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How to Buy A Ferrari for $20K

biophase

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It's not that simple.

BTW, this was our error in logic, too.

If your sales go down, and expenses go UP, and your selling price goes DOWN, what's left?

NOTHING.

I think this is why online stores with little inventory are ideal for this play, especially if you are experienced.

The biggest downside is that it dwindles down to nothing. No cash flow. The upside of that downside is that if it ever got to that point, you could just shutdown the store and walkaway. Take your remaining inventory and blow it out on Ebay. This is assuming you didn't take a $100k loan to purchase the store. :)

In reality, even as business declines, you can be very dynamic with your choices in the online world vs. brick and mortar. Your expenses are minimal so you can really float your store forever. I had some "failure" stores that I didn't get a sh!t about, but they cost me less than $3 a month to run. So I left them up and they still made around $200 a month. It's hard to just take them off line.

Your store will have value even if it's making no money. If your store was making $100k a year and went to zero, somebody will want your domain and probably your store software for a decent amount. They are paying for your domain's SEO, your wholesale contacts at this point.

Based on my experience, if you get your store up and running and are not on one of those hosted $99/mo programs, then the store should never ever run a negative month. I don't know how this would ever happen.
 
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biophase

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How do they make a site like BikeTiresDirect and pooltables.com?
How do they get the suppliers?

I'm sorry but did you watch the video?
He explained how he got his bike tire supplier in detail.
He also explained the software he used to start his site and then how we brought on someone to custom code their store.

People be lazy.
 

biophase

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Awesome thread, thx for MJ for posting it on facebook or i wouldn't have noticed it.

I dug a bunch into the helmet cams niche. Most of the companies are not accepting US based sellers anymore. So you have to buy in or buy through a middleman.

You know what, you are right. I forgot about that. I was turned down by 2 suppliers when I contacted them 2 years ago. But, if you watch that video I posted in the above link, you can still get in.

All you need to do is take your 2-3 helmet cam suppliers that will give you the time of day and open up a store that blows away the current stores and the other companies will contact you begging for you to put their cameras in your store.

That's how I look at it when I get denied. It's good motivation. :)
 

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I've been skipping over this thread for several days, since I thought it was about buying cars. That's not a big interest to me. Glad I saw Kenric's name on here one of those times. Great thread!
 
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jeandearme

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Oh God, I just get through the all topic.

I'm surprised that MJ didn't mentioned in this topic what he wrote in his book - that if You can't buy a car with hard cash in hand then You can't afford it.

Or am I missing something?
 

snowbank

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I'm surprised that MJ didn't mentioned in this topic what he wrote in his book - that if You can't buy a car with hard cash in hand then You can't afford it.

Or am I missing something?

I think you're misunderstanding. He would have the cash for a car. He opts instead of spending it on a car to spend it on a business that pays for a car. The car is then being provided by cash offset from a business in Kenric's case.

He is opting to do this and make payments on it instead of paying everything up front for a car. Doing this enables him to have more money to spend on something else, like a house as his example gave.

Whether you pay all cash for a car, or use a strategy like Kenric's, neither is wrong. It's all relative to the person doing it and what their goals are. If you're retired and have a bunch of cash laying around, you might want to pay it all up front. If you are actively seeking investments that offer high returns such as running internet businesses, paying car payments at 2%(or whatever car payments are) frees up more cash to go find 50%+ return type investments.
 

biophase

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Oh God, I just get through the all topic.

I'm surprised that MJ didn't mentioned in this topic what he wrote in his book - that if You can't buy a car with hard cash in hand then You can't afford it.

Or am I missing something?

I think the retitling made it sound like I'm trying to get a Ferrari for $20k. The original post was asking that if I had $100k to spend on a car, why spend it on the car when I can purchase a business that will make $100k in a year and pay for the car?

The $20k for a Ferrari was a real world example that almost happened. It doesn't mean that I only had $20k and wanted to buy a $100k car with it.

Hope this helps.
 

CEBenz

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It's not that simple.

BTW, this was our error in logic, too.

If your sales go down, and expenses go UP, and your selling price goes DOWN, what's left?

NOTHING.

LESS than nothing: You OWE money, and you don't have enough coming in.

You go into the Red.

Again, spreadsheets/projections don't always tell you this-- b/c they're only doing what you told them.

If you don't take market changes into account-- or-- for web based stuff, a change in google that takes you off page 1-- or some big change that makes your product dated or even obsolete-- you're in for some hurtin' for certain.

I speak from experience here. We're in the midst of cleaning things up, cutting expenses, increasing sales, etc.

There is nothing we can do about the market-- but (thankfully) it is getting better.

The last 3 years have been a HUGE learning/lesson for us. They've taught us that projections (and playing learning games, like Cashflow) are very useful when those things mirror the marketplace.

But when changes take place in the markets-- you need to incorporate them into your projections.

This is not always possible, since projections are, by nature, educated guesses about the future.

Guess the wrong direction of events, or not allow for a big enough changes-- and you're toast.

-Russ H.


Russ,

I've become convinced that many things in life really are a crap shoot. Im not saying this as a negative thing, its just that people need to understand that you simply cannot predict every eventuality that may arise. I mean look what happened in Japan, granted a Tsunami was probably a given, but who'd have thought they'd also have a mountain erupt and a nuclear situation to deal with at the same time?

As I've learned, if you do enough SEO work, even if you get google slapped, you shouldn't be dead in the water, you just may be running on one engine instead of two. As TK1 pointed out, if you buy a business that has double (I'd say triple) the profits of what you intend to have to pay out, then you have a larger cushion to deal with.

Truthfully Russ, did any of us expect to see the economy as bad as its been? No, but many of us have learned a valuable lesson from it. Its too bad some of us didn't understand the full magnitude of what was happening or I'd have had every dollar I could scrounge in put options in the banking sector for the ride down.

Bottom line, there are no guarantees. Russ, for all you know, a plane could fall out of the sky onto one of your B&Bs and then what? I appreciate what you're trying to say, I just think people need to put it into perspective.
 

TK1

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I would just like to add to my post in case anybody uses the tactic in this thread to pay a car with a business:

I was just giving an example with the DOUBLE stuff, if somebody really tries this I would recommend even TRIPLE or FOUR TIMES net profit in relation to the monthly cost for the car PLUS AFTER taxes and AFTER running the purchased business for at least one year as a test run and then buying the car.

I think a big bold word in this game is keeping yourself FLEXIBLE, so in bad times (that are not all and always predicatable) you can react smoothly or even close an online business (what I would never do personally because of no running costs - which brings us to the very important chapter in MJs book about hiring humans. The more people you hire in your businesses the more money you have to make month for month - look for deals where you can get the max profit with the minimal human ressources).

Russ,

I've become convinced that many things in life really are a crap shoot. Im not saying this as a negative thing, its just that people need to understand that you simply cannot predict every eventuality that may arise. I mean look what happened in Japan, granted a Tsunami was probably a given, but who'd have thought they'd also have a mountain erupt and a nuclear situation to deal with at the same time?

As I've learned, if you do enough SEO work, even if you get google slapped, you shouldn't be dead in the water, you just may be running on one engine instead of two. As TK1 pointed out, if you buy a business that has double (I'd say triple) the profits of what you intend to have to pay out, then you have a larger cushion to deal with.

Truthfully Russ, did any of us expect to see the economy as bad as its been? No, but many of us have learned a valuable lesson from it. Its too bad some of us didn't understand the full magnitude of what was happening or I'd have had every dollar I could scrounge in put options in the banking sector for the ride down.

Bottom line, there are no guarantees. Russ, for all you know, a plane could fall out of the sky onto one of your B&Bs and then what? I appreciate what you're trying to say, I just think people need to put it into perspective.
 
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Graves

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I had browsed Flippa out of curiosity a month ago and I saw websites selling for x1 or less. Couldn't believe it.
Still can't believe it even after reading this thread.

What's the "catch" ?
 

CEBenz

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Tk1,

I agree with you. I threw 3x out as a slightly better cushion than 2x. Obviously, it would be best if there was enough income from the business to also save some of it just in case you need the savings later to float things in case of a shake up.


@Jan Aswist,
As I think a couple here have already pointed out, the business is paying for it. Truthfully, I don't think even if a lot of people have the money on hand to buy a car cash, that they can really afford it. As someone above pointed out, its all relative.
 
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PopEmersen

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Thank you guys for this thread, this is so eye opening. I have around 30k that I have been looking to invest and I think I may got this route. Still have to do alot more reading on this. THANKS AGAIN!
 

Brootal

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TK1- As an example; how hard would it be to create that Medical Directory site? It looks so damn easy and can't believe that hes pulling in 8k profit per month for it.
 

CEBenz

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TK1- As an example; how hard would it be to create that Medical Directory site? It looks so damn easy and can't believe that hes pulling in 8k profit per month for it.


I'd like to know the same thing as I had an idea for an industry which hasn't yet been tapped.
 
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Inphinity

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Creating a site like that directory is pretty straight forward, tbh. The challenge comes in the execution - it looks to me in this example like they charge to be listed, but noones gonna pay to be listed until you have traffic. So you need to build traffic, before you can charge for listings - so work out how to get traffic going there in order to charge for listings, and you're set. Maybe you list a bunch of relevant places for "free" for a month - then contact them after you've built some traffic and see if they want to pay to stay listed, who knows.
 

kwerner

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^^^ Hmmm... this sounds familiar. ^^^ Haha
 

Inphinity

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^^^ Hmmm... this sounds familiar. ^^^ Haha

Yup, it's a common scenario in all sorts of business models. What I'm trying to highlight, though, is don't use "I don't know how to make a site like that" as your excuse not to... making it is the easy bit ;)
 
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kwerner

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Yup, it's a common scenario in all sorts of business models. What I'm trying to highlight, though, is don't use "I don't know how to make a site like that" as your excuse not to... making it is the easy bit ;)

Exactly right.
Speed++
 

CEBenz

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Yup, it's a common scenario in all sorts of business models. What I'm trying to highlight, though, is don't use "I don't know how to make a site like that" as your excuse not to... making it is the easy bit ;)


I believe the building the site to be an event, in MJ parlance and the promoting it and getting it traffic to be a process.
 

Inphinity

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So this example site is simply some market research to show that the model works, now you just need to implement it in a different niche, and bam ;)
 
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hatterasguy

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Cause the ecommerce store isn't guaranteed income you have to actually run it to make that kind of money, your buying yourself a business.

But I agree and this is a basic RK teaching that assets should buy you toys.

I'm eying an 8 unit condo project now, if I do it they money I get from that will lease me a nice toy.
 

Brootal

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Thanks for the replies inphinity. It is definitely motivating to see someone pulling in 8k profit with something like that.

For everyone else posting in this thread... there is a Fastlane opportunity within the one that we are talking about right now... As I am reading this, I am thinking that people would probably pay for a course on how to do this.
 

kwerner

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Cause the ecommerce store isn't guaranteed income you have to actually run it to make that kind of money, your buying yourself a business.

...I'm eying an 8 unit condo project now, if I do it they money I get from that will lease me a nice toy.


It would appear that we're really talking about the same thing here. But you may have to expand your thinking a bit to see it (and I don't mean that as a slam, by the way. I too used to think that real estate was the best way to build wealth, until I learned and studied more about different types of internet businesses).

In both examples, the e-biz and the condo project could turn into "buying a business". But if you hired someone to manage the business, then maybe you're only working 5% of the time in the business you bought.

However, the big differences are in the capital required for each business, the overhead costs, and the ROI. You should look into it Hatteras, you might be surprised. :)
 
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CEBenz

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There you have an example I just found for an interesting business to buy (or to steal from the seller lol):



PS: I wouldn't pay more than 100k for this.

In reading the comments on the auction, I came the conclusion that the seller is delusional. He thinks he's justified in his high selling price based on the his perceived POTENTIAL, NOT IT'S ACTUAL Performance. There is a significant difference. When buying a business, pricing should be based on the actual numbers, NOT theoretical potential numbers. THIS A MAJOR DIFFERENCE!!!

What if the growth slows down? Then it hasn't lived up to the perceived potential

What if the other monetization techniques don't work? Again, then it hasn't lived up to it's perceived potential

What if you can't/don't run it as well as the previous owner? Again, then it hasn't lived up to the mythical perceived potential.

I just wanted to point this out. Many were slamming RK for his real estate advice when the market crashed. They failed to understand buying at the right price, not just buying.
 

biophase

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In reading the comments on the auction, I came the conclusion that the seller is delusional. He thinks he's justified in his high selling price based on the his perceived POTENTIAL, NOT IT'S ACTUAL Performance. There is a significant difference. When buying a business, pricing should be based on the actual numbers, NOT theoretical potential numbers. THIS A MAJOR DIFFERENCE!!!

What if the growth slows down? Then it hasn't lived up to the perceived potential

What if the other monetization techniques don't work? Again, then it hasn't lived up to it's perceived potential

What if you can't/don't run it as well as the previous owner? Again, then it hasn't lived up to the mythical perceived potential.

I just wanted to point this out. Many were slamming RK for his real estate advice when the market crashed. They failed to understand buying at the right price, not just buying.

In that particular auction, my guess is that a good price is about .5-.8x or $40k-$60k. The meat of the site is the paid subscriptions. I don't put that much stock into adsense earnings because we've all seen examples of it disappearing in a day if the site or account gets banned.

This sale to me is an example of a site getting to an income and the seller wanting to unload it based on 2 months revenue to some sucker. If I could do that I'd sell my stores after showing only my Oct-Dec revenue.

But if he doesn't sell, he doesn't care. This is not a motivated seller and people on this thread shouldn't even be considering this site. It's like trying to get a cheap house from someone who doesn't need to sell.
 

CEBenz

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In that particular auction, my guess is that a good price is about .5-.8x or $40k-$60k. The meat of the site is the paid subscriptions. I don't put that much stock into adsense earnings because we've all seen examples of it disappearing in a day if the site or account gets banned.

This sale to me is an example of a site getting to an income and the seller wanting to unload it based on 2 months revenue to some sucker. If I could do that I'd sell my stores after showing only my Oct-Dec revenue.

But if he doesn't sell, he doesn't care. This is not a motivated seller and people on this thread shouldn't even be considering this site. It's like trying to get a cheap house from someone who doesn't need to sell.

I understand that biophase, I just wanted to people to be aware of this. It doesn't just happen on these sites, it's businesses and real estate everywhere that this happens with.
 
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TK1

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Basically you just buy his traffic - his business per se is nothing difficult.

His paid subscribers buy because of the traffic > he sells them potential clients = the easiest to sell "product" in the B2B world.

If you have a site like this and pick up the phone to coldcall businesses a business like this can even grow way faster.

PS: Take his business model as an inspiration and build your own for another niche - it's all about traffic. Either create your own traffic/internet marketing execution plan or partner up with a SEO guy.

TK1- As an example; how hard would it be to create that Medical Directory site? It looks so damn easy and can't believe that hes pulling in 8k profit per month for it.
 

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