Podcasts about rhodium weekend

Chris Yates is the Co-owner and COO of Centurica, a due diligence services firm that helps ecommerce entrepreneurs avoid scams, fraud, and unreliable information when purchasing an online business, website, or Amazon FBA account. He is also the Co-owner and CEO of Rhodium Weekend and the Co-founder and Managing Member of Vision Group Management, LLC.  Throughout his career, Chris has built hundreds of websites, generated millions of dollars in sales, and successfully created, scaled, and sold multiple businesses. He has also been an advisor on more than $50 million in online business acquisitions and exits. In this episode… Do you want to know exactly what you're getting yourself into when purchasing an online business? Are you looking for advice and tools to help you identify — and avoid — risky deals? It's difficult to evade unnecessary risks when buying a business, especially as a new entrepreneur. You want to acquire a solid, profitable business — but how can you do so without hard-won experience under your belt to instruct you every step of the way? That's why Chris Yates is here today: to share his own accumulated wisdom about online businesses and help you identify common red flags to prevent a disastrous sale.  In this re-released episode of the Quiet Light Podcast, Joe Valley sat down with Chris Yates, the Co-owner and COO of Centurica, to discuss the best-kept secrets for buying an online business. Listen in as Chris talks about his tips and tricks for diversifying risk, what to avoid when buying an Amazon FBA business, and how Centurica's MarketWatch tool is changing the game for buyers and sellers across the globe. Stay tuned!

Ep. #4 [THEME THREE] In this last episode of the series, “Demystifying Business Valuations,” we have Chris Yates, the owner of Rhodium Weekend, a community of online entrepreneurs, on the show to share the story of how he sold his business, Centurica. Chris received two offers from different buyers that were wildly different. In this episode, we hammer home the concept of intrinsic financial value vs. strategic transaction value by unpacking the differences in Chris’s offers. In the first half of this episode, Chris goes in-depth with the first offer he got from a strategic buyer–an Amazon aggregator–that wanted to do an “acquihire” (essentially wanting to purchase the company for the people and processes). Chris describes how the purpose of the deal drove the deal structure and terms and how it eventually blew the deal up. In the second half, Chris walks us through how he doubled down and focused on the intrinsic financial value of the company by getting a bank to pre-approve an SBA loan (ultimately determining the intrinsic financial value of the company based on the risk of the cash flow). Getting clear on the intrinsic financial valuation helped Chris during the second negotiation for a few reasons. First, he knew what his valuation was regardless of the specific buyer. Second, Chris was able to clearly negotiate the terms and deal structure efficiently because he knew what the company’s intrinsic value was worth. In addition, there are limitations to “creative” deal structures when an SBA is used. Being approached by a buyer can cause a rush of emotions for you as the business owner. However, in this series, we have consistently discussed how getting clarity on the intrinsic financial value is crucial so you can weigh all your options against what you know the company is worth. //WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast What You Will Learn How to structure an LOI so a buyer can’t steal your clients, processes, and systems. Why Chris decided to exit even though he was getting fed opportunity from old and existing clients. What was driving the acquihire buyer to want Centurica so badly. How Chris got into the mind of the acquihire buyer to really understand why they wanted his company. Why understanding what he wanted and why helped Chris negotiate with a buyer that initially had an unappealing offer. How Chris realized that ALL of the decision makers need to be sitting at the deal table. The uncertainties Chris had in the first deal and why he wished he had set the terms instead of reacting to each offer (and pulled away at the beginning knowing it wouldn't work). Chris’s thought process after the first deal fell apa

Ep. #4 [THEME THREE] In this last episode of the series, “Demystifying Business Valuations,” we have Chris Yates, the owner of Rhodium Weekend, a community of online entrepreneurs, on the show to share the story of how he sold his business, Centurica. Chris received two offers from different buyers that were wildly different. In this episode, we hammer home the concept of intrinsic financial value vs. strategic transaction value by unpacking the differences in Chris’s offers. In the first half of this episode, Chris goes in-depth with the first offer he got from a strategic buyer–an Amazon aggregator–that wanted to do an “acquihire” (essentially wanting to purchase the company for the people and processes). Chris describes how the purpose of the deal drove the deal structure and terms and how it eventually blew the deal up. In the second half, Chris walks us through how he doubled down and focused on the intrinsic financial value of the company by getting a bank to pre-approve an SBA loan (ultimately determining the intrinsic financial value of the company based on the risk of the cash flow). Getting clear on the intrinsic financial valuation helped Chris during the second negotiation for a few reasons. First, he knew what his valuation was regardless of the specific buyer. Second, Chris was able to clearly negotiate the terms and deal structure efficiently because he knew what the company’s intrinsic value was worth. In addition, there are limitations to “creative” deal structures when an SBA is used. Being approached by a buyer can cause a rush of emotions for you as the business owner. However, in this series, we have consistently discussed how getting clarity on the intrinsic financial value is crucial so you can weigh all your options against what you know the company is worth. //WATCH THE INTERVIEW ON YOUTUBE: Intentional Growth™ Podcast What You Will Learn How to structure an LOI so a buyer can’t steal your clients, processes, and systems. Why Chris decided to exit even though he was getting fed opportunity from old and existing clients. What was driving the acquihire buyer to want Centurica so badly. How Chris got into the mind of the acquihire buyer to really understand why they wanted his company. Why understanding what he wanted and why helped Chris negotiate with a buyer that initially had an unappealing offer. How Chris realized that ALL of the decision makers need to be sitting at the deal table. The uncertainties Chris had in the first deal and why he wished he had set the terms instead of reacting to each offer (and pulled away at the beginning knowing it wouldn't work). Chris’s thought process after the first deal fell apa

The market for eCommerce businesses has never been hotter. Now dozens of brand aggregators have war chests of $100s of millions of dollars with one mission - buy and grow eComm brands. We're now seeing valuations in the 5-6x of EBITA where just a few years ago we were only seeing 3-4x multiples.   Now is a great time to sell an eCommerce brand. And, if done right, it's still not a bad time to buy a brand.   Chris Yates is co-owner of Centurica a company that offers buy-side due diligence for digital businesses. He's also the founder of Rhodium Weekend - a vetted community of digital entrepreneurs and investors.  Here's a look at what we cover.   Mistakes when going through due diligence Most important steps/tips when going through due diligence  Mistakes when evaluating your own business As you hit different vacation tiers - types of buyers and buyers wants and needs change  How aggregators are changing the landscape of DTC M&A What is Rhodium weekend? Mastermind and speakers. Real in the trenches stuff and fun activities

Ben Aston is joined by Chris Yates, Founder of Rhodium Weekend. He's also a partner with Centurica and has advised on hundreds of millions of deals for online businesses, acquisitions, and exits. Listen to learn how to create value and sell your content sites.

Marketing is part and parcel of doing ecommerce, and it's becoming more and more difficult to make your products stand out from the competition as the marketplace becomes more saturated.    For this episode, we'll be talking about some pain points shared by many ecommerce sellers on the marketing front and provide some actionable tips to address them.    Joining me is Emma Schermer Tamir of Marketing by Emma, a company that helps clients boost conversions through engaging content and other creative marketing solutions. She is a copywriter by trade and she has over a decade of experience in marketing and customer psychology.   Whether you're just starting out or are already an established seller, this episode will show you that there's always something you can tweak to make your product pop out even more—and that even tiny, unrelated details can have a meaningful impact.    Timestamps: Pros and cons of focusing on keyword optimization - 4:58 Using language that convey what your product is all about - 8:08 Crafting kickass photos to showcase your product - 17:49 Why you should build out your dream customer avatar - 23:40 Understanding the competition and how to contrast yourself from them - 27:08 Speaking in terms of benefits, not features - 33:53   Even mentioned: Rhodium Weekend   I wanna thank Emma for coming on the show and sharing her marketing expertise with us. I'm sure you found as much value in it as I did. If you're interested to learn more about her company, head over to marketingbyemma.com.   By the way, something else you don't want to miss is our upcoming free public webinar about selling your business for top dollar, where we'll be breaking down the entire process of exiting an ecommerce business—from nailing down an exit strategy to post-deal terms. Head over to ecomcrew.com/webinar for details.    As always, leave us a review over on iTunes if you enjoyed this episode. It helps more than you know.   Happy selling!

Chris Yates is the Co-owner and COO of Centurica, a due diligence services firm that helps e-commerce entrepreneurs avoid scams, fraud, and unreliable information when purchasing an online business, website, or Amazon FBA account. He is also the Co-owner and CEO of Rhodium Weekend and the Co-founder and Managing Member of Vision Group Management, LLC.  Throughout his career, Chris has built hundreds of websites, generated millions of dollars in sales, and successfully created, scaled, and sold multiple businesses. He has also been an advisor on more than $50 million in online business acquisitions and exits.  In this episode… Do you want to know exactly what you're getting yourself into when purchasing an online business? Are you looking for advice and tools to help you identify — and avoid — risky deals? It's difficult to evade unnecessary risks when buying a business, especially as a new entrepreneur. You want to acquire a solid, profitable business — but how can you do so without hard-won experience under your belt to instruct you every step of the way? That's why Chris Yates is here today: to share his own accumulated wisdom about online businesses and help you identify common red flags to prevent a disastrous sale.  In this episode of the Quiet Light Podcast, Joe Valley sits down with Chris Yates, the Co-owner and COO of Centurica, to discuss the best-kept secrets for buying an online business. Listen in as Chris talks about his tips and tricks for diversifying risk, what to avoid when buying an Amazon FBA business, and how Centurica's MarketWatch tool is changing the game for buyers and sellers across the globe. Stay tuned!

Chris Yates is the Co-Owner of Centurica, an online acquisition and due diligence company that helps buyers, sellers, and owners of digital assets protect their interests and manage their portfolios. Chris is also a Managing Member of Vision Group Management, LLC, and the Co-Founder of Rhodium Weekend. Over the years, Chris has built hundreds of business websites, generated millions of dollars in sales, and advised on more than $50 million in acquisitions and exits. Brian Diener is the Director of Operations at Centurica. In this position, Brian helps potential business owners review acquisitions, verify seller claims, and avoid risky deals. As an e-commerce expert, Brian has bought, sold, and invested in $3 million worth of online businesses. He has also advised hundreds of clients during the acquisition process of more than $100 million in internet businesses. In this episode… Are you a buyer or seller of online businesses? Do you want to know how to make the transfer process as smooth, transparent, and effective as possible? If so, meet your new best friend: due diligence. The due diligence process is vital to a successful—and relatively seamless—exit. However, due diligence can be tedious, stressful, and confusing. That's why Chris Yates and Brian Diener help clients navigate the due diligence process through their company, Centurica: to make the exit planning process as painless and productive as possible. By analyzing every nook and cranny of your business to assess risk, improve documentation, and verify claims, these due diligence experts not only ensure a smooth transition, but also help you create a more valuable business. So, how can you start working with Centurica today? In this episode of Amazing Exits, Kellianne Fedio and Paul Miller sit down with Chris Yates, Co-Owner of Centurica, and Brian Diener, Director of Operations at Centurica. Together, they discuss everything you need to know about due diligence. Listen in as Chris and Brian reveal why SBA funding impacts your business' profitability, how to avoid crucial—but common—mistakes as an Amazon seller, and the secrets to dramatically increasing your business' value before selling. Stay tuned!

On today's episode, we speak with Justin Christianson, the Co-Founder and President of Conversion Fanatics. Conversion Fanatics helps businesses find additional revenue through conversion optimization strategies. Tune in to hear us discuss exactly what conversion optimization is and Justin's specific approach to helping companies increase their revenue.   Topics: Justin's work history. Explaining “conversion optimization”. Justin's favorite tools. Why directing traffic back to your homepage can make a huge difference. At what point the strategy goes beyond the customer's website. The importance of incremental adjustments. Keeping it simple. What is helping him through 2020.   Resources: Conversion Fanatics Justin's Social Media Quiet Light Podcast@quietlightbrokerage.com Transcription: Joe: Hey folks, Joe Valley here from Quiet Light Brokerage and the Quiet Light Podcast. As you know, we are online business brokers, a crew that has been there, done that. We help people sell their SaaS, content, FBA, e-commerce businesses and everybody's got a crazy amount of experience. Everybody's built, bought, and sold their own online business. Brad bootstrapped a company from 10 employees to 129 with three men ownership. He also acquired 26 companies or content sites in a six-year period and sold them to a private equity firm. Jason raised 10 million dollars in venture capital money and built a company. Amanda launched an affiliate business as a hobby, and it became the top four in affiliate in four months. Brian founded the world's first internet-based due diligence firm. There's a whole other crew; the rest of the team they've all got a ton of experience like that and now they're all advisors, brokers here in the Quiet Light team. I'm probably the least impressive of the crew. However, in the last eight years, I've sold close to 100 million in e-commerce transactions, probably at an average of about 1.1, 1.2 million dollars at a time. And we help first, that's the most important thing. We take that experience that we have and we help people around us, whether you are buyers that are listening or sellers. And we bring people on to the podcast like Justin Christianson so that he can help as well. Justin, from Conversion Fanatics and I'm stumbling on that a little bit. Justin, welcome to the Quiet Light Podcast. Justin: Hey, thanks for having me. Joe: One of the things that we don't do is read scripts as you can tell by stuttering through that but we also don't give fancy backgrounds on people. We love to hear it from them; what their story is and what their background is so could you introduce yourself to the audience here? Justin: Yeah, absolutely. So I have been in the digital marketing online world; I think this is year 19 for me. I started in my early 20s. I kind of moved up the ranks through affiliate marketing and lead generation and then became partners on a company and we exploded that company. I was actually the number one affiliate for it. We exploded it and grew it like… Joe: Just for the record, three ahead of Amanda. There's no question. She was four you were number one. Okay, I'm busting on Amanda right now, even though she doesn't listen to our own podcast. Continue. Justin: Yeah, we grew it like 500% in one year. We grew it almost 150 the next year. I sold it back to my business partners about; I guess it's been about 10 years, which is my time to leave. I started a private consultancy. I'm kind of teaching the implementation and optimization side of things. And then basically out of demand, I partnered up with my longtime friend Manish, who is my now business partner, and we founded what became Conversion Fanatics about six and a half years ago. Since then I've helped several hundred businesses. I think we calculated somewhere close to an additional hundred million in additional revenue for them through our conversion optimization strategies. Joe: Incredible. Justin: We just keep working every single day to be a little bit better and I'm fortunate enough to help some of the top companies in the world. Joe: And I know a few of them. I know a few of the folks that you worked with through Blue Ribbon Mastermind, our friend Ezra Firestone, and they speak very highly of you. And you actually helped Mark here at Quiet Light with his business Catholic Singles. Why don't you tell us though; I know the definition of it and I'm going to give a short story here afterwards but what is conversion optimization? Justin: Conversion optimization is really the understanding; well, I'm going to back up because conversion optimization, when you first say that, people often say, well, it's split testing. Well, split testing is just the vehicle that we use to prove or disprove whether we're right or not. But conversion optimization in and of itself is understanding the behaviors of the visitor; understanding their wants, needs, likes, dislikes, and where the key friction points are in an online journey and then doing what we can to answer the question why certain things are happening in that journey and then we split test to make sure we're right or not. So really, it just comes down to reading data and then executing on the ideas of why we think that data is telling us what it's telling us. Joe: And it's not just split testing, written content, or split testing images or videos or emails. It's a combination of all of the above, I would think. Justin: Yeah, we focus primarily on-site or on the ad side, but we're primarily; I would say 95% of our business is on-site, user experience, user interface kind of optimization. So, what happens on the website after they come from that ad and what can we do to make that experience better for those visitors and help those brands excel which will also lift up many other metrics in the business as well. Joe: So it's really perfect for the content, e-commerce owner, SaaS owner, and maybe the FBA owners that are trying to expand beyond Amazon and get some traction in their Shopify store or whatever store they might be using. Justin: Yeah. Joe: One of the things I have to say, I didn't understand what split testing was back in the day. I sold my e-commerce site through Quiet Light back in 2010. Mark, actually, Jason here was my broker at the time. I knew everything. I understood exactly what my customer wanted more than they did and kept doing these campaigns and putting them out there and putting out there, putting it out there. Finally, my web developer said, Joe, don't be an ass. Try split testing. I'm like, but this is right. And he's like, let's test it. Without a doubt every new campaign that I tested that I knew which one was going to win, I was dead wrong. And it would result in like 3% to 5% conversion rate differences and at a $200 or $300 transaction, that's a tremendous difference, isn't it? Justin: Yeah, I mean, we'll see; I'm looking at a test right now, it's like a 15% swing. Joe: Holy cow. Justin: I've got one running right now that's almost a triple-digit swing in terms of percentage gain. Joe: When you look at a client that let's say they're selling a physical product, are you looking first at their website to try to help speed up the website and improve it? What approach do you take with new clients? And I know they're all different, but give me an example of one. Justin: Well, really, I take the same approach with all of them, because my philosophy on that is at the end of the day, we're dealing with people. It doesn't matter what we're selling, they've all got wants, needs, buying habits, and decisions and pains and pleasure points and all of those things that go into that. So, I just try to understand and put myself in the shoes of that visitor. I look at the data and say okay, I'll look at their analytics and say, well, they're female aged 35 to 44, primarily they're shopping on mobile, they're falling off on this part of the website. And then I just put myself in the journey like what's stopping; what are the 10 things on this page that could potentially stop a visitor from going through the next step? What isn't clear? What can I add or remove to alleviate those friction points? And really what I'm trying to understand is what on that page holds the most weight in the eyes of the visitors? Because at the end of the day, you said you were proven wrong on a bunch of times. You were assuming something was going to happen. I've ran thousands of marketing split tests. I've strived for just pulling myself out of the equation in terms of my bias; my understanding, and I try to just really put myself in the head of the visitors. And once I do that, then it becomes much more apparent of what I need to test and where. And then as soon as I figure out what holds the most weight, I can then exploit that throughout the rest of the website. If they respond to social proof or they respond more to the benefits of the product or they need more trust aspect in the brand or they need to read more about the product or whatever, I try to figure that out. It could be copy-based. It could be image-based. It could be something as simple as moving a button off on a page. But I incrementally test those things to figure out what holds the most weight and once I figure that out then we just move throughout the site areas on the website and just keep going to try to continually evolve and scale and grow that business. Joe: Going back to the beginning, you said, you see when they drop off in their journey at a certain point. If they're looking at a product and reading an article and at some point, they drop off instead of actually placing an order, what tools or software do you utilize to see that path that the customer takes or potential customer takes to then drop off? It seems to me like that would be hard to access, that information. Justin: No, actually is not. It's one simple report in Google Analytics. Joe: I've been using Google Analytics for; how long have I been self-employed? More than a decade or more like 15 years, I don't know; something like that. Too long to the point where I still don't know how to do stuff like that. Is that training that Google provides you inside of Analytics and workshops or things of that nature or you've just learned it over the years? Justin: Well, it's literally a default report that I go to. It's under Conversions and you have to have e-commerce enabled. So it's under Conversions and then E-commerce and then Shopping Behavior. Literally, it's just a bar graph and it shows you the drop off points in that process and I just know how to read that and then you can dig in deeper and deeper and deeper from there. But generally, I'll get the understanding of it. So, I'll look at the landing page view and it's basically two reports. I'll look at the landing page behavioral report, so I'll see which landing page; their first visit interaction, what that conversion rate is. The Home Page is almost in the top three, almost always, even if you're driving traffic to a separate page or a landing page and the Home Page is generally underutilized by 90% of the businesses out there. Joe: What does it mean underutilized? Justin: They're not focusing on it. They don't care about it. They're focused on landing pages and product pages and checkout flow but yet I've seen campaigns double their return on ad spend by just turning some traffic to their Home Page versus a specific product page. But I look at the top-performing landing pages and then I look at that shopping behavior report and then I'll see okay, we've got this many people that are going on the Home Page, this many people have product views, this many people viewed the cart, this many people went to check out, this many people completed transactions. And usually, there's an outlier in that report. So, if it's on the product page like the product view one, I'll see okay they're in the product view and that means they're viewing a product page, but they're not adding to cart. And then I just go ask a few more questions of where you're driving the majority of your traffic, are you driving traffic directly to that product page or are you driving it to your home page or collections or whatever and then that'll give me a better understanding what those visitors are telling me. Joe: Okay, I got it. And at what point do you go beyond the website itself? Well, actually, let me back up, first and foremost. I talked to thousands of entrepreneurs over the years. Everybody listening to this podcast has a website. Please install Google Analytics because you're not going to be able to do any of this stuff that Justin's talking about. And just to dispel a myth that's out there, Justin, is Google stealing information from the people that are installing software on the website, or are they really just giving you the tools to help improve your business and make more money? Justin: I guess that's up for debate with who you ask but every single website… Joe: I don't want to debate that, by the way. Justin: No, I definitely don't want to go down that rabbit hole. Every website out there has it, I mean, has some form of Analytics involved. Joe: Yeah, I just sold a number of them where people have said they straight up don't use Google Analytics and they use some other unknown software or stat tracking data that doesn't do what Google does. So, please everybody install that. When it comes to AB split testing. So, you're figuring these things out. You get to the point where you decide you want to move a button-up or the order button up on a page. Do you just go ahead and do that based off of your experience or do you split test that always? Justin: Always split test it. I am literally proven wrong almost daily. Joe: Okay, it's not just me then. Justin: And we launch 50 plus new split tests a week for our clients. Joe: 50 split tests a week. Okay, always split test regardless. Here's a question for you. This might be tough to answer. When it comes to deciding the winner in a split test, my developer years ago gave me stats and he said, well, you've got to get to this number of total views and then statistically it's got to get here in order to make it a valid split test when you determine a winner. Is that still the case or just kind of do you wing it? Justin: Well, a little bit of both. I look at several different factors. I'll look at statistical confidence, which is one. You have to be statistically valid. You have to have a big enough sample size. You have to have a big enough separation. But I also look at the trend in the data. I look at is it flip-flopping back and forth or is it staying pretty steady as an improvement or a loss? How big of a loss is it out of the gate? And then I look kind of anything north of 25 conversions per variation then I'll start looking at the data. I always run it for at least a calendar week if it's showing promise or sometimes longer. Sometimes a test will run for a month. But there are also the times where you can run a test for six months and run millions of visitors through it and it'll never reach statistical confidence one way or another so you have to know when to cut it. Because if it's null or if it's flat or if it's bouncing back and forth, it's never going to reach confidence because there's not an algorithm on the planet that can factor that fluctuation. Joe: Confidence being the winner, one that's going to produce the end result that you want. Justin: Yes. Joe: What do you do at that point? Do you just flip a coin and decide whoever; if I'm the owner of the website and I like the images on one better than the other and if it's… Justin: So, if I don't know if it's a winner not, I'll generally call it a null result and I'll stick with the original. Unless it's not hurting anything and it's actually making it a better experience for the visitors. Meaning it's cleaning up a page or it's adding a function that might be beneficial that I can use to build upon. Or maybe if it's stripping down a page, then I can go in and then test adding some different types of elements back to the page and it just gives me some more online real estate to work with. So, it's kind of just sort of a guess at that point but I usually have an end goal in mind and I never want to push something that I'm not validating that it's an improvement. And I also don't focus just solely on conversion rate either. I focus on the bigger picture on engagement revenue per visitor, average order value, views on check out; all of those other secondary metrics just to make sure we're not; because you can improve conversion rate but make a lot less money or really dramatically decrease your revenue per visitor. So we just take a very holistic approach to the whole thing and I'm in it to win so I'm not going to push stuff just for the sake of pushing stuff. Joe: Yeah, so number one people have to have Google Analytics installed, figure out how to run the reports, and then always do split testing regardless. What are some of the; I mean you've been doing this for a long time, what are some of the other than I think you said which was people are not paying enough attention to their homepage? What other low hanging fruit is there that folks can do when they look at their own website where you see most common issues, where they can take a look on their own and try to fix things up? Justin: Well, there's a bunch of them, but generally visitors, we kind of live in this speed and this trap, I call it, of growth hacking and a lot of people just go in and say, oh, I think this looks better, let's go ahead and do it or let's change this or I saw so-and-so had it on their website can we do it on my website? And I've never seen that really go well. And also, I think that people think bigger is better so they feel like they need to completely redesign a page or add these big changes to make a big impact and the opposite is actually true. You need to incrementally adjust things to better understand those behaviors. The majority of people that I see are trying to cram too much stuff into a very small area. They're trying to over app their way to better conversions. I've seen stores with 70 plus applications and plugins and all of the stuff installed and they don't necessarily do the right things; adding more urgency and more timers and more pop-ups and things to your website isn't going to help you for a long term sustainable growth. But the glaring one that I see is people do not lead from a place of benefit to the visitors. They're screaming how awesome they are as a company instead of listening to the visitors and what their product is actually going to do for them. And I've said this in my entire career, it's kind of copywriting 101, it's you lead with benefits. So, benefit bullet statements. I go back to that all the time and then I use the features of the product to support those benefits. I've said this many, many times is I've got 16 gigabytes of RAM in my computer, which is great. It's a feature, but it's not a benefit. What does that do for me by having 16 gigabytes of RAM; a faster processing speed, faster video rendering, all of those things because nobody wants the feature. They just want what it's going to actually do for them. And a lot of companies just simply don't do it. They don't pay attention to it and I see it every single week on many, many occasions. Joe: I used to write ad copy for radio direct response stuff and it was 60 seconds and 18 of those 60 seconds were the call to action, which was the phone number; the 800 number at four or five times. We used to be able to get the features and benefits in 42 seconds; simple, clean, quick, clear. It's funny now we've got so much information and so many endless pages of websites that we feel like we do need to just jam more in and do more. Mike Jackness has been a regular guest on the show. He runs Ecom Crew and Ecom Crew Premium and he had a brand called Color It that we sold for him. And one of the things that Mike did very, very well is exactly what you're talking about when he reached out to customers regarding Color It. He had one of the biggest Klaviyo campaigns. He talked about it a lot on the show and that was giving them some benefit with every email that went out; helping them, teaching them, giving them some benefit, not hitting them up with a sales promotion every time. It's a help first mentality and that generally comes back to you. I think that's great. It's sometimes simple to do on a website, and I would think that sometimes it's a little more complex. Are you finding getting a little more complex with video for instance? We had Judson Morgan from Butter.la on talking about the increase in conversions from a static image to a video. Are you finding similar findings or do you split test those types of things as well? Justin: Yeah, we always split test it. I've seen the video go 50% improvement to a 50% decrease and everywhere in between. It just depends on the brand. I've got an auto detailing client that has all the gear for auto detailing and they're very video-focused so moving a video into the main spot on a product page in the carousel would prove really effective for them whereas other companies showcasing a shirt, for example, isn't necessarily as effective as a product that needs to be demonstrated so it's really a case by case basis. And if there's a video available, we'll try to leverage it as much as possible but I have literally seen swings go both ways. Joe: Have you been in a situation where you have been testing video and you're testing that less is more where it's maybe user-generated content versus high-end production and one outperforms the other consistently; probably not consistently, yeah? Justin: Not consistently. But I would say I do this with imagery too, is I kind of lean towards more of the user-generated real type side of things; the shaky camera, the ums and ahs because I think more people are relatable to that or they can relate to that a little bit easier. I've got a client right now that's got a product and all of their imagery looks like straight out of an Instagram model's website. Even their user-generated content is Instagram filtered and perfect and looks like they used a super high-end camera and I'm like, do you have anything real? Like some real, hey, this is awesome look at this. He's like, yeah, I've got all sorts of that. I'm like, well, let's test that because your visitors are literally saying we don't know if these are actually as good; the pictures are great, but we don't know if they're actually as good so we've got to build that trust that the product is great. And this is a site that sells 2,000 plus orders a day so they're doing volume, but their visitors are still screaming we don't know if we can trust this even though they've got 500,000 plus customers. So we're just trying to leverage that as much as we possibly can to showcase in different ways like, hey, this is real and it's not… Joe: Have you had the chance to split test that yet? Justin: We're in the process of gathering all the images. I'm literally going through this this week. Joe: And is that your role within the company or do you have other folks that help you? Justin: Well, I've got a team. Joe: Well getting down to the point where you're picking out those images, or do you let the company owner or your client pick out the images that you'd be choosing? Justin: A little of both, we're very collaborative. But I've got a big team of smart people; designers and developers and strategists and analysts and all of that stuff. But I'm very much involved and my business partner and I are in the overarching strategy. Some clients I'm more in the weeds with than others. This one I just happened to be going back and forth with because he was trying to push for one thing and I'm like, well, your visitors aren't saying they want that so I kind of had to interject and say, here's what we're seeing from that standpoint. Joe: And they're literally saying and you're; and I'm saying you and I know it's your team, but I'm saying it's so that the audience can go and do this themselves as well. You are literally going on to the reviews, to the Instagram comments and things of that nature, and seeing what the visitors are actually saying, or are these e-mails into the company that tips you? Justin: No, survey. This one is actually like just a type form survey saying here's the; we took the top three questions, like what questions do you have that we didn't answer? I do this with exit polling a lot too so almost all of our clients we've set up an exit poll. So catch the people that are leaving and just ask them what problem did we solve for you today or what question weren't we able to answer and give them that open-ended kind of outlet to tell us where we're falling short. And you'll see a trend very quickly of what that data is telling you. In this case… Joe: So somebody when somebody leaves the site without placing an order, if that's the objective, you've got the ability to have them fill out an exit poll form? Justin: Essentially, yes, just a one question kind of survey. Joe: Okay, that's fascinating. Imagine that, asking them why they didn't order and having them tell you and having you be able to fix that problem. What you're doing is not actually that complicated it's just hard work. Justin: Right. Joe: I guess you got to take the time in the detail to get to it, and it's funny, I find a lot of things in this e-commerce or online world that we live in not very complicated. It's common sense. Sometimes we just have to be told what we already know. Justin: Yeah, common sense is kind of lacking in a lot of cases these days it seems like. I mean, even in my career of almost 20 years, nothing's changed. Just the mediums have changed. So that's really it. Joe: True. Justin: People come to me and they're like, oh, hey, what's your framework and what fancy tools are you using and I'm like, I'm simple. I want to go down to the bare bones minimum possible to get the job done. I don't want to over-automate and over-analyze. I just want the visitors to tell me what it is and optimization in that. I mean, there's a science to it, obviously, but an understanding and an experience definitely helps but it isn't rocket science. I mean it's ask the right questions and my question just happens to be why. Why are they clicking on the button or why are they leaving that page or why are they watching the video or aren't they watching the video, why are they dropping off at that point in the video? It's just questioning everything and then looking for all the ways we can possibly test to improve that. Joe: It's a lot of whys in there and none of that becauses come from the founder of the company or the CMO or something like that. They come from the customer, which is smart. It's the mistake I made years ago when I thought I knew everything. I was dead wrong. It sounds like you are too most of the time when you're doing your split testing all week. So, listen to the customer, obviously, but you've got to get that information to the customer and ask them. Justin: Yeah, and I think as business owners, and it's why I hire coaches. It's why I hire people to get an outside, unbiased perspective because I see so many business owners often look at their business or even marketing executives for large, large corporations, they're in there every single day looking at the data, looking at the website, looking at the marketing message that they just get numb to it and blind to it. And sometimes the smallest little change and the smallest interaction or they're overlooking just some small lever they need to pull that's going to dramatically improve their marketing performance. And I fortunately and unfortunately see it all the time. Joe: I'm going to go on a short tangent here. You said you hire coaches. You've been self-employed for two decades in the online space. What kind of coach would somebody with your experience be utilized? What kind of coaches do you hire for yourself? Justin: So I started out; I'm a direct response marketer. I'm a B2C guy that for some reason started an agency. I have no idea how to run an agency. I never did when we started it so I've hired several; I've hired sales coaches, I've hired other business development coaches, I've hired lead generation coaches, I'm in a Mastermind right now for agency owners; all very top level just because there's a lot of stuff that I don't know from the inner workings of the process. I'm a forever student and I think I can learn how to do something and I live kind of by the motto that every day I need to be a little bit better than I was yesterday even if it's just one small incremental improvement. I'm a split test guy so I have to strive for that improvement all the time. And sometimes I have the wrong questions or I have the questions or I'm not asking the right questions on my own business and it's even helped me even through all of the stuff that's going on this year. There was a time where we had a lot of unknowns, even back in March and if we don't change this stuff we're going to be in freak out mode if we don't fix some stuff. So, I needed to lean on my coach and my crew and my circle of influence on the agency side to kind of help us navigate. Joe: Yeah, I think that's fantastic. And I ask the question because you obviously have done some things right over the last couple of decades and some of the audience members might just be leaving the corporate world and coming into this online world that we live in and one on one coaching is the equivalent of one on one therapy for people that need help but it's for you and your business. In many ways, it improves you as an individual as well as a business person and as an individual. We have David Wood on the podcast; he's a business coach, just talking about the benefits of asking certain types of questions and trying to make incremental growth as you've talked about here. And then the Mastermind groups like Blue Ribbon Mastermind, like Ecom Crew premium, like eCommerceFuel, like Rhodium Weekend, those are all group therapy, but it's group enhancement. Everybody shares their secrets with the other members of the team so everybody can grow and learn together. So I think it's brilliant, very, very smart things to do. Justin: There is a lot of; if you get in a room with people that are on that level or even above you and I don't always join into our monthly or biweekly phone calls on our Mastermind and all of the stuff and I don't always need help. I don't always have something to share but when I do, they're there. And I think there's a lot to be said about that, too. It's just having kind of that fallback and kind of a sounding board when you do have an idea or you're falling short in certain areas. Joe: I couldn't agree more. Justin, I appreciate it. Where do people go to learn about your business Conversion Fanatics; is it just simply www.ConversionFanatics.com? Justin: Yeah, www.ConversionFanatics.com. You can find all information about us. I've got a best-selling book that's also available on Amazon. If you go over there, find it. It has the same name, Conversion Fanatic. Joe: Awesome. Justin: And I'm all over social media so you can find me at www.onespotsocial.com/JustinChristianson and you can find links there; basically everything. Joe: Fantastic. Justin, I appreciate your time. Thanks for being on the podcast. Justin: Thanks for having me.

Chris Yates On Pivoting And Profiting During A Pandemic"I surround myself with others who have already started to take that leap or who are already a few steps ahead"- Chris YatesChris Yates Chris Yates is Founder of Rhodium Weekend and Partner in Centurica. Rhodium Weekend is a community of 6 to 8 figure digital business owners and investors. Chris has over a decade of experience acquiring and operating digital businesses. Chris has overseen $150 Million in acquisitions of eCommerce, Content, and SaaS businesses. Centurica specializes in helping entrepreneurs, companies and private equity firms buy online businesses.SHOW NOTESThe power of building a network around youThe importance of transforming a website into a lead machine through contentHow Chris solves problems by having the right community of people around himWhy you need to be in a mastermind groupChris' first principles of business: adapt and always learnWhy it's critical to diversity revenue and traffic to create a busienss of valueChris' approach to generating leads through digital marketingGenerating leads through paid advertising and organic networksThe power of peer groupsThe importance of working with the trend and not against itAsk yourself the question, "what the opportunity in this situation?"The value of customer and business relationshipsChris' challenge with his upcoming in-person Rhodium Weekend in light of the coronavirusDissecting elements of an in-person invent and transferring what you can to virtualFirst principles of both an in-person and virtual eventHow Chris leverages the power of word-of-mouth marketingChris found a way to monetize his passion for connecting peopleThe secrets of being a great operator for eventsWhat to look for in opportunities as an investorWhy business owners must disrupt their businessesThrive in business when you do what's hard for big companies to replicateThe strategies Chris deployed to avoid the pandemic from putting him out of businessHow Chris looks at what's ahead in the new economyThe importance of building trust with your community and customersChris' approach to buying and selling businesses and creating a business he keepsHow Rhodium Weekend channels Chris' passion while helping business owners solve their problemsThe power of scarcity and small groups to create a thriving communityChris' 7-year rule that puts people first every dayThe world needs leaders to get it through the pandemicThe power of stepping into the identity of a leader and not holding backThis podcast is brought to you by Deep Wealth. Are you a business owner who is wondering how to grow your business, sell it, or both? Perhaps you're wondering how to make your business pandemic-proof? Learn how the strategies to grow and extract the deep wealth from your business.Enjoy the interview!SELECTED LINKS FOR THIS EPISODEConnect with Chris YatesRhodium WeekendThe Deep Wealth ExperienceThe free Deep Wealth Exit eBook

Chris Yates is the founder of Rhodium Weekend and Owner of Centurica. Rhodium Weekend is an event for online Entrepreneurs who own 6- to 8-figure businesses, and for buyers, sellers, and investors of those businesses. Using both structured and unstructured time so each person can learn, network, and share in the way that works best for them. All attendees are curated through an application process to ensure the community is filled with smart, driven members who are willing to pay-it-forward with their own expertise. Episode Highlights: What is it about smaller, more intimate events that's working well? Money hacks versus real business Why is scaling challenging when you get involved in running the business? Insights about productized service businesses A good portfolio and filters work for investment Thoughts on deal structures like seller financing Where to seek for legal and accounting advice? How to build up mentorship and support for yourself Tweetable Quote: “I will buy any deal at any price as long as you let me name the terms. When you think what that means is price kind of irrelevant. I could tell you I will pay you a million for your business right now but I'm going to pay you a penny a day for a million days, that doesn't sound very attractive.” – Chris Yates Resources Mentioned: https://rhodiumweekend.com/ - Rhodium Weekend https://centurica.com/ - Centurica https://www.linkedin.com/in/chrismyates/ - Chris Yates's LinkedIn

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

Just as the title says, this episode is all about helping you get a better sense of how the due diligence process works by talking about a bit about how it was done for a brand we sold - ColorIt.com. I'm joined by Chris Yates and Brian Diener, from Centurica, a company that helps online business buyers conduct due diligence on prospective acquisitions. They not only handled the due diligence on ColorIt but also served as a go-between for myself and the new owners to ensure that this part of the buying process went as smoothly as possible. Chris provides a bit more detail about the Centurica through the following: What the company does (4:22) The process of doing due diligence (5:35) Potential costs for the service (7:14) Brian, who did the actual due diligence on ColorIt, talks about how it was done. Verification process (13:17) Accuracy of splitting up fees (15:02) Checking supplier relationships (16:47) How P&Ls are reviewed (19:45) What goes into a client report (21:09) The results and how we reacted (27:47) Learn more about Centrica's services from the website or book a free phone consultation.  Get the full picture of what went down with the ColorIt sale when you listen to these episodes. E246: Why I Sold ColorIt.com E247: Preparing for the ColorIt Sale with Joe Valley – Part 1 E248: Preparing for the ColorIt Sale with Joe Valley – Part 2 E249: How Our Filipino Team Reacted to the ColorIt Sale Get info about the Rhodium Weekend event in October. Finally, if you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes. If you have any questions or comments, feel free to leave them below. Happy selling!

What exactly defines an influencer in the marketing space? Do you need Oprah in order to sell your product? These days the term influencer is used so much as the concept spreads to become more of a “scope of influence” rather than just a celebrity endorsement. There are all kinds of influencers and within any industry, there are influential people out there, it is just a matter of finding them. When it comes to buying and selling a business, a company can add value to their business by diversifying their sources of traffic. The more diversity in traffic, the more the risk goes down for the buyer and the value goes up for the seller. Today's guest, Shane Barker, teaches the “Personal Branding – How To Be An Influencer” course at UCLA. He's a seasoned marketing consultant, who for the past several years has become an expert in using influencer marketing to boost sales for brands. Shane believes that nowadays companies have got to run an influencer campaign just like any other facet of the funnel in order to maximize their brand's reach. Episode Highlights: What exactly is influencer marketing? Finding that niche person for the product. Identifying real vs. fake followers and how feedback needs to be weeded. Measuring real engagement over just follower numbers. What is a good engagement rate to look out for. The influencer marketing software tools that are out there and how to use them. Aligning the influencer with the product. What is the typical cost per influencer? How can you track the influencer's impact? Why Influencer marketing works well. Tips and tricks on how to find influencers in your sphere. Cheaper alternatives to hiring a consultant to help with your IM campaign. Transcription: Mark: So this past weekend I was at Rhodium Weekend and we've talked a lot about Rhodium here on the podcast. It was out in Las Vegas and somebody that we know, somebody who's been on the podcast Shakil Prasla, a good friend of Quiet Light Brokerage happened to run into another Shakil; Shaquille O'Neal. And he has a great photo of himself on Facebook with Shaquille O'Neal and he told me and he said that Bobby Brobine called his attention and so Shakil just shouted out and said hey we share the same name and sure enough that called his attention and then resulted in Shakil our friend having a picture with Shaq; really really cool. It's always fun to be able to reach out to people who are well known and have some influence and obviously, this is something we can definitely use in business as well as in we are in a whole are of this in business and marketing called influencer market something I haven't done a lot of. Joe, have you done much influencer marketing? Joe: You do it all the time Mark. We do … you just did it. You just did it for Rhodium Weekend. How many people that have signed up for Rhodium Weekend have gone to Chris's centurica.com website for due diligence because you're an influencer and you talked about it? Mark: But I'm not on the same level of Shaq so you know. Joe: Oh I don't know. I don't know. Mark: I'm definitely not as big as Shaq in more ways than other knows because the guy's a big dude. I've seen companies use influential marketing before and it's crazy; the impact that you have on your business when you find the right mix. Joe: Well you know a lot of folks think influencer marketing is … I've had a couple of listings where Dr. Oz mentioned the product or the ingredient and the revenue went … sort of skyrocketed. I sold one earlier this year where the product was named one of Oprah's favorite things, that's like the golden ring. That was back in like 2008 and they still get traffic and revenue from it and it's 2018. So that is what a lot of people think about in regards to influencer marketing like you and Shaq. And by the way, Shakil call out that was a great photo thank you for that I showed my kids. But that's not really just the influencer marketing that I think a lot of our audience should be thinking about. We've talked about it all the time when you've got multiple channels of revenue, multiple channels of traffic it brings the risk that you're going to lose business down and increases the value of your business; the lower the risk the higher the value. Influencer marketing should be another channel. The next generation buyers people they're … my kids, I have 2 teenage boys, I cannot get them off of Instagram watching videos. My son, 17 years old, he learns everything. The computer I'm on right now he learned how to build it on YouTube through influencers. They're all about influencer marketing. So the next generation is going to be just that. We had Shane Barker on the podcast, that's who you're about to hear folks. He's a UCLA professor. He teaches a class on influencer marketing at UCLA. He's a consultant and he helps people. He'll take over their campaigns and he'll just tell you how to do it. He had some great advice in terms of tools to use to track your influencer engagements; how to find them, how to measure their success, and what to do in terms of maybe interviewing them and negotiating with them and writing up contracts with influencers and all these different things. The one thing I didn't touch up on was workload but he said that when you frame it up right and you put the right package together in terms of your plan through a consultant so you don't waste a whole lot of money it can then be handed off to a VA who should be able to run with it fairly easily. Mark: That's pretty cool. So is this going to help me get Shaq to a certain point in Quiet Light? Joe: Hmm … Shaquille O'Neal, no not Shaquille O'Neal but Shakil Prasla yes. He's already an influencer [inaudible 00:05:01.2] is what he is. Mark: I would rather have Shakil Prasla … actually, that's kind of a lie, sorry Shakil. All right let's get to it. This is actually a huge topic. I know this is going to be like the next big thing in marketing and this is one of those areas that people don't really know a lot about. Some people are doing it well. They're making a lot of money because of it. They're building their brands because of it. It'd be great to unlock this so why don't we go ahead and listen to it [inaudible 00:05:25.8]. Joe: Yeah I do. You've got to think about it just like an Amazon sponsored ad campaign, just like your content development for an SEO, just like your Google Ad Words campaign. You've got to run an influencer campaign the same way and Shane really talks about that in detail so let's go to it. Mark: Awesome. Joe: Hey everyone its Joe Valley from Quiet Light Brokerage. Today we're going to talk about influencer marketing with Shane Barker. Shane Barker is an expert in the space. How are you doing today Shane? Shane: I'm doing awesome Joe. How are you doing man? Joe: I'm good. You know back in my day there was no influencer marketing. It was pay-per-click and write good content and Google will reward you. Of course, my day wasn't that long ago. I sold my business back in 2010 but the world has changed dramatically since then and it constantly changed and you're on top of that and you are at the forefront of it which is one of the reasons that I will call it out right now why you haven't written a book about it yet because it's constantly changing right? Shane: Yeah that's the deal. We talked a little bit before the podcast started today. The thing is it is an evolving space. I mean it started off back in the day and I said back in the day as we kind of joke around about that but you know I'm doing this for a while but it's really word of mouth marketing right? Which back in the day the presentations that I do I always talked about like as an example would be like Tupperware. That was kind of like Helen who is a lady that she would have these parties and have everybody over and she was influential in the area because everybody loved Helen. She was a great wife and she'd have beautiful little kids running around. Everyone wants to be like Helen and they'll all come too. They'd have a few drinks and the next thing you know they're buying Tupperware right? So it's that influential type thing, that's how it kind of all started and then obviously we evolved to Beats by Dre and some other ones like that where you see this people wearing the headphones and they would go and give them the free product. And you see all these athletes that are wearing this stuff and I mean obviously they sold I don't know it's like 3 or 4 billion dollars to Apple so you know it's obviously some- Joe: I guess it's been around a while because celebrities have been endorsing products for years, for decades and they get paid for it. Shane: Absolutely. Joe: So that's influencer marketing right there let's do this. So Shane, I didn't tell you before we started recording we don't do fancy introductions. Obviously, we're a couple of minutes in already. Shane: Yeah. Joe: Can you tell those folks that are listening about your background, what you do, how you do it, and where you come from? Shane: Yeah absolutely. So I reside out of Sacramento California but I'm in Los Angeles quite a bit because I teach at UCLA. I teach a class called Personal Branding and how to be an influencer. It's a quarterly system so I do how to be an influencer on one side and the other side on how to work with influencers. We work with brands down there as well. So yes I've been in the digital space for 20 something years. I really jumped in the digital space because I had my own business. So it was one of those like hey I want to bootstrap this thing and I didn't have a lot of capital. This was a long time ago. I've got a company called Hotpad that I had a patent on it; a reusable heat pack. I had a cool patent on it and so I had to do everything. I had to do the logo, I had to do the website and this was this is probably 15 plus years ago. So we were jumping on the internet, there really was no SEO. We just put something up and something went on the 1st page. We didn't know how it happened or what happened. We were just excited that that was happening. There was no … there was just nothing, there was not a lot of software, there was … we were grinding this thing out and it was kind of wild wild west. And so I jumped into it and was working with this … once again probably 15 years ago on called getafreelancer.com and now it's freelancer.com. So I was stating hey, listen I want to manage projects and I want to go work with people that know how to do these certain things that I didn't necessarily know how to do. I was … at that time I was in school and I'd already owned my own business. Just as I owned a bar and I had done some stuff. It took me 10 years to graduate not because I wasn't smart. Well, I don't know … maybe because I wasn't smart but maybe the bigger the reason was is because I want to travel and do this and I had my own businesses. So I jumped into that and like I said for about 10 years I owned a bar and did some other fun stuff; all offline type businesses. And then when I was doing Hotpad the reusable heatpad company I decided to go back to school and that's when I really started doing outsourcing and kind of figuring out how to work with other people and I've been doing that ever since. I mean right now I have a 31 person team that's all over the world. I don't have them … yeah, I have all like project management software or like all front stuff in place. And so I have like where I'm doing this interview today is I have an office here in Sacramento that's strictly for content creation; for us putting content together. And my team is once again all over the place so they're … so it's kind of awesome. So that's kind of catapulting me out once again where I'm at today. We do heavy content marketing, we do heavy influencer marketing. And then I'll kind of talk about my story a little later about like how I jumped into influencer marketing and all that. But I consider myself like a brand and an influencer specialist and then also a digital strategist. Because it's just that's what I've done for so long when … it started off on SEO and then obviously a lot of social stuff and now we do influencer marketing. We're always trying to … the new stuff that comes along it always seems to knock on my door whether I want to do something new or not when it comes to marketing. So that's kind of where I'm at today. Joe: Well, our audience is full of people just like you and people that want to be like you; those that are leaving the corporate world. For influencer marketing, I want to go through some of the steps that you teach in that class at UCLA and the process. But let's 1st define it what exactly is the influencer marketing in your view? Shane: Yeah so influencer marketing in which I said a little bit earlier is in the back in the day it was influencer marketing was not called influencer marketing but really it was working with celebrities and getting somebody that had some kind of influence because they're an actor, or celebrity, or some kind of singer, or something like that and you ask them to endorse your product. But usually, it was for the Nike's, the Toyota's, these bigger brands because you had to have a big budget. And the deal was that you were going to do some kind of a commercial, maybe sometimes radio, but mainly a commercial where you would go and this person would say oh my god I have this kind of car this, I love my … whatever my [inaudible 00:10:57.3], I love my Toyota, I love my Nike shoes whatever right, usually bigger budgets and once again somebody that has a really really high influence. Well, last in the 5, 6, 7 years you've seen this switch of where really anybody can have influence. You don't have to have … you don't have to be an actor; you don't have to be a famous person to do this. And you'll see this obviously on YouTube, Instagram, Snap … sometimes on Twitter and then on Facebook as well. The idea is that an influencer is anybody that has influence over their sphere … over their community. So as an example you Joe obviously are an influencer because you have influence over your podcast and what we have here. So that makes you an influencer because people follow you, they listen to your podcast religiously, and they go and they get great information from it and they go and apply that in the real world. So if you were to say hey guys this is some software that I use and I've used it for the last 6 months. I've tested it its absolutely awesome then guess what probably a lot of people in your podcast are going to go hey that sounds like an awesome product. If Joe uses it then I should use it. And so everybody has this type of influence and we look at this. So as Instagram as an example I look at people, let's say you have 5,000 followers or 10,000 people I go well are those influencers? They absolutely are. I mean if I have 5,000 or 10,000 engaged … a heavily engaged audience I would much rather work with that person let's say as an example yoga mat. I'm a yoga instructor and you as a brand you're selling yoga whatever quick bed or something. And so you come to me, I would much rather work with a yoga instructor that has a 5 or 10,000 following that's heavily engaged than somebody who has a million or 2 million or 5 million. Because really at the end of the day what … in the beginning of influencer marketing was like hey I want to go with the people with the highest following right? They have a milion followers like that's how … it's who I have to work with because of the fact that you look at all those eyeballs. But the issue is this … and we all realize this thru marketing is that back in the day it was like if I can get a million visitors that'd be awesome. It's not the amount of visitors it's the quality of the visitors; the type of traffic that you're getting from that. So same thing with influencer marketing you want to really niche down and find the person that is really going to be best for your product. The reason why and we'll go onto this later but the reason why there's these issue with influencers and fake followers is because brands were paying influencers on the amount of followers they had. So you get a situation where they say, Shane, if you have 10,000 followers I'll give you a 1,000 bucks. If you get 25,000 I give you 2,000. But if you have 100,000, my friend, I'll give you 10 grand and then guess what happens an influencer goes man how do I get to that quicker? How do I get to that mark faster because obviously I'm doubling, tripling, quadrupling my money? Well, then what happens is now they're doing something where they're adding fake followers and doing some stuff that's obviously unethical to be able to get to the next price point. Joe: How do you measure engagement over followers? Shane: Yeah that's the deal and it's funny when you talk about back in the day because it literally when I talk to people I've influenced I mean I always talk about back in the day that makes it sound like we're like 100 or something; like I went to school with Jesus or something or Moses or like I was on the boat or something. But you know for us it's like when I look at this like we were doing influencer marketing 5, 6, 7 years ago there was no software right? So there was nothing out there to really … I mean what we would really do is we would go and try to find these influencers by search. Like go on Instagram and look up hash tags and stuff like that which is still relevant today and we still do that say obviously. And we would go and we'd put these profiles together and I would manually go look at them. Because that was it, like that was my … an engagement for me was not necessarily a number but it was more … we ended up coming up with an equation over time that we looked at of followers, engagements, likes and stuff like that. So we had a little bit of an equation or some kind of … and we call that algorithm because it wasn't that crazy but where we would go and take a look at that. And we would just have these Excel spreadsheets that I would just take tons of notes and we would do all this kind of crazy stuff. Now there's plenty of software. There's all kinds of softwares you can use. I mean we use … Grin is one of them that we use that you can do. There's another klear.com which is with a K. There's Neoreach, there's Revfluence … I mean there's all kinds of them. There's all kinds of different ones that you can go. Some of them are free, some of them will cost … I have, I mean I'm very fortunate since I have access to almost all the softwares because they want me to look at their software and evaluate it and stuff so I'm very blessed in that sense. Joe: You do? Shane: Well I mean you know it's so funny. I'm very humble about that and I don't think of myself as an influencer but over time you start to realize you're like wow I guess I am an influencer you know. I'm just not … I don't know I just don't think of myself that way, like when I go to conferences and speak and do stuff it's [inaudible 00:15:08.8] people come up to me like I've been following you for a long time. It's always really … it really kind of shocks me. Or like while walking somewhere and I'm not that famous by any means but they will come up and say are you Shane Barker? And there's been a few times I'm like God do I owe you money, are you VISA or like I'm just trying to figure it out right. It's like this weird … so you know an influencer [inaudible 00:15:25.1] come up I guess and things are good and I've got some good foundation and people are following me so I'm not mad at that by any means but- Joe: That's good. The software does it help you measure the engagements does it go that deep? What is this like Grin and- Shane: It does. So this is the thing you have to look at when it comes to engagement, this is the key and when you talk about software … so software is that 1st level. So the 1st level of when you're going in you go and you take a look at it, you can put in hash tags, you can put in keywords, you can do this kind of stuff. So let's say it's yoga, that's the thing I'm looking for and let's say I'm I can sell this yoga mats all over the world. So it doesn't necessarily have to be in Los Angeles or Las Vegas or something. So I go all over the world, so what I do is now I can curate these lists. I mean go take a look at them, you add them to whatever … some kind of a folder or whatever it is, you pull those people in. That's the 1st step and it'll say the engagement. And it'll say your engagement is 3.5%of 5.6% and software is the 1st step. That's where you're you curating the list and you're saying hey okay I want to find 10 good influencers so I'm going to curate a list of a 100 or 200 or whatever. And then the next step to this whole thing is you … software is lovely but influencers once again because they want to make money and I'm not saying all influencers are this way but … well, we all probably want to make money but there's ways to fudge your numbers. So that's what we have to look at. I can go on to Fiverr right now and I can add any picture on Instagram and I can get 10,000 likes for $5, $10; whatever the number is. Joe: Right. Shane: And that's not engagement. I mean somebody like if you came into my store … let's take this offline. I own a store and Joe you came in and you knocked and you said hey Shane I was wondering do you guys have this and I just went [thumbs up] that's not engagement right? You're like okay so Shane no … so say that again so what do you have this I'm looking for this- Joe: You just gave us the thumbs up. Shane: The thumbs up, that's right I forgot we go audio and video on this. So the issue with that is that's not engagement right? Engagement is like oh hey Joe thanks for coming in my shop. If you're looking for these blue widgets then you want to go over here or let me show you some … blue widgets are cool but the yellow widgets are the ones I think you need because of this this and this. So that's where we kind of get this thing of where the software is awesome go take a look at it but engagement is conversation. So if I'm a yoga instructor or a brand and you're a yoga instructor or either way you know vice versa. Joe: Yeah. Shane: Then what I should do as a brand I should go look at your profile and find out 1st of all how many other sponsorships you've had. We don't want somebody that has a new sponsorship every day because the audience is going to be a little unauthentic … not authentic right? Joe: You don't want somebody that has a new sponsorship every day you want somebody- Shane: No, because think about that like this is a thing, it's like it's like dating. If you wanted to date a girl that's had a new boyfriend every day for the last 15 years like you got to think well there's got to be something wrong with that right? Like there's … it's not … the numbers aren't working they're not … you really want to develop your brand, you want to develop a longer relationship with an influencer. But if they're talking about something every day the problem is then you get to a situation where people start to go okay does Joe the influencer really like this product or is he just doing this for money? Because it just doesn't feel like we want Joe the influencer that says listen I've tried this product for 3 months you guys you know I don't promote tons of products this is a product that I've used it's absolutely awesome this is why I'm promoting it. Joe: Okay. Shane: Right, so you want to get authentic- Joe: You're going to look at that engagement percentage and you're going to focus to see if they've had lots of different advertisers on a regular basis. Back to that engagement percentage so Shane, you had said 4 or 5% what they have … what is a good percentage? And I mean people talk about open rates and things of that nature in email campaigns, what is a good engagement percentage for people that are just starting off? What would they look out for; the number? Shane: I would probably say it's like probably 3 to 5 % is a good engagement rate. I mean anything higher than that is awesome. Joe: Okay. Shane: And here's another thing we talk about that engagement because I'll touch on this as well is you have to look at the comments. So we have this list of let's say its 100 influencers and let's say I'm looking for 10 great ones. You want to go through … you want to look at their profile; A. look if they've done a thousand sponsorships then I would get away from them or you look at the engagement. But you want to look at what people are asking for like hey Joe the yoga instructor. Hey, I want to know … it looks like you're using that new mat or you're using a new water ball whatever like where did you get that? Or hey Joe when are you coming to town or hey this … like what you want to show that people are engaged with the content and this is where things get … where people can fudge numbers where if you go to somebody and they have an engagement rate of 10% you're like oh my God this guy's crushing it, this girl's crushing it, you go and look at it and they have 1000 emojis, that's not engagement right? So you can … from software standpoint an emoji is engage- Joe: You want actual communication, people talking back and forth info and some responding, people asking questions. Shane: Right. That's the thing and that's when we talk about the … when I said I'd rather have somebody of 5 or 10,000 or 15,000 than a million. Joe: Yeah. Shane: That's where the engagement rate stays higher because Joe what I would look at is Joe the influencer. What I want is that if people are asking questions and you get 20 questions there should be 20 answers by Joe. Joe: Right. Shane: Joe, you should be going in there and saying hey … where I think is that's engagement. That's showing that you have an engaged audience. When you get to the … I'll use Kim Kardashian as an example, you have 20, 30, 50 million; they're not responding to anybody for the most part because they can't physically do all that. And so the engagement rate is a lot less. You have your audience that's … you get eyeballs so if you're Coca-Cola you're going to say hey I'll go with Kim because I know that she's going to get eyeballs. I don't really care about the engagement. I'm looking at overall exposure and they've got a big budget. If I'm a brand you really want to go take a look at that and say who is … who's on the come up. They don't have to have a million followers but who's engaged? Who seems to be really into it? What's a good product alignment? You're at this … is your product and this influencer going to align correctly? And then what I do … and this is a big one a lot of people don't do this, I interview all the influencers. I do a call just like you're doing here Joe. I get on there and I say hey Jennifer I've got XYZ product I usually have some questions and I say so tell me a little about yourself or what … who you've worked with. They should have some kind of a media kit so there's some 1st steps that we take. And then I go so tell me a little bit what have you looked in [inaudible 00:21:17.3] XYZ company and they go … I mean I haven't looked into it but I know that you guys are offering 1,000 bucks a post so I was interested. Joe: Right. And that's the thing I was just going to ask actually so thank you, you went there. How do you track this? How does it … what does it cost? I mean people do sponsored ads in Amazon, they do Google Ad Words, and it's a clear defined cost per click. What is it typically cost per engagement I guess or per influencer if they've got a 3% engagement and 5,000 followers? Shane: Yeah that's the thing is it's everything is negotiable. So this is where it becomes a little harder because you do for if you're going after the keyword Sacramento DUI attorney you know that it's $3 per click. It's very easy. If you're going up with Amazon there's a … they have a model that they put in place to be able to understand once again how popular it is and what they're going to charge. Joe: Yeah. Shane: Influencer marketing is different because you're dealing … each influencer is different. Each influencer, in theory, should own their own company or their own brands. So what you do … I mean there's certain websites and stuff and calculators you can go to and kind of what you think would be fair but what I always tell people is this, the analogy I use is like let's say if I have a Babe Ruth signed baseball card. And everybody tells you and all the big guys go hey man that's worth a million dollars Shane; guaranteed a million dollars. There's only 2 of those out there. Yours is in mint condition it's worth a million dollars and I go well I'm going to wait to get a million dollars. And then Joe you come to me and say hey Shane I heard around the campfire that you have a Babe Ruth card I'd love to buy it from you. And I said well it's worth a million and do you know what Shane I appreciate that but how about if I give you 75,000? And I go okay you know I'm actually not off. I guess I don't need to hold on to it. I mean 75,000 is a good deal. And that's a good deal right? It's a supply and demand type thing. The cool thing about brands is there's hundreds if not thousands of influencers. So everything is negotiable. There are some companies or some influencers that will do free product. There are some of them that will do free product plus some type of an affiliate link where they're getting some kind of residual sales. There will be other ones that just want a flat pay per post. But everything is negotiable so it's very difficult to say you should spend this amount. You have to figure out what you think is going to be fair. So if I go in and say listen I want to get to 10 influencers I have a $10,000 budget so in theory I have $1,000 per influencer. What you have to do is go in and figure out those influencers and talk to them and say what would you usually charge. Well I charge $250 per post on Instagram let's say. And so my mind I'm thinking I get at least 4 right? So I say how about this why don't we do this, I'll go and pay you $1,000 we'll do the 4 things but I also want you to do two Instagram stories and I want you talk about a Snapchat for 2 times. If I think that's a good deal and that can move some traction and you think it's a good deal then it's a good deal. So that's where everything is different with everybody but I think what happens with brands and what they don't realize is these influencers once the followers start getting honey because that's what brands still look at most of the time. Is that they get pitched 5, 10, 15, 20, 30 times not a day but a week- Joe: The influencers- Shane: The influencers do. Joe: Right. Shane: And especially if you're up there then you're getting pitched over and over and over right? So the thing which you have to do as a brand, you have to 1st you have to differentiate. So make a nice little catchy subject line. You want to get their attention, not just looking to work for you that's just kind of yeah okay I get it. But come up with something kind of flashy. But in the email, you're going to tell them, you want to make it a win-win right? Because influencers are used to people saying hey if you post 2 pictures I'll send you a shirt. And that's kind of like ah okay thanks. So you want me to A. the reason why you got in contact with an influencer is because you love their content. So they probably have a video, they probably have a video guy and a photo person and all this kind of stuff. They have like … it's a business and you're telling them that you're going to send them a free $20 shirt for 2 posts when they have costs. I mean there's a reason why you picked that influencer because they have great content. If they're a lower influencer what I mean by that lower followers and they're doing it themselves then maybe that makes sense. And maybe they love your brand and maybe they will do it for free. They'll say you know what I love you guys as brand why don't we do … you guys send me one shirt a month, I'll do two posts a month and that's going to be a win-win for everybody. Joe: Let me ask about tracking because you know with Google Ad Words you can track response at ads you can track … we know what cost per acquisition is. How do you do that with an influencer that you give $1,000? Shane: Yeah there's a number of different ways of doing it you know the ones that just want a flat pay per post … I mean that's … the difficult part is … I mean what I would recommend is so this's the thing if this is my company this is my brand this and what I do with my clients. There's a number of ways to do it. There's coupon codes, so you put Jennifer25 so they should put something on hey this is Jennifer these are these products by these companies I've used it in the last few months everything's awesome and I've worked out a deal where you guys everybody gets 25% off hurry it's going to be gone in 40 hours; whatever the message. Joe: The influencers, for the most part, is saying use my coupon code and being up front and saying I'm getting a commission I'm getting paid I'm- Shane: They're supposed to, FTC you're supposed to right? So the thing is because they don't want you like in theory fooling the public right? So it's no different than if you had whatever Snoop Dog talking about Toyota on a commercial at the bottom really low will say Snoop Dog was paid for this promotion. So there's … they want to make sure people aren't being fooled so you should put this as some kind of a sponsored ad or #ad or #sponsored something like that. Joe: Okay. Shane: They would put that in the hash tags it's … the FTC's there's always a little bit of gray area with that. But if you put some things like that you should be safe. The thing is that what you want to do when you have those like I said when those people reach out to you and you're trying to develop those time relationships. The thing is you have the coupon code so you can use something whatever that is the thing but one thing a brand realizes is just because you hire Jenny that has 50,000 followers they can't be a frequency deal. So email marketing if I want to go buy a Coca-Cola what I do is I see a commercial and then I see a banner and I see this when I go to the store I go, man, I feel like drinking a Coca-Cola for some reason. It's the same thing will influencer marketing, don't think 5, 6 years ago you could put up one post and probably make some great money; it's a frequency deal. So you don't … when you're negotiating with influencers make sure that there's 1, 2, 3, 4, 5 … there's multiple things that they're going to do for a set price assuming that's how you want to … but just make sure it's a multiple deal with the … so we have coupon codes, you have an affiliate link. So Instagram being the example there's only one place to put a link right so it's a very valuable valuable place. What we use … there's a number of different things you can use but with that you can either A. you can negotiate with the influencer and say hey we would like to give you an affiliate link that you put in your bio thing and we'd like for the next 2 weeks while you promote this product we'd like for you to have that affiliate link in there. So they can put link in bio or something like that. So it pushes them up there but you have to have a contract with that influencer and make sure they know what they're doing. That's another big thing with this is we have brands and if- Joe: Where do you find these contracts? Shane: You can look online. And we actually have some templates that we use that we could that I think … I'm sure I've shared them on multiple different posts but really just a brief right? You want a brief of like hey this is the hash tags you are going to use. This is the kind of content that influencers have used in the past that have been successful but give the influencer free reign to do what they want. Just give them basic guidelines. Hey, we're also looking for you not to do any anything within our competitors for the next 3 months so that you're not doing 10 different campaigns about the same kinds of stuff; just some basic stuff where you're covering yourself. We want to also want to make sure that our link is in your bio for at least 2 weeks or a month or once again everything is negotiable but you have to talk about those terms ahead of times and brands don't because they don't know. That's the reason why I always recommend hiring a consultant or somebody to help you with your 1st few campaigns because then they can … there's these things where you can lose a lot of money and not know what you're doing and just assume by hiring an influencer an influencer is going to do what's best for you. Most influencers aren't marketers; they aren't right? Joe: Right. Shane: The yoga instructor that just … he's a yoga instructor, he didn't go in and get his marketing degree and say hey I'm going to go and try to build this huge community. He just started doing what he does. Joe: So he needs guidelines given to him from you on what to do and how to do it. Shane: Yeah because if not then it … you just, you need some direction. Joe: Got you. And you've talked about Instagram; my kids are always watching videos in Instagram. Occasionally they snap back and forth and I don't know how they're ever going to make money on Snapchat but I'm sure they are. I'm sure they probably are. But what social media outlets are the best options for people that are selling yoga pads [inaudible 00:29:20.6]. Shane: So Instagram is where we spend a lot of time because it's like that lifestyle; everybody wants to like have the pink puppy and be doing yoga be … have the perfect little cute little babies around and the perfect relationship. And so it's that lifestyle type you know when I'm always on my jet I'm eating caviar and life's good. And then we have YouTube which obviously is awesome because YouTube's always going to be out there. What I mean by that is YouTube's the number two search engine. Joe: Yeah. Shane: So we work with an influencer that does a review of a product or talks about your product they'll go and put that content and they have a huge subscribership let's say it's 10, 15, 20, 30, 100,000, 1 million and that video literally goes out to all those people and then you get those eyeballs on you. Joe: So the software you mentioned before measure engagements on different mediums like YouTube and Instagram or? Shane: It can. Yeah, there's multiple … there's different softwares that do different ones. I mean there's one or two that can measure engagement in all of those. Or what you can do … what you want to do is you can talk to the influencer and say hey put this in the brief. I want to make sure that I'm getting all of the inside information on my campaign and how it went and what we did and that kind of thing. Joe: Okay. So Instagram number one, YouTube number 2, is there a 3rd that people should look out or a 4th or a 5th that you'd consider? Shane: I mean Snapchat is not bad and then Facebook and Twitter there's some stuff going on there. But really where we spend our time is Instagram and YouTube just because it's the amount of how many people around them. I mean people spend I don't know … I guess like 55 minutes a day on Instagram. I mean I think it's after … like after you die it's like 8 months or something … I mean it's … of your life time. I mean it's crazy right and obviously people spend a lot more time on there and then YouTube once again as always it's that evergreen content that's always going to be out there when people are looking for certain things. If you have a … once again I have this thing and this is a brand new patented product and I get someone to do a review on it on YouTube and they've got a huge subscribership like my sales could go through the roof because of that. Joe: Right we've got a number of transactions over the years where I've had businesses that had huge spikes because of Dr. Oz mentioning the product or the ingredient in the product. I sold one earlier this year … I think all these years have blended together, earlier this year where it was on one of Oprah's favorite things back in 2012 or 13 and that carried it for a long time. Would you recommend that the audience members that have the yoga mats of the world go after those big influencers or just focus on the smaller ones or maybe a combination of both because you might get lucky? Shane: Right. You might get lucky. I mean it really depends on budget as well. So if you're going to go after I mean Oprah being the example that you give. Like if Oprah talks about your product then all you have to do is hire somebody to count your money at that point. Joe: Right. Shane: You got to … you physically have to figure … you have somebody and get maybe 100,000 and just have … and just count the money and just probably I will organize it through serial numbers just to get something to do. Joe: I think these people would argue that you also have to scram like it's an inventory to fulfill those orders because that's what happens. Shane: Oprah is not going to promote anything without knowing that you've got some good distribution in place. Joe: A good problem. But that with free endorsement as well, it was sending products to that influencer looking for a free review and Dale called them one day and then said hey you're going to be in this issue and they're like oh my God that's two days from now. Shane: So I'll answer your question, so Oprah obviously being the mega of this whole situation but there's no reason not to ask bigger influencers or smaller influencers … I mean smaller following. They're going to be probably more apt because they're hungry and they're just either getting started and that kind of stuff. You see the prices can be a little lower. They're going to be more engaged stuff like that. But I'm not saying don't shoot for the stars. I'm not saying don't send something to Oprah if you have a patented product that really takes care of a need that nobody knows about because you'll never know. You're saying right there that all of a sudden Dale gave the phone call and said hey we loved your product and you're like you've got to be kidding me right? The thing is nobody is going to knock on your door if you're not out there and pushing. If you're not out there sending that information to Oprah or whoever you'll just never know. And so what I would do is do a nice … I mean I would once again just pull in what … figure out who your buyer persona is and if it's Oprah's people because you have a book that you just read and it's a self-help book and you think you can really help everybody, you have a different angle, you've got a great phenomenal story then pitch Oprah. Go for it. Like why would you not? She's not going to know about people that don't pitch her but I would also say the smaller influencers are … you know ones of medium size and all that go after them as well. The other thing that I always do is like let's say I'm a newer company I go and look at my hash tag. So let's say I'm #whitecoffeemug so … great I go and look that up and that's the name of my company. You might already have influencers in your sphere that love your product. Joe: Okay. Shane: That's a no brainer right? Like that's a … you go in there I'm already talking about your product I don't … you need to convince me of anything except how much free product I can send you to keep spreading the good word about my product. Joe: Okay, awesome. So for those that are listening again that are trying to sell yoga mats and use the medium influencers, forget the shooting for the stars and Oprah that type of thing. These people are usually entrepreneurs with maybe a remote contractor or 2 or 3 VA's here and there. They may take this project on themselves at 1st and then hire somebody to take it over once they've setup SOP's. What kind of time do you think it would take if it was me and I'm working 25 hours a week running my business which is pretty standard for the types of businesses that we sell, should we focus on a lot 5 hours a week to get started, 10 hours a week and what kind of budget would you suggest somebody starts off with that maybe they're doing a couple of million years in an annual revenue. Shane: Yeah, so what I would recommend and once again I'm not just saying this because I'm a consultant. I would hire a consultant and say hey what do we need to do here? Because there's people that have paid me a lot of money for me to learn what I learned … what I know today. I recommend that with anything, not just influencer marketing, with anything; like if you want to jump in and do your own PPC figure out somebody that's a PPC consultant and have them so you listen I just want to hire you for 5 hours a month or 10 hours a month or whatever. I want to put together my ideas. If you can go in and tighten them up it will save you so much money because as entrepreneurs we always go hey we'll do it ourselves right? I'm a grown ass man I'm going to go do this, I can do it. It's not a problem. I'm not going to delegate because I have at least 2 more hours in the day. I'm only working 22 hours in the day I have at least 2 more hours, sleep is so overrated. I'm going to do it myself. Okay, that's awesome; take it on. I'm not here to squash your dream but what I am telling you is that if you have a consultant that helps you along the way they'll help you with you know these … they'll potentially save you money, save you a lot of time. And because there's like plans I'll put together for people and say listen now you go hire a VA or let me show you how to do this or put the plan in place and now these people can go and implement it and they will come back after a month and hey what problems did you have? Hey, you kind of messed up here let's look at the pitch emails you sent. Who responded? Now, what do we respond back to them? Like that's a person that wants to take it on themselves. We have two ways of working obviously, one is hey we'll do it for you like don't worry about it. You sit back we're going to just ask you questions you give us the answers. Or the other way of like hey you want to learn right? And a lot of agencies don't do that like you want to learn because they don't want to give up the secret sauce. I don't have a problem giving up the secret sauce. I want to help you out and I just want to make sure you're successful. Joe: Well look I think what's going to happen is a lot of folks … you know we give up a secret sauce all the time. We help. If you help people they may say you know what I love this I think it's going to be great please do it for me because they're busy doing other things as well. So I think it's a great idea. Some of the people that are listening may want to give it a go and shoot from the hip and see if anything sticks which is probably not the greatest idea in the world. Others will hire a consultant to create a campaign and then they'll run with it, they'll hire the VA. And others may say look just please take this on and run with and we'll measure results with you and if you want we'll keep going. Shane: Also, we're doing that thing too is we're actually developing a course as well. We're doing of course for influencers and for brands. So now we're in current stages of developing that. So they'll also be an inexpensive option or a cheaper option than hiring myself as a consultant or hiring my company to do everything for them where they can go in and take a course for whatever $97 or $300. And they'll go in and they can go through it and once again they'll have enough information there to be dangerous so they don't have me on an hourly basis. Or if they want a bigger project they can do that as well. But we're developing that ritual as we speak. Joe: What's your timeframe? People are going to go okay great when is it going to be done? Shane: I knew you we're going to hold me by the fire Joe because I told you about the book earlier and so then you put me on tonight. Joe: I know. Shane: It will be done by the 1st of the year. Joe: Okay. Shane: That's right, I said it. Joe: When it's done make sure I get that link and we'll put it on the show notes of the podcast okay? Shane: I can't wait but by the 1st. If not by the 1st then I would just … I'll drop off as an entrepreneur and just go and do something separate that's not online just because I'll be so ashamed. Joe: 61, 71, you've got something like 80 days maybe to get it done okay. Shane: Now you're just trying to stress me out, Joe. I mean come on I just gave you a date I mean now I got to go talk to my people and go listen we're going to have to double our staff- Joe: [inaudible 00:38:00.2] for meditation for that stress. You'd be okay. Shane: Okay. Joe: You're not just … no, you're thriving on stress. Come on. Shane: I love that, like the fact you just told me that like secretly I don't even need any more coffee. Like I just got these goose bumps on my back that I said you know what I'm going to show Joe. I'm going to show him by the 1st he forgets this. Joe: Please do. Shane, I love the influencer marketing approach. So many people focus on one thing and you know when they diversify their revenue streams, their sources of traffic it de-risks or lowers the risk of the business and the lower the risk is for the buyer what happens the value goes up. So for those that are listening take a look at it. Take a look at influencer marketing. Hopefully, this episode of the Quiet Light Podcast has helped. Shane, tell the people that are listening how they would reach you if they want to talk to you about consulting or talk about maybe you taking over their influencer marketing campaign. Shane: Yeah so you can reach me at ShaneBarker.com that's S-H-A-N-E-B-A-R-K-E-R.COM and my personal email is shane@shanebarker.com just email me if you have any questions or if you need anything I'm here to help once again. Joe: And if they want to be an influencer themselves they can just head on down to UCLA and take your course right? Shane: Yeah, it's a really cheap course. It's UCLA, I mean it's only one of the top 20 universities in the nation. It's not a problem, just get a little bit of financial aid you'll be fine. Talk to your parents. Joe: You must be doing something right if it took you 10 years to graduate and now you're teaching at UCLA so good for you. Shane: I'll tell you. Thank you so much. Joe: I appreciate your time make sure you give me that link. I'm going to hold you to it. Shane: I'm on it. Joe: All right buddy, talk to you later. Shane: Thanks, Joe bye bye.   Links and Resources: ShaneBarker.com Shane@shanebarker.com Influencer Marketing SaaS: Grin.co Klear.com NeoReach.com

John began his career working in politics, including as a writer in the Clinton White House, Office of Presidential Letters and Messages. He was also a Speechwriter in the California Governor's Office during the Davis Administration, and later he became an Attorney. John gave up speechwriting and the law to become a blogger and podcaster! He helps business owners connect with anyone they want to connect with. And they find their businesses grow exponentially because of it. He also owns and operates a website and related Podcast called SmartBusinessRevolution.com where he shows entrepreneurs how to build and use relationships to build more value, revenues and profits in their businesses. John's take on the business: The number one, most important thing that will determine your level of success or failure in business is your relationships. In this Podcast episode John shares his insights on building stronger relationships, and connecting with people that can make a difference in your business. Episode Highlights: John's history as a white house intern, staff writer, attorney and entrepreneur Why “helping first” matters most. How to build relationships without being awkward. How to break the ice with a new group of people. Learn some basic mechanics of talking with people. Making connections brings more value. Why delivering value works best. How making introductions builds value for you. How does John make a living in “networking”. Events where “mixing” is required and new people are attending. How to monetize Podcasting Transcription: Mark: So I remember an event … I think it was three years ago, I was at Pubcon and I had hired a PR firm to be able to help with Quiet Light Brokerage and some things that we were trying … no was it four years ago we were trying to do and I had hired somebody to come with me from a PR firm and she was an awesome networker. I mean she was phenomenal at what she did. And she came out to me laughing at the networking event at Pubcon because she said this is so funny. She's like I'm so used to networking events where everybody's a professional networker and she said people here obviously are not because everyone was looking down at their phones and shuffling their feet and saying I don't really want to introduce myself to anybody so I'm going to pretend like I actually have something to do on my phone. And you know what that was also me. I'm a terrible networker. I'm not really good at it. I'm a natural introvert. Joe, I understand you had John Corcoran and he's a networker and you guys talked about networking. This is an area where I struggle so I'd love to learn a little bit more about what you guys discussed. Joe: You know one of the first things John said was don't fall asleep, don't tune out because it's networking. You can grow your business dramatically by meeting the right people and being introduced to the right people. You don't go at it with that approach ias John's thought it's more just building relationships and those relationships lead to additional connections and relationships that can help grow your business; double, triple the size of your business. It's helped us dramatically through what this podcast we've met so many people. It's broken down doors and they feel like they know us more because of it. The networking that John talks about is exactly the same. It's through all of the different events that we might attend to. And he kind of gives some tips on breaking the ice to make connections and really kind of the Golden Rule approach to networking. It's a fascinating story. John's actually a fascinating guy. He used to work as a speechwriter for … I think it's called presidential letters during the Clinton administration. He did not know Monica Lewinsky. For those listening, I did ask. It was pre-recording but he absolutely didn't know her. Yeah, everybody chuckles poor girl really, seriously. He went to law school after doing that and eventually became a lawyer, practicing attorney and replaced his income as a lawyer by podcasting and blogging and doing that through networking. Pretty impressive guy, great story and I think he can help a great deal with people that don't realize how important networking is in helping other people is to their business at the end of the day. Mark: Awesome let's go right on into it and learn a little bit more about networking. Joe: Hey folks it's Joe Valley from Quiet Light Brokerage and today I've got a very special guest. His name is John Corcoran and he has a ton of experience both as a writer for the White House, as an attorney, and as a networking specialist. John, welcome to the Quiet Light Podcast. John: Thanks to have had me, Joe. Joe: Quite heavy here man. We met at the Prosper Show you're doing that very thing, walking around with a camera and a microphone, networking, talking to people, helping James do a great job there which they always do and I think you've been a big part of that. But that's my intro right there. I need you to tell these folks that are listening all about your background, your experience, who you are, and what you're all about. John: Sure. Well hopefully, people didn't tune out when they heard oh networking I hate that stuff. That's a funny reaction that people have. It's kind of like sales right? We know it's important but we also kind of hate it. And oftentimes that's because we've had some kind of negative interaction or negative experience with it; some guy coming up and sticking you his business card in your hand, in your face trying to sell you on something at a networking event. I'm not an advocate of that. I think there's a lot smarter ways to do it, a lot of tools that we have available. My background you know when I was a kid I moved around a lot. My father lost a job three separate times and each time we had to move across the country 3,000 miles away; away from family and friends. That experience taught me the importance of building relationships in business and it's critically important. And as a result of that, I've had some amazing experiences in my career. As you mentioned right there in the White House, in the Clinton White House years, speechwriter with the Governor of California. I had my own legal practice for a number of years and now I've got a business called Rise25 and a blog and a podcast called Smart Business Revolution. That's really more of my focus now and we bring people together at live events and I really enjoy doing that. Joe: Tell us a little bit about your background in terms of … I'm looking at your bio here and it says you went from party school to the White House. Just for the sake of the people that are listening, how the hell did you make that transition from being at a party school to writing speeches for the president? John: It's strange I know. It's a strange trajectory. So yeah I mean basically I went from an English major, getting a BA in English at a party school to within a year of that I was a writer in presidential letters and messages in the Clinton White House. It's kind of like a second tier speechwriter. I'm kind of like a … you know as a speechwriter has pulled a hamstring then we would step in, that kind of thing. But it was an amazing experience. I had interned in the speechwriting office during college. It was an amazing experience and I went back to college. And networking lesson number one is keep in touch with the people in your network. And once you build a relationship with someone it's really important to keep in touch with them. And so I was back at college, I knew I'd love to get a job at the White House but not all former interns get that kind of gig and so I kept in touch. I would send things from time to time like speeches or articles or passages that I found that I would send to the speechwriters. Not as a way of saying like hey do you have a job for me? But they … it kept me top of mind and what do you know a month or a couple of months later, a year later something like that they reached back out and said hey we heard about this position for you and I ended up applying and getting it. So it was an amazing experience. Joe: Were you taught that or did you just intuitively share information, stayed in touch and tried to help with little bits and informa,tion that you found? John: Yeah looking back I think really it was part of how I grew up and having to be that kid who is new in the class. I remember what it's like to move in the middle of a school year into … I went from Southern California to Massachusetts which is a huge culture shock. From being a kid it was like out at the beach to like dock siders and button downs and stuff like that in Massachusetts. It's a very different kind of culture and showing up in the middle of the school year when everyone had been in the same group of kids for years and years. And so it taught me the importance of being able to go into a new community and be able to make friends essentially. And I did that a number of times growing up and so I just realize the importance of it. And also just with watching my dad struggle when he got laid off a couple of times, the importance of building a network before you need it. You need to have these things so that when the S-H-I-T hits the fan, which it does from time to time, the economy or your company going under or whatever you've got to have that network. You have to have built those relationships first so that you can use them when you need them. Joe: Yeah I think it's essential. There are several mentors in my life that have given imparted wisdom. One of them is along those lines and it kind of goes with what I've recently studied which is a DarrenDaily … they call them DarrenDaily it's a Darren Hardy program, you know essentially it sounds like what you do about speechwriters was you gave something to them first. You didn't expect anything in return. You were giving them something to help them. Hey here's an idea and you were on top of mind because of that. And then you kept giving throughout the year and eventually, you got something back. Maybe it wasn't your intention to get something back but you were there, you were front of mind and you were offering something to them. I find that the same thing applies to what I do. You talked about networking it'll gross folks, don't tune out because of that. Same thing with a broker man, I'm a “broker” right? I'm a business broker. People get sort of turned off by that if they go with the general label of business broker. But more than anything else we just simply try to help. We try to help people with whatever the issue is, with the experiences that we have, with the knowledge that we have, with the relationships that we have. I refer people out all the time helping them connect with bookkeepers, attorneys, whatever it might be expecting absolutely nothing in return. Eventually, we'll run into them at a conference and spend some time with them and build a relationship with them and then they may refer somebody to us or if when they decide to sell their business they'll think of us first. I don't like networking. I don't. I never have. I'm a bit of an introvert. I love doing the podcast because it's just you and me it's not a whole group of people here. I don't have to walk up in a crowded room. I'm a kind of a low talker so people can't hear me. I've got a big microphone now so that helps. How do you advise people to sort of break the ice with a new networking group or a mastermind group or if they're at an event like Rhodium Weekend like E-commerce Fuel like Smart Marketer, like Blue Ribbon Mastermind, and to just walk up to a group of people and start talking? How do you recommend they do that? Just say hey because obviously, they're strangers too? John: Yeah I mean there's a high level and then there's the mechanics of what you use in a physical … a face to face type of interaction like that which also applies to online. You know a lot of networking we do these days can be through tools like LinkedIn or Facebook or something like that where you can really leverage relationships. So I would say first you got to start with okay am I at the right event to begin with? And that requires some really deep soul searching. Are you going in the right direction with your career? And people do pivots all the time. They change, they just … they lose passion for something. So you have to be sure you're going in the right direction because you can't squeeze blood from a turnip. And if you're at the wrong event then you're not going to find the right people there who you're going to want to engage with or you're going to want to talk to. So start with that and then secondly I think you're right about the give approach. You've got to focus on okay I'm going to give, give, give as much as possible and then after that people are going to want to return the favor. And that doesn't mean you should be taken advantage of but it means you should try and deliver value to people first before you try and hit them with a sales pitch. We've all been hit with a sales pitch right off the bat where people tries to get something from us or tries to get us to buy from them and it just doesn't feel right. It sits in our stomachs. So don't be that kind of person. Be a giver first. And then [inaudible 00:11:08.3] talking to people face to face in an event or something like that. Usually, I think people struggle because they over think it and they think okay I want to come up with some brilliant thing that will be related to my vocation, that will get us in a big discussion around what it is I do so that I can sell them on something. Well, the truth is you should spend a lot more time on just more human conversation. It could about hey how about this crazy weather we've been having or when did you get in? If you're at a conference you know where are you from? Maybe it's something on their attire, maybe they have an interesting shirt on or something like that. A lot of times there are little tidbits that you can you can pick out of there and then that gets you into a conversation. And then people leave little breadcrumbs all the time they just require exploring. People will mention oh yeah I was a little delayed my daughter had a volleyball tournament and so I wasn't able to get here when I wanted to. Well, that's a huge opening right there explore that. Go a little bit further and say oh really where did she play volleyball, what was the tournament, what was … how is she doing, what position is she in? Just taking an interest in people will get you really really far. Joe: It almost goes back to our teenage days when our parents told us just to take an interest in the girls and ask questions and it would work out pretty well. John: I know. Joe: We were teenagers and we paid no attention and we got it all wrong. At least I did, I don't know about you though. John: Exactly. I don't even know if my parents gave me that amount of advice so [inaudible 00:12:37.8]. Joe: I'm trying to do with my kids and I know that you're doing something with your son. I saw it on LinkedIn. I love that you're helping him sell some- John: Yeah we're- Joe: It's … I almost said Girl Scout cookies. John: Yeah … oh no, it's Kab Scout. And it's funny he's like a natural born entrepreneur. He just turned eight and loves selling stuff, loves making money and so we're kind of using it as a teaching opportunity. But right there, there's a good example okay. You said I hate networking, a lot of people say that I hate networking but I love connecting with people. They'll follow it up with that and then I'll say okay well what do you think networking is really? I mean it's connecting with people. Maybe you hate being in a room full of strangers and not sure what to say, that's a given and that's fine. I totally get that. A lot of people get uncomfortable in that kind of situation. But me sharing my son's experience and experience we're going through with learning about setting up a website to sell Boy Scout popcorn as a fundraiser you know that's a way of remaining top of mind with people who are in your network on LinkedIn. And people see that and then it's also a way of teaching too because I'm also using it as a teaching opportunity as well. And it also personalizes me. I found … you probably found this too, when people they know more about you personally, a passion, or a hobby that you have or they know something about your kids or something they're a lot more connected to you. And I mean I discovered this a long time ago, long before I had kids. When I asked people about their children before I had kids I would ask too about their children because I notice they would light up. And it just breaks down these walls, breaks down these barriers, it allows you to really accelerate the connecting process so that you get to know that person a lot better and they're a lot more motivated to help you. They start to treat their interactions with you less transactionally and more like a true friend, a relationship; something that they actually are invested in helping. So that's why I do things like that is sharing a little piece … if you share a little piece about your life, it's not everything, but sharing a piece about your life it makes people more connected to me. It makes me top of mind and who knows where it might lead after that. Joe: Right, I couldn't agree more. I saw it and I felt it humanized you and I felt like I knew you a little bit better even though we've only met a couple of times. I was a guest on your podcast, you're a guest on ours, and we met at the Prosper Show. So I totally get it. By way of example a lot of people listening they're either buyers or sellers and they love to monetize things. They say well how can I monetize something? And I want to give an example, I got a text today about two hours before this recording where someone was at an event in Miami and I introduced him to somebody else. They connected and he said to me, he sent me a text and he's like thank you for introducing me to so and so. I feel like I got 1.5 million dollars' worth of value out of that lunch and I'm buying a business from him for much less than that so I feel like I've doubled my money. And they were able to meet face to face for the first time and just get that connection. And that particular individual is making a point of helping lots of different people. I can't give you his name but every time I speak with someone that has connected with him it's not about what they got from him it's what … which they did get it's what he did for them. And that comes back around and it gets monetized in a variety of different ways. Most people listening again are either buyers or sellers thinking how the heck is this going to help me? Back when I sold my business in 2010 there weren't really any Mastermind groups. There were certainly not any Facebook groups. There weren't any Smart Marketer events or Rhodium weekend, any of these things that we go to now and connect with people over and over and over again and it's eventually just a trip to hang out with our friends. Hanging out with those friends now and sharing that information without expectations or getting back anything else is what I think is the way to immaterially monetize it. You can monetize it but you have a hard time calculating it. Do you have any direct experiences or examples where you can say you know I introduced these two people … this person connected with so and so and their business took off because of it? John: Oh … I mean I couldn't narrow it down. I mean I have so many examples of that sort of thing and I do it more than most people. So I don't want to say that you need to spend all your time doing that. There are some connectors who spend too much time going out delivering value, connecting other people. But let me put it this way if you try the alternative … the opposite that certainly doesn't work. We know that doesn't work. If you just go out there and you don't try and deliver value and you just try and pitch people we all know that doesn't work very well right? So if you try the alternative, if you try the give first approach you will see dollars and cents to your bank account, others will see dollars and cents in their bank account. I can think of offhand two situations where I introduced two people to each other, kind of like you, you're just an introduction; no strings attached or anything like that. I just thought you two would get along and they started a business together. In one case those two individuals, they lived in the same state but opposite sides of the state. One ended up moving to the other part of the state so that they could work together and have a business together as a result of that one introduction. And you know those people will walk to the end of the earth for me after I've made that introduction. So it definitely turns into dollars and cents in terms of more clients, more referrals that sort of thing. Joe: But that wasn't your intention right? John: No … I mean it's not my intention but I will say this, look we're all in business, we're all motivated by making money, we want to keep the lights on, we want to keep food in the fridge right? So I don't say at all that you should go out there and you should just be randomly introducing everyone on the street or be doing it matchmaking or something like that. You should do it strategically. You should do it because it's good for your business. I'm not saying go on and do it because for charitable purposes although it is a great thing to do and it does great … it puts great good out into the world. I'm saying do it because it's good for your business. It's good for your career. And it has just been the experience that I've lived. There are great books out there by the way, Give and Take by Adam Grant, Dale Carnegie all the books that he's written. These books they give voluminous examples of people who have resulted in much value coming back to them as a result of the value that they put out in the world. Joe: And you got to a lot of events, a lot of networking events where you have got both business owners, employees, founders, and potential buyers attending them; are there any particular events that you love because specifically the way that it's organized for networking that you can … through off the top of your head, two or three of your favorite events? John: Is this cheating or can I say the ones that we do because they're- Joe: You know people are probably going what the hell does this guy do for a living? It's networking, how does he make money so … answer the question how do you make a living? John: Sure. Joe: You're a networking guy, how do you make a living? What do you do? John: Yeah. So … well, first of all, I was a practicing lawyer for many years. And even when I was a practicing lawyer I mean just introducing your clients is really valuable and giving … thinking about your clients because they will send more business back to you. Your referral partners would send more business back to you. So when I was actually full time practicing law I was practicing what I do today. Eventually, that pivoted into a blog and a podcast which replaced my income as a lawyer and I monetized both of those through a variety of digital courses and through affiliate promotions and that sort of thing. Today I run Rise25 with my business partner. We do live events. We go to conferences and we partner with conferences and hold on connection events like VIP receptions, like dinners, like all-day Masterminds at conferences. Again connecting people but we create the forum. We invite the people. We bring them in. Another thing we do also- Joe: Just to understand so you're not actually putting on the entire event, you're putting on a segment of it or a specific group of attendees. John: Right, and there's an important lesson in that because we've done our own standalone events but the reason that we do a lot of that now … an important lesson for others is it's a lot easier to go where the fish are already gathered to go fishing rather than try and pick some spot in the middle of the lake where there are no fish and attract them back to it. Go to the spot where all the fish are gathered which is what we do around conferences. The other thing we do is we do some Done-For-You lead generation as well. So we do Done-For-You lead gen so helping people with the process that we've used for years to generate leads for our self we help other businesses with that as well. Joe: What types of businesses? John: It's primarily professional services but e-commerce as well. So it's anyone who's … I mean who doesn't need leads right? Every business needs leads whether it's you're trying to connect with someone who might buy your business or whether you're trying to connect with new customers or clients or referral partners or strategic partners or whatever. You know there's a lot of different … the truth is everyone need … and like you're selling like a very inexpensive widget which is often the case with e-commerce there's often someone higher leverage who you are trying to connect with. So that might be other website owners or it might be other people who are selling on the same marketplace as you, or just other sellers that you want to connect with, or other professionals or something. It's a variety of different applications that we'd manage for people. But you asked … so you asked the question earlier was types of events that I'm preferable to. The type of event … and I want to answer that because that's an important question and it actually guides my decision making in what events I go to. I don't like going to events where the culture does not encourage people to mix with one another and what do I mean by that? Oftentimes you have events where at a local … this often happens on a local level like at a chamber of commerce or something like that where you have repeat people coming back month after month and they kind of know enough other people that there isn't enough mixing. I like events personally where I go to an event and I can just stick out my hand and talk to someone or someone else will stick out their hand and just talk to me where you feel free to meet other people. The other thing is I really like formats of events which breaks the mold. They're not just the boring, stuffy kind of reception type of format but I like the ones that are different. So actually just last night we had an event in Chicago which was a VIP food tour and we've done this a number of times, I did one in San Francisco a couple of weeks back and it's like a progressive dinner party meets a networking reception. We kind of combine the two and rather than keeping everyone in one room with watered down drinks and talking to each other all night or maybe being at a dinner table where you're stuck talking to the guy in the right of you and the guy in the left of you for the entire night, we take a group and we take them to multiple locations over the course of an evening. So you're up, you're down; you're sitting next to different people the entire time. You're walking or sitting on a bus next to different people. And we love doing that format because it gets people meeting more people which is really what we're about. So that's another piece of what we do. I realize [inaudible 00:23:45.3] to what we do but you asked the question what types of events so I really enjoy that format. Joe: All right. Tell us about Rise25 and the blog … the podcast and the blog. I want to know more about that. I have a feeling here John that people are going to want to listen to your podcast and learn more about what you do. John: Yeah. Joe: Just … let's hear it. John: Yeah so Smart Business Revolution I started it about eight or nine years ago now. It was a blog and a podcast, it still is. I continue to write there. I continue to publish podcasts. I started … this is an important lesson because now we do help clients with this as well so this is part of the lead generation piece is eight or nine years ago when I was a full time practicing law literally I had a client who came in and he hired me for a tiny little matter. It was $500 of writing a lease for him. I was reading about the guy and I was like wow this is a really interesting guy. He was an entrepreneur. He had started multiple companies one of which had gone public. So he's really successful. I was thinking how can I make … how can I turn this guy into like my best client? You know come back to me over and over again. Literally what I just did is I said hey do you have like 20 minutes I'd love to just like ask you some questions about your career and your businesses and everything. I'm going to record it and I'm going to publish it. I didn't even know how to do that. I didn't even know how to record or publish; podcasting wasn't even a thing back then. And so I ended up doing that, I asked him all these questions. What's amazing is you're publicizing that person. It's exactly what we're doing right now. But you're publicizing that person and you're also asking them questions about their challenges, their opportunities, you're figuring out are there other ways that you can help this person or deliver value to that person? And so what do you know he ended up turning into a great client. He ended up coming back to me and saying hey can you help me with this and this and this other thing too. And it's a strategy that I've used over and over again. I've done it probably three or 400 times with different people where you just simply take an interest in someone else. And you go the extra mile so you actually record it and you publish it and you give them a promotion, give them publicity, you send traffic, you send eyeballs to them. Again it's exactly what you're doing right now. You don't have to have a podcast to do it although podcasting is such an accepted and understood medium these days so that's really the best way to do it today. And I think everyone should have a podcast because it's so powerful. Joe: And you've figured out a way to monetize the podcast and the blog as well which is really weird if we think about the fact that you went to law school, quit to be a podcaster and a blogger and you replaced your income. How did you manage to do that? John: Well so, first of all, you can monetize a podcast … when people hear … I know I just wrote an article about this. I did a research study and I surveyed hundreds of podcasters and I asked them how they monetized their podcast. And so you can go to Smart Business Revolution and you can see the article now. It's at Rise25 also. And people generally thought … they thought of the traditional model, the old school media model. Like I'm just going to build up a big audience and then I'm going to sell ads or sponsorship. And that is only one of dozens of different ways of monetizing a podcast. It's actually probably the worst of all of them and yet everyone thinks that that's what you need to do. It's the most difficult to do. So I mean I've monetized my podcast in a variety of different ways including getting more clients, getting more referrals, filling live events, filling webinars, strategic partnerships; you name it. If you can connect what it is you do which is your business, your profession with the podcast which not everyone does a great job of connecting those two. Sometimes they are completely unrelated and if you have a hobby podcast that's fine that's not what we're talking about here. But if you connect those two and you use them to build more relationships with prospective clients, with referral partners, with strategic partners, you use that podcast in order to build more of those relationships and connect with SALT leaders and gurus and speakers and authors that you would never otherwise have a chance of connecting with then it's an amazing powerful tool. It's … I mean I've been able to have conversations with people who would never give me the time of the day you know what I mean? Like I can't email Gary Vaynerchuk and say hey man I would be in New York can you meet me at a Starbucks for 45 minutes? I want to pick your brain; I'm going to ask some questions about my business. Is that cool? [inaudible 00:28:00.1] like who are you I'm not going to do that but I had him on my podcast even though he's a busy guy because of the nature of the medium. So that's why I'm such a huge fan of the medium it's just … and it's a much better way to network. That's what we're talking about right? Connecting, building relationships, seeing how you can help each other, giving, all of those are encapsulated in the process of doing a podcast and everyone should do it. Joe: I agree 100%. It's what we do; it's why we do it. Because we're connecting with people like you that might be hard to connect to or with otherwise. John: Oh yeah absolutely, I wouldn't return your call if it weren't for that. Joe: I know you're never going to list it … and it personalizes things right? You can write an amazing article, give some amazing advice but without that personality behind it, it's just words on paper. We had people tell us that if they chose someone else to go with someone else it's because they felt like they knew them because they listened to their podcast. John: Yeah. Joe: So I think the personalization of it is important. I think that for those listening that maybe an expert on an advertising business, content, blog, or a SaaS business, or an e-commerce business and you're wondering how the heck do you benefit from this, how would you start a podcast and what … how is it going to work for you? You're going to connect with people that are going to be experts giving advice and you're going to benefit from it in your own business being able to apply some of that advice and being able to pick their brain as well. In addition to other people that have had great success that may come onto to the podcast and share their story and may want to do business with you as well. You just never know what's going to come of it if you just help others and give. And yes it is business we're all in this to put food on the table and hopefully put some money in retirement and stop doing this someday when were not capable anymore but it's fun and it's enjoyable. John: Yeah. Joe: And we get to make a living from it which is kind of nice too. John: Yeah and you know I say it's kind of personal and professional development that also doubles as marketing. Because you're enriching yourself, you're learning, you're asking questions, you're learning and you're also recording it and you're going to put it up on the internet and it's going to exist forever. So it's marketing that will be out there for you forever. And if you're asking well I sell a widget, it … I don't see how that's going to help me or maybe it's some other seller out there that you want to connect with or maybe it's potentially a buyer. I mean that's a great way to use that as a tool. It will help me with hiring, recruitment right? There's so many other ways that you can you can do it. I mean I'm sure Joe you've had this experience, I've had this experience when people come up to me and you have a conversation with them and they're just kind of like smiling as they listen to you talk because you know what's going on in their head they're thinking wow he sounds just like he does in the podcast. And people will say that, they'll be like man you just … you talk just like you do in the podcast. Well, guess what when I'm on the podcast that's me. I'm not putting out an act or anything like that I'm just actually being me you know. And we've had people that would go … a couple of people who came in to our event recently in San Francisco who had gotten to know me from the podcast and the funny thing is … and this takes a little getting used to, the funny thing is that they've been listening on their own time while I'm doing other things to episodes, past episodes, the whole back catalog and when they come up they feel like they've already built a relationship with you. That's wonderful because of the know like and trust process right? You are already that much further along so it then makes it just a lot easier to have a conversation with them around some kind of strategic partnership or a client … a relationship of some sort. It's just a lot easier. You'd move the ball a lot further down the field. Joe: 100%, I couldn't agree more and I would recommend that everybody does it. For those that are going to events and I've been to many of them and I have that stigma of being a broker. We don't pitch at Quiet Light, we're just here to help so we have to get around that stigma some way. But I was at an event last March I think it was and I've had a conversation with two or three other people and this guy walked up and he just stood there and he started to shake his head up and down and you know at the right moment he just stuck his hand out and introduced himself. And that I think taught me a lesson. It's the hardest thing to do when you go to some of these events like this, you see groups of people talking and you'd say damn they all know each other. I really don't know anyone. It's my first time here. The reality is that even though they're talking and having a good time and having a drink and laughing they may have just met. That was exactly the case that night. The three of us had just met and this person came into our conversation not knowing whether or not we really knew each other and he was welcomed into it and that's what these events are all about. You should never be shy about walking up to somebody and saying hello. You should never be shy about talking to someone like John, talking to someone like myself if we have something that we can help with that's our operation. That's exactly what we do. We're going to give you any and all advice we can. And if someone like John and myself try to get their hooks into you for a commission they're the wrong people to work with. Just walk away, get what you can, and move on. But don't be afraid to stick your hand out and shake your hand and just say hello. It starts a conversation. It's the hardest thing to do but it's also the best thing to do wouldn't you agree? John: I totally agree. Absolutely. Yeah. It's just funny as you're saying about having a stigma you know I think a lot of people feel that way. Especially when they're in business which most people are right? You're in business, you're at a networking event and you're thinking oh other people are thinking that I'm just going to try and sell them. I know this because people email me every day about this saying these things. And I think a lot of times we get stuck in our head a little bit and look I mean I totally get it. I worked for politicians. I've been a lawyer. I think I'm going to round up my career by working for the IRS or as a tax professional so just the most detested professions possible. So I'm used to being in that type of position. I totally get it but look if you approach not thinking about okay how am I going to get this person as a client as soon as possible and you approach thinking okay I'm just going to learn about this person. I'm going to learn what I can do if there's some recommendation I can provide. Maybe they're a huge fan of something else I'm a fan of and we can connect over that. That's it. That's all that matters. You're going to build up trust. You're going to get to know them. And then later there might be the possibility of doing business together but start with that first and that gives you a great foundation. Joe: I agree if you do that enough your pipeline of new business will eventually fill up and it will be continually flowing. John: Absolutely. Joe: John, how do people find out more about you and learn about your experience and get to listen to the podcast and things of that nature? John: Yeah, thank you sir. So Smart Business Revolution is the podcast on iTunes, Stitcher, wherever you listen to podcasts. SmartBusinessRevolution.com is the website. Rise25 is the other website and yeah reach out, I love hearing from people who heard me on a podcast so I appreciate it. It's a pleasure being here. Joe: You're a good man John. Thanks for your time. John: Thank you.   Links: John's LinkedIn Profile Smart Business Revolution Blog & Podcast Rise25 Book recommendation: Give and Take by Adam Grant

Do you want to know how to grow and scale your business to sell it, but don’t know where to start? It’s true that creating a business from scratch and growing it can be a tedious and long process. However, for my guest, Chris Yates, buying a business instead is a great way to go. As a digital entrepreneur and founder of Rhodium Weekend and owner of Centurica, Chris has proven that when you have the right tools, you can build a business that gives you freedom and growth. Chris shares insights and strategies, how to avoid the big mistakes people can make when looking to buy or sell and working in partnerships and more. He also talks about the core values you need in the business that will afford room for your passions, as well as unusual strategies that will guide you to become a professional buyer of a business while minimizing the risks involved.

The second week of October was a particularly busy time for me. I was up in Vegas to speak at back-to-back conferences. First up was Retail Global Las Vegas, an ecommerce event organized by Aussie ecommerce veteran Phil Leahy. This was then followed by Rhodium Weekend, a gathering of online business owners and potential buyers. In today's episode, I talk to Dave about my biggest takeaways from attending and speaking at these events. There are a lot of investors looking to invest in ecommerce businesses. With banks offering low interests, a 50 to 100% ROI that's typical of ecommerce businesses is all the more attractive. Many ecommerce entrepreneurs have their significant partners involved in the business. More often than not, drawing a balance between your professional and personal relationship can prove challenging. No one really knows how to deal with the online sales tax issue. I joined a three-person panel session on this and about ten minutes into it, these experts were arguing amongst themselves on how this issue can be addressed. Tune in to this episode for the details and Dave's input on them. Overall, I was quite happy with how these speaking engagements. I was more relaxed and able to focus on how to deliver my presentation better to the audience. We've opened up registration for EcomCrew Premium for 3 days. Get access to exclusive content - courses, webinars, swipe files, and conference presentations. You also get unlimited 1 on 1 email time with both Mike and Dave. Finally, we have our members-only Facebook group, which allows you to interact and learn from other ecommerce entrepreneurs. Registration closes at midnight Pacific time so go ahead and sign up today. If you want to get involved in the Online Merchants Guild, you can get all the information here. As always, thanks for listening to this episode! If you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes. If you have any questions or comments, feel free to leave them below. Happy selling!

Two years ago, Brett Curry from OMG Commerce would not have recommended advertising on YouTube. But today, he sees it the way we now look back at Facebook. When cost was cheap and the audiences were huge. YouTube gets a billion views a day, a billion! Brett's company knows all about advertising on paid channels…be it Amazon or the multitude of Google channels. Recently Brett has seen opportunities on YouTube that allow his clients to advertise on a fixed cost per acquisition basis (my favorite)! In this podcast shares what he finds works and what does not. No need to hire his firm…if you want to learn how to do it yourself, good news! He's created a course with Ezra Firestone. See the show notes. Episode Highlights: YouTube has always been a great content platform. How recent ad types make YouTube much easier to monetize. Youtube is used as a product search engine more than people realize. Viewers (and now shoppers) on YouTube are actively doing something, these new campaigns can target people based on that activity. Nothing sells like video if it's done right. Brett explains the pre-roll and true view options. The key tips on how ecommerce business owners can approach the daunting task of video ad producing that can be profitable. Some companies use agencies and others are hiring full time video people in house. Search behaviors are different on YouTube than on google. The integration of the platforms allows for hitting more people in order to make more money. Why Youtube is an invaluable re-marketing platform. If you give Youtube the right audiences to go after and you and you have a video that's powerful, over the time the machine will start hitting that CPA target. These platforms can successfully follow the journey of the buyer. The importance of getting all the campaigns working together and connected. Transcription: Mark: The world of search engines has changed significantly since about 10 years ago right? Google has been the king for a long time. I believe they started around 1997, 1998 and they've dominated and kind of set the tone for what we think a search engine is supposed to be. But in today's world, if you're in e-commerce or if you're in online business in any way you have to think about different avenues for search. For example, Amazon is the number one search engine for products at this point. But the number two search engine in the world is also owned by Google and that's YouTube. For a lot of us especially those who have been in the online world for a long time we sometimes just think narrowly about Google because that's what we've always done. But there's a lot of other opportunities where people are actually searching and have that direct intent and that's going to be YouTube as one of these things that we need to look at. And Joe I guess you talked to somebody who's really been focusing on YouTube as an advertising channel to be able to acquire customers for a business and he gave you some insights into how to use this channel more effectively. Joe: Yeah I spoke to Brett Curry from OMG Commerce. I saw him do a presentation specifically on monetizing through YouTube. I guess the best way to explain this is once upon a time on radio I had a campaign, a niche model called Per Inquiry. And we would pay the radio station per inquiry that converted to an actual customer. It's cost per acquisition that we call it now. YouTube has that opportunity now. So Brett really honed in on advertising physical product companies and doing it cost per acquisition … I'm stumbling like crazy here folks sorry, cost per acquisition on YouTube. It's not something we think of out of the gate when we think of YouTube because we're just watching the latest sports, concert, whatever it might be but people are starting to really use YouTube for searching for products and then clicking that link and converting. There are video opportunities where you only pay if someone watches the entire 30 seconds. That's something else we talked about but the one that excites me the most is the cost per acquisition model when he gets into that detail. Mark: Now I think video is something that all of us need to start opening our eyes to. I think there's just tons of opportunity when it comes to video. And you know fortunately, I think it's a little bit intimidating for most of us. And I say fortunately because if you can get over that intimidation if you can get over some of the worry about “man this is actually pretty expensive to produce” there is a world of opportunity out there if you can start getting it. So I'm excited to listen to this because I've really only just toyed a little bit with YouTube advertising. I haven't actually gotten in and tried to understand it fully so this would be a good primer. Joe: Yeah it's great. And don't fear the production costs folks because some of the best converting videos according to Brett are the ones that are actually customer produced. So consider that in terms of presenting to on YouTube. That's it, I'm done talking. Let's go see what Brett has to say. Joe: Hey folks it's Joe Valley with Quiet Light Brokerage and today I have Brett Curry from OMG Commerce with me on the line. How are you Brett? Brett: I am doing fantastic Joe thanks for having me on the show. I'm excited to be here. Joe: You're also a podcaster too right? You've got a podcast what is the- Brett: Yeah. I love podcasting and usually I'm the one firing off the questions and listening. Honestly, I think listening is the harder job of the two here. So I'm looking for just to talking up a storm here talking about YouTube. Joe: Awesome. Well, I want to talk about a whole bunch of things because I think we met at the … for the folks that don't know we met at the Blue Ribbon Mastermind Conference in Denver. It's part of … I'm going to get that chain of events here wrong probably, it's part of the Smart Marketer Group, right? You guys … how long have you been part of that group with Ezra? Brett: Yeah. So I met Ezra Firestone at a Traffic and Conversion Summit event like six years ago. It was in San Francisco. It's a long time ago. I met Ezra there. He was just launching his Mastermind Group called Blue Ribbon and I thought to myself this is a dude that I need to know. And so we kind of striked up a conversation, I joined the mastermind group, the rest is history. So I think that was I think years ago believe it or not. Joe: And I've been going to mastermind Groups and we talk about them here on the podcast whether it's Rhodium Weekend or eCommerceFuel things of that nature. Blue Ribbon right up there for those listening if you can … if your business is big enough and you've got the revenue reach out. Find Ezra somehow through Smart Marketer probably right? Brett: Yes smartmarketer.com you got to consider it. I'm a huge eCommerceFuel fan as well. Andrew Youderian is a friend of mine. I think they do a killer job but yeah those two are right up there man. If you're serious about e-commerce and growing check out both of those and you're welcome Ezra and Andrew for the club. Joe: And for those listening if you're not in a Mastermind group or you're a buyer and you think how am I going to learn all this? It's through these mastermind groups. They didn't exist for me. I sold in 2010 as Ezra was saying I spoke to him on an earlier podcast. They really didn't exist when I started and now they're available for so many people to get so much more success I think than I had at the time. But listen I want to talk about OMG Commerce. I want to talk about you. You did a presentation at Blue Ribbon Mastermind on monetizing through YouTube and then kind of blew me away with the specifics of that and then all the other things that you do around that at your company. We want to talk about that. Can you give us … the people listening some background on yourself, on your company and how you started, what you do and then I want to jump into that. Brett: Yeah, absolutely. So right out of college in 2002 dating myself a little bit, I launched an agency; a small agency helping local businesses with TV, radio, and print; so kind of traditional old school media. I became a marketing junkie in college and I was introduced to Dan Kennedy and Jay Abraham and some of those kind of marketing gurus. I fell in love with the psychology of marketing and I kind of fancied myself as a copywriter for a little bit. And so I launched this agency, I started doing SEO in 2004 and somewhat just clicked. No pun intended it just fit my personality. I liked it and so I kind of became and SEO nerd. But still thinking about copy and the conversion rate and things like that. And then moved into AdWords and then really things took off in 2012 when I got hooked on Google AdWords and kind of … really we started our agency OMG, my business partner Chris Brewer and I we started the agency in 2010. But 2012 we kind of got hooked on Google Shopping. I wrote The Ultimate Guide to Google Shopping after months and months of testing and perfecting things. Shopify published that and then that kind of helped ignite the agency. And so since then, I've been speaking at events like Traffic and Conversion Summit and Ezra's events in social media marketing world and internet retail and things like that. And so really the agency is built on driving traffic to e-commerce stores and primarily using Google Ads; so Google Search, the text ads, Google Shopping, Display Network, and more recently YouTube. I've always been a fan of You Tube. Recent ad types make it much easier to monetize and much easier to track and create measurable results. So I'm doing a lot with YouTube. And then kind of the other side of the business is Amazon. Helping companies with their Amazon ads as well and so … but I spend most of my time in the Google Ads ecosystem. Joe: Well I tell this story and I'm sorry for the podcasters that have to … listeners that hear me repeat this but you know I spent a lot of money on Google Ads and I didn't have any experience. I didn't have any training. And I think there are too many people out there doing that. They were like me. The problem is that I've discovered is that you try someone who claims to be an expert and in fact, they're not. And they take your budget and they blow it up and you cost per acquisition goes up and your profit goes down and you know this is six months before you want to sell and all of a sudden the value of your business goes down as well. When you get up and presented … I knew first and foremost because you are at Blue Ribbon you are going to be top notch. But then I dug deeper. I sat by Chris, we talked for a while and you talked specifically about YouTube and I know that you can't do that alone and that you've got to package everything else in there. But some of the things that you talked about were … and I'm going to let you dig into it and tell us about it, some specific fix targeted cost per acquisition and only paying if somebody views the full 30 seconds and a whole bunch of things that I don't think is out there for the average person that's doing all of the marketing channels themselves to figure out. So tell us about that a little bit. Brett: Yeah absolutely and I think I'll just … I'll set the stage really quickly if that's cool just talking about YouTube in general. And you know I've been a fan of YouTube forever. It's always been a great content platform. Everybody is on YouTube. A billion monthly users, average session duration is like 40 minutes which is longer though on Facebook. And the cool thing about YouTube is it's full of a lot of learn, do, and buy moments. So if I'm on YouTube I'm actively doing something. I'm looking for how to fix my lawnmower, how to fix my washing machine although I try to avoid that at all costs and just pay people. But if I'm at pinch go to Google or go to YouTube to learn how to do things or researching products. That's something that a lot of people don't know is that YouTube is used as a product search engine pretty frequently where people are looking for unboxing videos and demo videos and things like that. And so … or just you know how to, my kids use YouTube all the time from everything to how to play the piano to … my 16 year old son now is looking at how to pick up chicks which will it make you proud or worried I'm not sure. But yeah you can learn anything on YouTube right? So when someone's on YouTube they're actively engaged in what they're doing and so the beauty of that is you can target people based on what they're doing on YouTube. But then like you alluded to now there's these ad formats that just really make it powerful. And so it's kind of combination now of better targeting than ever before so we can make sure we're reaching the right person better than we ever have before on YouTube. Everybody is there but how do we get to the ideal person for a particular e-commerce business. And then how do we have like a bidding and ad format that people want to click on and want to take action on and we're paying a rate that makes sense. And so that's kind of the backdrop. But yeah, so you talked about only paying if someone engages. That's called YouTube TrueView and so for those that don't know that's the pre roll or before ad. So if you go to YouTube to watch a clip from The Office or something and then there's an ad that pops up before that or the place before that you've got five seconds until that magical Skip Ad button pops up. And so the way that works is if a user skips the ad before the 30 second mark or before the end of the ad whichever comes first then the advertiser doesn't pay. So you know I could watch 28.9 seconds of an ad, click skip and the advertiser doesn't pay a penny for that. And so … or someone has to click through to the sites. If they're watching and they think ooh this is cool I'm going to click on the ad and go to the site and then the advertiser is charged for that as well but really an awesome concept. You know I used to in the previous agency days, I did quite a bit of TV and it was my favorite medium pre … before I got really deep in online marketing just because the power of video right? Nothing sells like video if it's done right and so … but if you're running a TV spot you pay for the spot regardless of if people walk out of the room or change the channel or whatever. With TrueView you're only paying if someone watches or engages so it's pretty powerful. Joe: Well let's talk about … for the people that are listening and that have a physical product and let's say they're just doing Google AdWords and they wanted to reach out to you how did that … how does it start, how … to me the idea of producing video if that's something you've never done is kind of daunting. How do you try to approach that? Brett: Yeah it really is and so this is what separates YouTube from say Google Shopping or Google Search ads which are just the text ads. You know a text ad that you can create in about three minutes. Or if you did research it takes a little bit longer than that but it's really easy. Google Shopping, the ads are pretty easy. There's just data feed involved, there's product feed involved which can be a little bit tricky. But a video, man that's tougher. You got to hire a video crew potentially. You got to hire an actor or you've got to be comfortable on camera, whatever. Ultimately though you really can create a video even using an iPhone if you wanted to but my advice on the video itself is be straightforward first. So I think … because we've all grown up seeing ads we have all kinds of ideas of what works and what doesn't work. So we know the funny Super Bowl commercials that we like and so we think we need to recreate something along those lines right? So I need to come up with something like the what's up guys from Budweiser. I'm a believer in direct response. So that's the type of ad we suggest that you run because most physical product companies if you're not huge a pure branding play is going to be tough so you want something that's direct response. And so I prefer a kind of straightforward approach. But a couple of things you can think about is one, you do need to hook someone immediately. So that Skip Ad button comes up in the first five seconds so hook them immediately. So what do you got to say, what question are you going to ask, are you going to be like running up to the camera, are you going to be doing something interesting to make someone say okay I was going to skip because I don't like ads but there's something about this that I need to watch. So hooking them in the first five seconds is key. I believe you got to lead with the strongest benefit. So what is the benefit that your product provides? Is it time savings or is it status or what is that major benefit and then dramatize that. Bring that to life even if it's just you talking and showing the product. So that's important. You also got to incorporate some social proof. So do you have a testimonial, do you have an endorsement, do you have something … are you endorsed by somebody that is trusted by your marketplace; some kind of social proof. And I think and kind of part of this you want to show don't tell you know. A talking head video can work but you want to show as much as you can. That is few of the things to consider to [inaudible 00:15:24.2] have to get in to but things like [inaudible 00:15:27.5] sort of moving the risk. What are the risks that someone has in their head before they buy? So if you're selling apparel or footwear or something what if it doesn't fit? Then what do I to overcoming some of those objections in the video is important. And then a really strong call to action, so like hey what do you … what do I want you as the viewer to do next? If you leave that … oh but this is just crazy to me, you know most people think “well it's a compelling ad people will naturally click”. Not necessarily, you kind of have to ask them to. Like go here, get this free shipping code, or check out this, or watch this further demo, or join our email list to get a discount; something, some kind of call to action and then push people to do that. And the nice thing is there are some new ad formats that really make those CTA's or calls to action pop. But that's just kind of few of the things that make for a good video. But I admit making a good video is much harder than other ad formats, it just is. Joe: Through your agency do you guys have a referral program … people that you say okay these guys have done a good job and you refer people to agencies or do you find that the entrepreneur is creative and ingenious and can create a video on their own and make it work? Brett: Well, yeah it's interesting. So we're seeing now a handful of our clients are hiring full time video people because of their product videos. So video can be useful on a lot of ways right and different types of videos. So maybe I just have a pure product demo video and I put that on my product detail pages and then I'm cranking out little short clips for my Facebook advertising and then I'm launching maybe YouTube content that I'll try to get to rank organically and then I'm running YouTube ads and I've got someone creating that. So surprisingly this is something that I don't think existed with the size of companies we're working with now. You know kind of two million to 10 million a year and really up to pretty 20 million whatsoever, a lot of our clients are in that range. Those companies now have full time video people. Joe: Okay. Brett: There are a few agencies I could name but we don't do any of the creative work ourselves but I can make recommendations. Joe: So let's go to that assumption then that the client has video … has access to it or produced their own, why YouTube though? Why … like when I go and I search … like I did a search today on how to export a profit and loss statement from Xero because a client said it can't be done and I'd seen it done. I get them all the time. Oh yeah? Well let me send a video. So I did that and I sent him, I skipped the Quiet Light Brokerage banner ad because we don't need to click on it. Brett: Yeah. Joe: But it never really occurred to me to buy through YouTube. So what … people know that when you do sponsored Ads inside of Amazon or you spend money on Google Ad Words or Facebook that there's going to be a certain volume you can get to in return on investment. Is it worth it to advertise on YouTube? I know it has a billion viewers but how many people are really thinking products? And is it worth it; a bang for the buck? Should people be paying attention to advertising on YouTube? Brett: Yeah, the quick answer is this; absolutely. And this is one of those answers that even just probably two years ago my answer would have been a little bit different. It kind of would have been a maybe. Like I said YouTube has always been a powerful platform. If you're a good content creator and you created good content and got organic traffic and then YouTube has always been a good source for running a business. But from an ad platform, I believe it's just become viable for a lot of businesses. I would say most e-commerce businesses should consider it and that's a relatively new development. So aside from everybody being on there and aside from people being actively engaged where like you're looking at how to pull a report from … it was Xero? Joe: Xero. Brett: So how to pull a report, if there'd been an ad related to something like that maybe it would have captured your interest or maybe not. But you can target people based on what they're doing on YouTube plus much more. So, of course, YouTube is owned by Google and so now you can target people based on their behavior that Google sees even off YouTube. So one of the options you have is keyword targeting. So if maybe I've got a new Xero alternative so better than Quick Books better than Xero whatever I'm going to … I want to woo people over to my new accounting software; which sounds like just the worst job in [inaudible 00:20:04.7] accounting software. But anyway we'll [crosstalk]. Exactly, I think I just fell asleep as I was mentioning it. But so then I could use keyword targeting and I could target people looking for Xero and Quick Books and Quick Books Online and Quick Books online tutorial. And maybe I'd even target things like why is Quick Books doing this; like some pain points around Quick Books like Quick Books keeps crashing things like that. So those are some of things people type into YouTube kind of just to find a fix. Well then if I've got the alternative to Xero and Quick Books then I run my pre-roll ad for somebody watching a video on how to fix a pain point inside of Quick Books. So there's this keyword targeting that's based on content on YouTube which is really powerful. But then going to what I alluded to a minute ago you can also target people based on what they're searching for on Google. So I think it'd probably be a toss-up like who has more information about you; Google or Facebook? I don't know really. They both know everything about us. And so I don't know about you, my search behavior on Google is different than it is on YouTube. Often if I'm going to YouTube I'm just watching music videos and stuff like that like sort of as in background even. But I search on Google for all kinds of stuff. So then you can target people on YouTube based on what they're searching for on Google. So if I sell running shoes I can look at a whole host of search terms that someone maybe typing on in on Google and I can build an audience around that and then target those users the next time they're on YouTube. Joe: So it sounds like if someone is doing any paid advertising on Google whether it's AdWords or Google Shopping or whatever it might be that they need to think of YouTube as just what it is which is an extension of Google. They're owned by Google. It is Google. Brett: Yeah. Joe: And all those same tools and resources are there that you just got to think visually. So it's really the last couple of years you started to see your advertising work better and get … Google's getting better at it to allow you to do a better job. Can you give me an example without naming any client names on in terms of what it's done for them so that somebody doesn't go “oh, wow, okay”? Brett: Sure. Joe: And what other channels within Google they're also spending money on? Brett: Yeah absolutely and so I'll kind of mention this first, I think YouTube is for a long time have been good at creating brand lift. So even kind of before some of the new targeting options and before some of the new ad options it was good at getting people to be aware of a product. So we'll use Boom by Cindy Joseph because Ezra wouldn't mind if I talk about it and we run all of the Google ads for Boom. But if we ran YouTube ads introducing people to Boom … let's just say we had no call to action I think at the end which we wouldn't do that but let's just say we did, that would likely cause a brand lift. More people would start searching for Boom on Google. After watching the video they'll be intrigued and say oh what is this let me check out a little bit more. And so that's always been kind of the platform or always been a benefit of the platform. But then kind of beyond that the next thing I would recommend someone to do is look at using YouTube for remarketing. So for people that visit your site whether they go to product detail page only or whether they add to cart and abandon, let's remarket to them. So let's use YouTube as a remarketing platform. And so that's what I've been doing for a while as well, taking our remarketing list like you alluded to all of this is built in the Google ads platform and it's now rebranded as Google Ads, not Google AdWords. So it's all in that platform so we can upload our remarketing list, we can start segmenting that and running YouTube ads to those people. So we typically segment break out site visitors, break out PPC viewers, break out cart abandoners, and kind of have different ads that we run from them. But then kind of beyond that we're looking at a new format called TrueView for action. And you kind of mentioned this before too where you're … this is where you're bidding on a CPA basis. So basically what we're doing is we're telling YouTube hey I'm willing to pay X, I'm willing to pay 100 bucks or 80 bucks or 50 bucks or whatever for a conversion and over time YouTube gets really good at dialing that in. So if you give YouTube the right audiences to go after and you have a video that's powerful over time the machine will start hitting that CPA target provided your site converts as well. Joe: Google TrueView? Brett: So as- what's that? Joe: Did you call it Google TrueView? Brett: It's TrueView for action. So it's a subset of TrueView. So you could just run standard TrueView which is the ad format I talked about before where someone has to watch 30 seconds or the whole video or you don't pay. So that's kind of standard TrueView. With standard TrueView, you're paying a cost per view. So you're telling Google I'm willing to pay five cents, two cents, 20 cents per- Joe: Yeah, risk … there's risk there but it sounds like the TrueView for action is look you're not going to pay unless it converts which is- Brett: Yeah exactly. Joe: But is there volume there? Brett: There is immense volume and that's one of those things where we've seen people be able to scale pretty quickly. So with Boom by Cindy Joseph, we went from not even really a channel to a pretty large channel quickly. And we were able to start kind of dialing in and hitting their CPA target within a couple of weeks. And then it will sustain that now for several months. Joe: What happens in the first two weeks when you're … if you're doing TrueView for action aren't you always hitting that CPA target? Brett: No. So you're not. And you give Google the CPA you want to hit and you set a daily budget. Joe: Okay. Brett: But the machine is experimenting in the beginning. And this is something where this is a little bit different than let's say Facebook ads as an example I know … and I'm not a Facebook ads guy. I don't run … I don't run our Facebook even but I know there is kind of this thought that with Facebook ads you build a bunch of an ad sets and you let them … you know each one spends 30 bucks, if it doesn't convert kill it, whatever. Really search pruning quickly. That doesn't work on YouTube, not with TrueView for action. You need to give the machine time to learn. So you're maybe going to be letting it run for seven or 10 days. Obviously, you could pause it if nothing's happening. But usually that CPA, it's going to be above the CPA initially and then it's going to start getting closer and closer to it. So we found again with the right video, the right targeting you can usually hit your CPA target if you let the machine kind of dial in. Joe: Okay, and you guys don't do any of the Facebook stuff. You're focused on most of the Google platforms and then you do the Amazon platform as well. Brett: Yeah exactly. Joe: And is it because that you integrate the Google Shopping, YouTube ads, Google AdWords, PPC whatever they've rebranded it you integrate them all together. Brett: Yeah. Joe: Do you think they help each other? Is it Google has gotten to the point where is it intelligent enough to pull resources from one to the other to help improve cost per conversion? Brett: Yeah absolutely and then one of the things that Google just really stepped their game up in the last couple years in the last six months even is audience targeting. So being able to apply some of those audiences even to your search campaigns and a few of the audiences to your shopping campaigns. But it is all connected because if you think about it if I'm in product research mode, if I'm looking at buying a new … let's say I'm buying a new [inaudible 0027:37.5] a couple of this things for a house and then I'm researching on Google then maybe after I find a few things I'm going to YouTube to watch a video or some unboxing videos or installation videos now I'm going back to Google. And so what you can do if you've got all of the campaigns setup and part of a … we call it a full funnel approach or a team of campaigns, we're not viewing search and shopping in YouTube as this completely separate entities but how do they work together because they do. So if someone finds us on search or shopping when they don't convert then let's use YouTube as the remarketing vehicle. If someone discovers us on YouTube and they watch a video and they become engaged with us but they don't purchase well then let's add them to a remarketing list and target them with search and shopping ads. Because maybe someone learns about your brand on YouTube they don't buy, their next activity is going to be I'm going to go to Google and search. I'm going to go search for this company now or find out more and so we can target them that way. So that's another piece we look at as we create a list of people that have viewed a video as an ad. And then we layer that into our search and shopping campaigns. And we've seen this … let's just go back to the Boom by Cindy Joseph example; we even created some campaigns where we only target people that have seen a video ad. And a lot of those people then go back to Google and they can't really remember the brand name but they remember seeing the video or whatever like something's caught their attention so they're just they're typing in a bunch of random things. Like make up for older women or you know things that would've been mentioned in the ad. And then we're able to target them because we built a list of people that viewed the video as an ad but actually converted them to research a shopping campaign. So if we just think about it, if we kind of step back and think about our own journey like what's my journey as a buyer? I really just click on one ad and buy. I don't just see one ad for a brand new product I've never heard of and purchase immediately. That doesn't happen. I'm usually going to search for something, be exposed to it, click around, visit, and then see another ad and then convert. So we would … we like to get all the campaigns kind of working together and connected. Joe: So let's say that someone is managing their advertising campaign themselves and business is getting big enough to they want to elevate themselves to more of the captain of the ship instead of a navigator if you want instead of just focusing on one part like the marketing are there resources out there to learn everything you need to learn about for the Google ads platform within Google and outside of it or is it simply your 20 years of expertise that … and what, staff of 17 that allow you to be better than any Tom, Dick, or Harry that's going to try to do it for their own business? Brett: Yes. So I mean there is a learning curve and I think the learning curve is a little steeper with Google ads than it is other platforms potentially. It's one of those things where learning the basics is not that complicated but then seeing how everything interacts and how one change leads to other implications is a little trickier. So there's a little bit of a learning curve but there are some good resources. So on the Google Shopping side, I wrote the Ultimate Guide to Google Shopping a few years ago. Shopify published that. It's totally free. Joe: Do you have to update that on a regular basis? Is it changing? Brett: Yeah, I just updated it a year ago. I needed another round of updates. The core of it is still good but it needs to be updated. Joe: Okay. Brett: I'm working on a course with Ezra Firestone. We launched the beta version on all of Google Ads. So it kind of starts with- Joe: Oh, excellent. Brett: -that foundation of Google ads. Joe: That's what I was looking for and I didn't know that. For everybody listening, I didn't know that by the way. Brett: Yeah. Joe: Because look some people are going to be hesitant to work with an agency. Brett: Sure. Joe: And historically I've been anti-agency although I owned one. I owned a media buying agency specifically for radio back in the day. Brett: Yeah. Joe: And my experience is as an agency owner is that you're going to work really really hard because you want to client to keep spending money because you get a percentage of that money that he spent. So you want them to be successful but as an e-commerce owner, my experience was … God, they blew it, my gosh my cost per acquisition went way up. Everything is destroyed. They're not paying any attention to anything that I said but what you did and what you presented was great and different. So that's … I wasn't going there but thank you for going there. So you've created a course on the Google ads platform with Ezra which will be done when? Brett: So probably by the time this … I don't know when is this is going to live but it will … it's launched in September of 2018 is when it will launch officially. Joe: Okay. Brett: So it should be available here pretty quick. Joe: So people can find that probably on smartmarketer.com right? Brett: Smartmarketer.com Joe: And OMG Commerce I would assume as well? Brett: Yeah well, have some links to it as well. Joe: Okay so let's assume that a certain group of people are going to be I'm never working with an agency and they'll Google and they find that there and they'll get that expertise and training which is exactly what I want. I want people to get the best advice and expertise. Brett: Yeah. And one thing I would maybe add to that is I would recommend that everybody get educated at least to a certain degree. Even if you plan on outsourcing it or hiring internally for it, learn the basics of the platform. Learn how everything kind of ties together. Because then you'll be able to analyze does this agency I'm going to be getting they know what they're talking about, is this person that I'm hiring do they know what they're talking about? So I think as a business owner you got to educate yourself at least on the basics and kind of see how the full funnel works and things like that. But yeah you don't have to hire an agency. You can hire someone in-house and train them up and that could be great for some businesses. Joe: Unless they quit. Brett: Exactly, yeah. That's true, yeah. Good to be diversified a little bit. Joe: I agree. Well listen, Brett I appreciate it, I appreciate your time coming on here just sort of unraveling the mystery of YouTube because again to me I've never thought about buying something there. Now that we've talked and I saw your presentation it's every time I'm seeing an ad and I've actually watched a few which is interesting but I haven't clicked through to buy yet. And I think that that's going to change. And I think that people will get ahead of it and start learning it now and being one of the early adopters of advertising on YouTube. They'll get ahead of the curve like those that focused on Facebook first. Brett: Exactly and I think it's … I think Facebook's going to be a viable ad platform for the foreseeable future. I think You Tube is going to be as well but I would liken where YouTube is now to where Facebook was a few years ago where it's pretty affordable to be on YouTube. Those costs will go up over time as more people hop on to the platform but it's a great place to be. And yeah we've seen from skin care to apparel to automotive to tech; all those verticals in e-commerce are getting good results on YouTube so it's worth exploring for sure. Joe: Fantastic, so YouTube is today where Facebook was a few years ago. Brett: I think so, yeah. Joe: That's a good way to end it. But for anybody that does want to talk to you, I think they can find you at OMGcommerce.com is that right? Brett: Yup OMGcommerce.com I'm happy to chat, happy to do an audit potentially of existing efforts and I'll let you know how we could potentially help. So yeah OMGcommerce.com. Joe: Well put that down in the show notes and if this is out before the course is done we'll go back and we'll put it in the course after the fact so that those that just want to learn on their own and maybe bring it in-house can learn from that as well. Brett: Yeah awesome. Joe: Thanks for your time Brett I appreciate it. Brett: Okay thanks Joe I really appreciate it. [inaudible 00:35:07.7] All right see you.     Links: OMGCommerce Website ecommerce Evolution Podcast – Get to know Brett How to Use YouTube to Scale Ecommerce Ads – Online eCourse

Sherry interviews Chris Yates of the Rhodium Weekend, about his founder origin story. He talks about how his parents shaped both his entrepreneurial and creative side, how he views himself as a leader, and the head vs. heart dilemma. Want more content like this? Check out our book. The post Episode 179: Founder Origin Stories: Chris Yates appeared first on ZenFounder.

Sherry interviews Chris Yates of the Rhodium Weekend, about his founder origin story. He talks about how his parents shaped both his entrepreneurial and creative side, how he views himself as a leader, and the head vs. heart dilemma. Want more content like this? Check out our book.

Similar to outsourcing fulfillment, today's podcast guest says for many entrepreneurs, it may be best to outsource the collection, management and disbursement of sales taxes with the new Economic Nexus ruling by the Supreme Court. In this podcast, first we cover what the decision means to online entrepreneurs, and how it will impact the average business. For some no action needs to be taken. For others a lot of action must be taken. And ignoring the details is not really an option. Sometimes the least interesting subjects and work as an entrepreneur bring the most value. Well-managed financials are one such thing. Held within the broad “financials” umbrella is now sales taxes. While the answer to the questions, “should I collect” used to be grey. Everything is fairly black and white now. And the subject is never going away. Episode Highlights: Don't geek out on Sales Taxes. Outsource it. See SALT experts below. If you have Nexus it means you have an obligation to potentially register and collect sales taxes or income taxes in a given state. Physical Nexus is where you are, where your business is, where you are storing inventory or where Amazon is storing it. Economic Nexus is the change with the Supreme Court decision. The states could define other ways to define Nexus. For instance either $100,000 in sales or 200 transaction in the last 12 months – and you could be required to collect sales taxes on those revenues that occured within their state…regardless of Physical Nexus. Economic Nexus takes effect immediately for the 24 states that already have them on the books. (Links below will lead to finding the 24 states) Notice and Reporting are other ways to determine Nexus. It's really confusing! You MUST register to collect sales taxes. If you collect and do not remit, it is CRIMINAL. Hire an expert to register to collect sales taxes. There are 45 states that require it. Only register where you have to if you are a small seller. But if you are doing 10-20 million in revenue, “suck it up” and register everywhere. SALT experts can handle almost everything for you. See notes and links below. SALT is an acronym for Sales and Local Tax Experts Use www.WhereStock.com to determine where Amazon is holding your inventory. Seel link below. Taxjar is a good option if you wish to take on managing this yourself. Scott & his outsourced accounting team at Catching Clouds use Taxify (but recommend both options) The Supreme Court Decision may not increase a buyer's liability in an asset sale. Transcription: Joe: So Mark Jason got an e-mail this week and he had a question and it was “What makes Quiet Light different?” And Jason gave it an interesting answer and I want your feedback on it. It says “Well the formal answer is that we're all entrepreneurs but that's not really it. The difference is that Mark … you Mark Daoust is one of the best human beings on earth and that permeates everything we do. As a result, he attracts good people that are always doing good work with the best interest of others even if it's painful for the broker we ignore our own incentive to do what's right.” Did you pay him to say that? Mark: Yeah … well, I'm not going to say exactly how much but he got paid for that. I think it's a little over the top. I mean really. Joe: But he didn't write that down. He said it to someone and someone wrote it down and shared it with me. And I … look I shared this to put you on the spot. You look by the way very much like an internet entrepreneur today. You've got a t-shirt with some ducks on it, a little duck, duck going on there. Mark: Duck, duck, gray duck. I'm from Minnesota and I [inaudible 00:01:53.2] I'm going to put this out there, it's a more sophisticated game. All you parents out there stop this duck, duck, goose crap. It's all duck, duck, gray duck; that's what we're doing here. Joe: Don't know if we have time to go into what the heck you're talking about with duck, duck, gray duck. Well just … I thought you were going into hockey or something like that. I wanted to touch on one more thing you know Jason talks about that and you and the environment that you've created here and the caliber of entrepreneurs and advisors that you brought on. I listened to a podcast last night with Chuck Mullets and for those that are the buyers in the audience today, if you have not listened to the 27 tools for due diligence I think it was, listen to it. Because some of the tools in there were just amazing and I've been doing this for a long time and I haven't heard of any of them. I have to take my hat off to Chuck and give him some compliments for the job that he did there. I was really really impressed. He's a … I'll say it, he's a lot smarter than I thought he was. Mark: Ah, you know the bar was pretty low, to begin with. Joe: But I want to just raise myself up a little bit and show you something. Mark: What's that? Joe: I have on- Mark: Oh you have on Chuck's shirt that he made for you. Joe: I have my Quiet Light logo shirt on. So there you go. Mark: While I'm wearing ducks. Joe: Oh I didn't shade you there. Okay, listen this podcast is about something that's really important. It's about the Supreme Court decision to change the way that sales taxes are to be collected. Let's not get into details, let me just tell you that we had Scott Scharf on again. We specifically talked about the problem and the solution. What does this mean to e-commerce entrepreneurs and how do you solve it? I can tell you right now when you get three quarters of the way through the solution is … if you are up for it just like you outsource your fulfillment to a 3PL you can outsource your sales tax collection and distribution and management. And if it were me that would be my recommendation but it's absolutely there and you don't have to deal with all that little detail and there's a lot of it. Mark: Yeah and I like to say a word to people that share a person holiday with me, and when I read and hear about some of these red tape sort of restrictions that are coming down, I have a tendency to plug my years and go la-la-la-la I don't want to hear it. Joe: Right. Mark: I like the days of the free open web when it was just easy to do things. But the fact of the matter remains this is the direction we're going. Joe: Right. Mark: Restrictions, regulations are going to come into play more and more frequently and these aren't necessarily bad things we just needed to understand how to navigate them. And so an episode like this is timely, I'm glad that you got Scott on the line to do this episode because this is the [inaudible 00:04:34.0] time the episode given that this decision just came down a few weeks ago. Joe: Yeah some of the things that we talk about here on the Quiet Light Podcast are painful as entrepreneurs. Particularly those that don't love this detail, they love the excitement of driving revenue and the marketing aspect of it. These painful things when you pay attention to them will make your business more valuable if and when you ever decide to sell. So again listen to the whole thing. Get through it, he talks about it in detail point by point. But I try to keep him on track so it's not … he doesn't geek out too much. Scott loves this stuff. Mark: Scott? Never. Joe: He calls it geeking out himself. So we try to get on track to … okay how do … how does a guy like me, how does a guy like Mark, like an entrepreneur listening, how do they overcome this giant massive ball of red tape? And really, I think the answer is, outsource it. And we're going to give all of the ability to do that down there in the show notes. Mark: Sounds great. Joe: Let's go to it. Joe: Hey folks it's Joe from Quiet Light Brokerage and today I've got Scott Scharf on the line with me from Catching Clouds. And we're going to talk about the Supreme Court decision that's come down regards to sales taxes, define what the problem is, and then give you a solution to it in the second half of the podcast. Scott welcome … welcome back actually right? Scott: Yeah it's great to be back. Joe: All right so you know we don't do fancy introductions. Tell these folks who you are and what you do at Catching Clouds so they understand what level of expert you are here. Scott: Yeah at Catching Clouds we're e-commerce accountants who are really experts in the accounting e-commerce businesses and of course sales tax management; which is why we can talk about this topic. We've been doing this for the last seven years and we love solving problems for e-commerce, sellers, anybody that we interact with it. And this Quill decision is definitely one of those things. Joe: Quill decision, that it that's the name of it? Q-U-I-L-L. Scott: Well, yeah so Quill was a decision from what 26 years ago that the Supreme Court overturned their own finding that really delimited what states could do to go collect sales tax from small businesses that are selling across state lines. Joe: Good. Okay, so they overturned it. So, folks, you heard Scott say that they're e-commerce accountants and I just want to reiterate … and you know my little soapbox here. E-commerce accounting, accounting, good financials, clean documentations, it's one of the four pillars to get maximum value for your business. So if you're using anything other than Xero or QuickBooks seriously consider talking to Scott if you want to get maximum value for your business. Because Excel spreadsheets for a 20 million dollar company or if you're doing a half a million in revenue doesn't matter, you're going to lose value in the sale of your business if and when some day you decide to sell. So there's my little pitch, definitely- Scott: [inaudible 00:07:24.7] Joe: these services. Okay so if I understand this correctly this is no longer physical nexus which I think everybody that's listening knows the definition of it; what it means. Is economic nexus, can you tell us what the heck that means for these folks? Scott: Yeah so actually physical nexus still applies so it's not that they got rid of physical nexus it's just not the only consideration deciding if you have [inaudible 00:07:52.0] of fancy. Joe: So let's say what physical nexus is anyway then, go ahead. Scott: Okay. Well, physical nexus … well, first nexus is if you cross a threshold and you have nexus based on some parameters means you have an obligation to potentially register and collect sales tax or income tax or other things in a given state. So if you don't have nexus you don't have to do these things. Okay, that's the first part. So there are different types of nexus, the first one is physical. It's been around for quite a while. It's where you are, your business is, your business is founded, you have employees, you have property. Okay for an e-commerce business, it's wherever you're storing your inventory. If it's at a 3PL on either coast you have a nexus where you're storing your inventory. If you're an Amazon FBA seller, when you send inventory to three or five warehouses they'll move it to up to 26 states that's your inventory and it creates nexus. There are a few other ones out there but from a physical perspective … I've been around for a while, there's like affiliates and other things. But the main thing it's where you are and your property is. Joe: Physical nexus, okay. And now we've got economic nexus, what is that? Scott: So economic nexus what states have determined and the brakes were taken off with the Supreme Court decision that they could define other ways to determine nexus to basically either require your business to do reporting and other function or register and collect sales tax in those states. So what they've done is said hey if you're doing over typically in the standard is based on the Supreme Court decision $100,000 in sales or actually more importantly 200 transactions either in the last calendar year or in the prior 12 months and that would mean that they're expecting you if you're a larger business to register and collect sales tax from there … of any consumers buying products you're shipping to into that state. Joe: How many transactions do you say? It was 200? Scott: 200. Joe: So if it's a $20 sale it's only what 1,000? Scott: $1,000. So $100,000 people see the $100,000 and think that oh God there's no way I didn't know you'd do $100,000 in any states last year, but it's totally based on your average. So if you take your average sale price and multiply it times 200, if you've done more than that revenue in any states that have these laws you're over that threshold. Joe: Okay so economic nexus passed by the Supreme Court, when does it take effect is it immediate or is there-? Scott: It's immediate for the roughly 23, 24 states that already had these laws on the books. And the only thing that was holding them back were these court cases that were just … was decided a week and a half ago. Joe: Okay so there's 24 states, not all 45 that collects sales taxes but that is 24 of them. And for folks listening, we will add a list of those 24 states but there'll be a lot of resources in the show notes that we'll give you that through their software as well. Scott: Well and it's not just economic nexus, you have to remember there's now notice in reporting states that aren't doing economic nexuses but have set thresholds for doing notice and reporting. They're basically two different new ways of determining nexus and they're both in effect now and there are other states that have them starting later this year and more. So it's multiple ways of nexus that might impact your business. Joe: Okay so I'm just going to say a few years ago I did a presentation at Rhodium Weekend all about e-commerce selling and part of it was sales tax collection accounting. So I wanted to say to Yana if you're listening I was right. She came after me after that now that's never going to happen. It's right. So really just don't even worry about the 24 states I think physical nexus, economic … basically get prepared to collect and remit sales taxes everywhere and use a special service that can allow you to do that. First though … and we'll get to that but first do you have to register to collect sales taxes? Scott: Yes. You have to if you are not registered you don't have a license and a number from the state, it's criminal to collect sales tax and not remit it and not have a license. It's also criminal to collect sales … have a license to collect sales tax and not give it to those state. Those two things have additional penalties and they'll come after the business owner's criminally. So you need to have a license before you start collecting sales tax and then once you start collecting sales tax you have to give it back to the state either monthly, quarterly or annually; whatever they say. Joe: Okay just to clarify, you used the word criminally three times. That's a little scary. Scott: Well it's … but unfortunately both Amazon and Shopify and these other sites, I mean literally there's a button in Shopify that you can click that says collect sales tax in all states. And it's easy to start collecting sales tax in the 45 states that have sales tax. So technically it's very easy to hit these buttons and not realize and you just want to be careful. And in difference between criminal is there's additional by jail. Everything else related to sales tax is expense and cost which is more likely to happen but maybe not as painful but can be pretty painful based on penalties and interest and other things. Joe: Right. Okay, so first and foremost let's just define and answer this simple basic question that some folks have been asking, does this mean … and I know the answer to this thus do you, does this mean quote unquote I have to start collecting sales taxes? The answer is yes. The answer is you should have been collecting them before, you had to before. Correctly? Scott: Well correct, if you have physical nexus that goes back in time. Okay, most of these economic nexus laws are new. And the way they're currently written is if you pass the threshold then the expectation is you register and start collecting sales tax going forward. So there's going to be nuances and changes but in general, if you exceed most of these thresholds for economic nexus or notice in reporting basically the expectation is you go out, you register now, and you start collecting forward. And there's no … depending on the state but for most states, there's no real risk of you owing money or have not done whatever in the past, you can go forward. But when you have physical nexus because of Amazon FBA or a 3PL then you need to consider if you register and collect going forward where you still have a risk of any previous outstanding liability which I know within a sale you're very aware of to make sure you know both the seller and the buyer are aware of any business liabilities or do you go back in time and pay anything that you didn't collect in the past; which isn't fun. Collecting sales tax or paying in sales tax you didn't collect from the consumer on each individual sale. Joe: Yeah because that's directly coming out of your profits now instead of collecting and just passing it through. Scott: Yup. Joe: Okay, so let's jump to making this easy for people that are listening. The bottom line is that they need to start collecting sales taxes and remitting them. Obviously, get registered to collect sales taxes. There're software out there that does this right? Because you're talking about you need to do this, you need to do that, and for me as a former physical products e-commerce seller, my eyes would roll into the back of my head, I would [inaudible 00:15:15.0] more and I'd never wake up again. Can't … Can I just pay somebody to do this for me and if yes what are the options and how much would it cost me annually or monthly? Scott: Well the first part, so you don't pull out your own hair, is there are multiple services out there that will help you with the registrations and register you in multiple states because it will drive you crazy. Every state is a little bit different. On average I'll pay about $100 per registration plus $20 to $50 in registration fee for some states, that's the first piece. So if you've decided to register in two, five, ten, whatever number of states you need to get registered first and I suggest … it'll just drive you crazy, is would be to get registered and there are a number of services out there that can do that for you. Joe: Okay and we'll put those in the show notes but why Scott only five or ten whatever you decide to get registered? And why wouldn't you register for every state that requires you to collect sales taxes? I guess maybe because you never sell any … somebody in the state of- Scott: So one it's just that overhead in the cost of doing business. So the first thing there are 45 states that have a sales tax and we are all heading sometime … I would have said three to five plus years that we're going to collect sales tax on every e-commerce sale, it's now probably two to four years or two to three years. It's going to happen a lot faster but there is a cost even on the low cost tool or outsourcing it … and I'll talk about some of those numbers in a minute, but you really only at this point want to register for sales tax where you have to. You shouldn't have to if … now if you're already a 20 or 30 million dollars e-commerce business just suck it up and go to all 45. Joe: Right. Scott: Anybody else below there, you're paying more money for compliance and tools and registrations. And in some of these states when you register for sales tax nexus you are in some ways volunteering to pay income tax. Potentially depending on the state and the situation; minimum franchise tax like in California which is $800 a year, and then additional fees, and not only the sales tax cost but paying a CPA to file and deal with franchise tax returns and income tax returns. So you want to as a small business or even a medium sized business minimize that overhead and only do this in the states you need to but you definitely want to start the big states where the population are. California, Florida, Texas, and those other bigger ones is the basics to get that going but you would want an easier way in. So figure it out for the first batch that you're doing and then do another batch and another batch. So you just can't stop your whole business to do sales tax and you just have to balance those things out. But at the same time, you don't want to show this huge [inaudible 00:17:52.3] selling and talking to Quiet Light. This huge compliance overhead and its overkill and it's going impact your own profitability and the money you're taking out of the business. So just want to find a balanced approach as you get there. Joe: How do you determine that? Is there a tool or process inside of Shopify or if you're an Amazon Seller that tells you that you know what sales you have by state? Scott: Yeah so there are two … for sales price there's a couple of ways to do it. So the first if you're an Amazon FBA seller there's a great tool called wherestock.com you pay him $30 and they'll log in … we'll get you the link, and they'll connect your Amazon site and they'll … it'll take them about a day and they'll give you a report showing you all the warehouses where you have inventory and when it started. How far back in time if you had inventory in the Michigan warehouse and if you go through that list and you don't see North Carolina or some states because of the type of your products it'll tell you, you might have had or five of these main states that you've never had inventory in and you don't have nexus there; which is great news. The next piece is really a matter of downloading all of your orders out of Shopify for the previous 12 months or the last year and then just pivoting the data or doing a total if you know how in Excel to show you your sales; both the number of sales in each state and the total dollar volume in each state. So you want to know your own numbers and any that you're over $100,000 in sales or unfortunately $10,000 in Washington State, Pennsylvania, and Oklahoma starting on Sunday I think. I think it just started Sunday. I think it was July first and it's happened right before it. Those are $10,000 in sales which is really low, everybody else is 100,000. So that'll … you'll go through those states and add up the ones that you have, look at the ones that you have the most amount of sales and income in and start with those. You want to know your own numbers and work through your own list. The other option is and I can provide a link to our tax calculator that we have in there … bunch of other people putting them out there that basically take your average sale amount enter it and it will total all those things up. But those are the two things; one, all of your income across all of your sales and then this Amazon wherestock report to let you know what's going on in FBA and that'll be in your information and then you just build a list and you work your way through your own priorities on how many you want to do; all at once or a few at a time. Joe: Okay so just to dumb it down a little bit. If you're doing 20, 30 million dollars just suck it up and do all 45 states. But if you're doing maybe just a million dollars in revenue, which is fantastic, do this report because you don't want to have to register in 23 states that instead of all 45 if you don't have to. Scott: Right. Joe: Someone else talked about it in this way. I mean that registration alone is going to cost you $100 to $150 so maybe $3,000 or so for 23 states that you don't have to register in. But if you're only doing $1,000, $2,000, $3,000 in revenue in the state of Montana it doesn't make any sense to register because a. you're not going to hit that threshold and b. realistically Scott is if someone in the state of Montana that works in- Scott: Montana is a bad example they're not on sales tax. Joe: Okay. Scott: So pick one of the few states that doesn't have one but Nevada or however else- Joe: How about Maine? Scott: So it's always a risk man, your question is so should you or not you … are you going to, can you fly under the radar- Joe: Yeah. Scott: Are they going to find you tomorrow and what's going on? So it's a risk management decision between the cost of compliance to your business versus the overhead and the cost of compliance and then the chance of being caught. There are four million Amazon sellers, there's between five and ten million businesses doing e-commerce these days. The states just had their handcuffs taken off and they're all going to go woohoo let's go get this money from out of state sellers. It's going to take them a while to ramp up and the chances of getting caught are very very low and they have been low and they're still very very low okay? But there isn't really no ambiguity now; there's no more well, maybe, or there's this court case, or whatever else. Joe: Right. Scott: So until now and whenever possibly the Congress does something or more lawsuits happen which take time this is the way things are today and you just have to make that decision of a risk management. So you never want to mess around with the IRS when it comes to payroll taxes or W-9s and contractors but for sales tax, you're going to have to balance those out. But the chance of being audited or being notified by the state is significantly higher than it's ever been in the past. Joe: Okay let's talk about the services that are out there; as in the software or services that you recommend for listeners just … you can do your download calculator that I'm going to provide in the show notes to determine the revenue by state and things of that nature to decide where they want to register. But what softwares or service programs do you recommend that folks check out that you have seen people use consistently that make this a whole lot easier? Scott: Yeah for people doing it themselves I would start with TaxJar it's by far the easiest to use most straightforward they … not only do they pull in all the data but they process the filing for sales tax and the payments in all 50 states. It's both the easiest and I, from what I've seen the lowest cost. They're a great tool. They have a great blog and a ton of information and support and it's the best way to do it yourself. The next one that's a little more powerful- Joe: Hold on a second. Scott: Yeah? Joe: In terms of a TaxJar thorough cost ballpark if someone's to put in all the states what would the overall cost be to … and do they do registration or just compliance? Scott: Okay so TaxJar does not do registrations. Joe: Okay. Scott: It's only the sales tax data aggregation to pull it all together from channels. Pull everything together. One note is if you have sales that are outside of Amazon, Shopify, or BigCommerce you have to import that data into TaxJar so that you have the complete thing. From all the sales so your filings are accurate. But in general, you're going to pay a monthly fee between I think 29 and up to 500 depending on the number of sales. Whether it's a thousand per month, 5,000 you know … in larger apps you're going to pay a base monthly fee no matter what; totally reasonable wherever your SaaS thing. And then you're going to pay a per-filing transaction. So if you're paying filing quarterly you're going to pay four times somewhere between $21 and $30 per filing. I don't have their pricing memorized. Joe: Sure. Scott: So if you're filing quarterly your costs are going to be lower. If you're filing annually it's going to be these monthly fees. So if you're a smaller seller the pricing can work out to be fairly affordable. They also have kind of an unlimited filing piece so if you get over a certain level … and I haven't done the math whether it's 20 states or 30 states but there's a certain point where you can pay it for kind of an unlimited plan and get to a max price. I think that's in the 4 to $6,000 for the year kind of total. But you can using that tool max that out and really lock that compliance cost in. Not counting your time making sure it's being done right. Importing data, dealing with notices, and just making … keeping an eye on it, it's not a set and forget process. Joe: So, on the high side it sounds like maybe $500 a month and your maxing out the services there, on the low side $29 a month so it all depends upon the size of the seller and how much you do. Okay, you are about to mention another- Scott: So the next one I would say is Taxify and that's what we use because we're doing hundreds and hundreds and hundreds of returns every month. It's a little more powerful in certain ways. They have integrations. It can handle a wider range of different businesses and there's … it's just they're really kind of head to head but for DIY most people go with TaxJar just because it's easier to use. TaxJar is more powerful if you have a more complex business. You might want to consider it or compare the two. Pricing is pretty similar between those two and- Joe: Those using TaxJar you said TaxJar, not Taxify. Scott: No we're using Taxify. We are using Taxify. Our accounting practice for us to file we use Taxify but I've known the TaxJar guys for six years now and they really do have a great solution. And any of our stuff we talk about those two is really the primary ones to consider third one is- Joe: Hold on I want to just interrupt again sorry. On this option, you're saying you already use it which means that with your accounting services for sellers of a certain size I assume, the collection, the management, and remittance of the sales taxes are part of your services as well. Scott: Correct. Joe: So I don't have to learn the software, I can hire you guys to do it. Scott: Correct. Joe: Okay. Scott: Well and I'll talk about some other … outsourcing is absolutely a viable, just like you outsource fulfillment to a 3PL or to Amazon FBA, sales tax is something you don't want to geek out on. I've done it for the last six years, it drives me crazy but I geek out on it. It just … it will distract you from listing products and buying products and designing new products and all the front end stuff to generate more income. That is absolutely something you want to … you might like that we look at here's how you do it yourself and you should understand anything you outsource but we do that. We offer the service but we also do notice management. The states send all kinds of notices. Even if you pay on time they'll send you a notice but if you don't respond to the notice they'll fine you for not responding to the notice. So there's more to it than just a set and forget tools. These tools are phenomenal as they deal with the complexity. Because every return is different, they have 50 different fields. They really aggregate the data and reduce the complexity of filing and paying which is awesome which is why we use automation. But then there's there is more to it. Joe: Okay, you're about to mention a third option for folks. Scott: Yeah third option is Avalara TrustFile. Now if you really are already a 20 or 30 … so Avalara has two products, they have a smaller and a lower end one which I don't think is as powerful as TaxJar or Taxify called TrustFile which you can use. They've cleaned up their pricing but it's still a little confusing but they're a viable tool. If you're already let's say five or really 10 million and you're doing more than just e-commerce you can consider Avalara AvaTax which is their higher end tool which will give you more control automated. If you have an accounting department it is definitely a tool you would consider. Quite a few CPA's and accountants use AvaTax as well to do more complex larger sales tax across multiple businesses. So those are really the key players, there are other smaller players out there but those are really the key players that are really focused and understand what's going on out there. Joe: Okay. I was listening to your better half Patti on your YouTube channel. She does a great job, by the way, great Q and A's there. I think she mentioned SALT experts and what they do and what not. Can you define what a SALT expert is and why someone listening might want to consult with one of them? Scott: Absolutely so a SALT; Sales And Local Tax expert, these are people that will do one, they can do a nexus study which tells you where you have nexus and it'll tell you whether your products are taxable or not, are they a food, are they a candy, do they have flour in them, are they clothing or … they can go look at all that. You can all interpret what the states say but these are people that do it all the time and will contact the state anonymously or you. The next thing they will do is what's called a voluntary disclosure agreement. If you owe a state tens of thousands of dollars of back tax and you want to come clean because you want to clear out your liability to sell your business and just make sure everything's done right, they'll go to the states anonymously and say I have this seller and they'll represent you. And in some cases get penalties, sometimes interests, and can potentially get a payment plan if you're cleaning up historical sales tax. And you want that person representing you a SALT expert, not your CPA. Unless they've done it multiple times in their own state you really want to talk to someone that's an expert. They're the people you want to call if you're audited to represent you and help you get through an audit. So those are the unique things we haven't talked about but the main thing is you can outsource your sales tax compliance to them. They will do the registrations and most in almost every case they will set things up. Most of them are very technical … in our case we at Catching Clouds we're really great at setting up Shopify to collect sales tax right and Amazon and eBay and in the more technical configurations. So we're very technical accountancy but they will help advise you on those things. They're all over it. They talk to me about the technical stuff, we're really good friends. It's a great community. I'll try to just solve this for sellers but then you can pay them a monthly fee or a per-state fee to take care of the data collection which you have to give them. The filing, the payments, notices, and kind of provide a complete service to outsource your sales tax. You can go to one person, pay them to take care all of your sales tax that's going on and advise you and then they're the ones that are keeping tabs on all the changes that happen every week; every month if that's the route you want to go. Which is a good way to go, in general, I'll give you a safe number, you really want to budget at least $50 per state per month. So you're looking at between $600 and $1,000 per year for this to not be an issue to worry about but you need to budget the right amount. Plus you want to have that same space because everyone's … Arizona's awful that they'll come back the second year and hit you with hundreds of dollars additional fees per county and everything else that you didn't count on and you can't get around and they'll deal with these random issues. Joe: Okay, great. I have a list of those from your website for those listening again in the show notes SALT experts will be available. Sounds like a one stop shopping place to go and just outsource all of this. Of course, some people that want to do the work themselves will have those calculators that you talked about there as well Scott and the links to the Taxify and TaxJar and Avalara. A couple of quick questions before we wrap this up, and maybe they're not quick questions but historically when someone sells their website … their physical e-commerce business in this case, the question of liability for past sales taxes that should have collected is really really gray, right? Scott: Yeah it is. Joe: And only once for those listening how do you solve that problem as a buyer? In most cases, most buyers don't worry about it. They really never have and these are people that are a lot smarter than you and I combined. They don't worry about it; pretty high level folks. In one case I had and think about this as a seller, I had someone that it was … the business sale total value was around $758,000 but they did the math and they said look in the 24 months that you've been around you should have collected X amount of sales taxes and let's call it $50,000 in that purchase price, in that $750,000 in the asset purchase agreement $50,000 was set aside in Escrow for potential sales tax liability purposes. And when the buyer went out to register to get their sales tax in the state of California, Texas, whatever if that state said yes, of course, we'll register you but we know that you owe us from this brand, you didn't own the company but from this brand you owe us $17,000 then that money would have come out of that 50,000. For the record, the buyer was able to register in all the states that he wanted to register and not a single state said okay great but you owe us money hence all 50,000 was released. How does this Supreme Court decision in economic nexus change that liability moving forward for the buyers of these businesses? Scott: I don't think it … I think it only increases the chance of the state contacting you and having to either answer the questions or go through an audit and all of these things are moot until you're actually audited. And you're at that point where you're dealing with an auditor and then then they ask for historical records and financials and everything else. Up until then, it's not really an issue. Unfortunately, though it's the decision of that state; are they going to hold the new business and whoever bought that Amazon seller account? They want to attach the liability to the Amazon account where it was being sold that you buy a continuing Amazon account which is what most people do or is it tied to the prior business and the business owner? The people selling you need to be concerned when you get that big chat to set some of this money aside if the states come after you historically because if you've spent it all, it really … in most cases tends to tie to the original business owner of the business. So I would say that there's … it's really if you're buying [inaudible 00:34:44.4] sale you have to be worried about it more than anything else. If it's an asset sale you're buying this asset, starting a new business, you've got to register fresh and move forward. There's a small risk but only after you've been audited. So it's just a couple of nuances there. Joe: So very very small risk and only after you're audited and the odds of being audited again, incredibly small. Scott: Correct. Joe: Okay. Let's talk about those out there that are wholesaling. They're buying products and wholesaling them, they don't have to collect these sales taxes is that correct? Scott: They don't but you have to follow the rules. The first is and what really does this finding really change is instead of collecting tax exemptions certificates; so for every B2B sale you have to get a tax exemption certificate and it's not just a picture of the sales tax license on the wall of someone's cell phone. You have to have something that has your business name on the top that other companies who you sold it to their tax licenses whether it's one state or multiple states. And it doesn't matter which states they are and an owner or a business manager an approved person of that company signing at the bottom saying they're responsible for the sales tax. Okay? Joe: Is it on a form? Is it an official form that they would fill out? Scott: There's a form per state and there's a great multi-state form. I can get you all of the links and if you want to have a process that you have them and keep in mind that they pretty … a lot of them expire every year. So you want to have all of these forms from your five or 10 or 50 or 500 B2B customers on file. And if you get audited by any given state then you need … then you have these to say hey I didn't have to collect sales tax but if you don't have the forms or they're expired or you're missing them that … then they can say all of that was taxable and you owe the sales tax. Even if the other company sold it and collected sales tax they can double dip and come after the information. What this decision really changed was two things related to B2B sellers. But first, as most people tend to collect tax exemption certificates for their own states where they're filing where they would expect their own business to get audited. Now that it's kind of every state can look at all this information, B2B sellers should start collecting tax exemption certificates on every sale. And if you have your top five or ten B2B customers, go back and get them from those ones and … to make sure you've got this filed. And then just set it aside in case you're audited. The second big impact of this for B2B sellers is now your B2B sales, number of transactions, and dollars volume count towards these economic nexus thresholds. It's all of your sales. It's your B2C sales and B2B. And even if you're 100% B2B and you have no tax you're still going to cross this threshold. And the states are still going to expect you to file a return. And it is going to cost you the same amount in compliance for you as it does. Even if you give them no money like every number is zero. Joe: That's really important for people that are doing both B2C and B2B. I was thinking just wholesale B2B but we have a lot of clients that they'll sell to let's say for instance chewy.com they're selling their own website but they wholesale to Chewy. They need to pay attention to this stuff as well. That's great information. Scott: It's all of their sales. It combines both and it's looking at all of your sales. Because what the really the states are doing and all these laws are meant to do is to get to the point where every transaction is taxed and they get a sales tax from every sale. That's what they're trying to do so pretty much most of the pain goes away if you register and collect in a state. You don't have to worry about different fines and fees or other unknowns, you can start defining your cost of compliance but that's really where we're going. Joe: Okay. Do you think this Supreme Court decision is good or bad? Overall for the individual states that are going to be applied this collect and collect is what I'm saying. Scott: I think it's bad for e-commerce sellers. I really do. The compliance costs just went from an unknown maybe I can avoid them to … and we're heading that way so I think it's bad for e-commerce sellers. Of course, it is great for the state bureaucracies that are going to go out and collect a bunch of money from other states until something else changes to back it down. I think it's going to increase the risk for smaller sellers and even mid-range sellers of having more unknown's that could impact your business. From us, as consumers, we're really getting to the point as a company … a country since we're so consumer based, it's all about products and services and things along those lines that we're really heading to the point where we're going to pay a sales tax on everything. It's just that the cost and the complexity and potential risks to all small businesses, not just e-commerce businesses, anybody that has a product and ships it out of state or does anything else now has to be concerned about that much more in running a business that you know e-commerce businesses are 24/7, running really fast, the rules are constantly changing, you just didn't need this additional in my opinion large overhead of cost of doing business to really impact them. Joe: Right at the end of the day hopefully it would be great for states and the roads and highways and schools in the state in which you live. But for now, it's a major complexity that you as an e-commerce owner have to deal with. Scott, as always you're fantastic. These details are great … for me personally they're overwhelming many times but that's the point of the show notes and simplifying it and really … perhaps hiring that SALT expert to do the vast majority of this work for those listening that choose to go that route. Scott before we depart any last thoughts or recommendations for people that are listening; both buyers and sellers? Scott: Yeah. Just take a deep breath plan out time once a month or a quarter to focus in on this. Add up your numbers, decide your risk tolerance, and then move on. And then don't worry about it for that month or quarter. And then when you decide to do it, think about what it is you're doing and make a decision and move on. You don't have to stop all your business or sales or everything else. Just take a practical approach. This is one more thing that has to be on your regular process; like checking your insurance or other things that you're validating. And just keep moving; keep selling and growing. Balance the risk and then just move on. Joe: That's great thanks, Scott. As always appreciate it look forward to seeing you at the next event and hopefully lots of folks will reach out to you here. And be at peace of mind here with what you've shared. Thanks so much, Scott. Scott: Well, thank you. Links: Catching Clouds eCommerce Accounting Patti's Q&A about Sales Taxes and the new SCOTUS Ruling Catching Clouds Academy Fox News Supreme Court sales tax ruling: The winners and losers MSNBC Supreme Court Rules States Can Require Shoppers To Pay Online Sales Tax Internet Sales Tax | What Online Retailers Need to Know Sales Tax Nexus Threshold Calculator Sales Tax Permitting with SalesPermitted.com Get your FBA stock locations summarized and delivered to your inbox. Sales and Local Tax (SALT) Experts – Outsource Everything Cathie Stanton and Lauren Stinson, Cherry Bekaert ► http://cherrybekaertsalestax.com/ Michael Fleming ► www.salestaxandmore.com ► https://www.salestaxandmore.com/chart… Diane Yetter ► www.salestaxinstitute.com ► https://www.salestaxinstitute.com/res… SaaS Sales Tax Apps: TaxJar ► https://www.taxjar.com/ Taxify ► https://taxify.co/ Avalara ► https://www.avalara.com/us/en/index.html

Chris got fired from his last job, thankfully! He was speaking with co-workers about his affiliate revenues he was making on the side and his boss found out and fired him! Fast forward almost 10 years and Chris is the host of the UpFuel Podcast and an expert in the Amazon Affiliate space. He is the owner of several businesses in the Amazon space, including affiliate, SaaS and physical product businesses. His opinions and recommendations are not theories…they are from real life experiences. Chris is humble…you'll get that in the Podcast. He didn't sell or pitch anything. He just shared his experiences being an Amazon Affiliate entrepreneur. One thing he said over and over when it came to being successful within the Amazon Affiliate space is to “differentiate” your site. Make sure that whatever product line you choose to pursue, that you differentiate your site from others…there needs to be a strong reason why the end user would review products on your site versus the competition. Episode Highlights: Chris has been self-employed for just under 10 years. His Amazon Affiliate income replaced his “job” income…before he was fired. He owns wordpress plugins, saas, affiliate and physical product businesses. Each niche has its strengths. Choose a niche that is of interest if you are starting out. If you are building a portfolio of Amazon Affiliate sites, then a system and process takes precedence over passion. Price point matters GREATLY within the affiliate space. Develop a product review site, not an information site to help buyers make decisions. Content is still critical, and Chris outsources much of it these days. Amazon's cookie length is 24 hours, allowing you to make money off products you are not reviewing. A long term approach is the key to long term success. Building links can accelerate ranking, but is no replacement for good quality content. When buying…beware of PBNs! Transcription: Mark: Joe how are you? Joe: I'm doing fantastic Mr. Daoust, how about you? Mark: Good. I'd understand you talked to a friend of Quiet Light and a friend of Brad one of our brokers here, Chris Guthrie. Joe: Yeah Chris is from UpFuel.com and AmaSuite and I mentioned those upfront because we didn't talk about it at all during the podcast. He's an entrepreneur, have been self-employed for about 10 years, went off on his own after he got fired. He was actually talking to his coworkers and bragging about how much money he was making doing affiliate marketing and his boss found out and fired him; probably the best thing that ever happened to him because he'd been doing very well ever since. And the subject of the podcast is really specifically focused on the Amazon Affiliate Space. Meaning you build the site doing product reviews on say vacuum cleaners and people look at those reviews click on one that they like and it takes them to Amazon, somebody buys it on Amazon and you get paid. And it's really Chris's … one of his areas of expertise and I mentioned Up Fuel which is his podcast and his blog that he talks about this on so I would recommend people tune in. But also AmaSuite which is a software service that he's built that helps people sort of narrow the path in terms of what they want to find, what products, how to … what niche, what category and he didn't talk about it at all. He didn't pitch. He didn't promote so I'm doing a little bit for him because what I was trying to get was a clear path for people that want to either build one from scratch or buy one and grow it or things of that nature. And I think that he was hesitant to talk about his own product because he's such a nice guy. He really … listen Mark I'm going to, don't let this go to your head but he reminded me of you a little bit which is he just wants to have conversations and help people. And when he helps people it comes back around. And it was a great great great show and I think it'll help a lot of people in terms of the Amazon Affiliate Space. Mark: He reminded you of me huh? Joe: Yeah just the better looking, a lot better looking. Mark: The poor fellow. Joe: All right well let's get to it … I mean if you … it's got to be good so let's get to it then. Mark: All right here we go. Joe: Hey folks it's Joe Valley from Quiet Light Brokerage and today I've got Chris Guthrie on the line with me. Hey Chris how are you doing? Chris: I'm doing well thank you for having me. Joe: Chris you're like a … you're a little bit of famous in my world you know. You are. You're like a star. I know you from your podcast and we've run in the same circles for years but didn't get a chance to meet each other until last October right? It's Rhodium Event Weekend out in Vegas. It turns out you're very good friends with one of our brokers here, Brad Wayland. You guys are in the same neck of the woods I think right? Chris: Yeah well actually he's an up and a little bit south to Seattle; he's over several states but- Joe: Okay so in the internet world I guess you're in the same neck of the woods because you're- Chris: That's right. Joe: You should like candies; you guys don't even if grocery's on. Chris: Yeah. Joe: But you talk to each other often? Chris: Definitely, yup. Joe: Well he speaks very highly of you. And I … as I said pre intro here we don't do fancy intros. I don't have your bio in front of me. I know about you. I know what you do a little bit. But I think folks want to hear it directly from you. So why don't you give us a little bit of background on how you got started in the internet space and what you do for a living these days. Chris: Definitely. Yeah so probably the reason why I try and put myself out in the first place is just because it leads to conversations and other different types of opportunities. That's kind of some eyesight a long time ago when I was digging into this online space that I wanted to blog about it and talk about it because it would lead to relationships and friendships that I count people out and they count me out. And that's sort of why when you said the famous thing I think … I don't really think that but it's more just that's kind of why I went with that direction. But yeah I pretty much just have been doing various online businesses now for about 8 ½ years full time. On the Amazon Affiliate Side of things that's actually how I was able to first leave my day job. I was just fired but I left ahead that job and was able to just keep doing online stuff because my Amazon Affiliate income had replaced my day job income. And so I just basically got to work the next day working on building more sites and growing the main primary site I had at the time. But yes so other than Amazon Affiliate thing I also run WordPress plugins, a SaaS company, physical product company, and other different types of Amazon Affiliate or well regular affiliate websites as well. So a bunch of different things along the way but yeah I've been here right for quite a while. Joe: So what's your favorite in terms of running the business? Do you like the physical product space which takes working capital and things of that nature or the Amazon Affiliate Space? Chris: It's tough to say because each one has its benefit. With the affiliate side of things, you don't have any … you don't have to deal with any capital it's just other than your initial capital to invest in the content creation and building a site out. There isn't going to be as many costs associated with that especially once you get up in ranks and start making money. And then there is … in many cases there's less ongoing expenses. But on the physical product side you're constantly putting in more cash and then a lot of cases it's just a matter of trying to lay the damage to yourself for as long as possible so you can continue to grow that business. I mean everyone has a different goal in terms of what they want to do with any business type but in the physical profit side you've got to do … you've got to re-invest so much more. So I can't really answer I guess one way or the other I think it really comes down to what people are most interested in. For me, I like both and so that's kind of why I still kind of have my feet in both areas; both on the physical product side and if the affiliate side and then also selling software and things like that. Joe: Got you. Well as we talked a little bit before we started recording, I've sold a number of affiliate spaces, businesses where they're selling Amazon Affiliate products and making money through Amazon Affiliates. And it's becoming more and more prevalent in some of the event groups like Rhodium Weekend, a lot of folks getting very interested in that. I've always been in the physical products space, I had a couple of content sites and my physical products site was actually write good quality content and Google will reward me was my methodology. And it happened but I sold physical products. But the affiliate space is fascinating for me and I think more and more people are wanting to learn more about it. So that's obviously why we're chatting today and want to really get your expertise on how do you get started in this space? How do you focus on growth? Can you ramp it up? Can you do pay per click? Do you do social media? Do you do the tricks and tactics that they do with physical products on Amazon, or what's the approach? And then maybe keep in mind that we have both buyers and sellers that listen to the podcast. So tell me from a starting point how do you begin in the Amazon Affiliate Space? Do you just simply research a product, pick one, and go with it? Do something you love? What would you recommend to those listening? Chris: Yeah definitely. So for the way I like to do things is I like to look into … it's more of a just general niche research. And that's of course … you said that where there's a lot of baggage because there's a whole different bunch of different ways you can do this. You can use various tools to help with the research process. You can just go out to Google based on things you're interested in and do research in that way. On the Amazon Affiliate side, that's what I'd spent more of my time doing was focusing more on areas that I was most interested in personally. So I had a site that was focused on like smaller computers and that was something that I was interested in personally. So that's kind of how I decided. I was looking at the various niches online and what people were ranking for and how they're making money. And it just seemed like a lot of the content they are creating wasn't really … in many cases at least for the niche that I was in before I sold that site, they weren't even actually reviewing the products that they're talking about. They are just basically writing articles and using CNET [inaudible 00:08:34.7] large conglomerates, larger websites to come up with the information they could write about. So what I did and so I was … you know contacted these companies and got them to send me products for free and I sent it back and do things like that. So with any site that I do whether it's Amazon Affiliate or anything else it's … for me, it's mainly about finding a way to differentiate. So looking at any niche is just okay what can I do to be better or to better serve the audience than the existing niches that are out there? So I usually- Joe: Okay. I would think it would matter that it's something you're interested in because with an Amazon Affiliate Space you're reviewing the products. You're writing content about it. You're sharing your voice and your opinion. It seems like it'll be important that is something that you like. Chris: Yeah definitely I mean that's … for me that was the approach. I mean I think that if the goal and this isn't something that I've done personally but if the goal is to really systemize and launch dozens of sites or something like that then you would need to just … you could really do just things your interested in because you can't potentially run out of those. But you'd be looking at different types of criteria just like what's the average sign price of a product, that's one of the things that you focus on as well is if you're focusing on a niche where the price is much higher then you can make more money in Amazon's Affiliate program because of the way they have the structure; their affiliate payouts. But that's something to consider as well is just the price of the items that are going to be sold. Joe: Okay so focus a little bit on something that you like but also look at the math behind it in terms of the Amazon Affiliate Payouts and the different categories that they have and the price points. Because you're going to get a paid … you get paid a percentage of the close transaction I assume; is that right? Can you touch on that a little bit, how you make money as an affiliate? Start from scratch and assume that people are tired of physical products or tired of SaaS products and they want to maybe buy one of these. How do you make money doing it? Go right into that a little bit. Chris: Yes, so the way that it's done pretty much is just focusing on … actually to see and try to pull up the actual charts that I have memorized it off the side of my head but each category will have different types of payouts. And pretty much the way you can … I would say and try and pull it really quick but I have it in front of me … yeah, so the way that I would that is find- Joe: So somebody reviews a product and let's say they're reviewing vacuum cleaners. And someone sells vacuum cleaners on Amazon; obviously, they do. And I'm talking about the reviews on those physical products and someone clicks on the link and goes to buy it on Amazon, I get paid a percentage of that but I never have to own the physical product that's the upside of this right? I get a percentage of the sale but never have to purchase the inventory, correct? Chris: Exactly yup and in pretty much the … and I was trying to find the category here, so every category is different and they'll show you which … what the fees are like I'd give you one example, so if it's outdoor tools for instance that's 5.5% as a percentage that you'll get. And the great thing too is any time that you send someone to Amazon you'll get a commission on any product that they buy while they're on Amazon. So even if you're referring people to vacuum cleaners then you can get sales on other types of these accessories as well within a 24 hour window. That's the cookie blank for Amazon. Joe: Excellent. So I know that with physical products you can get to the top fairly fast. There's different processes and categories and not just on Amazon but if you're selling a physical product all that you need to do is pay some PPC ads for instance with Google Ad Words. It's not a winning formula oddly … obviously all the time but with affiliate how are you getting traction? How are you getting up to page one of the search engines and is it a short term game or is it a long term game? Chris: Yes, definitely more of a long term game. With any website that I'm trying to build out and rank it's more of kind of like we say you're creating content or someone is creating content for you. Looking at what's ranking there and listing okay what can I do that's better than that? And then having someone or doing it yourself. Creating out that content and creating something better. Things that you can do to accelerate the process of trying to rank would be building links and doing things like that. For me most of the time it's more of an emphasis on the content creation side aspect but like in the case of the examples I was referring to before that I sold, I would do things like trying to … because mine was in the tactical category, I try to do things like breaking news within that niche. And I would contact larger sites to say hey this product is available on Amazon now. And like in gadget and other types of sites like that, I had a link back to my site because of doing that. So it's like another way to try and help with getting more link authority from external sites that would help with the content that I was creating for that site. But that's kind of the process that … and I would never do anything like pay advertising for affiliate sites. It's … and I'm not sure if any of Amazon affiliate person out there that's doing that. For me I just … it never [inaudible 00:13:30.0] just because I know that the margins you're getting from the sales of the products you're referring rather. Joe: Yeah. Chris: There's not really enough money actually if I'd like to drive then paid traffic to try and convert that paid traffic. Joe: Right. Chris: Years and years ago people would do just racked paid advertising straight to Amazon's website and you could do that before they banned it but that was like years and years ago. Joe: Got you. Well, they get smarter every year and fix the problems and make it tougher. And the people that are doing it right, I think survive in the long run and knows that cheating to get to the top end up getting kicked to the curb hopefully anyway. Chris: Yeah. Joe: So with an Amazon affiliate site, some people have the impression that if you've got a physical product site that you're constantly managing customer service, constantly managing inventory and that it's a grind, you get to constantly churn out new skews to stay on top of the competition and then, of course, grow beyond Amazon.com to the different countries. It sounds like and some people get the impression that it sounds like, seems like Amazon Affiliate would be build it and let it grow slowly and it's a lot less work. But from what you just said which is breaking news and staying on top of things you're putting in the same kind of effort on a daily basis I would assume with an affiliate business as you are with that physical products business or is that not the case? Chris: It's not necessarily the case. I think it really depends on the niche that you're in because you know it like before we hit recording you mentioned another mutual friend that does Amazon Affiliate things as well. Joe: Yuan Fitzner let's just say his name out loud. So Fitzner it's you and he's a great guy. For anybody who doesn't know him, find him through Rhodium Weekend; he's fantastic. Chris: Yeah so he's probably a good person at all as well but he doesn't do any link building, right? He focuses more on just creating the content and that's similar to the strategy that I do as well. But in the case of the niche that I was in specifically before I sold that site doing that as a strategy was … I knew there was a benefit there. Because I think one time Engadget linked to the site and they didn't change the affiliate link. I think it was like several thousand dollar affiliate fees that they … but in that case, it was more just like here is something that fits- Joe: You didn't point that mistake to the under laying and good backing. Chris: None of it, it's just like tip line and you just say hey here's this product that's out now and people are probably excited about it and it's available on Amazon now. And yes that was a nice little bonus but … so now it was more of like niche specific. I definitely think that … I'm probably more often than not actually. You're building out affiliate sites because I had other sites as well. I have other sites that it's not like that. Where we're not trying to break news or do things like that. It's just more niche specific. Even people in the technical space they don't want to do that approach and they don't have to. I mean that's just kind of the style that we chose for that site. Joe: Okay so good quality content, SEO friendly over the long run and theoretically you'll get rewarded. Is that the basic simplified dumbed down approach? Chris: Yeah I mean it does simplify it but that's really kind of the core. And I think I really emphasize just the differentiation aspect. Like any site that I build it's always like okay I don't really want to enter this area unless I'm willing to do something multiple times better than what's already there. So that's the approach I take for really building any site. Joe: What are some of the mistakes that you've made then in terms of doing these affiliate sites? I mean what did you learn the hard way? Chris: Yeah. So of the some of the mistakes I made was … at least for me personally, I do better having fewer sites and just focusing on doing really well with those sites as opposed to having many sites. Like another [inaudible 00:17:09.7] can find that was Spencer he … years and years ago he used to do like hundreds of niche websites and make money from Google AdSense. For me I never … she was interested in doing that type of approach and systemizing in that way. But for me at least it was just a matter of trying to focus on two small niches and so I can … I think I had one that was on HDMI cable reviews. Which was a fail because that was … HDMI cables are inexpensive and then it's also it's just kind of a small niche and … well, not necessarily a small niche but it was kind of a … it was hard to do well with that one then than some of the other niches I went after. Joe: That could seem like it would change a whole lot over the years either. Chris: Yeah I mean it was … well, that's the change in standards in terms like new for kay, signals and things like that. But yeah it was just like if you can go with higher price items that's helpful right? With the part that I was doing is computers and so it'd be you know … or small laptops rather that would be more of a payout each time. Joe: Okay, I had an example given to me maybe at December, January you know someone that was passionate about … I think it was salt water fishing and writing a blog about salt water fishing and within that doing the affiliate links on the different tackle and lures that you can get with salt water fishing. Would that be an approach that someone could take? You know if I have a passion like that whether it's salt water fishing or basket weaving if you will, to build a site based upon that passion and then just go with that approach? And then the follow up question is all right great how do I learn about SEO as you have over the years? What resources do you have? Because it seems again really simplified to say just build a site that you really are passionate about, find great products, review them, and off you go. But you're still got to build an SEO from this site and write good content that that the … your Google is gonna love, right? Chris: Yeah so going back to the example, I think if you're building out just a site that you're passionate about and then trying to then add Amazon Affiliate as like a monetization … kind of like an add-on, I think it's harder to make Amazon a larger portion of the revenue for that site. If the goal isn't from the start like hey we're going to build out like a more of a review type site as opposed to here's something that we're interested at about just general information and then here is while reading this article happened to may be interested in this specific lure or whatever the example is you gave. Joe: Salt water fishing. Chris: Yeah, so that just from what I've been looking at sites in the past it just seems like that's more challenging. What usually ends up happening in those types of cases, the website owner usually ends up making a larger portion of their money just from banner ads or other types of ad platforms like that and then Amazon is more of a supplemental as opposed to the sites that I build. It'd be more … really focused around the review side of things. And so it'll just be like people that are coming to this content are interested in reviews about this product and so then that traffic is more likely to buy something than people that are just interested in general information come to my site and then they may or may not be in a buying state. Joe: So a clear differentiate is a content site that's just giving information about products in general versus a review site when you're comparing a variety of different products. And when you choose one of those products it's going to Amazon and you get a percentage of that revenue. That'd be, right? Chris: Yeah and I don't think it's a bad thing to do … really your example where you're building out because it's great to generate revenue from ads and just have a lot of traffic as well just from various articles you're writing and all about salt water fishing and then also be able to make money from Amazon with the Affiliate Program. It's just there's two different ways that you might see sites if you're on the buying or building or selling side of things. Joe: Well on those three sides which do you like … do you think, let's just talk about two; building or buying. We had Walker Deibel on the show a couple of weeks ago talking about build versus buy or buy versus build. It's actually in a book. He's coming on the Quiet Light team as an advisor in July. Do you personally in terms of specifically the affiliate space, Amazon Affiliate Space do you think it's better to build or to buy? Chris: Well I've done all of them. Build, buy, sell, every aspect on the Amazon Affiliate Side. I prefer now at least … I've been doing this for a lot longer to … or that depends right? Because it depends on for me at least where my capital might be tied up; either I just recently bought something or I'm doing other investments that are outside the online space and I want it just free of capital. And so I'm not actively looking to buy something or I'm just trying to focus on okay now that I've got that other thing going on but I can try and focus on scaling up all my things and as well. I prefer, if I had to pick one I'd say I prefer building and then being able to sell after that because for me at least I'd like to be able to invest less of my own personal cash. I know you mentioned [inaudible 00:22:18.3] before, [inaudible 00:22:19.4], a lot of the buyers there they don't have access to capital that I don't have access to through … you know people have consider with more money that they can then use as investing partners. And so I suppose if I … given the opportunity I had more capital then I would probably be doing more buying. So I guess it's tough to say. If you don't have cash and you want to just get started then building would make the most sense and maybe you can sell once you get to a certain point. That gives you some capital to either reinvest and build more sites or maybe build or buy other things. But if you have access to capital from … for any reason then buying would be great because you're able to just start with something existing. Joe: How long has it been for you from that build to sell? Do you typically hold something for 12, 24, 36 months? What have you seen? What do you try to set as a goal for yourself when you're building something? I think okay I'm going to build this to eventually sell it if that's your goal, how long do you like to hold it for? Or does it just depend? Chris: Well, a lot of the times it's more just a … it really does depend. Because half the time I do this site … well most of the time actually when I do these sites it's more a matter of I'm building something up, I like the cash flow and that's kind of the main goals is just building our monthly cash flow from various websites, businesses, etcetera. So that's kind of more of what I'm after is just getting more cash flow and then rather than just trying to pull out my capital right away and just to sell. So for me, it's all about the cash flow and I am not always interested in exactly trying to sell. Joe: How many how many balls do you have in the inner; Amazon affiliate wise, how many sites are you juggling now? Chris: If I were to add up all the different sites it'd probably be … I had to look- Joe: You know it's more than a dozen or so when you have to look. Chris: Well, no it's more I was trying to get a specific number. I'll say it's less than a dozen but I also include in that other affiliate sites that just make money from other CPA type offers opposed to Amazon. Joe: Got you. Chris: Because kind of once … for me, Amazon was a starting point. That was kind of how I got into the whole space was building out this Amazon Affiliate Site, I was doing it on the side outside of my working hours in a completely unrelated job and just trying to find a way to earn enough money to do this full time. And then once I started making enough money from Amazon it opened up all these different opportunities to try and do other things as well. And that's one is going to software, creating tools for Amazon Affiliate Sellers or well affiliates rather and doing things like that. Joe: How long has it been since you were thankfully fired from the last day job you had? Chris: Yeah, I was looking it up. Actually, I have it on my calendar October 13th is the day and it was … it will be nine years this year, later this year rather. And then I'll be 10 years the next year but that will be sort of, that'll be what 2000 … I'm trying to think now what the year it is, 2018 so it's 2009 I believe. Joe: 2009. Chris: Yeah. Joe: It's a long time to be self-employed; it's impressive that you pulled that off. Chris: Yeah. And now for me at least it's more of a matter of just further building out multiple different income streams and revenue streams from a variety of different businesses. There's … well, that's a whole other discussion right whether you should focus on just one thing or kind of spread it out. For me, it was more like build something out that starts making cash. And it's like well I don't know if I can really sell this for enough to make it worth selling. It's not going to change my life in any meaningful way so I'll keep it and have someone help me out to run it. Well, that's kind of the approach I'm working with. Joe: So if someone is listening to this and they were in your shoes, you know where you were 10 years ago and they had a day job and they want to do what you've done which is building Amazon Affiliate Sites and make some income on the side what should they expect? Should they … if they pick a category they like, they do a review site, they sign up, they get involved should they … would your expectations that they're going to hit 1 out of 10 on sites that they do, 2 out of 10, 5 out of 10. What would you give them in terms of a ratio so that they can understand and of course these are all ballpark numbers and what kind of money can they really make? I mean we're talking about on the small side a few thousand bucks a month and the people that are big and really experienced at this you know what kind of money are they making? Chris: Yeah you know that's a tough … it's tough I think with the ballpark it's a challenge to give an answer to that because the experiences that people have may lend themselves to be able to be successful more easily. Joe: All right, well look everybody listens to me all right. And they're like Joe you're an idiot but I like you and you know would … I have people tell me like they feel like we're old friends from this nude podcast. But you know me through Brad, we chatted, if I was to do this … let's be specific. You could say … be honest say, Joe, you're going to do 1 out of 10. Just face it, Joe, you're not going to do well. I mean you're the expert what would you guess if people are going to do this with some these in experience on a thing that they love and they're smart and they're going to do research online, they're gonna go to your podcast, they're going to go read everything about Chris Guthrie and figure how you do it. What are they going to do, 1 out of 10, 1 out of 5, what do you think? Chris: Ah if they're learning from me it's going to be 100% right. Joe: You're a humble guy every time okay. Chris: Yeah and though I'd say probably it's … with a lot of things, you get into it and sometimes they'll hit and they'll do well. So for me, the best site that I have was doing over 10k a month. Joe: Okay. Chris: Worst site would be like $300 a month. And that's where I'll be some of the weaker ones and then some are them between where I have a few thousand or so. Hit rate would be more like maybe 25-50% with sites that would be doing pretty well. But it … yeah, it's just really tough to answer that question for me. Joe: You improved that hit rate I would assume with the research that you do upfront. Is that right? I mean just like a physical products business on the web, on Amazon or Shopify whatever it is if you do your research up front; what are the competition price points, how are you going to sell it, things of that nature- Chris: Yeah. Joe: And you're doing the same thing with Amazon Affiliate; you need to pick a product with a great margin, something that you can write about, something that has been up searches online. What tools do you use to help … even if you have a passion for something whether it's worth it on … whether it's worth creating an Amazon Affiliate Business? So are there certain tools that you use to help that hit rate go up? Chris: So well tools for like the research side of things? Joe: Yeah to help ensure that the path that you're going down is going to be as successful as possible. Chris: Yes, I use a lot of SEMrush actually. So I use that tool quite a bit because I just like to pull up a site, see what stuff is ranking well, where they're getting their traffic from and- Joe: Do you have the paid subscription for that or do you just use the free version? Chris: So I fluctuate off and on. So from the process of building or going back to yeah I'd more than all do the paid subscription, and then if it's okay we've got enough stuff on our plate let's just focus on what we have and not create anything new then it's like well I don't really need to pay extra subscription right now. So I fluctuate in and out. Ahrefs is another tool I use as well although that was another one that I just was okay I got a good sense of where our competitors are in their links, where they're getting traffic, and okay I cancel out as well. So it's like- Joe: I always get that one wrong, it's A-H-refs is that right? We did a giveaway when we launched the podcast on an account on a subscription for that but it was Mark's area of expertise. Can you spell it out for me? Chris: Yeah, it's A-H-R-E-F-S.com and I'm not even sure how you're supposed to pronounce that either. Joe: Okay. Chris: So I mean I met someone that works for the company at that conference as well. I didn't bring that up but yeah- Joe: Mumble what they said that'll generally work. If you actually … the way my 16 year old does, he just speaks confidently and I believe him when he's comp … no idea what he's talking about but he speaks confidently. I think that's the trick. Chris: Yeah. Joe: All right so Ahrefs- Chris: Yup. Joe: You went through it and that one is more of what links the sites have right? Is that what you're looking at? Chris: Yeah, so it'd be more like looking at both viewers and the lengths for me. I was merely just trying to see where my key rankings were and so I was kind of more just tracking how it is we're doing. For SEMrush that's why I would use just the tool for research. And the thing is that here's what … the thing with tools and especially the two tools I just mentioned they've been around for years and years and years so they have so many different things that I probably didn't even know. Like I probably didn't even need one or the other it's just like when you get comfortable using one tool for one thing you'd use it for just that one thing. And then you might use this tool for the other thing. But that's kind of what the approach I would do. Joe: Okay. So do that research upfront and what you're looking for is traffic, competition, links, things of that nature before you go down the path to increase success rate, any other recommendations that you'd give somebody just starting off? Chris: Just the main thing I would say is well … I mean if you're looking at what … just looking at larger sites that are doing well. Seeing … I try to reverse engineer a lot. So when you're looking at starting from now that you're doing your research process and seeing what sites are getting in the traffic beyond just like figuring out why are they getting this traffic. Is it because they have a bunch of links pointing at them? Is it because their content is much much better? That's … I guess I keep coming back to this like but it's always for me differentiation. What is it that they're doing that's really doing that is working really well for them and then how can I do better than that? And so in the process of doing that research and looking at that then you're going to see okay it looks like they're using AdThrive or something for their ad platform and then they're using Amazon's Affiliate Program and maybe they're using LinkShare so you link to Walmart and things like that. Joe: From a buyer's side if somebody came to you and said “Hey look I'm looking at buying this site can you give me your opinion on it?” What things should buyers look for that maybe somebody in the Amazon Affiliate Space has done this sort of cheat and it's not going to last, is there anything that stands out that people should be aware of or look for? Chris: It's not because … you want to look at where they … if they are building links you want look at where they're doing it because there's you know PBNs or things like that are definitely more gray area. Joe: If I were … go ahead and say what PBN stands for, please. Chris: Yeah, Private Blog Networks, that's where people build out like huge networks of blogs and then they use links on those blogs and point them at the site. And then those blogs are getting traffic or links part of them as well. So that looks like you're getting links from higher quality sites when in fact they're just sites people would construct pretty much solely for the purpose of pointing links at properties they own or properties their clients own. And I can't remember exactly how long ago it was but Google cracked down and quite a bit. From what I've seen people kind of just got it underground and so it's kind of the [inaudible 00:33:26.3] a lot but … so looking at that is helpful in terms of how a buyer can protect themselves from that. Usually, you're able to use some of these third party tools to help check that out. There's also things where if you're signing an agreement that's saying I haven't used a PBN and then you find out that they are because maybe you're ranking stopped or go down because they've stopped in turning to run that PBN and point the links at you then that's something that you could have legal recourse to go after them. But that might be something out of buying side that included- Joe: Yeah, that's what you definitely don't want to have to do is to go after them after the fact. Chris: Yeah. Joe: Because you're chasing them for money that you gave them which is never a good position to be in. Chris: Yeah. Joe: But certainly doing the research to see where those … where the traffic's coming from and see if there is a PBN and trying to avoid it as much as possible. I think a lot of the times Chris getting to know the person, trusting a broker that's involved if there is one involved, really getting to know the seller in a positive manner. I always recommend whether it's a $35,000 site and it could apply to 3,500 as well, or a 3.5 million dollar site, if you're buying it, it's your money, you worked hard for it, get on a plane, spend an extra thousand dollars stay in a Holiday Inn whatever and meet the person face to face. Do a Zoom or Skype conference call so you can see them and talk to them but meet them face to face before you close the transaction. You can go under LOI in advance but I just don't think there's a better substitute for a handshake, having a lunch or dinner or beer and getting a better feel for them. Of course, you've got to do that due diligence and that research and hire experts like yourself or [inaudible 00:35:14.5] whoever might do the research if you don't have it to protect your money. It's something you worked hard for and I can tell you right now that when you make an investment and you blow it, it's really really hard to pull the trigger again. I know a lot of people that have done that. I know more people that have been incredibly successful and then unsuccessful. But those that thought they knew everything and thought that everybody was kind and trustworthy like they were and they pulled the trigger and something changed in the world, there was a shift with an algorithm update or whatnot and things just fall apart. They can fall apart very quickly. So lots of research meet somebody face to face, use the tools that you're talking about, the Ahrefs and SEMrush, check for PBN things of that nature. You know most people are good but it's the few bad ones that you just want to avoid in my opinion, in my experience. As far as up the top line revenue you think you know if somebody that can do this maybe they're making $10,000 a month that they do really well, how many hours a week are we talking about that is going to take to operate a business of this nature? Chris: It's definitely if … so for I guess it depends. For me, I'll give … I can really only speak to my own experiences. So for that site that like my bigger site that I had before I sold it, it was probably 15 hours a week or so and then the rest of my time was on other projects. So it wasn't like a full time thing because I was doing it outside my day job in the first place and then I only added a little bit more time because then I thought okay well I've got this new time. I don't want to have all my eggs in one basket because now I have no job and just one primary site and then other sites that are also helpful but wouldn't be enough for me to cover my bills and for … at the time I was like okay I just want to make sure I could … I don't have to go back and get a job. Joe: [inaudible 00:37:01.3] Chris: And so that's kind of the approach that I took and it worked for that site. It really depends on me and a lot of times too with Amazon Affiliate Sites especially, you're able to hire out for a lot of aspects of the process of building; either building, maintaining, any aspect to that because it's just content creation and there are a lot of writers that you can find. They can cover that part. And so if you're not doing it yourself and you're finding ways to get yourself out of that process then it can be much further reduced. Now I try and just … for me it was I try to only come up with ideas and then work with people that can help implement a lot of these or to … it's more just about trying to really limit the amount of time I spend on actually like creating content for instance. I might like to write about something on a blog personally but if I can have someone else do it then it wouldn't make sense for you to do that. Joe: Yeah, content creation can take an awful lot of time. Chris, we're running out of time. Can you share any last minute thoughts or recommendations for those that are listening that are either building, buying, or selling Amazon Affiliate Sites; any last minute advice that you would give them? Chris: Yeah, I would just say that … well, actually I'd say if anyone is curious or has other questions feel free to … I would like to say feel free to email me. Joe: You know without a doubt I want to … let's talk about how they reach you. We'll put it in the show notes as well but you know throw out whatever email address, phone number, blog sites, anything you want to share right now I'd be happy to do that. But we'll also put it in the show notes so everybody can find it in writing and get a link there too. Chris: Yeah so to answer your question I'd say decide on what you want to do right? If you're trying to … and everyone probably has a different expertise or where they're at with their life, what they want to do. If you're limited by a capital and you have a lot of money to invest then it may make sense to just simply build something so you can build it up and then come to your brokers like you guys of course and then sell it and that can give you cash that would … you could then use to reinvest and do those things. And that might be something you would do while you're still at your day job. If you're already on a site where you have access to more money then buying something would make sense. And being able to then take where you're at and growing it from there. I'd really just say that decide which focus you want to go with. Make sure you find ways to differentiate. I mean I kind of bring out that this whole time but for me, everything that I've done with any business is always been for me differentiation and finding ways to do much better than the competition. Joe: That seems to be the good … best key word here is just be different. You don't want to be like everybody else; differentiate yourself. Still do all the things right, still build something that people want to come to and trust but differentiate yourself in whatever way that you can. Excellent. Chris, how do people reach you? How do they find you? Share any information you can now so that they can get in touch with you and talk about this. Chris: Yeah, so best place would probably just be UpFuel.com which is my site. We didn't talk about it much but I sell the WordPress plugin that helps people with Amazon Affiliate things as well and that's EasyAzon.com. Joe: EasyAzon.com? Chris: Yeah so if it's … if you're running WordPress and you know a lot of people do of course then that's a software you can use to help with creating links and earning more money from those links as well. Joe: Excellent. I will make sure that link is in the show notes as well. So UpFuel.com, EasyAzon.com anywhere else that you are in the world? Chris: Twitter @chrisguthrie and yeah so that's probably the main ones but I'm happy to … if any … if you're on the buying side and you're just looking for second opinion, I try and I've just done well with trying to provide value and people with no expectation, no return and then things work out so- Joe: I agree. Just help people have good conversations and it comes back around. All right man listen I appreciate it Chris thanks so much for your time. Hopefully, folks that are either building buying or selling Amazon affiliate sites will get some good resources here. Thanks for your time today I appreciate it. Chris: Thanks.   Links: Upfuel.com: An up to date article with respect to the Amazon affiliate niche. Easyazon.com: The plugin that a lot of WordPress users install as well (they have over 10,000 installs). AMASuite.com: Discover products and how to differentiate and source them inexpensively.

When it comes to buying internet businesses, is it better to buy big or buy small? Today we are chatting with Jeff Hunt of Own Optimize. Jeff has one of the largest web business portfolios we have come across here at Quiet Light. Through close to 60 transactions, he has owned a total of nearly 500 websites. These days Jeff spends his time working on his websites and educating others on how to buy internet businesses. After a career with IBM in the services business, a move overseas led Jeff to the internet where he started a real estate website. Despite a tech background, he didn't really know anything about websites when he started out. Soon he learned that buying them was much easier than making them and started to build his portfolio. Today we talk to him all about what to focus on once a website catches your interest. Episode Highlights: Start off on the right foot at the very beginning of the process. When buying a site, what you're really looking to buy is a quality website that you can grow and automate. Jeff's range of investment is typically sites valued at $50,000 and under. Of course Jeff experienced failure, 8 out of 10 of his sites didn't make it. He admits to being guilty of chasing too many things at once. Success for Jeff has come from a combination of buying and building. Making a smaller purchase is not always for financial reasons, it can be for a new buyer to explore whether or not they even like the business. When a buyer starts small they get an opportunity to learn the transaction process. Smaller websites can carry more risk. They may not have had enough time to grow. With large sites, you still have some leverage even if you come across hard times. Owning larger sites that garner larger revenue allow buyers to afford to hire a team. Before a purchase, study the heath of the business; the historical data, the ratios, and the percentages of cost that make up the total cost. The seller should have found the key to attracting new buyers and that knowledge can be passed onto the buyer. The buyer needs to really understand the business model and hone the process that the seller has achieved. Transcription: Mark: Joe, How are you? Joe: I'm good Mark, how you doing today? Mark: Good, good! I got to talk to another member from Rhodium Weekend, which is one of those events that we talk about a lot on this podcast, to talk to Jeff Hunt. Joe: I know. Jeff Hunt's a good guy. I think he's bought four hundred (400) businesses in his lifetime. Mark: Websites, a lot of these– yeah it's about forty (40) or fifty (50) transactions that he's done, so mostly some 50,000 dollar transactions. Joe: Pause, I said four hundred (400). Am I completely wrong? Mark: No, you're not completely wrong at all. So forty (40), fifty (50) transactions but whole of about 400 to 500 websites at all. Joe: Okay, got it! Mark: Yeah, can you imagine trying to manage that many sites? Joe: Absolutely not! –trouble doing my job here at Quiet Light that is an immense amount! Mark: Yeah, I know everyone recognizes you as a slacker. Joe: (laughs) Mark: So anyways, he's bought a lot of businesses, he's bought a lot of sites and he has a lot of experience on that. Now he's teaching people, he's got the website investor– the book that he wrote. And he talks about developing systems to buy sites, successfully. And he talks a lot about some of the mistakes he made along the way. What we talk about some due diligence, but also about this ongoing question: Is it better to buy small or buy big? Now what was better for you, what's– could've helped you avoid risk more and how's that changed from the years. He's got a lot of insights into due diligence that were fascinating and honestly, the interviews I've done, I kind of wish we would flip this one around because towards the interview, absolutely, really going to miss some good topics. Joe: It's interesting that the subject of should I buy a million dollar business for– or ten– how many thousand dollar businesses always comes up. And all we can do is thought from own experience and on what other people like Jeff have done. And I think, I've had Kevin Peterson on the upsell buying portfolio SAS business as he said– I think we've quoted him that it– it takes the same amount of work to run a million dollar business as it does a hundred thousand dollar business in some cases actually takes less because it's more established. And Jeff bought forty to– 5400 smaller sites, right? Mark: That's right. And we talked about that. I do think that running-a-large of business is often less work And I wrote an article on this, years ago, We have not been blogging for almost a year now because we've been focusing on the podcast but I did right an article on this rad. I went into the data actually to take a look at: What are the average number of hours that people are working on smaller sites versus larger sites. And what is the average number of staff and how does that correlate with revenues. Really some fascinating data in there, so excited. I got to transcend you deep dive there. So all in to that much show notes, anyone wants to do some further reading. But larger sites, they're often less work. And in some ways, that's risky because there's– you have more cash flow and we talked about that. If you have a business that's– that has twenty (20) thousand dollars of revenue and you lose a key client or you lose a key-traffic source when things get cut in half, you don't have but ten (10) thousand. Joe: Absolutely! That's why, just to say it so people hear it that the– the multiple's evaluation on these jump when your discretionary earnings is up that million dollar mark, you're going to jump significantly in terms of the over-all value not– obviously because of numbers but because the multiple actually jumps too, from a– let's say from a three (3) to four (4) for an instance. Mark: Yeah and I was talking to a potential client the other day who has a business who– it's multi-million dollars of revenue but the earnings are starting to have troubles and he said, “Would anyone buy this?”. And I explained to him that if a business has millions of dollars in revenue, even if it's struggling from an earning stand point, yeah, that's going to really negatively affect the business but this is probably still is soluble. But if you have a business that makes five (5) or ten (10) thousand dollars a year in gross revenues and isn't making any money probably not going to be sold. An orgs couldn't be very difficult to sell for anything of value, so can newly certain size? It's just more flexibility on the part of a buyer. Joe: Yeah! But Jeff has a different model in system and he's buying lots of smaller one's so he's doing something very, very right. Different than your blog couple of years ago, talked about so be real interesting series got to say. Mark: Yep, let's get to it. Alright, hey Jeff! Thanks for joining me. Jeff: Hey, it's great to be here, Mark. Mark: I know we know each other from a mutual group that were both part of. And people who have listened to the podcast before will be familiar with this group, at least you've heard of it before, and that's Rhodium Weekend. You and I have attended it from the past some years, right? Jeff: Yeah, love–met a lot of fantastic people–Rhodium is a good– as you know, it's a group of people either buying, or have already bought in to operate online businesses so it's kind of really unique crowd and be part of it. Mark: Yeah, if anybody wants an introduction 0:05:43.3 let me know, I'd be more than happy and of course, Chuck will surely be able to provide that as well. Chuck Mullins who works at Quiet Light Brokerage, introduced me to Rhodium. And really– Chris had actually stopped me, but really Chuck encouraged me to go. And it's been a good investment of our time and place. It's good group and I met you there few years ago. We talked at the conference and we've seen each other at conferences since then. I think the last time we met in person was Afilias somewhat last summer. Jeff: Yeah! That's right! And I met Chuck there I think the first time at Rhodium and I formed a number of partnerships there so it's a great group of people, it's your (0:06:22.0) way around the business that were in. Mark: Alright! So, let's start getting into little bit in the– as our listeners know, we usually love our guests introduce themselves. So if you want just give, just kind of quick background on who you are and what you do, that'll be really helpful. Jeff: Okay. Well, you know, I maybe one of your older guest– I don't know but if the white here kind of gets it away a little bit, I'm in my fifty's and I'm still on the website business so… Mark: Oh, my! Jeff: Kind of funny like the bunch together that we hangout or they're a little bit younger than I am but I give them a run through their money. I actually started out in the corporate world. Probably like a lot of people buy websites and I had a crew with IBM and I was in middle managements. I had a pretty lardge organization, people who were in to service this business. So, big companies with give us their I.T. departments to run so I had development organization, infrastructure guys, and a lot. And how to buy a budget of about twenty five (25) million dollars, at that time. It's kind of funny that even though I was kind of that technical business, I didn't know anything about the internet at all. And so my first introduction to the internet was actually I started a real estate business. So I moved overseas, left IBM, moved overseas, I started this real estate business and I realized it needed a website. And so, I kind of just dove in and I learned out to do all the websites, staff and crew website for this business. And then after that , I– you know, my eyes kind of got opened to the side of the all. Starting website really hard and so I started looking at as ways to buy them. And I started buying websites and over the last ten years I actually– I've done probably fifty (50) or sixty (60) transactions and about something like three hundred (300) websites, actually probably closed to the five now but while it does ring, big groups like networks of websites that did some more functions than those kind of things. So– Then along the way, I kind of wanted to leverage some of my assets. One of my assets was just– I have been doing this for a while and you know, having my fingers and all kinds of online businesses and different business models across all the sites. And so I wrote a book called The Website Ambassador and then I've done courses on website investing and some networking like at Rhodium and other places and stuff. I really enjoyed this– I just love– I really love almost everything about online businesses. And just the lifestyle part of it but really like the analytical part of it, the marketing component and operations component. Component is just– is just low fun. So that's my story. Mark: So– I'm sorry, you said three hundred (300) and four hundred (400) websites in total? Maybe more? Jeff: Yeah! Like one of my purchases is something like two hundred and fifty (250) websites that were– I can't even read the domain names. They were German and French. And there were these affiliate websites selling Amazon FiliA products and to Amazon Germany and Amazon France. And I ran with those for couple of years some of them died off and then I sold them. Mark: Oh, okay. How in the world do you begin to even manage that many sites? Jeff: Yeah, well–you know, that's one of the many mistakes that I've made I think in the course of my website career is buying too many and chasing too many ideas that looks really interesting like– it's probably happen to you. Maybe it hasn't happen to you though like I see these things and I think “Woah! That's a very unique business modeling and that's really cool. I like to learn more about it and pick it up. Like uncharmed by those particular sites, actually those who're kind of template sites and so there was a lot of automation. There were programs that could make the same update to, ten's, twenty. Sometimes more sites at a time. So that's how we managed them. Mark: Okay, That makes a little bit more sense. Now when you say that you've been buying all these websites, we don't have to talk specific dollar amounts but who are we talking about larger sites, smaller sites, what's the range that you really been investing in. Jeff: Well I've bought in– again maybe this is something I would do differently for starting over again but most of my sites for sub- fifty thousand dollars only handful of that amount, just a lot of them as like mentioned. And I've done kind of a combination of buying and then building and typically for me the cycle's ban or buy something that I don't really know that much about like I started out with Google news approved sites and merely day so I bought a dozen different news site over time but then after a while after a year or two into that, I really understood that news business borrowed so it was very easy for me to actually create my own news websites and then go from there and I've done some more things. For example Mozilla site– so one of the reasons that we buy is because were learning something, were picking up. Were kind of learning from something that's already working. And then later on if you want to add to it by building from scratch, that's kind of a logical sequence for me. Mark: Yeah, alright, let's dive in to that topic a little bit because we get that–this question a lot from potential buyers, especially first time buyers. People that might become mean and in. They know that they want to get in to the website business or some sort of online business, they're coming from the corporate business world like you did and they might have good enough money to do a larger deal but their wonder, is that the right thing to do? And I think you might have touched a viewpoints here which might be interesting. let's talk about, specifically, let's just start with the benefits, binds small to start. You've done a lot of bind small sites and smaller sites. What were some of the big benefits that you've gotten from that and then maybe later on we can move in to some of the drawbacks from that. Jeff: Okay, yeah! That sounds great! And one of the first things that I say when I get that question by big or small is: Whatever you buy, it needs to be a good quality so it needs to be something that's very stable no matter how big or small it is. So, kind of get to your specific question, what are the benefits of buying small, first the obvious one is that you're risking less capital and for many people, that's important, especially when they don't have that experience that leads to the confidence to something bigger. So that's kind of important. And many people are running to ask me that question and it doesn't even matter what their capacity is. Some of them have a capacity in capital to buy very very large websites, multi-million dollar websites. They still don't want to do it. They want to spend five (5) thousand or twenty five (25) thousand or something like that and the reason is because it gives them the, yeah. One of the things that they think about necessarily is they don't even know what it's like to be a website owner. So it isn't just the risk of the money but they're not even sure that they'll enjoy the– be and stay which is being the owner and upper of your website. So that's one thing that binds small can do. Kind of give them a taste, what it's like. And then secondly it gives them an exercise of the transaction process. That's as you know, the transaction process is quite different from very small sites than from a large one but at least they're going through the steps of– during the evaluation, looking, evaluating, waiting, executing a transaction, setting up the accounts, perhaps hiring the team, and all of those kinds of stuff. And then some basic things that if you've never been on the website business, you've never done before like giving hosting setup and domain ownership and some of those basic things. So that's kind of the value. And the other thing is that, whereas the dynamics and management of large versus small can be quite different some of the basics in terms of the actual business models behind the sites are actually quite similar. So the content website monetized by advertising is very similar too. Whether it's big or small. Just the mechanism and process you put around that are different. So if you're unfamiliar with the business model, you can pick up some familiarity from buying a smaller site. Mark: So, you said that I think it's a key point here, and that is bind for education. And bind small for education is something that you've done quite a bit, in where you bought, you've learned in this industry a net shore, a style of online business. And I've been able to use that as an education, they will build your own as well. I talked to buyers a lot about their first purchase and an advice to buy smaller if they want to get that education set, understanding that, can you talk about that a little bit more how you've used buying small to be able to learn more about the nature, about the business style? Jeff: Yeah, that's excellent accredit in general sense education and one of the ways that we educate our self is through relationships and at working and so really, the important part when you buy a site is the relationship that you have with the seller and those have been valuable to me. I meet so many really , really instructional, educational relationships, from sellers who– and that starts with setting at the relationship– setting off at the right flow with the relationship at the very very beginning on the process. But many of the sites I bought I got really good coaching, I have relationships to this day with people that I bought sites from eight (8) years ago who were entrepreneurs, they figured something out. Most– as you know, most business is fail. Very high percentage of business is fail, off line or online. And even at higher percentage of online business is fail, been off. And I think it's just because more people try at the online business but when you have any site that's been around for a while and it's kind of built up a following and so on, is one that hasn't fail or at least not yet. And so the entrepreneurs who're able to do that and figure that out, a lot of times, they know things that you want to know from them so the key thing is actually learning what has been built, what the process is, that they use to attract customers and we'll probably talk more about that later. I hope we could. Mark: Yeah, I'll get you to talk about whatever you think will be worth talking about. I do want to talk a little bit about the differences though on bind big versus small. You mentioned in there one of the benefits to bind small is you're obviously risking what's capital. And I would completely agree with that. I mean, it's pretty obvious, if you're buying a million dollar site to buy in a ten (10) thousand dollar site, there's significantly less at stake. When I tell buyers to buy small, initially, often times I'd tell them that and say, you know, be prepared for a little bit higher risk profile. And in my experience in– feel free to disagree with this , that's in my experience buying small often comes with a little higher level of risk. I know you said you have to buy quality. What's been your experience as far as the quality businesses that you bought in this small range? Jeff: I totally agree with you and the reason that buying small carries more risk is because most smaller websites don't have the same age. They don't have the same momentum they haven't necessarily withstood the test of time. And what that really means is, in the internet business they change really fast so new competitors enter the space, there's changes in technology, changes in software, and most importantly there's changes unlike the big players like Facebook, Google and the like. And they're making policy changes and all those things, so when you buy a smaller site, in most cases, they may be successful, cause they're flying under a radar of sorts and they haven't been around long enough to see the change from desktop to mobile or from easily making Facebook ad purchases to a more competitive environment, faced to capture all those things, so as a result, the lower in sites is almost always more risky. Now obviously, you can mitigate the risk the longer you look but sometimes it takes a really long time to find the site that's– that has true stability. That's still kind of that low end so, yeah, that's right. So my experience with that, that answers a specific question is that I've failed a lot of times. Probably, my early sites that I bought, I bet you eight (8) out of ten (10) just didn't make it. Either they didn't pay for themselves and some of them might've made almost no money, most of them made some money but not nearly what I wanted and then they kind of take her off. It's hard. Mark: I found as well what larger sites having that extra cushion more discretionary earnings and more revenue, gives you a lot more ability to, not to make a mistake and absorb it. With the small site, if it's only generating twenty (20), thirty (30) thousand dollar per year, if it loses a major source of traffic, all of a sudden that twenty (20), thirty (30) thousand will go down to five (5). And now, all of a sudden you're questioning why I'm even doing this anymore. Where, you were as a few–you have a business's doing five hundred (500) thousand dollars a year and discretionary earnings and it gets hit hard. You're still probably making six (6) figures and have some leverage that are to be able to– may buy yourself out of this situation or fund what needs to be fixed Maybe place that better or so, there's a little bit of subordinate there. Workload as well, I mean– I've found in your website, in some sense, I found that with larger sites, sometimes that workload can actually be less because you can afford the higher people, where as with other site that's kind of on the edge. And I ran into this with my first company actually that I owned, I got it to a hundred twenty(220) thousand dollars in revenue and really I needed to hire people but I needed all the money. I was getting so– I couldn't really afford six months of that financial hit. What's been your experience with that? With dealing with casuals and maybe the freedoms that casuals would– of a large business would bring you? Jeff: My experience is exactly what you said where– and in fact I have websites right now where I'm forced to do things that I really shouldn't be doing, I should be spending my time thinking about the strategy, looking in for competition, time plotting on a road map, and in managing people on. And some sites is just aren't making enough money for me to hire someone to do that on month you have. So that's absolutely right, that when you get that, and you know– as I mentioned I– that there were intersections and that I've done everything where I sweep the floor myself, so I kind of gone the whole gimmick and certainly when you have a team then it really freeze you up to use your mind in a different way and that's a lot of fun if that's kind of where your skills are, what you want to do. So definitely not to big advantage of buying big. Mark: Alright, so you have done– how you told me at the beginning, I didn't worry about, how many transactions again, estimated? Jeff: Only sixty (60). Mark: Alright, that's a ton! I mean quite label with more or less than a thousand for ten years, that's with lots and lots of buyers and sellers. Sixty (60) percent is a lot. I'm going to put you on the spot and if you don't have an answer for this please just ignore it. I'm curious, what's one of the craziest thing that you can share that you've ran across in your process of buying sites? Jeff: Well. you know, I've ran across more than I– there's some crazy one's I've ran cross that I haven't bought. But there's several of them, one of them that I talk about in my book is– I found this site that– I had a hard time finding out what product is sold but it was insanely profitable like nine (9) percent profit margins but it was an E-commerce site. So it was a hard physical good and when I looked into it carefully, what they were selling was a urine. Laboratory processed urine for people who're trying to pass drug tests. And so they said, after I finally understood exactly what their product was, I understood why it was hard for me to understand, because they didn't want to like, advertise it too much that they had to do it enough to be on the safe side. Mark: There you go. One of the first clients I took on was selling poppy flowers and they were selling them for couple rearrangements, I may be naive. I had no idea that they were used for opium as well. And I had one person tell me, one buyer was like, “So are you okay with selling drugs?” I'm like, “What? What are you talking about?” Ends up, they were not, but there is people buying the poppies. At least my theory at probably buying the poppies thinking that they were buying drugs. They're probably just get stomach ache. Jeff: Alright, well, you know, that's interesting you bring that up because it's an example of one of the subtle eficlosures and we ran into this issues a lot in this business crossly, even for sites that you would think don't really have controversy around them. We ran into this kind of things. So it's one thing that buyers should be aware of. Mark: Let's (0:23:21.2) to that because you've got your course to write your book as well. Your course is at website investor.com? Is that right? Jeff: Yeah, ownoptimize.com is a good place right now. Mark: ownoptimize.com, Okay. Jeff: Yeah! Mark: We'll link to that in the troll notes so just go over to our website and look in the troll notes for the course, the online course. Let's talk about some of the lessons that you teach in this course. Obviously, we'll keep the best secrets for the courses. So– but, what are some of the things that you try and teach buyers who are taking your course? Jeff: Well, one of this– I don't want to over simplify and this may just sound too simple but one of the biggest mistakes I think that new buyers make is they don't just look at the graphs. And it's amazing what this simple graphs can tell you, the direction of the traffic, and the direction of the financial, those two simple things are really, really important. And a lot of times when you look at a graph, let's say twelve (12) month graph and it's– you can kin od tell visually that it's down or gently downwards sloping, but in truth it may actually be like twelve (12) or twenty (20) percent downward sloping and if you just extrapolate that into the future– I mean, business is going to be worth nothing in just a few years and so I think people tend to have an optimistic view when they look at numbers and sometimes they realize that their businesses that are losing money overtime and they feel like the moment that they buy this site, it's going to stop losing money, it's going to start– it's going to be flat or go up from there and there's no real reason to think that. So that's kind of really simple but that's a way that you can dismiss a lot of sites unless you have really specific knowledge about why it's going down and a very specific idea about how you can turn it around. Now we can talk about that way or two because a lot of people– that's hard to really know for sure. So then you need is just to stay away from those kinds of sites so we need to look–. So overall, key thing is you look at the graphs, if it's a stable business, you're looking for a stable business because the most important thing is– I kind of teach a risk-based methodology but for valuation and also for valuation-selection websites so for me, real core thing is you're looking for the engine for customer acquisition and you can– all kinds of sites she can evaluate, usually the successful ones. The owner, the creator, has found a way to systematically attract new clients and if it's a content site and the client is website visitor or if it's a services site, a client, whatever it is. And that process–whatever the process is, it might be toasting the Facebook every day, it might be buying Google ad words, ads, it might be just content creation regimen, it might be a product launch, philosophy on Amazon like these kinds of steps, I'd choose these kinds of products, I'd brand them in this way, I'd quadrant them in this way. And the process may be –it may not be like mind blowing in terms of what it actually is, but it might just be very consistent and perhaps complex and blast. and whatever that process is, it's that– is that engine it drives the site, that's really what you're buying because if you can get your mind around it and understand what it is that they're doing that attracts these customers consistently and then you can start envisioning how you would do that yourself and perhaps, how you would scale it, how you would tweak it to enhance it, then that's kind of the whole agree, So you want a process like that but you feel like doesn't have a hauls or gas in it, like you can see why it's working and how it's working and you get your head around that then you know the business model and then if it's historically if it's a cheap pretty solid results, consistent results, there's always going to be pivoting and changing strategies and so on but you get a model like that, that's kind of what you really want to buy, to probably grow what you're trying to buy as a buyer so that's kind of a key thing and then there's all kinds of methodology around you, valuation. We look like — there's like several dozen things you can evaluate that there's content and ownership and reasons people are selling and the financials and branding, legal aspects–all, all those kinds of things that you want to look at but the core thing is that how do they get their customers and what's the risk profile on this side. Mark: So how do you– how do you, work for– so that's really, really good advice, understanding the customer journey from beginning– from top of funnel, just awareness of the site that you're looking at down to the actual acquisition of the client. Right? How do you handle that insane environment like Amazon or were dealing with all the market places or even with– I guess with E-commerce, you do have a customer journey but have you worked much with Amazon to see how you would evaluate that? Jeff: Well, no, I don't have a lot of very specific experience with Amazon but I can tell you that– Amazon FBA is actually a very sophisticated business because there are so many elements of it and you have to do each of them quite well, actually. That's one of those cases were it's not just a simple three (3) or four (4) silver bullets and you win. It's like the people who do Amazon FBA well, do a lot of things well. They do product selection very well. Niche selection first, product selection well, then they understand the launch process like putting the right brand on their product and giving those initial reviews. And they understand the inventory process. They don't have cash problems with having generating a man and then having nothing to sell to people. Then they have to understand the operational aspects too like how do they wants making sales, how they actually get the product out and in a good way and then servicing the customers later on and answering their questions from there, just get a review and so it's really kind– it's a complex process so the– what I just said earlier about what's the engine behind it, well in that case, the engine is, are there good SOP's, is there a good team, is there like –what's kind of the new ones that has a loud– like some people, super good at branding and they're super good at that product launch process in Amazon and so that's kind of what's giving them the edge over the competition and other people were good with analytics and numbers and ratios and shipping cost, cost of good sold to whatever they're spending on customer service and all that kind of stuff. Which that's all fine but it's kind of that it's up front-end that's probably more important in Amazons like how they're interacting with the customer. Mark: Well this is why it's so important for pre-sellers to document their processes because a lot of this stuff is done almost from a skills like that is developed over years. Having those processes, documented, the stuff that you're doing on day-to-day basis helps buyers like you, Jeff or any of the buyers out there understand what's going on and try to sum it– that is as well. I want to go back about what you said about graphs because that really caught my attention. I–I'm with you on that. I love graphs. I think visualizing data, specifically the financial data is something people don't do enough. And I might geek out a little bit here, and save my finger craft that I used when I'm evaluating business myself, is year over year analysis that I like to look at both the revenue and to those gross profit. Definitely take a look at that if you're able to, if it's done on cruel basis. My discretionary earnings, it was a year-over-year because it soothes out some of the seasonality that you're naturally going to have in pretty much every business (0:31:12.3) has, even a little bit of seasonality. Is there a better–like a favorite approach or favorite sort of graph that you would recommend or any other piece of geo that you would look at to say, “Hey! Here's kind of a peak into the future or maybe what the drafts of help of these businesses” Jeff: First of all, I love year-over-year analysis too when you have a business that has enough historical data out there to be able to do that, and that's really, really helpful. But in terms of adding to that, for me, one of the important things is ratios and if you have a numbers degree, whether it's finance or accounting, whatever they teach you about that. But actually it's simpler than– you don't have to learn what you do in school. What it is, is your looking for things like the percentages of the cost that make up the total cost of the product or the service and a lot of times you can find problems where, for a few months, shipping was a lot of money or cost of product or cost advertising is a lot of money and then there's–and then some of those cost drop-off where the ratio changes, the percentage change radically. And for me, those are kind of– a lot of people are afraid of financial analysis in funnels but actually, we understand that what you're looking for is kind of that stability in the business and then a little– the flags or things that changes in the ratios, changes– the peaks and valleys in the chart. And is there good explanation for those peaks and valleys. Peaks and valleys are just fine. The only concern is what are the reasons behind those peaks and valleys and sometimes, for example, sellers, so they really have– they may not have any idea why they're getting more customers or any idea why they lost customers. And the big problem with that is that when you buy the site and something happens, you're not going to be able to get those customer back if you don't know the reasons for those things. So some of the tools and things that I look at. And also just say, they kind of end in the evaluation stage and stay on in due-diligence stage. One of most important tools for new buyers is to compare different sources of information, just in the content, for example, a lot of times, you'll have analytics reports then you have your ad network reports and sometimes you have bank statements, you have taxes, you have– you actually, a lot of times have a lot of different sources for very similar information and it's important to kind of compare those sources together to see if something's missing, something's kind of wack. And it kind of really helping, so in E-commerce is same thing, where a lot of times you'll have traffic and saying why I'm getting this many sales, repay-dues and then you have shopping cart software on your website, you have merchant processors who have similar data and then whatever is in half-thing in your back account and all of those things that's lying out. So , there's actually some, pretty simple tools, once your kind of aware them to take the mystique off of what're people are a little bit concerned about when they first enter business. Mark: Wow! there's– I kind of always restarted with this, rather than buy a big verse and buy a small sort of conversation that is a lot of details you get in to hear, but we are up against clock a little bit here. I think this idea of understanding the customer journey, understanding how they become customers, and the process they're involved there both can help any buyer understand how healthy a business is and how new was or how specialized they're going to have to be in their–works with that business but also potentially uncover some opportunities if there's leakage, for example in that customer journey wherein you're losing a lot of people at a certain step maybe they are taking advantage of cart abandonment technologies or maybe they don't have a good e-mail automation. Well these are opportunities that might be available for buyers. And then also this idea of looking at ratios; really, really solid advice. Jeff: Yeah, the ratios– what I will do again when I'm evaluating business is I'll look at cost of good sold– gross profits were the first things I will look at. Is that ratio staying healthy because you don't want a business where that's getting squeezed up at time or at least you need to understand that. But also you compare advertising to total revenue are you having to spend more just to keep the same revenue? Or has that owner adjusted another area so maybe they're spending more but cutting back on staff–But to make the bottom line look healthy but ,maybe lying underneath there's a few issues that you have to be aware of. Mark: I would love to sit and talk for a couple of hours because I think we could talk for a couple of hours. So, maybe what we'll do is we'll have you on again in the future and we can continue the conversation. In the meantime where can people learn more about you? Jeff: I've a website called “HeckYeah.org” and then “OwnOptimize.com” is where I'm selling my courses right now. So those are the two places. And yes Mark, I would love to– this is one of my favorite topics really is this idea. First time buyers, second, third time buyers; what are the questions that they have, which they look for and as you said, lots of things we could talk about. We're just barely scratching the surface so I'd love to come back and talk some more about it. Mark: Cool! Hey Jeff, thanks for coming on. Really appreciate you coming on and well, stay in touch. Jeff: Yeah, sounds good, great. Thanks a lot for having me. Links and Resources: Jeff's Website Jeff's Course The Website Investor

What are the different aspects needed to grow a sustainable business that is transferable and valuable? Today's episode is all about planning a successful strategic exit plan when selling your business.  Whether it be online, offline, or hybrid, how you lay the foundation for your business is the key to a smooth transaction even before you start the process of selling. We are talking with Ryan Tansom, a fellow podcaster, consultant, and successful business seller all about how he turned his sale into a springboard for helping others accomplish a great exit. Episode Highlights: How a strategic exit compare to a financial exit. Figure out how to align growth strategy with exit strategy in order to get what you want out of the deal while taking into account the financials, the company culture, and the potential legacy involved. When an offer comes to the table it is important to weigh all the variables. Think about any way that the buyer can do to add to his profitability. Show them all the things the things they can do and package it up for them. Network early and often with people who align their motives with yours. Make sure you know what the buyer's business continuity goals are. From knowing their goals you can come up with ways to fill their strategic plan. Understand the industry on both sides of the transaction so that you can design how the business can look for a strategic exit. Prepare early for the sale of a business so you don't get any nasty surprises during due diligence or negotiation. Ryan lays out the framework of a strategic sale. When strategic exits work and when they don't. Transcription Mark: Joe, how are you? Joe: I'm good, feeling old and tired but pretty good how about you? Mark: You are old and tired and I'm catching up quickly. Joe: But I'm not cold it's 63 in North Carolina today and you going to get snow this weekend right? Mark: Stop it, Stop it, by the time this episode airs it's going to be a beautiful year and I will no longer be recording episodes, I'll be outside enjoying it. Joe: Yes. I mean 36. Mark: Something like that, alright when we talks to people that want to sell their business, pretty common scenario, they're looking for a strategic exit or maybe they'll say, you know, we go to the whole valuation process and then they come back and then say “I've got a couple of companies of mine that might be really good fits to acquire the business right?” Nothing about strategic. I'm sure you get the pretty often on your side. Joe: Sure. Yes. Mark: Yeah, right. So strategic, how do you actually do them? Are they worth it? Do we actually get more money from them? That is the subject of today's interview. I sat down with Ryan Tansom. Ryan has his own podcast which we talk about a little bit, but he's got a really cool story, he and his dad were in business together in a traditional offline business. They are selling copiers and had all sorts of contracts there. And they went to the process of merging that company with another one. They first try to sell the company, and found out how difficult it was, then they spent some time retooling in and really planning their exit, and after they've retooled and planned their exit they were able to do a deal in just a few weeks. So his whole thing right now is to help people plan their exit and build value on the business at the same time, but I wanted to talk to him about how do you plan an exit if you want to do a strategic sale? Does that make sense? That you actually get more money from it and what are the chances that's going to happen? This is a fascinating conversation. Joe: Good. One thing that most people don't do, and that's plan their exit. They usually just wake up one day and decide, “I'm tired I want to sell the business I'm ready to move on, So you know I've talk to Ryan a number of times and I think He's life experience, what he went through  with his business with his father trying to sell finding, it was difficult and then actually putting a plan together and deciding, when he executed that plan and he'd sold the business very quickly and I think to a strategic buyer. He learned a lot and he's sharing that with people now. So It's nice that he's got the first hand experience in the sharing with people and I think he does a really good job at it. Mark: Yeah, and so in this we're going to talk about what do you need to do to get strategic exit setup and not surprisingly, it's a lot of the same stuff you have to do  if you're going to have a financial exit or a regular market type sale. Just take a little more upfront work and we talk about the chances of it actually happening. I also talk about how that it's not always the best thing. The very first business I sold went itself to a strategic exit. We ended going to a financial buyer because they actually got more money from it so we talk little about that as well. Well we get on into it because it's a lot good mini topics in this episode. Joe: Let's do it. Mark: Ryan, hey how are you? Ryan: Good Mark, how are you doing? Mark: Thanks for joining me. It's been a while since you and I met, well I think we're just talking about this a year and a half ago or something like at Caribou Coffee here in the Twin cities. Yeah you're local to me which I like. Ryan: I know we're local yet we're sitting here on video right? Mark: We should've done the very first podcast with [inaudible 0:03:58] and where he would have be like saddled up right next to me. Alright cool, well on our podcast we like to better a guest introduce him selves, probably because we're really lazy and don't like to do the upfront research but also because guest  do a better job at introducing themselves. So could you introduce yourself a little bit to our listeners? What is your story, what's your background and why are we talking. Ryan: Yeah, I appreciate it, I'm glad to be on the show I'm usually the one doing the interviewing so this is actually a lot of fun. So Ryan Tansom, my Dad and I had a family business kind of a little bit of backdrop back in 2014 we end up selling it. He grew it from the ground up, bought a semi [inaudible 0:04:32] of copiers in the mid 90's and ended up growing a very substantial business that I think we've topped for about 20 million and a hundred employees, and I joined the firm full time in financial crisis, and it was pretty much lot of all hands on deck for the seven years I was there. It was.. We realized that company was not sellable  because there's a private equity firm that was buying out platform companies in each marketplace, and we have the opportunity of potential to be one of those, and they passed on us so we spent pretty much in next 6 years, 7 years going. Okay what do we need to do to build a sellable business that either I buy it or we sell it to someone else we didn't really know what were options so we just roll up our sleeves and did a bunch of stuff. Build out the outsource, the IT. Remarketed ourselves, did a bunch of stuff, and then in 2014 ended up selling it to a local competitor here which the sale went very well financially, but we left a lot of money in the table from a lack of tax planning and some other deal structure that things we could done creatively, and then also we found out a strategic sale like that that there's a lot of redundancies, so I ended up having to fire a lot of my good friends, and family and the employees, so since then I've been in a mission to figure out how do you align your grow strategy with your exit strategies so that you will get what you want, regardless whether it's financial or you know, anything associated with your business that you know, whether it's legacy or culture, and stuff like that. Hopefully I sent too much but it's definitely the backdrop of why I'm doing what I'm doing. Mark: Alright so there's a lot that we can unpack here and we're going to have try to pick a branch and go with it, because I think there's a lot that we can unpack here. Business that you and your dad sold, this is more of a traditional offline business right? copier sales? Ryan: Yeah, where on we have15 sales representatives that were knocking on the doors and I wish we would have done something that would have been a hybrid, and we would have probably gone that direction, had we, continue grow on the business, but I think, you know, every offline businesses, which is what we were, has the opportunity to have the hybrid online stuff that a lot of that community that you're involved and I'm involved you know. Mark: Yeah, I think a lot of the online community is moving towards this more traditional business model, at least in the E-Com Space and you've seen it all. So in the and largest as company, because they do develop our staffs and in onboarding, customer service and all that. So similar to your stuff.. So I guess, let's talk first about the fact that you left money on the table, with your.. You spent six years trying to hammer the business industry, I think there's a discussion in there on it's own, like, how do you line your crawl strategies and your business strategies with an extra strategy, but I like to know a little more about the money on the table. A lot of times when we say people leave money on the table, that's because they have maximized the sale price of their business, but were there other areas where you've guys felt that you left money on the table? Ryan: You know, I think yeah, there's a lot of different variables in this, and you know, I've got a Podcast too. I've interviewed lots of entrepreneurs that have soul and I've tried to unpack this exact topic as well and there's the “Hey there's a price so I might want to give you 2 million dollars for your business” it doesn't mean that you're getting 2 million bucks because you're paying taxes, so there's the whole deal structure whether it's asset sales or stock sales, or how the deal structured from earn outs, from an SBA loan financing, whatever it is, you know, when someone starts courting you, whatever dollar amount is thrown out, there's a lot after the fact than what actually comes in your bank account. So whether that's a tax planning, the deal structure, you know, escrow all that kind of stuff, and then there's the maximize the value of the business, so there's kind of, two different key components to it. Mark: Yeah and I think, just by way of example, within online businesses, say that your [inaudible 0:08:10] corp, and somebody wants to buy your business for 5 million dollars. Great, and they're getting an SBA loan and everything looks good, but then you get to it and at the end of your purchase agreement there's this asset allocation agreement that's to how is this been allocated tax wise, and the buyer says “Well, we want to pay, out of 5 million, we want 1 million to be your salary for the next 2 years for consulting, that's part of the purchase price” well now that comes at ordinary income tax, cruise up your whole tax, percent tax situation.. Ryan: Because you know [inaudible 0:08:41]? Mark: Yeah, how much are you getting from that point, and you're from, for buyers trying to relegate towards income, makes sense because they can learn it off in a way, because they were going towards assets, it's a long period of times that they can make that of. So, there's a lot of, like you said there's a lot more complexities there, in terms of the deal structure. So let's talk about maximizing the value, the dollar amount. Did you feel like you guys left some money on the table with that? Ryan: No, actually we did as much as we could of, because our business naturally.. I got it appearing to what is the, honestly the best kind of business because we had contracts, that were locked in with reoccurring revenue, backed by bank financing, we've bundled them with maintenance, so like, if you want to buy, manage IT services with.. You know, bundle them with servers, firewalls, maintenance, copiers. I mean you'd be bundled in finances and then, it'll be 60 months typically and it'll be in.. It's as good as a mortgage, so when you're looking at what we did and what our industry.. It wasn't something that we were like geniuses or anything, either the whole industry, I've been gone that way and I think the whole industry was built of greedy sales people. In reality it was good as mortgages because you can't cancel. So, it didn't really matter when you think about a strategic sale like that, the relationships of the sales people, the admin, all the infrastructure was redundant. Because we can literally just take a bunch of paperwork and give it to someone else. And so what you're mitigating less on the sale on like the, EBITDA, multiples, because the cash flow is not the situation, it is your Han dinging over contracts. So I don't think there's anything we could have particularly done on that aspect to maximize the sale of the business, but the industry itself taught me, what, “we got lucky, is pretty much what it came to” versus “we could always use other business, where it might be, a 50 million dollar consulting company and there's nothing to sell besides a bunch of people”. So, I realized, after the facts that we got lucky and there's a lot of other ways to maximize the value of the business from the strategic operational side of it. And then it comes down to, we sold a couple of branches prior to selling the corporate headquarters, so the first time we sold our branch we got  about half the price because we didn't have preliminary due diligence done, they didn't trust us, we couldn't get the right documents and all these different things so there was technical stuff on that aspect that we, by that time we ended up selling, we knew what questions are coming at us and why. Mark: How did that impact the price the second time around? Ryan: Second time around when we ended up settled…  I mean we closed in 2 weeks. Mark: I know how. Ryan: Very substantial sale so average closing is, either we talk in months and months and months, either because, we came there with a package and said this is exactly what we have, here's our profitability, here's where every single dime goes in and out of the business, here's why, here's our, I mean employee contracts, customer contracts, lender contracts. I mean everything was just ready, versus the first time and we knew it was like, we're bumbling idiots. Didn't have any clue what they're asking and why. Mark: Yeah, we've created a very simple paradigm at Quiet Light Brokerage that we call the 4 pillars of value and that is, look at the risk of your business, the growth opportunities, how transferable it is and the last one would be in documentation. Now I think sometimes people take that documentation that light as to.. Well, it may not really make that much of a difference on the value of the business, it's just going to make it easier, actually makes a difference in the value of the business too. Ryan: 100% yup, I got people that I know, that I've interviewed and talked to, where their value actually went up by 30% because.. But with a click of a button, especially by drop box these days and software where you can, “Hey here's everything” A – you can get more buyers at the table quickly, if you can do that instead of having threads through all these documents, but, you end up as the seller end up guiding the process more than the buyers. Because in the marketplace 90.. No, plus % the time the buyers are coming in there and they're going to find every reason to discount that companies so they can  make in return.   Mark: Right! and on top of that it's risk right? So a buyer takes a little good in business with poor documentation, and they don't know what they don't know. And so they see that as being risky and they will discount an account for that risk as well on the purchase price, and you don't have your stuff together, you can't defend against it. Alright let's talk about strategic sales. Because you guys did a strategic sales and this is something that I find a lot of questions on. First let's talk about what was the difference between a strategic and a marketplace sale in your realm. Ryan: So it's my world it's every world right? So a strategic sale realm, let's start with the financial sale. The financial sale whether it's an ecommerce business or if it's a traditional business or whatever it is, someone's looking for a cash flow. What's transferable cash flow? So if I want to buy Quiet Light, if you guys are dropping a half a million bucks to the bottom line or whatever it is, I want to.. How transferable is that? So that's where the multiple EBITDA comes from. So, if I can buy that chas flow without having any risk that it's going to decline, and you apply a multiple which is how many years, what's my rate of return that I want,  3 years, 5 years, whatever it is, and the more transferable that is the higher the multiple goes up. So, I mean someone that's looking for cash flow as a lifestyle buyer, a private equity buyer, I would say that there's also strategic financial buyers which is someone that understands MNH extremely well and knows how to do this, that's kind of like a hybrid. So they're looking for cash flow and they're applying a rate of return based on the risk of the business and the asset. Then you and this strategic sale which I think is one of the funniest ones because every business owner, every entrepreneur that I sit down in front of, or I talk to, you know your business, you're intrigued better than anybody else out there, right? So you know who you'd partner with, where they collaborations with you, all these different things, and I don't want to say the multiples even they go out the window, but it's more of how fast, in terms of, if thinking of rate of return from 3 years to 5 years, or wherever the buying might be, and the rate of return is, how fast can we pay for that? So regardless of the EBITDA, now you're saying “okay well, are there complimentary products and services? Is there a cross pollination between customer list” Is there horizontal ways, there are vertical ways you guys can expand, and if you can think about everything in the terms of the buyer, the strategic buyer and what they would do with your business, you can literally model it out for them, how fast they can pay you for your company. Mark: Yeah, so this is great. I want to talk about this because we get this question, wow goodness, probably one out of every four or five people that contact us to sell. One of the very first things that they say is “Well I have a few companies of mine that might be a good fit for us” and they're thinking it in terms of that like strategic sale, they think it's going to be much more valuable to them and there is some truth to this the webhosting industry it's a classic example, webhosting, at the very first I sold working with Quiet Light Brokerage, first started Quiet Light Brokerage was a webhosting company, and webhosting company has a tons of roles because it has a bunch of user accounts that is on our servers and it's very easy to migrate that user accounts over to another server, keep the packages the same as really just paste and transfer it **** sometime **** and a monthly contract so it's really really easy without transfer overall stuffs, so like you said all of the expense profile of those companies you do really care about that because if I me acquiring a company I already have those expense profiles. I know what to cost me to host for 500 clients, so it will become a client count. Now when you're talking about strategic sale, like I said, there is not only to redundancies which you dea'lt with, first hand, it sound like,  in your sale redundancies where you have multiple sales people doing the same thing so you a lots of people go, but there is also the synergies of my crop up with one company that is a name in an industry right? Ryan: Right! And there's [inaudible 0:16:28]for us, it was, that we didn't sell telecom. It was the one thing in outsource, the IT in office technology that we didn't do, since okay, we got, you know, 2 or 3 thousand accounts, how many people can you sell telecom to? A lot, probably. So that is not guarantee in profit that they're going to make, but it makes a deal look better, you know, then you can make some basic assumptions or something like that, and then you know, cash or order discount on suppliers. We weren't taking advantage of that. So we start to think about any way. Going to that buyer and saying, here's all of the things that you can literally get packaging up for them, and you know, I think there's some people that you and I know in Rhodium, and why see that, the reason that they start on their family to start in the retail, wedding industry, they got online… well, weddings usually don't have repeat customers, you know there are couple every now and then.   Mark: Hopefully not.   Ryan: I usually do subscription services so, what are different ways that they can expand their products and services, because they have a crazy amount of volume that come through their doors every single year. Because they got a very good foothold in Minnesota here, but so it's their robes, it's their jewelry, it's there. Other things that they can sell them and they know the volume of their customers, so you know, yeah there's the sale or the purchase price and the profit but they're more looking at do I build it or I buy it? So they know how long it's going to take the opportunity cost of how long it's going to take to build it, screwing things up, all that kind of stuff. Mark: Right, alright so let's talk about how you would.. Let's say, we have a listener out there, they own a business and they're thinking, “I've really like a strategic sale just because my business is unique enough I think there will be enough benefit for maybe 3 or 4 companies that are sort of [inaudible 0:18:03]my industry. How would they want to go about preparing their business and thinking about that exit, a potential strategic sale. Ryan: That is a good question and I think you know this whole conundrum of exit planning and grow planning.. I believe that if entrepreneurs are running the business the way that they should and working on the business not in the business, and treating their business like an actual investment, then it is like, where are all the different options that I can sell to whenever and how fast can I [inaudible 0:18:29] so it's being ready no matter what. If you are in love and addicted to a girl then you're having a blast, great! But always be ready for industries that change, Google changes their algorithm, Facebook gets kind of a little bit a heat like they are right now, always preparing yourselves so that, the first and foremost is the due diligence, your docs, and knowing, and really cleaning up your financials because, if you can answer any kind of questions that even your friend would ask, the buyer is gone just, completely slam you down. So getting your house in order, the financials, and the due diligence is one thing, but then, thinking about, “Okay so these are going to be.. These five companies are companies that i can eventually sell to” Who are they and what, why and how will your decisions in the business affect where you're going. So for example if one of the companies is running and you know, he is an Amazon merchant or something or someone is running on Shopify, don't go build out a Magento, you know, spend 300 grand in Magento if someone that you're going to sell it to is doing Shopify. I mean, that's the same thing that we did. We spent 300 grand on an ERP's because 85% of the people on our industry had it. That's why we could close in 2 weeks. Knowing how you are spending the money and why in relationship to where you're going to sell, and again, so if you think about, if your service has complimentary service to just someone else. Don't go spent a bunch of money building out something that they have. Because you are not going to get a return so you're going to spend, your immediate cash flow, but then you're not going to get the attitude because they don't seem [inaudible 0:19:58] I think it's aligning where want to go and why and then also that strategic decisions that you are doing in between there. Mark: Yeah, alright I want actually bring a really basic level here, because the thing is important point to make special more talking about strategic sales. I think people get with the financial market sale where you take a look at the profitability of the company and you have Joe blow buyer come in who really isn't related to the industry. We all know that he wants to get return on that investment after 3 or 4 years, you'd see that investment come back in so it's pretty easy to apply a multiple. Sometimes when we're talking about strategic sales people come and go crazy and they start thinking, well, look at all the upside potential that is going to come about from this and so they start lowering their valuation expectations through the roof because sometimes strategic do get really high relative valuations of this realm to the financials, that said, I'm going to make a very basic statement here and I'm sure you'd agree. Strategic still need to see an ROI, right? They still need to see a return of investment. Yeah so, what you're saying is when you're building out your company, when you're really planning that exit and working on the company, think about the ROI that the potential buyer is going to have and don't build something that's going to super expensive for them to migrate it over, right? Ryan: Right and it's like, so how we went about it is, I want to know this business, I want to know why they should buy this business more than anybody else. So like, I want to know everything about their business, I want to know exactly what their marketing strategy is, what their profitability strategy is, I want to know their strategy just as well as they do, whether you can or not. Because then you can show exactly how you fill their strategic plan, based on what they're buying. Mark: Right, so let's talk about modeling a little bit. When you're talking about strategic sale in your case with your dad in your business, [inaudible 0:21:41] done in season staff and so, when you're looking at presenting the financial picture to potential acquiring company, how did you go about that? How did you pitch it as far as the ROI? Ryan: So, I had like literally our entire.. I mean we have cash list statement and we learned a lot first time, right? So I knew every single penny that went in our business and why, so we did some serious cash flow modeling so we had our whole P&L, and then we had the forecast of what was going on to the sales and the cost of goods, our profitability, and I hacked a bunch of stuff through it, and I said okay, and I buy GL code Mark.. Mark: Wow Ryan: We did a.. Yeah, I know. Because there's the, in the financial buy, there's the add backs, right? So, a hundred grand might be 300 grand on the value, whether it's being added to the value or not. So, usually in the financial buys, you want to take that off to increase your EBITDA, so that way it's applied to the multiple. But in this system the same thing were [inaudible 0:22:41] you don't need these people, you don't need these servers, you don't need these things because you already have them. So, that is all dropping to the bottom line which will then help them calculate the ROI's so, we just looked on them and say okay, here's how much of the expenses you can take out of this, with these assumptions and then move back and forth, you said, what we actually need these people, we need these things, and then you're just negotiating back and forth but it was not more in the add backs, it's more of understanding the redundancies and the strategic value behind this. So it's a similar exercise but, you know, and now comes actually kind of the same but it's more specifically to operations. Mark: Well on the key pieces I think, needs to be understood is you need to understand the industry and the business itself. We work for the financial, forex leads site, this was several years ago. And they were getting lots of leads that they were selling and they wanted to arrange a strategic sale to a forex broker. Because they knew that they were jittering these leads and so that the equation really became okay. We know how much we're getting paid out on their [inaudible 0:23:43] basis for these leads. But as a forex broker, here's where the dollar amount for the valid leads are, and now we can start modeling our what does this look like, how much revenue is this site really making, from a forex broker's standpoint and then the other value proposition there. Ryan: Yeah it's literally of about knowing both of the businesses and the industry as well as you possibly can. So you can just design exactly how it looks. And then you backing up numbers, you know, I'm just kind of making some other things up but like, you and I have talked and I think that was when you were on my show, we're talking about the hybrid of the online versus offline and so, if someone has literally the best data ever on their drip marketing, their automation in their online marketing and knows exactly the entire cost of acquisition of one wheel, and whether it's Facebook ads or Google ads, all of what the email mark and you say “here's how much all this stuff cost,” they can go in and if you're going to [inaudible 0:24:38] and sink that up with an offline business, like there's some huge power there because you know that they're not doing that potentially. So you can, there's just so many different ways to design that I guess. That's kind of the fun part. Mark: Yeah and the nice thing about strategic is that there's really, you have the ability to blow a traditional valuation out of the water, right? That's one of the big advantages. Transitions can also be a little bit easier because they already know the industry and so you don't run saying “here's how you do this little process that you should probably know anyways” it's a little easier to transition. When I talk to people about doing strategic, so I often tell them that I don't think it's a good idea for them. And the reason I say that is mainly because they're difficult to do if you haven't been preparing. How long do you think it takes to really prepare business for a strategic? Ryan: So I think maybe I'll go back with remarkable steps which is what's the order of operations I think you should do to do this correctly, right? So kind of the assumptions to repeat is beat your foundation setup, build your financials, build healthy business from recurring revenue, the clarity of all these different things, making sure you don't have a bunch of concentration in one client, all the typical ways of de-risking your business and if you're striving to make a healthy business like that then you'll have lots of options. So at the bare minimum, you should be able to sell to a financial buyer, so then called to 3 to 5 times multiple EBITDA. So you know that, financially going okay, if it's 200 grand, I know that I'm going to be getting 600 or a million. Whenever it might be, right? So I know that's how or that's my target. But with a strategic sale, you could completely blow it out of the water, but that's kind of like hunting. It's hunting for unicorns or really specific synergies so you mention 5 people, that's fantastic but, what if they don't want it? What if they're struggling? What if they don't have the money? Don't have the ability to get banked? All those different things. Those are things that you don't know and yes you should work towards them so I think, to answer your question, I don't know but really helps with that, it's like, we knew our buyer. Like  half of our employees has hog back and forth, you know, we're in the same industry trade associations so, I actually had taught the woman I interviewed yesterday at my show, she would have spent 2-3 years building and fostering those relationships, so those people could have been at the table. She didn't do that, so this is more of a relationship building, going in Rhodium Weekend, going to the YC Events, going to [inaudible 0:27:00] all these different things where people build relationships. And then what ends up happening is, I [inaudible 0:27:06] the bar over a napkin, and then you're back in the stuff. Mark: Yeah absolutely, that's actually normal when I [inaudible 0:27:13] people that want to do strategic is, if you want to know strategic, 2 or 3 years down the road, contact the companies now and don't say “Hey I want to sell to you” just contact and do that real networking stuff and get out there. Once they've become aware of your company, and you start to learn each other's companies, then you can sort of see that conversation for down the road. Ryan: And then you get out on their radar, right? Because you're not on their radar otherwise. So, there was actually a really interesting story that I heard Mark from one of the guys I interviewed in my Podcast, where he was at a trade association, he started talking one of the base competitors and he goes “Why don't you buy me?” and that's how he started and they started, you know, BS and then it went around and then the guy has said “You know what? Let's have a [inaudible 0:28:00] every 6 months call to see how you're doing” and these people literally told him exactly what to do, so they could buy him. Mark: That's great. Ryan: That was super unique, right? His name is Norm Brodsky, he wrote Street Smarts and he was a part of the small giants book, so he's on the cover of [inaudible 0:28:16] and a lot of exposure but like, I think the concept is very unique, because if you wanted to buy my business, why don't you just keep telling me what to do, and if everything works, I mean, like I said it's kind of a shooting for the starts, but I mean, you got really nothing to lose at that point especially if you don't need to sell. Mark: Yeah alright. So you said a couple of things a while ago, I think is a good foundation I have and this is a general advise, and feel free to disagree with it if you disagree with any of the advice that I typically give people and respect them on this. With strategic, yeah you can get the out of the water valuation sometimes. But it all starts with first making their business safe, financially viable business and in someone that you can sell in a financial market. You are dealing few buyers, this is probably the biggest obstacle to a strategic sale, you might have half  a dozen companies that can potentially acquire a business and the sake people make is they went in and say “I want to sell my business” then they called ABC company and ABC company's saying “Yeah we don't have a million dollars” or “You were not in our annual budget this year” or “Acquisitions were not in our plan for this year”. Ryan: Right, I'd pause you there for a second. They may have the money, but like, everybody's busy, right? So what if they're developing their own software or doing something else, they might just not have the physical time to integrate the two companies. Mark: Right. Yeah absolutely. So you need to have that relationship in place and it has to make sense as being a natural evolution. Kind of like a marriage, right? I mean.. Ryan: Yeah, totally. I mean, you're partnering up with someone. Mark: Yeah, and last thing I would say is, take a look to see if actually does make sense. That first company that is sold, in the webhosting space, I could've sold that very easily in a strategic sale, because there was so many strategic happening, we did a financial sale because we knew we're going to get more money. So, where you can often blow the top of the valuation with this strategic, it doesn't always happen that way. Sometimes financial actually does work a little bit better. Kind of a weird, odd case. Ryan: Sorry you're.. Mark: No, go ahead please. Ryan: I think the one thing to that people really need to think about, because you might blow the valuation off the charts, but I tell you what Mark, the reason why I do what I do now is because we got the financial target that we wanted to hit, I literally had to fire 60 of my friends and family. So if your culture in your employees and the clients.. You have to understand what's important here because in a strategic sale redundancies are huge. So, how will you stomached that afterwards? Like going and calling all of our employees in, they was way at 85 or something like that at that time and they only kept [inaudible 0:30:47] I mean like, that's literally the stomached ache. Are you going to be proud and happy about what you build? Is it just a financial target that's fine and you have people dispersed across the US and there's a lot of VA's and you're not orally loyal to them or if there's people that you care about, like they are role playing that strategic sale I think is extremely important so you can calibrate against all your options. Mark: That's a really, really good point. So what do you do now? What are you doing these days? after the sale, of course. Ryan: So other than being in the Podcast just like yourself, so, we have a company called GEXP Collaborative, so, it's Growth and Exit Planning collaborative, that's what it's stands for, and it took a lot of time, over the last for years.. Exit planning I think there's some negative [inaudible 0:31:33] to it because you might not want to sell right now, but it's literally both having a good business. So we combined the two which is growth and extra planning because it's like, we're talking about what are your plans and then how do you back in to all your strategic plans, they sell where you're trying to go with you options and I found some amazing people in the industry that have different disciplines because you got legal, finance, the front insurance, deal structures, you have the business brokers, you got all these people, and they all play a roll, and how do you back into that plan? So, if you kind of think, we're almost like a building, If you start a building you start with the budget and a blueprint, because you can't build a building without either of those, so the budget is your financial targets, where you want to go and why, so is there debt, net, the amount that you need or cash [inaudible 0:32:22] and what's the blueprint. So what are the five different strategic buyers and then you got the six financial purchase, timing, role, responsibility, and you're back and do it, so you can then hire the team [inaudible 0:32:34] so the growth next to planning that we do with the collaborative team is literally building the budget and a blueprint, and then actually coordinating the team like a general contractor because no one person can do all this stuff. I've been doing it non-stop day and day of four years, and I still couldn't single hand lay out to someone. Mark: Yeah, there's a lot involved with that.. now if somebody is listening to this, one of the misconception running to all the time, with clients that come to us and say I want to sell, I'm not really ready because I did not plan ahead maybe should've talked to somebody 2 or 3 years ago. We try to get people to talk to us, the brokers, a few years in advance. For you, you're focusing again on that growth as well so even if somebody isn't ever planning to sell, it still makes sense to talk about that growth. Ryan: Because the reality is you're going to do the best of your business at some point. I mean, there's people, like I work within this, the baby boomers, well they're going to die in your business but then what you're doing is you're working on the shares and the estate planning and dispersing the shares to employees, and to kids, and do trust, so he's going to sell his company, and you know what, he loves it, great! But then there's, build a business that has value and has cash flow and you de-risks then you can literally do whatever you want whenever you want. So yeah you're right it's coming ahead of time but then also knowing the people like you and building these relationships, you can't do this at the last second, you're going to leave money on the table, you're not going to be as happy with terms and conditions and so many times Mark, and I don't know if you see this, but a lot of people that are out there, and the people that are in aggressive growth path, they're all acquiring company so the out of the blue offers happen all the time. So whether it's PE firms or funds or other strategic buyers, and how do you know what to weigh that against if you don't have a plan? So you don't even know like how much I'm going to get? What terms? I mean, you're thinking on the fly and that usually doesn't go as well..   Mark: Right! The number of time I've heard from clients, get in to this process and say, “Man, I really wish I've contacted you a year ago” I mean it happens all the time, no one ever thinks about selling their business until they actually want to sell their business and I think what's really cool about what you're doing is you're focusing again not just the exit, you're focusing on growth. Because a good growth strategy is a good exit strategy they often go hand in hand. Ryan: You're back can do it. You know, I just have a little plug for you guys too, because we do not do what you do, and I think a lot of entrepreneurs, they really think, because they understand their business so well that they can sell their business by themselves, and “Oh my gosh” it's the first time you're going to do it and why.. Like every one of those professional should pay for themselves, it should be your return of investment, what to spend, because you know it's an emotional roller coaster first of all and it's like a 24/7 fire drill while you are in the process which is what your team does, right? so I think all the people, if you have the right advisors, and that's another reason left a lot of money on the table, is you need to have the right advisers. I mean it wasn't people that do it all they want, they do transactions, they understand the market, your industry, and so having the right team is crazy important. Mark: Yeah, alright could you plug as well if anyone listen to this and enjoys the Quiet Light podcasts, and hopefully you do if you've listened this long, Ryan's Podcast talks a lot about the same stuff, you talk a lot about selling, you talked to a lot of entrepreneur's who has sold their businesses before, and you go over a lot of the same material, but with a little bit of a difference spinned to it, really, really high quality content and another one, what was name of the Podcast where can they find it? Ryan: “Life after Business” Mark: Life after Business. Awesome! So we will link to it in the show notes on our Podcast page, we'll also link over the Ryan's website, and Ryan, anything else that you want us to link or to want to draw attention to, please feel free. Ryan: We got a resources tab just like you, you're my model right? So I guess I said year and a half ago, you put me in the right direction with the presence that I wanted online, so we got white papers, and resources and Podcasts and all that kind of stuff so. Mark: Awesome, so definitely check at his site and feel free to reach out to him, if you just want to talk, he's a good guy to talk to. You know I can talk all day about this stuff and someday we probably will. Thanks for coming I really appreciate it. Ryan: Yeah, had a blast Mark, Thanks! Mark: Alright. Links and Resources: www.gexpcollaborative.com Ryan's website Life after Business Podcast Ryan's podcast link

Today we are talking to Chuck Mullins all about due diligence. An internet business veteran who is now a part of the Quiet Light team, Chuck purchased his first internet business while still in college and was more successful at 18 than some of the most seasoned entrepreneurs. For both the buyer and the seller, the due diligence process is one of the most difficult parts of buying and selling an online business. Fortunately, there are a lot of tools that can be used to simplify the process. In this episode, Mark and Chuck look at over 20 different due diligence tools and explain how you can use them in our due diligence processes. Episode Highlights: Chuck guides us through a group of tools that can be fundamental to any well thought out due diligence plan. Any buyer knows that this is the most important thing you can do to make sure that no stone is left unturned when preparing to make that purchase and hit the ground running. Try using a due diligence consultant service. We don't advise leaving it all up to them but they can take some of the work out of your hands. Never just research the business but remember to also research who is selling the business. Google trends is very powerful. Google Trends lets you read the trends that any given business may have experienced. Be sure to be aware if your acquisition is “trendy” or “evergreen.” SEM tools can provide insight into the business potential and the size of any risks. Website crawling tools are used to determine customer and market trends. Social media tools are an additional way to gain insight into connections for that business and also the business owner's niche interactions in their niche. Lessons from Due Diligence: For first time buyers the best advice Chuck offers is that you don't know what you don't know. Due diligence gives you the answers. Know what a tool is good at, put it in your due diligence toolbox, and use it correctly. Surround yourself with the types of people who can help you. Be careful to use your lawyer for law and your accountant for money. Always remember that you as the buyer ultimately make the business decision. Don't be afraid to ask questions! Keep good records of what you have looked at. Work off a checklist and be meticulous about it. A seller is as interested in you in the success of their business. Transcription Mark: Hey Joe, how are you? Joe: Doing good Mark, how about yourself? Mark: I'm doing well, I'd talk to somebody that we both know well and that's one of our own Chuck Mullins. Joe: Mr. Chuck Mullins, good man he is. Mark: He is, yeah. He joins us on the interview on the video part push on the interview wearing his Quit Light shirt which he had embroidered. The only person at Quiet Light that has one. Although, He didn't tell me that he made one for you. And I haven't seen you in it yet. Joe: He did I almost put it on today. It's just, it's a little big so I [inaudible 0:01:16] it. I need to put on some layer, run it through a two cycles of the dryer. Mark: It would have been so appropriate because, you know, he's wearing his shirt in this interview and you've been wearing your shirt in, and he's getting, make one for me though of course. Joe: He should. You're the founder of Quiet Light Brokerage. Mark: Absolutely. Joe: You should have like a logo on the back of your office chair that says Quiet Light Brokerage, what's wrong with you? Mark: I thought about it but. Most of my office is really a mess. If you seeing this on video and we'll talk about this one a bit. My office is usually a mess. It's all about angles, right? My angles a little bit of center today because I don't want to show you the rest of my office. So, yeah. But this actual episode is going to be great for a video. If you're listening in your car, if you're listening on the podcast, you'll still get a lot of value out of it. But I'd recommend at some point checking out the Youtube channel. We are separating our channels, so we will have a new channel, just for the podcast episodes. And this episode will, going to kick that off. So make sure you'll go there and you subscribe. And the reason that is a good one to watch on the Youtube channel is because we're reviewing due diligence tools in this episode. We actually go over 27 different due diligence tools. We bring them up on the screen and you can see, we kind of browse around and fumbling around on somebody's sites. As we talk about how you can use this in your due diligence process. Any buyer out there who is looking to acquire a business in the next few years or so, you know due diligence is probably the most important part of that process for you making sure that you're checking under every rock and every hidden area to see is there anything wrong with this business that I need to be aware of. Well Chuck and I go over 27 tools that he has used personally in his past of buying businesses. So we bring real interest in episode from that stand point. He brings a lot of experience in buying and selling businesses for.. Do you know how long he has been doing it? I can't remember off hand. Joe: In 1997 I think. He was self-employed in college, making more in one month the most people make in a year when he was in college. Mark: Right right and then, He and I have been presenting at Pubcon for 7 years. We go over this video a little bit but we've been presenting for 7 years at Pubcon together and people always come to see Chuck and then hopefully I can pick up a couple of the scraps to come off the table when presents. So it's a great presentation on a how to go about buying online businesses. Joe: And just a point out of the obvious remaining, not so obvious. Technically we represent the sellers in what we do. Well we can't help them and help them while unless we also help as many buyers as possible. So it's, many people would think that what you're about to present with Chuck is in contrast to what we do. But we're always about full disclosure, always making sure that buyers are making good investments and so that both they and the sellers are happy to closing table and it's successful transaction down the road as well. Mark: Yeah, absolutely! Again, we going to do represent the sellers, but if our seller's getting sued, 3 or 4 months later that is a pretty bad job on our part. So it's important that both buyer and seller walk away from a deal, happy and when you know that deal. So that's the goal. We get a transaction wins. And part of that process is due diligence. I say, I hate like throw a due diligence. When I first started Quiet Light and I got like, you know, a monster due diligence, I would kind of [inaudible 0:04:31] and be like, Oh man, this is going to be a pain. Now when I see a well thought out due diligence, it's makes me happy because I know that, that buyer is going to be really happy and that deal is gone go through. Because where they're going to really inspect that business thoroughly. Joe: Yeah, well thought, that was important. Not just a massive list but a well thought, that was specific to the business that's being purchased. I've seen blank at due diligence less come through where somebody clearly copied and paste it. But I'm excited about this episode Chucks a really, really smart guy and successful entrepreneur and I think a lot of people would learn some good stuff here. Mark: That's good, very good. Let's get to it. Mark: Hey Chuck, how are you? Chuck: Doing great. How are you Mark? Mark: I'm good. Thanks for joining me on the call. I see you have your nice Quiet Light shirt on. You're the only one at Quiet Light that has that shirt. Chuck: That's because I took the initiative to have it made. Mark: Right. We'll get them for everybody else eventually. Chuck: Actually, I think I bought Joe one. But he didn't want it. Mark: Oh really, I got to start getting on him so he wears it from the Podcast. Chuck: Yeah Mark: Yeah, anyway for this Podcast, if you guys are listening to this in your car, this would be one of the once that I would recommend over going to Youtube and we've set up a new channel on Youtube just for the interviews. We're going to put all our interviews on that channel. I'd recommend looking at that because we're going to review a bunch of due diligence tools. A little bit of background between Chuck and myself. Chuck and I have been presenting at Pubcon. What? 7 years I think? Chuck: Yeah, I think so. Mark: Yeah, a very long time. Chuck invited me to speak within that Pubcon a while ago. We've been doing it ever since we've had all the people join us occasionally, to talk about buying and selling websites. But he and I have been talking about that night. Typically we talk on the sell side and Chuck was talking on the buy side. And the result was that more people are interested in what Chuck had to say than I was ever had to say. So I figured, it would be good to have you on here. Both, so I think we can get to know you a bit better. I'd also review some of the due diligence that you've use in the past in buying online businesses. So let's just do a quick introduction for you as far as your background. What's your background in buying and selling online businesses? Chuck: So, I started my first website back in 1996. Through the few years, made a bunch of money in college just a kind of doing really well. And made more money than you know, than I was living on. So I start looking at doing various investments. So, start looking at real estate, franchises, I was looking at car washes, and a storage facilities, and a Laundromats. And nothing ever, just kind of, really worked for me or really peaked my interest enough. You know like, I dabbled in real estate. But everything just kept kind drawing me back to the internet business. So then, you know, I made a few websites that were successful. But I started thinking about you know, what if I could acquire somebody's company and then just build upon that and stand on somebody else's shoulders, instead of trying to prove out a model myself. You know, use a model that has been proven by somebody else. And then just take all the knowledge I had, and expertise, and grow that. So I start doing really well, and at a certain point I just fell alive, you know presenting at a conference, and kind of just, giving back, and then that's when I reached out to you and I think my initial presentation I gave was with Jason, Quiet Light, we did it at affiliate summit. I don't even know, 8 or 9 years ago.   Mark: Yeah, I remember that. I was in the audience for that presentation and then, that was January. I remember specifically because it was really cold at that conference in Las Vegas. The fountains were frozen when we got out of the hotel. I was kind of surprised about that. So it's cool! So yeah, you've been doing this presentation for a long time and I know whenever we do the presentation, when we get to the slide on due diligence, whereas all the phones in the rooms go up to take pictures, because people are really interested to know what's our tools they can use to do due diligence. So we're going to review some of these tools here, as well as talk about some of the principles, buyers might want to apply when you're doing your due diligence. As always, we'll just throw out the blanket; cover your tails sort of a disclaimer here. Due diligence is ultimately a buyer's responsibility. Make sure that you're doing it, make sure that you are bringing in professionals. What we're going to do is were going to give some advices to things that we've seen work, but by all means, this is not complete when you're talking about due diligence. Wherein you need to apply a complete process to the business that you are looking at. So I'm going to share my screen here and open this up, and I'm just going to share the full screen, and hopefully on my [inaudible 0:08:56] of so that people don't get those. But can you see that chart does that come up for you? Chuck: Yeah. Mark: Alright. Good, good. So here we go, where going to just get started right away with this list of tools and I'll be browsing to the website as you talk about the individual ones. The first one that we're going to talk about is Centurica and they're full service due diligence firm. They are the only one of that sort that we have on this list. So why don't you talk a little bit about Centurica, what they do and why they made this list. Chuck: Sure, So Chris Yates is the owner of Centurica, they've been around for quite a while and Chris runs a buying and selling website conference called and Rhodium. Rhodium Weekend I think is kind of, the official name. I ran into Chris way back when I started to look at buying and selling businesses. he was the first person.. I'm always looking for knowledge where I look into learn more. So doing some searches and came across his conference and went to it. Kind of on a whim, because there was no information about the conference because that was the first one that they've had. So it was like, trying to figure out and I thought well, for the money, maybe I'll pick up something and if not, it's not a total lost because you know, I'm just come and go to Vegas to hang out. You know Chris is really a smart guy and I ended up I think I was probably the first one we, to get into his master mind group. So I'm going to master mind group with Chris and a bunch of other entrepreneurs and he does this great due diligence product were he just kind of takes it over from you. Will do like a full blown due diligence review on a business that you're going to acquire and I would never say that you should handle fully the [inaudible 0:10:33] somebody else do the due diligence. But you should allow, if you're going to hire somebody, do it in parallel with them. So that way you're just getting, you know, a second, third set of eyes on a due diligence and on the business that you're looking to acquire. So they offer various levels and, so it looks like they've got something from 59 dollars right there and all the way up to, I think a 5,000 dollar package. That's kind of like a suit to nuts version. Mark: Yeah and just look at the website; they have a whole team of people here that are associated with them. A lot of these people, you and I know, we know them through Rhodium Weekend and through that master mind group as well. These are some really smart guys, good guys, to be able to just get on the phone with and get their feedback. In fact, I'm seeing n a few guys here, Mike Nunez, he has been on a Podcast with us before and a super smart guy. Well, these guys are [inaudible 0:11:24] really good contact as well. These are people that you can arrange calls with and bounce my ideas of. The amount of money, 5,000 dollars, some people might [inaudible 0:11:35] sort of price tag, but what do you think? Do you think that's worth spending that much money on due diligence support? Chuck: Yeah I mean, with Quiet Light, we're generally not dealing with the lower end deals, right? We're generally dealing with mid to high six figures, mid to low seven figure deals, so you know, five grand and that's their highest package, right? They got stuff that's cheaper, but how could you go wrong, you know, spending.. If you're on a million dollar deal, what's five grand, is what? Half a percent? I think it's probably money well spent. Mark: Yeah, absolutely I agree. The only assets that you put an end, this is, that whenever you are hiring somebody on the outside to potentially look for problems, understand that, what they're going to do is they're going to find problems because that's what you're hiring them to do, and they should do that. So this is not a criticism or some trick or by any means or attorney that's looking up for liability issues. But as the buyer, understand that you need to take that information, process it, through a business decision that you're making. Any sort of due diligence tool? I knew the ones that we offer here, that's the way that you should be going about using that information, that fits into the larger scheme. Alright, let's move on, Centurica is a good service. If anyone wants an introduction pres, it's either Chuck or I can provide an introduction pres as well. The next two are related obviously, Google.com and Google Trends, everybody knows what Google is, I'm sure most know what Google Trends are. How would you use each of these sites in a due diligence process? Chuck: Sure! So with Google, right? I mean, it's just a matter of Googling things either about the business, about the person, if you're buying the business, Google the terms around the business, and look for red flags, right? Look for if they've got one star review, average one star review, maybe that tells you something about the business. You know, look for complaints, things that are negative about the business, right? It's kind of one of those, you'll catch all due diligence place where you just, kind of sorting through all of the information that you can find on a given business and/or a person. Never just research the business, always research the person who is selling the business as well because, you could find out a lot of stuff and make sure that you're avoiding, potentially avoid some of the pitfalls, if somebody has done some sketchy stuff in the past, and find that out. Mark: Yeah, absolutely. You can learn a lot about their background as well, and all you have to do is search for all of the places that I have written for, come up, but years ago, I was involved in a lawsuit in those couple of pages. And so, anyone that was doing research on me, I would often get those sort of questions, “What happened then?” everything was fine. I didn't mind the questions, but people that were being smart and doing due diligence would ask about that. Chuck: And don't just look at the first page of Google. Look at the 2nd, 3rd, 4th, 5th, right? Because anybody can hire a reputation management company that will push some of those negative reviews, you know, to the 2nd or 3rd page. But they'll be there generally, still, just maybe a little lower. Mark: Right, Now if anyone wonders and are looking at the screen, I did not play hockey. Even though I'm from Minnesota I'm not a hockey player. There's a couple of them, that's out there that have gotten their name out there. Google trends, what search term I put in there? Chuck: Yeah so type in Paleo Recipe, or Paleo Diet I mean, because Paleo is a little different. So, if you look at the screen. Mark: You changed the date range? Chuck: Yes I changed the date range. That's, in January, you see that giant spike. Because that's when everybody is getting into a diet mode. Check that out even further. Mark: So we're looking right now. Let's set 2004 to present. So we'll do the entire history in Google Trends. There we go. Chuck: Sure, so you know, if you're looking to buying a business, and you're seeing.. Well use Google Trends to figure out what the trends are. Here you'll see is like a giant up peak that just kind of went up, and then all of a sudden it just kind of, trail off, and you're going to find things like this. Then you'll also notice that there is like ups and downs, like inter year, so that would be like the seasonally of the business, right? So just because you see, like this one giant peak, which correlates with January, and then you know, throughout the rest of the year it drops until December where December is at it's low, around Christmas time then it spikes immediately back up. So you're going to look for not only seasonality but you can look for long term trends. And when you're looking at businesses, think about whether the business is a trendy business first, it's an evergreen business. So, diet in general is a trendy business. If you look almost any diet, you'll see that there's a, it goes up, up , up, up and all of a sudden it tails off, right? There's something made it go up, usually it got unpopular, and then it'll trend off. I personally, one of the businesses that I bought was a Paleo website, and I managed to buy it exactly at the peak market, and then.. Mark: Right about there right? Right around January of 2013, early 2013. Chuck: Yup, definitely it's like, it was going up, up, and up, I'm like, great! Then it went down, down, down, and it was less great. So, luckily, we were able to so a little bit of magic and kind of keep the revenue going by trying to grow the business but it's another story. Mark: Something else that you can do with this, so as many people know, I own CatholicSingles, and the turn chart out for CatholicSingles doesn't look that great, when you look at it. Something I've learned from this chart from a few other places is, if you think that you're buying a website that gets lots of natural search traffic, be careful to make sure that it's not branded search traffic. So what's happening here is, the previous owner was losing out to a competitor who was beating him in a brand search, and so, the site still gets lots of natural search traffic to a keyword that still has a lot of relevance. But he lost a lot of brand relevance as well. So you can, if it's a large enough property you can often pick up on brands trends and what are not, you're going to have to compete on that [inaudible 0:17:34] as well. You can type in competing services and see what their trend is overtime as well. And you can actually compare the two together. So you can see how competition is playing along with. Maybe what you're looking at acquiring. Chuck: And then if you scroll down, you can do it by region as well. So what are the countries that has something popular. So maybe it was a US based company, and you see “Hey look! It's doing well in Canada and South America” or I guess none of that case was in South America, but Australia, and I think it was Mexico maybe. So maybe you expand into some of those other countries. Mark: Right, right. Exactly. Yeah Google Trends has some good date out there, I recommend again putting in your, whatever, competitors you know of, and comparing the traffic and the trends for the competitors and get the sense for, how those are working together. Chuck: And one additional point would be, Google trends is the search volume of a specific keyword, so it's not some magic formula, it's how many people are searching for something. So sometimes, people search, the way they search for things changes overtime, so you just want to, kind of remember that. That just because, you know. People might have been searching for, I don't know, Blue Widgets but now they're calling it, instead of Blue Widgets, they're calling it Blue Fuzzies, right? So it doesn't always mean that the actual market is declining at it. Sometimes it can just be a change in the way people are searching. Mark: Yeah, I think an example, that would be internet marketing has pushed toward in digital marketing. And so you see, the phrase you use to refer to something, is slightly different overtime. So, that's a good point. Now let's move off this chart because it's sort of depressing. State business websites, this is one that I haven't really seeing people a whole lot of, but it's a really good idea to use state business websites. Chuck: Yeah, I mean it's just the basic of going to whatever state the company is in, doing a search for the business, finding out who the owners are, and if there's any kind of red flags that maybe appear on that, just some basic due diligence there. Mark: Yeah, that one's not coming up here, but when you do the search, what will happen is, you'll see the records with the state, whether or not if filed in good standing, any other possible red flags that would come up. It's really just checking their box, making sure that everything is on the up and up with that business search. Maybe we can get back to this, if that comes up again. BuiltWith is a really cool tool and it shows all the technologies that a website was built with, right? Chuck: Yeap! Absolutey! So if you want to look at, like the technologies that go.. Is your internet out? Mark: No, I just typed it in wrong. Chuck: I guess your internet wouldn't be out, considering we're.. Mark: Right, right. So we could take a look to see what Quiet Light Brokerage is built on. And you can see that we have Googled conversion tracking, you can you see the whole technology stack and all the services that are used. When this might be useful as if you're looking at the P&L and you don't see a subscriptions but you would see here Drip. And you know that Drip is a subscription based service maybe that's not their P&L. That would be something to catch and maybe ask them about to find out what's going on there. Maybe they just start using [inaudible 0:20:47]the website. Chuck: Absolutely! And you know, one of the things you want to do as part of getting ready to acquire a site is make sure that you have the people and place to take over any kind of service that you need in advance. Right, so, if you have no idea how to use Drip and you're taking it in purchase in your company, maybe you need to has somebody in place who does know how to use it or request a standard operating procedure so that you can learn how to use it. So I would definitely have a list of like all of the kind of aspects of the business that you're not proficient at. And make sure that you have people in place that can help you with that [inaudible 0:21:26] running when you do take over the business. Mark: You know something that, speaking of Drips, I talked to Rob who sold Drip to Leadpages a few years ago, and he talked to me about how Leadpages was completely ready and able to switch over to a new website surely after they closed. They were making plans and building out technology as they were going through due diligence so that they can hit the ground, running right away. Something that might you want to do as you're going through a website's technology stack is take a look at what services are you using. If you are going to the Quiet Light website you'll notice that we have Hotjar, for example. Now I haven't tracked anything with Hotjar on the website in a while. We use it for surveys once in a while, but this would be a service for, maybe those report that you want to ask for during due diligence. Maybe some heat mapping that would just be useful information for you to be able to see and as you're making plans. Or OptinMonster, asked, have you run these campaigns before? What was the conversion rate like on these campaigns? And you can start getting really prepared as you're doing your due diligence to make that transition. Of course some sellers may not be eager to share some of that information with you, so go about that with some level of sensitivity understanding that they might be ready to open up all the books to you, but knowing what's there can help you request different reports. And Chuck you said something before in one of your presentations, probably multiple presentations and that was ask questions. Ask lots and lots of questions. Chuck: Yup, absolutely. I always say ask, ask, ask, and even ask questions you know the answers to. I feel like that's like some kind of weird tactic that people do. But they ask questions regardless of whether you know the answer because you almost want to get a seller to lie to you, because then you know how trust worthy they are right? If somebody's going to lie to you about something, it's a red flag. So, I've seen a lot of people that will ask the same questions in multiple ways. You don't want to be annoying right? Like, don't ask stupid questions but definitely ask. I shouldn't say, you don't want to ask stupid question because almost no question's stupid right? But we all understand there are all stupid questions that you shouldn't ask, that's just, are irrelevant. But don't feel like, if it's relevant to you then it's not a stupid question. So, ask everything. Because the time to ask is before you buy it. Right? You don't want to have a bunch of questions after you've inked the check. So, ask early and then ask often. Mark: Then the other thing too is you can get more callers on a particular answer. I know when I talk to some sellers and ask them why are you selling? They'll give me an answer one day and had talked to them another day and they give me s slightly different answer. And it's not that they're lying. The reasons are complex. There's more than one reason going on there and you gain caller, you gain more information about what's really going on behind the sale. By asking the same question, and looking at, in different formats, I know when you started to do video interviews or recording interviews of some of our clients and part of the reason for that is because people talk about questions differently then they might write them out. So this could ask a lot of those questions. Chuck: Yeah, absolutely! Archive.org. Mark: This is a great one. So if you're doing some due dilligence there's a whole industry people who just buy expired domains, stir a new content on it and then run with the site. Some of the amazing firm like [inaudible 0:24:38]some of them are buying like big sites, or what used to be a big site and for whatever reason, site's no longer so, this will give you an idea like in 2008. What was the site look like? Was it a brokerage site or not back then, you know. It's not always a bad thing but if it was something spamy back then, It might still have some problems moving forward. So it's also good just to see if you had some ideas of you wanted to try this or try that. And getting an idea for some of the things they've tried in their past or looking at previous screenshots of what the site was like one, two, three, four years ago? Mark: Yeah, I think one of the big challenges that you always have as a buyer and.. Sellers as well have this issue, right. Sellers know their business intimately because they've lived with it for so many years. As a buyer, you're coming in and trying to compress knowledge that they've gain over the course of sometimes 20 years now. And to a decision that you have to make within or week or two. Going back in the scene, what the history of the site was, just kind of, again it adds color, it adds more information into what does this person done in the past for the business. Like you said maybe we can see some things that they tried and you can ask them about that, if you're looking at the Quiet Light site, yeah, you might see that we sold some domains in the past. And if there's someone looking to buy us they could ask a question on that, you know, why don't you sell domains anymore? And we could go into that whole discussion. Chuck: Something else to look for is to look for gaps in the years so you know, you can put something on your website, right? And your like, your a [inaudible 0:26:14]telling a way back machine not to cross your site anymore. So if there's like a three year gap, why is that gap? Most legitimate sites aren't blocking the way back machine. From calling their site, so you know, that might raise a red flag and might be something you want to dive in on a little deeper. Mark: Awesome, alright let's move on at Trademarkia.com. Chuck: Yeah, you know it's a, if you're, if they told you to have a trade mark, search for it, figure it out. If they have told you they don't have a trade mark, search for it. See if somebody else has a trade mark right? Make sure that they're not infringing on somebody else's.. What's the word I'm looking for.. Somebody else's IP. You don't want to buy a business if they're infringing on other people's stuff. Mark: Yeah, and this can also be a very useful in search results if you're advertising on Google and you have competitors that are stepping all over that brand search. If you get that trade mark and you have the ability to get a trade mark you can keep all of those guys off, and brand is usually a very cheap way. But if you have competitors branding against it, that's [inaudible 0:27:16] your IP, so, searching for that trade mark is a useful thing to do. Alright, moving to the next set of tools and these tools here seem to be more of, search competitive intelligence and taking look at a site's search profile and I should just say probably maybe SEM. All [inaudible 0:27:33] right? Because this still include adwords as well? Chuck: Yeap, yeap! So organic and paid, my likes spy for a lot. It's a.. You can look at people's history of what kind of ad campaigns they did. As so, if somebody says “Oh we've only ever run one ads set and haven't done much testing” and then you look back at, and shows you. Well actually they ran a hundred different variations of this ad. Cross, you know 5 years and blah blah. So you will able to see a.. Verify some of the information they said. You can also check and it will show you, like literally shows you, what paid ads they ran. And like detects in them. So if you think, “Oh I wonder if they try this”, so you're going to look back and see what sorts of ads they've run. It's kind of interesting, you can also use this right here, like you see their competitor. So that'll show you overlap, so if you know some of, some competitors, you'll be able to see like what keywords they have overlapping using this venn diagrams. It's some really cool stuff and then you can look for opportunity, for words that they're going after, that your knots. They also have they a tool in here somewhere that will allow you to look at specific keywords over time and then it puts it over a timeline and has the Google updates. So you can see like, ok they had this key word was, you know, rank number 1111, and then drops off to like number 7, and [inaudible 0:28:57] Google get an update right when this happen so you can potentially know why they dropped off, it's because, well, Google did this update. So seeing what people are using like a private blog now, where to get a bunch of links and it's like doing really, really well then everything drops off a cliff. Because of Google did an update and it affect it, or, the reverse is true where they went from having nothing to all off a sudden number 1 rankings, just like overnight. And you can see, okay, well nobody just all send this from zero to number 1 ranking for 20 different keyword terms so then you know, Well, they must have done something to have that spike and then you can dive into what they're using like, blog that works for paid links or whatever. Mark: Yeah, any sort of quick changes in these results are going to be something to watch out for. So that's over all a good tool. And a lot of these tools out here, Moz, Open Site Explorer, Semrush, Magestic, AAtraps, I personaly like AAtraps. These are all really good tools, using in combination. It's going to give you a sense for how the data all adds up. Understand that when you're looking at data, in any of these tools, they have to use third parties to estimate what this is, for example, they're estimating for Quiet Light Brokerage, where estimated adwords budget is 3,000 bucks. Actually not too far off from that, but it's not accurate. Just understand that these are useful for trends, these are useful for getting another point of data, nothing's going to replace first hand tracking, it should be Google and Linux, or whatever tool people are using to analyze something. But you can use all these external tools in combination as well to try complete picture of what a website's doing and how it's ranking. Chuck: It's a bit [inaudible 0:30:45] That was I think only Google adwords, so if not taking your account, pay traffic, whether it's Facebook or other things. Right? Mark: Yep, yep! Absolutely that's right! Let's move on to a.. You like Spy for the best from all of these? Chuck: They are all kind of different. So there's like different reasons to use different ones, right? Some are for keyword research, some have like keyword difficulty tools, so part of due diligence isn't just looking at what the site has done, but where you can go with it. So I like to use a couple of them to do keyword research. See where their gaps are, you know, opportunity for me to grow the business. They're all kind of hit, different things to different things well. So I don't have one favorite. I do like SpyFu, I like Moz in the past, [inaudible 0:31:31], Majestic. And then on that list, we kind of didn't point it which I'm guessing maybe you thought I put in a wrong spot, but the alexa.com won. I haven't actually used this yet, but it's apparently a new tool that they rolled out. It's a competitor to all these other ones, Moz and Majestic. So they're doing a paid tool just like all these other guys. So, I haven't really dove into it yet, but it'll be interesting to maybe see how their data looks. Mark: Yeah, I actually just saw this the other day. And was intrigued by it. I haven't dug into this at all. But you would imagine that Alexa's by Amazon. You would imagine that they have some pretty good access to tools to be able estimate this information, with some level of accuracy. Chuck: And you know they've been around, since when, like early 2000 or earlier. So they've been crawling off these sites. So who knows what kind of information they've stored. I see [inaudible 0:32:34] has really good info going pretty far back. Mark: yeah, I know you're right on that. I think actually Alexa may have been the first competitive intelligence tool. That try to rank websites. Maybe there was somebody else before that. But they were the first one's who really gain attraction. Or that for a long time, everybody I knew had their Alexa bar. Up in their browser and you can see what, aside Alexa ranking was along with its paid rank. Right every marketer back in early 2010 and those two things, up in their tool bars. Chuck: It's fine, so I went to the site yet the other day, just checking it out and looking for their little site ranking. I could find it anywhere, so I'm not sure if they still have it or not. Mark: Yeah, I don't know. I try to look that up recently as well and I wasn't able to find it. I was behind actually this pay wall which is how I came across [inaudible 0:33:24] they are now offering this. Chuck: Yeah, yeah. It didn't, for a long time, like, right Google paid rank and the Alexa ranking have been dead like nobody uses those as a real stat anymore . But I just wanted to check it out. Mark: Yeah, yeah I know it's always interesting stuff. Alright let's move on to page 2 here. We're going to get into 3 tools here. [inaudible 0:33:46], deepcrawl.com and Copyscape. What do these tools do? Chuck: Yeah, The first two are pretty similar to each other. And what they do is you can plug in a domain name that it will crawl the entire site and it will look for all kinds of things. Like errors or not errors. Right, so it can show you just by crawling to the site. It will crawl every single link on the site from every single page. So it shows you like if there's dead links so if there are stuff that's going for like 404 pages, no errors, 500 errors, it will show you the redirects. So what I've used it for in the past is the one finding those dead pages or the 404 errors and then also finding the redirects and sometimes you'll see like stuff gets layered, where it will be redirected to this page, which layer's was then redirected to this page, which layer's then redirected to this page. And ultimately, what should you be doing is just going back and linking from the first page to the last page. And not using all of these bounces because with each bounce you have the a, potentially you're losing some of that authority has being passed through. Mark: Yeah, and there are the futuristic will do an on-site SEO analysis for even, one that I've used in the past that all definitely throw a, [inaudible 0:35:01] to be Orange Fox, Jacob Hagberg, has done some reports from Quiet Light Brokerage. and a lot of these tools do is, what these services work, will do, they just to analyze in a condensed manner. Because they look for opportunities and they also look for potential issue. Like you're saying, if there's tons of redirects in there, that's a problem, you are losing out an authority on those pages. 10 pages , 404, broken images. Images without all tags, accessibility issues. These are all things that you want to be looking for. Not necessarily as like major red flags but you know, a buyer beware, but also as opportunities that if you start to fix and clean these things up, there's going to be a natural lift in rankings on its long tale keywords that maybe you're on page 10 to 20 right now for, maybe that will bump you up to the first 10 results . So wait for you to just grow some opportunity. When you're looking at these 3 tools Chuck.. Chuck: The first two are very similar, right? Screaming Frog, is one that you have on your own computer, and then it use your internet connection to then crawl the site. DeepCrawl, they are running it from their servers, the Screaming Frog is relatively cheap. I forget the amount but it's hundred to 200 bucks a year. The DeepCrawl one is fairly pricey so, I would always recommend this Screaming Frog but the other one is a good service as well. Just cost a bit more. It's a 150 pounds a year. Mark: Right. They do have a free version? I've used the free version to be honest it's worth just upgrading to a paid version. Free version will give you just a flavor of what they can do. But if you really want to dig deep and really figure things out. Yeah, again, here's a 500 URL limit, most websites are going to blow through that 500 URLs because you have all their images, you have everything else connected with an individual page, so you'll go through that 500 pretty quickly. Copyscape is a bit different from these two though. Chuck: Yeah, it's different. I threw it, kind of witness just because it's one of those things, where again, you're looking for problems, so you type in your domain and It'll give you list of you know, places that content made and stolen from. So kind of, similar, but different. Mark: Right. This can be useful to see if you have people that are maybe trying' just scrape your pages entirely or if the page you're looking at for some reason is built on a shakey ground. This was something that was used a lot more probably, I don't know, 5, just 7 years ago. I know Copyscape has a really big issue on a really big useful tool for duplicate content issues. A lot of that is going away now. But I would imagine you would find copies of content that somebody's publishing their blog contents, say, on Medium or LinkedIn. I imagine this would probably pick up on that. Chuck: Yeah. I believe so. And you know when we talk about the duplicate content issue, where talking about like, right for organic search but there's also the duplicate content issue where, “Hey everything on this website was stolen from somewhere else and you're going to get sued because you stole our base content.”, Right so, I would be checking to make sure that people aren't stealing other people's content. You know, so I think that's a good part of due diligence. Mark: Yeah, absolutely! Alright Public WWW. This is a tool I have not heard of. Chuck: Yeah, that's a great tool. It kind of isn't a vain, of like, a Google right? But what's cool about it is instead of like.. If I want to search for something on Google. Google looks at what is this plate on the page meaning. If I search for Chuck it's looking for.. If somebody would look at a web page and see the word Chuck on it, then it might come up, right? But with this website, it's actually looking at the source code. So if somebody had a comment that was Chuck, it would potentially come up there. So, anywhere from the word Chuck, right? It's more for if you want to look a analytics code, or if you want to find somebody's affiliate ID. So if somebody's says, “Hey, I'm just running AdSense on this site, and I don't have it anywhere else.”, So we could took.. Put in the AdSense number, and it will show you all the sites that are using that same AdSense ID on their website, right? So you can look for, maybe they're doing some competing stuff, maybe they just, you know, they're driving more income through the AdSense, but having a multiple sites vs the one. And it's not complete, right? There's, it's only as much as they crawl so they're only going to have as much data of the websites they crawl. But you can definitely find some stuff. You can also use a little tip here, would be.. Let's say you have an affiliate product your promoting, right? And you're making some money off of that, and say, you found a new product you want to promote and it makes 10 times the amount of money for each one you sell and you know that like, “Oh! This product, if I switch it to this one, I'm going to make 10X.” Or you could look for everybody who is promoting this old product, and then you're going to try to acquire those sites, and switch them to the new affiliate product and 10X the revenue. A lot of different things you can do with that. Mark: I've heard some of people ask about that, specifically with affiliate sites. You know, “How do I know that this is all coming from the site that I'm buying.”, and so that would be one tool that you could use. The other thing I could see this being useful for is if you have a tool for it. This would be a pretty rare case, but if you're buying a business as a tool, that's using on outside websites. WordPress plugins site, WordPress themes site, or any other tool like that, you could start to get some ideas as for the installation volume. Using the tool like this. Alright, SpyOnWeb.com. Chuck: So similar right it's a looking for people's AdSense IDs and things like that. It's not as complete, with the other one you could search for a lot more different types of things. But still a useful tool. Mark: Right, it gives you some machine information as for our tools also sharing this IP address, DNS server. So again, not [inaudible 0:40:53] information here, but just acquiring [inaudible 0:40:56] this. We have our [inaudible 0:40:58]. So If you want to find out what the [inaudible 0:41:02] rank is, just go to SpyOnWeb and you could also see the page rank which is saying Quiet Light Brokerage just a like a question mark for page ranks. So that would be an information. That would have scared me about a 6 or 7 years ago. Alright, DomainIQ. Chuck: Yup, so DomainIQ and the other two that were listed. This are for finding out information about a domain name. So when was it registered, how many times has the DNS changed, has the ownership changed recently, what other domains are on the same server, or same IP block or same IP address, so if you know, if you're buying something from somebody, and they say it's the only site they have and then you look start looking up and down the IP range or looking on the server or the same IP and you see there's other domain names that are the same thing and are not disclosing it you, you know, that's potentially going to be an issue. You can look up who is the owner, so if it's like similar registration name or similar email address used to register the domain, it will show you all of the domains they own. That are using that registration information. These are all for the most part paid services. So if you want to get, like the good data, you got to pay for it. But they do give you a basic level of information for free. Mark: Right. I don't think anybody has to use all these tools. You pick 1 or 2 out of each of these categories that you want to use. The only one that I would recommend maybe use in multiples one would be in this search intelligence the SpyFu, Moz, and SEMrush. I think it might be worthwhile having upwards of three maybe four depending on how lights would turns out those services. Because like you said they all do slightly different things. Chuck: It's a matter of like what they've indexed right? So they each have their own crawlers, and none of them are going to crawl exactly the same subset of the internet. So, it's just, you're going to find different things while using different ones. Mark: Right, and they all have different levels of accuracy you could see here DomainIQ is [inaudible 0:43:04] to be higher than the last one. And also, few other bits of information that I would say are incorrect but again you use these points of data… Chuck: That was 5,000 dollars? The appraisal value? Mark: That was [inaudible 0:43:17] it's less than 500 dollars. And we have more than 24 backlinks, but again, all these tools are to be used in combination with each other to put together a large picture. Obviously a tool like Google Analytics or [inaudible 0:43:31] you'll going to want to use that first. And then, these tools are been used to fill in the gaps. Chuck: And also like know what a tool is good at, so like last one, you're not going to use that tool for the appraised value right? Like, that's nonsense. But if you scroll up, scroll up a little bit. If you click on, click on the ownership record in the blue, the blue button is there. Let's see if we'll.. Mark: We got gears turning here.. There we go Chuck: Okay so just search who the owner is, when is the last time you updated, when it expires, the age of it, right. So you've owned it for just about almost 11 years, you're using Cloudflare, here's the “who is” info…. Mark: It's kind of a bad corporation name, I got to update that. Chuck: Well there you go. And go back one more time on it, I'll click on one more thing… Mark: All these tools take too long to load up. Let's move on, because this one's getting a little bit longer. Let's get it on to a Bannedcheck.com. Chuck: Yeah, so this one is a, and it's not 100% right. But you can type in AdSense account and I'll tell you if the AdSense account has been banned. Again, not 100%, but if it's says it's banned, that's probably a good indication. I'm sorry not the AdSense account number but the actual domain name. Right so, if somebody says, “Oh! I switched monetization methods, because I didn't like AdSense and I was making a bunch more money with this.” Well, maybe that's not the case, maybe it's that they got banned. So, this is a good one. They can tell you whether they've been, not a 100% right. But if it's says that they've been band, then they've probably have been, right? Mark: Good news with this, I'm making money with Quiet Light Brokerage because it came back and it says that it's not banned for Google AdSense. Chuck: I wonder how that helps with our value of the 500 dollars. Mark: Hopefully, this is a little bit, so all you buyers that are looking to buy a business, we're going to require that you click on an Adsense ad. Because I think that's completely [inaudible 0:45:16] with our terms of service. Mark: socialmention.com. Chuck: Yeah, so just you know, you type in various things here and it will just tell you where it's being mention as far as social goes. So just a good tool for doing some basic due diligence. Mark: Yeah, let's repeat, useful to do, using combination with a Google trends to be able to see. Google Trends is measuring the data on Google itself. Looking at how the different social media networks are also processing the data. It's going to have a different look than just what Google has. On that note, I would say BuzzSumo, which is not on your list. It's another tool that I would recommend adding and it's a page where they do the free option but you can take a look to see what content has done really well on a particular domain name. As well as what content in that specific niche also does well. So you can really got a sense for how popular [inaudible 0:46:15] and what's getting shared and what's not. Well for then Google but also within the social media. It seems fantastic. Chuck: This one definitely should've been on my list then I'm not sure why it wasn't but I actually like this one a lot better. Mark: Will add this to the list. For people who want to download it. Last one it would be just going direct to the source of Facebook LinkedIn, Twitter, etc., etc. Almost every websites these days has presence on all the social media networks, visit their pages I assume that's kind of a lesson there. Chuck: Yeah and again, with like a LinkedIn, right? Looking at the person's profile looking how many connections they have. Are they in a niche where they should have 500 LinkedIn connections and they've only got 3, Maybe that tells you something, right? Why are they connected with all of these hackers or whatever, right? It's just a matter of again, researching the people and not just the business. So I think it's a good tool for researching people. Mark: Awesome, right. So that's a lot of tools that we just went over. Let's talk just a some couple of lessons, and we're running pretty long on this Podcast. So, we'll talk just a couple lessons about due diligence. I'm going to turn off the screen sharing here and talk about couple lessons about due diligence. What would you say for somebody who's going about due diligence the first time? What couple of lessons would you, or principles, should they really use in their due diligence efforts. Chuck: So I think one of the biggest things, is first in for most you don't know what you don't know. right, so having people to help advice you on what to search for and what to look for can be critical. So don't just think you know everything! Because none of us know everything especially when it comes to different tricks and tactics people can employ to inflate the numbers in what they're doing. What else, do you have any idea you would suggest? Mark: I would, and so on that note, obviously bringing people like an attorney, bringing an accountant, as I said before that be careful when you do so because they are being brought in with their specific purpose in mind, that are being brought in to look for liabilities, for being brought in to look for problems, and you are the business owner trying to make a business decision. Your accountant that's trying to make an account decision. Your lawyers try to make in legal decision. And so, you have to take their advice and put it into a broader framework business . It's a good business choice for you. You use their bits of data as [inaudible 0:48:41]data. And create a whole picture with that. The other thing that you said, where you cover this one's ask, ask, ask. Don't be afraid to ask for questions and then the third thing that I would recommend is keep good records of what you have looked at. And I'm working through the due diligence for the client, if a buyer comes back and ask for the same documents that they may have already received earlier on. Extremely annoying for a seller who doesn't understand why they even needed it in the first place. And a lot of sellers get skeptical buyers. They think this person isn't really serious about it. they're just looking fishing for information and if you end up passing the same documents 3 or 4 times, even twice. It start to grow those seeds of doubt and to bigger than just seeds and it cause a lot of problems really later on. So be organized in your due diligence just as you want your seller to be organized. Even your documentation. So that you'd know what you have and work off a check list, where be the last thing that I would ask. But don't be afraid to add to that check list as you go through. Chuck: Sure and something else I would add, kind of similar, not a little different, is with the seller. They're interested in knowing that you're going to do well with their business and whether they realize it or not, the questions you ask them are important to them. Almost always. So if you're not asking good questions, they're going to think that you're not serious or that you're not going to do well with the business and we often see that buyers, or sellers won't always sell to the person who offers the most money often times they're selling to the person they think who's going to do best with their business or somebody that they like. I see it time and time again. Recently I had a nice 7 figure deal, I was working with and every time I get off a call, you know, I do a wrap up call with the seller, “Okay, what do you think? and he went like, “Well that person didn't ask any good questions like, I don't want to sell my business to them.”, So make sure that you're doing some due diligence upfront, you're looking into these things and you have good questions that you're asking that are relevant to the business. Mark: Yeah, absolutely! Do not research ahead of time, not wasting your seller's time on the conference call is important. A lot of good sellers, when they go to sell a business, within that first week, they're going to do half of dozen to a dozen conference calls and it's exhausting to do. So if they get into a call and somebody asks, ask them question that was covered right up front. There's a good place to ask questions that have never been answered, and there's obviously you haven't done your homework, sort of questions. So do have basic homework ahead of time so that people know about, that you've put in that upfront research. One thing I'll add at that fellows, is if there's something that you're not familiar with, ask them about it and don't be afraid about that. And at the end of the day, as a buyer you want to protect your money, but make sure you're not making a bad investment so, don't be afraid to ask those questions. If you ever have questions about, “Can I discuss this or what do you think?” Use the broker. We're here to advice with the buyer and the seller through that process, we want to see a good deal done for our client. Chuck: Absolutely! Mark: Alright, this has been really long, but I think, good information so, Chuck thanks so much for coming on and maybe down the road, we'll do another one of these. Chuck: Sounds good. I appreciate it! Mark: Cool, thanks! Chuck: Alright, thanks everybody! Links and Resources: Centurica offers a full blown due diligence services. Google Google Trends Builtwith Archive Trademarkia.com SEM tools: Spyfu moz majestic alexa semrush Website crawling tools: screamingfrog deepcrawl orangefox copyscape Publicwww is a source code search engine Spyonweb for looking for peoples adsense tools. DomainIQ provide information for domain pages Bannedcheck.com Social media: Linkedin Buzzsumo fantastic sm network tool.

Being a founder is a tough, lonely job. How do you stay sane (and happy) on this journey? Our special guest today is Sherry Walling — a clinical psychologist, founder of ZenFounder, podcaster, and author. We discuss how founders can overcome their emotional challenges, how to make sure that your family is on your side, and how to maintain physical and emotional health. Podcast feed: subscribe to http://simplecast.fm/podcasts/1441/rss in your favorite podcast app, and follow us on iTunes, Stitcher, or Google Play Music. Show Notes ZenFounder — Sherry's podcast with Rob Walling The Entrepreneur's Guide to Keeping Your S**t Together — Sherry's upcoming book with Rob Walling ZenTribes — Sherry's group program for entrepreneurs MastermindJam — a matchmaking service for mastermind groups MicroConf, DYFConf, WordCamp, Business of Software, Rhodium Weekend, FemtoConf, BaconBiz — some of Sherry's (and Jane's) favorite conferences Episode 45: Onboarding Your Spouse — an episode of ZenFounder podcast Sherry's website Follow Sherry on Twitter: @zenfounder Today's Sponsor This episode is brought to you by Userlist.io — a new tool for sending event-based email to your SaaS users. Overwhelmed with existing automation tools? Try this simple solution for converting free trials, user onboarding, and promoting specific features in your web application. To learn more, join the waiting list at userlist.io. Interested in sponsoring an episode? Learn more here. Leave a Review Reviews are hugely important because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes. Here's how.

Sherry interviews Ryan Tansom of Life After Business podcast about the experience selling of his business. They discuss the process and pain he went through and the way those tough experiences spawned his new business. He’s built a second act aimed at helping entrepreneurs make their exit a success. Ryan’s website, My Solidity Support ZenFounder Episode Transcript Rob Walling: Welcome to this weeks episode of ZenFounder. Two announcements before we get started. The first is that this week is the last week to sign up for the current Zen Tribe. If you go to zenfounder.com/zentribes you can get more information but Zen Tribes are groups of 6 to 8 entrepreneurs who commit to meeting weekly for eight weeks. Sherry leads you remotely via, I think it’s Zoom these days and offers the place, people, time, and guidance to tackle the unique struggles and challenges that you experience as an entrepreneur. So if you feel like you need some community with other founders, like you’re out there floating on your own, and you need to connect with other folks and kind of be guided into that next phase of entrepreneurship, now is the time to head to zenfounder.com/zentribes In addition, the book is coming out very soon. The book is The Entrepreneurs Guide to Keeping Your [inaudible 00:00:53] Together. How To Run Your Business Without Letting It Run You. And the book is about learning how to master your stress, dismiss your fears, and rapidly accelerate your business growth. So it’s a lot of what we talk about here on ZenFounder and a lot that we haven’t talked about. It’s so much of the knowledge and wisdom that Sherry and I have learned from interviewing founders, being founders ourselves, and from Sherry’s deep knowledge of what it takes and the stress that surrounds being a founder. So if you haven’t signed up zenfounder.com/book will get you to the book landing page. I would highly encourage you to check it out because we’re going to be launching in the next few weeks. There’s a print version, there’s going to be a kindle version, audio version, all the things you want and you want to be first on that list to hear about it. And finally, this weeks episode of ZenFounder is Sherry interviewing Ryan Tansom of The Life After Business podcast. It’s a great interview and I hope you enjoy it. Sherry Walling: Well Ryan it is so great to have you on the show. Thanks for taking the time to talk with me. And we met at Rhodium Weekend last fall, which was a great conference. Both you and I were part of the speaking docket that year and unfortunately I didn’t get to hear your talk. But I got to talk with you enough to know that I want to talk with you more. So it’s been fun to get to know you a little bit since we are both Minneapolis based. Ryan Tansom: Yeah, I’m glad I’m on the show. Sherry Walling: Yeah! So I am excited to learn more about your story and talk about the process of reinventing yourself a couple different times as a professional, even at a young age. So, maybe we could start out just by giving us the kind of the short version of these two companies that you have been deeply part of. One you sold and one you’re now starting from scratch. So what’s the quick road map of your life of a professional so far? Ryan Tansom: Keep it brief, right? My dad

Today's guest is Chris Yates. Chris is an entrepreneur who acquires and manages portfolios of websites. He is the founder of Rhodium Weekend an event for investing in online businesses, and he runs several online businesses including Centurica, Buying and Selling Websites, and Vision Group Management.   Chris started his online entrepreneurial journey in 2009, while running a digital marketing agency. He felt client work wasn't scalable, and he had an urge to build his own assets. He also got a call from a former partner/mentor who wanted to partner with Chris buying online businesses. They bought 10 or 12 websites that year, and Chris thought it was so much fun that he sold his marketing agency and started acquiring web businesses full time.   We talk about Chris's online journey and the benefits of being able to build an income online. We also talk about how isolating it can be and how Chris and his partner decided to start Rhodium Weekend and how passionate Chris is about getting like-minded people together to talk about what matters most for their businesses. We talk about all of this and more on today's show. Episode Highlights: Chris shares how Rhodium Weekend is his passion. A couple years ago, Chris bought Centurica and has been building out the company. It's been fun helping people find the right businesses to buy. How there can be ups and downs with online business. Especially, the penguin algorithm update. How when you buy a business, you buy what the person did to the business previous. How money making hacks are not sustainable. Changing a model from organic traffic to paid search. How Centurica can do SEO analysis for a website and risk analysis. How opportunities can be flipped around. Heavily relying on Google organic traffic. This could be a potential risk. They try to be an objective third party, so that the buyer can know what they are buying. People who work with Centurica are people wanting a risk and valuation. They analyze data from broker listings for a starting point. Risk assessment and analysis. They also verify that seller claims are accurate. The importance of trust but verify. Start with the profit and loss statement when looking at a potential business to buy. Understand the trends and seasonality and what the capital requirements are. Google analytics is great because revenue is usually driven by traffic. Ahrefs backlink tool is one of the simplest tools to find backlinks. Look for quality links and bad links that look artificially generated or look like spam. SEMrush can help find rankings and traffic numbers. FBA businesses and third party sellers. Every business model has specific due diligence. Diversity of skews is better than relying on one product. It's important to look at seller metrics. Are they selling directly or third party fulfillment. Look at refund rate to judge product quality. Look at both the positive and negative product reviews in relationship to other competitors. Take a deep dive into the notifications look for complaints or policy violations. Resources: Chris Yates Rhodium Weekend Centurica Centurica Website Buyers Report Buying and Selling Websites Vision Group Management Chris Yates LinkedIn @ChrisYates30 on Twitter The Four Hour Work Week Ahrefs SEMrush

The Rhodium Community is a very small, but highly engaged and connected community of digital entrepreneurs. The idea is quality over quantity and their invite-only, yearly conference “Rhodium Weekend” only has ~100 tickets available. I was fortunate enough to receive an invite to Rhodium Weekend 2016 and to put it bluntly it changed the focus for this podcast and helped me identify a need in the market which eventually lead to the decision to quit my day job and pursue my own passions and business full time. You could say it was life-changing. If you keep up with Liberty Entrepreneurs then you know that I’m interested in cultivating my own community of digital entrepreneurs and hopefully host a conference in 2018. Chris’ experience and feedback in both of these areas as well as his experience being a successful digital entrepreneur has gained my respect. I just had to have him on the show to tell us his story and how he’s found more freedom in his personal life because of entrepreneurship. Thanks again for tuning in! Contact Info: Website: www.ChrisYates.org Rhodium Weekend Conference: www.RhodiumWeekend.com Chris’ business: https://centurica.com/ PLEASE LEAVE A REVIEW ON YOUR FAVORITE PLATFORM! Youtube: http://www.youtube.com/c/LibertyEntrepreneurs iTunes: https://itunes.apple.com/us/podcast/liberty-entrepreneurs/id1057809945?mt=2 Soundcloud: https://soundcloud.com/liberty-entrepreneurs Stitcher Radio: http://www.stitcher.com/podcast/liberty-entrepreneurs-podcast TuneIn Radio: http://tunein.com/radio/Liberty-Entrepreneurs-Podcast-p805213/ Google Play: https://play.google.com/music/listen#/ps/Iqp3bpqbhske6s6476yfy2yyylu Player.fm: https://player.fm/series/liberty-entrepreneurs

In this episode, you’re getting another exclusive peek at a never before shared talk from the 2016 Rhodium Weekend event. My guest presenter for this talk is Mike Nunez of AffiliateManager.com. His company has spent the last 15 or so years managing the affiliate programs for brands ranging from startups to Fortune 500 clients. In […] The post 060: Rhodium Talk: Improve Monetization With Affiliate Marketing – Mike Nunez of AffiliateManager.com appeared first on RhodiumWeekend.com | Buying And Selling Websites Event.

In this episode, you’re getting an exclusive peek at a never before shared talk from the 2016 Rhodium Weekend event. My guest presenter for this talk is Ewen Finser who has used advanced keyword research tactics combined with creating quality content to build a portfolio of authority websites. The income from the sites have allowed him […] The post 059: How to Rank in Any Niche Without Link Building – Rhodium Talk with Ewen Finser appeared first on RhodiumWeekend.com | Buying And Selling Websites Event.

I just returned from an amazing conference, the Rhodium Weekend in Las Vegas, Nevada. It’s geared towards a small, but active community of digital entrepreneurs who specialize in cash flowing websites. It really changed my perspective on things. http://rhodiumweekend.com/ From now own, I will concentrate on Digital Entrepreneurship rather than Entrepreneurship in general. That’s not saying that brick-n-mortar companies can’t be wildly successful and create the lifestyle that you want. It’s just not my focus and I give the reasons in the podcast. If you’ve been keeping up you’ll know that I interviewed Trevor Koverko in Episode #32 on the topic of buying and selling websites. You’re welcome to check it out here: http://libertyentrepreneurs.com/2016/05/le32-trevor-koverko-part-2-how-to-buy-cash-flowing-websites/ It’s a bit Internet out there and I met people building and running all of the following online businesses: Affiliate marketing Review sites Authority sites AMZN FBA sites Podcasts Community membership and mastermind groups Premium Subscription-Based Websites Dropship and Self-fulfilled e-Commerce SaaS Businesses The community is excited, energetic, passionate, intelligent, humble (most of them) and very helpful. A common theme was that many got started because they wanted to “Escape the Cubicle” and live a more free life. To do this, many created their own online companies or bought one to manage and run. I learned that it takes a LOT to run an online company and anyone looking for an overnight success can fuhgeddaboudit. Standard skills involve: SEO Systems and workflows Marketing Automation Lead generation Managing an email marketing list and drip campaign Webinars Community engagement Social media management (finding right platforms) ...and so much more Needless to say, there’s a lot to build but we can create communities of like-minded people to help us becoming successful. This podcast is for you. This podcast is a journey and a challenge. It helps us hold each other accountable for the things we say matters to us, but we instead sit around and complain. Look, I get it. I’ve been there. I appreciated a round of State-hate like anyone else that recognizes what’s going on and the tough situation the government has put us in. We can’t feel sorry for ourselves and dwell, but instead let’s BUILD! Let’s actually create the world we want to live in. Compete with the State’s services and compete and help each other become successful. We are an army, a peaceful army, of people who want to make the world better...and we can do it. What are you passionate about? What knowledge can you share with the rest of us? Who can you connect us with? How can I help you? What do you need to become more successful and free? This is the Liberty Entrepreneurs Podcast and my goal is to help people passionate about liberty build their own free and flexible lifestyle by becoming a Digital Entrepreneur. If you share this mindset, then let me know. I’m raising the yellow and black flag. My vibe will attract my tribe. Let’s go, we have a lot to BUILD!.

This is episode 47. Today we are joined by Mark Daoust, founder of Quiet Light Brokerage, which specializes in helping entrepreneurs get the highest value from the sale of their online businesses. Today’s podcast is a recorded presentation by Mark from last year’s Rhodium Weekend – he explains the early mistakes he made in buying and selling websites […] The post Rhodium Talk: Selling Your Business – How NOT To Leave Money on the Table. Episode 047 with Mark Daoust appeared first on RhodiumWeekend.com | Buying And Selling Websites Event.

This is episode 34. Today you’re going to hear one of the presentations from Rhodium Weekend 2015. This talk was voted one of the attendee’s favorites. The presenters are Dave Parkinson and Andrew Pincock of Adduco Media. Adduco is a marketing agency focused on marketing, selling, and systematizing technology. Dave and Andrew came to the Rhodium […] The post Rhodium Talk: Scaling From Lifestyle Business to Inc. 500 with Dave Parkinson and Andrew Pincock (Podcast 034) appeared first on RhodiumWeekend.com | Buying And Selling Websites Event.

Episode 26 with Chris Yates. You’re about to hear Chris’ opening talk from Rhodium Weekend 2015. A word of warning, the audio might be a little off at times but I appreciate you sticking around to listen because the content is worth it. In this episode: My story of doing over 50 plus online business acquisitions […] The post Chris Yates Rhodium Talk: Lessons Learned From 50+ Deals in 6 Years (Podcast 026) appeared first on RhodiumWeekend.com | Buying And Selling Websites Event.

Episode 025 solo show with Chris Yates. Big announcement about the future of the Rhodium Podcast plus highlights and takeaways from the live Rhodium Weekend 2015 event. Don’t miss this one and please share! In this episode: Find out exactly what went down behind the scenes at Rhodium Weekend 2015. Hear recorded clips from all the talks […] The post Big Podcast News and Highlights From Rhodium Weekend 2015 (Podcast 025) appeared first on RhodiumWeekend.com | Buying And Selling Websites Event.