant. So they send a text, they get opted in, and that's when they get that welcome message and get opted into the automated flow, abandon cart, and all those different things. So that's kind of like how it's set up. Joe: Okay. So can you talk to us about specific examples where you've had a client that's just been doing e-mail marketing and they brought you on board and what the change was in terms of their open rate, their conversion rate, their total revenues, and things of that nature so people listening either as current owners of online businesses or potentially buyers of online businesses and looking at growth opportunities as a buyer as well. Can you help out with an example or two? Arri: Sure. Yeah, we have a lot of examples. So one of the things that I wanted to mention is that your e-mail list is an asset and your text list is also an asset. And those are people that you can reach out to get them to make a purchase even after the rising cost of Facebook ads and all these different things. These are people that you can reach out to because you own that customer list. So if you're buying a business and they have a text list it's a really great asset to own. Joe: I got to tell you I've sold 120 businesses in the last 7 years and I don't think I've ever asked the question do you have a text list nor has anyone ever said well Joe you're asking about the e-mail list what about my text list? So it's rare. I assume it's coming in the future and that's why I've got you on today. But is the text list usually the equivalent of any e-mail list; smaller, larger, how big are they? Arri: You can have like large text lists and they usually work way more than your email list just because of the difference in the performance like being able to reach someone directly. So a few examples I think I've been like working with Ramone like you mentioned like when we started working together they were doing a lot of emails. So everybody that we work with it's always hesitant. It's like you know what I've never signed up to receive texts from a business. I don't see why anybody else in the world would want to receive texts from a business. So this is one of the things that we get all the time. And one of the things that we say is that you're not your customer. Like your customer doesn't live the same way. There are people out there who are looking to get like deals sent directly to them so they can save money. And there are all kinds of people out there who are willing to receive texts and most customers are and we have data to prove it. So that's the first thing. And then when we started doing the text messaging, when we launched our promotions and stuff like that we saw that text was performing four times better than e-mail. So we started to like send more text messages. Joe: In revenue what we got four times more revenue than email? Arri: Yeah. Joe: Do the math on that. People if you're listening and you have an e-mail campaign gosh Mike Jackness that's; ColorIt was huge on the e-mail campaigns, text messaging four times the revenue. That's crazy. Crazy good and it's time that we sort of adopted text messaging. I know that it's hard to ignore when it comes through because if you want that blue or green or whatever color of dot you have on your phone when a text comes through if you want it to go away you have to open the text. Arri: Yeah. And the crazy part is that looking at the millennial group like over I think it was 80% or so opened that text within 90 seconds. I think it was something like that. And yeah people don't always open every text they receive. So that's one of the great things about this. So we send our texts even for this Halloween campaign and things that we just launched every single text that we sent we saw well above 10 or 15% or so click through rates and the conversion rate was at least like 6% or so. And with text like you mentioned people open it and then they want to take to action, right? It's very short. And one of the things that we do is that we add images and GIFs. We design all these custom-built before; our design team does all that stuff. And I think that's one of the biggest value propositions is that we do the creative for the text so that it's not like somebody is just receiving a text from you they're also receiving like engaging content. So we design these GIFs and we improve the conversion rate. So every time we send like a GIF and text compared to just sending text we see twice the conversion rate when we add the engaging GIF. So those are some of the designs that we do. Joe: So for all non-millennials out there the proper pronunciation is GIF, it's not JIF clearly. That's an ongoing joke in my house. Sorry, I'm sharing a joke, people. So it's a visual aspect to it, it's just not content, they can see the images which is proven to bring more emotions to the surface and obviously convert higher. Are there any sort of categories or spaces in terms of products; e-commerce where it works better than others or certain things that you've tried and it just wouldn't work. You know Quiet Light Brokerage we've got a list of; you and I talked about this, we've got people that want to be notified and get notified when we launch new listings. I would think that text message marketing would work brilliantly for them because they'd get instantly notified instead of having to check their email. In Ramone's space, in his category, it works obviously brilliantly. Are there any spaces where you find that; I'm sure there are people that are listening and going oh yeah but I run a such and such type of business, it wouldn't work for mine? Is there anything that; is there truth to that, any that you can think of, or some categories that work better than others? Arri: That's a great question. I think the reason why people ask that is that they probably think that their customer is different than like everybody else. And the answer to that is as a business all you're doing is providing a solution to a problem to a specific group of people. And if your product works and if you have happy customers those people would want to hear from you and that's the reason why I say text works for like any space. I don't think there's any sort of brand that we work with that we saw okay their customer is not responding to text. And the reason is like I said you're solving a problem for these people and these people want to hear from you. So every single time it doesn't matter what space you're in or what product you promoted. It has always worked for their target audience. Joe: Okay, so we've talked about how to capture more phone numbers on the mobile devices, how to reach them, what the conversion rate is, usually four times the amount of revenue in e-mail marketing, and the fact that it works for every category in your opinion. What about A-cost or return on ad spend or average cost per order, how does that compare to e-mail marketing or if you're familiar with the FDA space things of that nature, do you have a sense in terms of whether it cost less or more in terms of cost per order service text marketing? Arri: Yeah, that's a good question but I wanted to add on to the ways that we collect subscribers real quick. One of the things that we've been doing recently is actually like leveraging Facebook and Instagram ads; lead ads to get more phone numbers. So when we run these text campaigns we realize text is performing way better so why don't we supercharge our text list. So we started running Facebook ads to get people to opt into just text directly through Facebook and then they're able to get on your text list so you can put them through nurturing flows. This was one of the performance methods that we've been using. Going back to your question which I completely forgot. Joe: No, I love where you just went. I wrote my question down so I can look down and ask it again. But you're talking about what would be in e-mail flow that Mike Jackness has always talked about with Klaviyo. You're doing the same thing with text message marketing. Arri: Yeah. Joe: What did you call it; what was that flow you called it just now? In terms of like okay everybody, listening can remember but you and I can't; skip it. It's the flow of nurturing, right? Arri: Yeah. Joe: How you're going to nurture that customer along and help them, help them, help them, and then give them something that they could take action on. I was asking about average cost per order or return on ad spend; what are you seeing there? Arri: Yeah the average return that we see for the plan that we work with is a 25, or the minimum return is 25X and usually for brands that we work with… Joe: Cut it down, 25X? Arri: Yeah. Joe: So I spend $10 and I produce $250; is that right? Arri: Yeah. Joe: So I did that really good math. I spend a dollar and I get 25 back. That's easier math for you and me. Really 25 times? Arri: Yeah. Joe: I'm seeing on e-commerce businesses between when they're doing e-mail all sorts of PPC, Facebook, Google AdWords, whatever it might be but all of it combined with Google as well where the average cost as a percentage of total revenue is somewhere between 9 and 15%. You're talking an incredibly low number here. Arri: Yeah. Joe: It sounds too good to be true. I don't mean to talk over you but people I just want to like hammer home on it really 25 times? Arri: Actually I'm being super conservative here. Joe: Really? Arri: Yeah. So the reason why is that the way we do text messaging we're already like we're capturing for the most part people who are already interested in your brand. So people who are on your web site. So you have good website traffic. That's the reason why text works a lot because we're getting people who are interested and then we're able to reach them directly on their smartphones and then you create really custom automated flows and really great broadcast. So that's how we're able to get really high returns. Like I don't think we have like any brand that's getting lower than like a 50X, to be honest. But we like to say we guarantee a minimum of 15X return. But yeah we get really high returns. And I don't even want to go with the ones that are getting like 200X or whatever because that will scare people. Joe: There's going to be a limit to what they can spend if they're getting even a 50X or 15X I guess the limit would be the total number of phone numbers that you have and how often you send these messages, right? I mean with e-mail I know that with Klaviyo; Mike's campaign on ColorIt, he would send e-mails all the time. They were helpful educational e-mails and really in that regard and then there would be a promotion where they could get a discount or a sample pack or something like that. How often are you sending text messages on one of these nurturing campaigns or flows as you call them? Arri: Yeah so we break down the messaging by automated flows and one time messages which is basically broadcasting. So with the automated flows, we like to send; when somebody subscribes we can send them a message immediately with like whatever the offer was and then we can send reminders. We send like two reminders within 24 hours for them to take action. And then on top of that, we have the [inaudible[00:28:04.1] and if they do not take any action or purchase then we'd get them into the Welcome Series which we can send that every three or four days and we'd like to stop after like five messages. We always give people like the reply stop to unsubscribe because if somebody signs and just said then we rather have them unsubscribe and save us some text money. And there was always that option. And then if they get into abandoned carts we have two series abandoned cart recovery messages that we send out until they make the purchase and then we go in to post-purchase. So with post-purchase, you can do a lot of things with like product-specific flows. If somebody bought this product you can say hey; you can upsell them other sort of products are related. So we can get really nitty-gritty with that. And then we have the one-time messages. With broadcasting, we recommend sending at least twice a week. I've seen people who have like text lists and then never want to message them because I think they're scared that hey they're going to receive too many messages. I really talked to a brand yesterday and they're like yeah we sent only one text a month and I'm like yeah you guys need to be sending at least like 6 to 10 maybe 2 every week because you're just going to like double how much revenue you'll generate. Joe: Right. And if the customer doesn't want to hear from you they're going to opt out; as simple as that. Arri: Yeah. Joe: That was the approach Mike took with Klaviyo and ColorIt as well; send as many as you can, be as helpful as you can, and let them know if they don't want to get any messages they can opt-out. It sounds like your approach is the same with your clients. Arri: Yeah. And I think that content really matters too. It's not about just like blasting sales. I think people think that because we are having all these crazy resources that we're always doing sales but we rarely do sales. It's always like short and sweet content with like a GIF that kind of illustrate what we're trying to say that engages the customer more into taking action and in between, we add like sort of small discounts. So it's not always about sending like hey we're doing like a storewide 20% off or whatever. You can actually send like a content. Joe: Okay. Talk to me about the cost to get started with something like this. I mean with Conversmart your business; that's Conversmart, there's no T in there folks but we'll put it in the show notes as well. How does someone get started dollar-wise? What's a test look like in terms of giving it a shot and seeing if it works and how many times do they have to really test it? What do you recommend to new clients that are coming in? Arri: Yeah. So SMS at the very bottom of the funnel so I recommend having a good amount of traffic; at least 20 to 30,000 web site visitors in order for it to work if you just want to do bottom of the funnel but if you want to use the Facebook ads to start growing your list which is a really good strategy because with the Facebook ads you get people to opt in to your text list and those people who were opting in are also buying which is paying for the cost for you to acquire those leads. So you're basically getting free leads. Joe: That's something beautiful. Arri: And then we'll tell you about because that's probably we've been doing hey let's get more free leads. So that strategy works really well. So we get people to opt-in through the web site and then we also get people to send some automated messages. Those are some of the great ways to start. So first you got to get people to opt-in. You have to have the traffic. You get people to opt-in by having a pop-up or on your mobile device or you do the Facebook ads and once they opt-in then you have to send messages. I think Thank You messages is the most important part lke it goes back to e-mail, right? I've met some people and it's always the same situation; it's like hey I have this e-mail list but I'm not even e-mailing them. It's the same with texts. You have to text the people who have subscribed. And it's always great to text at least once a week so when are you doing your promotion so these people are not completely forgetting about your brand or who you are. So it's a great way to stay top of mind while generating revenue. Joe: But budget-wise though for people going should I try this, is something I can give it a go, do they have to have a thousand to 5,000 or 10,000 dollars set aside to test this with? What do you recommend? Arri: You can get started fairly easy. In fact with our partner Postscript which is the platform that we use; if you own a Shopify, it's the one that we work for Shopify but if you're on another platform we can definitely chat about that. But it's super simple to get started in fact I can give you guys like free 1,000 credit if you want to try out text messaging. You can give them the link or something like that. Joe: Yeah, great. We'll put that in the show notes. Arri: Yeah you get charged by how many messages you send if you want to do it yourself. There is no platform fee or anything like that. So once you get those credits you can start sending and see kind of like what the results look like. And like I said it's only going to cost you if you send the text messages and be able to tell if it's working or not. So it's very simple to start. Joe: Okay. So it's all about the number of texts that you send. First, you've got to capture as many phone numbers as possible and get them to opt-in. Like we've got a fairly large list after a decade of email addresses and phone numbers, we can't just use those phone numbers we've got to get them to opt-in first, correct? We're going to follow the law. Actually, they opt-in to receive information from us anyway via email would that apply for their phone numbers as well? Arri: No they have to have opted in for the text. Joe: I got it. Arri: So if it said like only for them we're going to finish up 5 today check here to opt-in for the e-mails it has to also say text otherwise they're not opting in for the texts. Joe: That's good to know. Okay, any last thoughts for people with e-commerce businesses in terms of text or actually I'm saying e-commerce but I would imagine this would work for SaaS and content businesses as well, right? Arri: Yes. In fact like even with like a B2B company. I got a text. I signed him up for like a demo and he's texting me and we actually had a conversation. So this is a great way to like follow up with people if you're like not even in the e-commerce space. You can text them… Joe: It worked for you and worked for Quiet Light too so I don't know why I'm thinking only e-com. Arri: Last words; if you're an e-commerce business I definitely recommend looking at text because it's going to be the number one way people are going to be communicating. As emails are being sent even more I think there's going to be like over 319 billion e-mails sent in the next year or whatever so text is a great channel for you to reach those customers and you don't have to go all in. You can do like small tests and kind of see what the results look like. So yeah I highly recommend checking it out and doing some small tests to kind of see what the results look like for you. Joe: Okay and it looks like they can reach out to you and get a free consultation as well. How do they find you? What's the URL that they'd reach you at or things of that nature? Arri: Yeah. So Conversmart.com, that's where you'll be able to find us, you'll kind of see like kind of an overview of what we do with text messaging. We take a really different approach to text messaging that people haven't seen before especially with the content that we send and the creative that goes along with that content. That's really what helps brands double that conversion rate when they send all these text messages. And also as an agency, we take over the entire channel for you. So basically you can sign up and basically, you just see like money come in from text messaging after a couple of weeks and then we just give you all the reporting. You don't have to do anything besides approving the content and everything. So we'll basically like take over the entire channel for you. And that's pretty much like what we do for every brand that we work with. We don't want them to like worry about getting 11% open rates and 1% click-through rate over email. We can supplement that by sending people text messages that they actually like. And people are going to convert from those text messages. Joe: Excellent. Well, I know that what you're doing is working because you're hanging out with the likes of Ramone and that is rad. So you're doing something right. There's no question about it. Anybody out there that's interested in reaching out to Arri just go to Conversmart.com. Arri I will see you at the next Blue Ribbon Mastermind event and when Ramone gets back from filming today which he's doing for Quiet Light thank you, Ramone, give him a high five. Tell him I said hello. Arri: Yeah. Joe: Thanks for your time. I appreciate it. Arri: Alright. Thanks for having me. Links and Resources: Conversmart Free 1000 Postscript credits
Mike Jackness is a hardcore entrepreneur who has built and exited many e-commerce brands. Mike began with affiliate marketing and cut his teeth in the online poker world and grew into legitimate e-commerce businesses. He started with Treadmill.com, Color It, Icewraps.com, Wild Baby, and then took his experience and shaped it into Ecom Crew. Ecom Crew is Mike’s podcast and blog that provides real-world value to business owners and e-commerce professionals. He tells me what he learned from his multiple exits and why he is always moving forward and avoiding boredom. What you will learn: Mike’s experience with entrepreneurship. How he got into affiliate marketing and the online poker business. The reasons Mike walked away from his poker business. How he exited the company and managed to set up a passive income. The lessons he learned from affiliate marketing. Entrepreneurship is an addiction. The 6-month hiatus that led to Ecom Crew. Why Mike returned to entrepreneurship. What is Ecom Crew? How Ecom Crew has changed Mike’s view on business. Entrepreneurship is not for everyone. How to be real with your audience. How to build strong brands. The downside of creating an office culture. The sale process of Color It. Mike’s plans for the future. Takeaways: Reflect on why you have your business before burnout sets in, what's the point? What do you need financially to be successful? What are your options? Links and Resources: GEXP Collaborative Ecom Crew Ecom Crew email The One Thing by Gary Keller Conscious Capitalism by John Mackey The Entrepreneur Roller Coaster: Why Now Is the Time to #JoinTheRide by Darr en Hardy About Mike: Mike has been involved in online marketing for over 10 years. During the poker craze of the early 2000s, he ran one of the largest poker affiliate companies in the world with over 60 employees (He even owned part of the Canadian Poker Tour!). After Black Friday (the day congress basically made it illegal for Americans to gamble online) he ventured into e-commerce with Treadmill.com. He sold that company in 2014 and have since then started multiple other e-commerce brands with total revenues over $7million annually. Today he’s based in San Diego but he lived throughout the world including Las Vegas, the Cayman Islands, and out of a Class A motorhome while touring North America.
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