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GOLD! From 0 To $240,000 Per Year PROFIT In 18 Months

ZCP

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Can any of you recommend a website, book, online course, mastermind, or something similar for a beginner to walk this path (of purchasing a business with positive cashflow that meets RichardD's criteria)?

Ideally, I'd like to find a mentor who would profit share with me when I do all the work and they save me from dumb mistakes while speeding up my learning curve.
Do one and fail miserably. You will learn a lot and get past this limiting belief. And, it might even succeed!
 

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becks22

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why wait? do it now.
I'm working now to start expanding my current business and stepping away from employee/ owner working 60+ hours to actual owner not working on the day to day actions of the business. Once I do that, I will :)
 

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I'm working now to start expanding my current business and stepping away from employee/ owner working 60+ hours to actual owner not working on the day to day actions of the business. Once I do that, I will :)
sounds like a bunch of excuses. put 1 hour into it (with full focus) today.
 
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richardd

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My main consulting client just renewed me till 2021. I was actually stressing about this for a while, since I'm trying to stay on my plan of business expansion. Projected profit will be in the 400K range for 2020. That will give me a good 200K after taxes to purchase more businesses. If I can hit the 75% ROI, I should be able to add another $150K in profit for 2021.

Those are my goals. Progress.

My wife and I were just discussing plans to travel way more next year, even after we move to Central America. She loves traveling first class. I said, sure, why not? Business is looking good.
 

Create_Value

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These are my initial thoughts on my own version of your criteria.

1) Profitable
2) Low weekly hours necessary for owner operation.
3) Poor marketing (because I can improve this, thereby increasing value after purchase)
4) Scalable.
5) No physical location. Allowing work from home without need for leasing office/store.
6) Digital/software products or services. Not a time-for-money service-based business.
7) Instant credit card sales, vs NET30 or other delayed payment processing.
8) Full control. But open to passive investment partnerships. Limit dependencies with external entities.
9) Amenable to integration marketing (I can scale advertising without cash outlay by offering commissions to other business owners who advertise my product on their thank-you page/back end)
 
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richardd

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These are my initial thoughts on my own version of your criteria.

1) Profitable
2) Low weekly hours necessary for owner operation.
3) Poor marketing (because I can improve this, thereby increasing value after purchase)
4) Scalable.
5) No physical location. Allowing work from home without need for leasing office/store.
6) Digital/software products or services. Not a time-for-money service-based business.
7) Instant credit card sales, vs NET30 or other delayed payment processing.
8) Full control. But open to passive investment partnerships. Limit dependencies with external entities.
9) Amenable to integration marketing (I can scale advertising without cash outlay by offering commissions to other business owners who advertise my product on their thank-you page/back end)
This looks good. If you have a budget for how much you're willing to invest, go on the internet since there are many business brokerage sites, and peruse the listings. Find some that fit within your budget, and then message me. I'll give you my opinion on each, and we'll see how they rate against your criteria. Sound like a plan of action?
 
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richardd

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@Shanice asked me for any tips on how to filter through scammers selling businesses online. So I figured I would share here.

One tip when filtering out scams in business-for-sale listings. Typically, businesses are valued/appraised at 20-25x monthly revenue, not profit. But many sellers list their business at 20-30x monthly profit. This applies more towards smaller businesses that are priced at or below $100,000. For example, if I'm selling a business on Flippa, and my business makes $2000/mo in profit, I might list it at 20x = $40,000. Sellers will obviously vary. In any event, if the listing price is in line with their monthly profit numbers, then no red flags go off for me. Scammers claiming the same $2000/mo in profit will offer the listing for $4000 . But this shouldn't make sense because why wouldn't they just keep running the business and then after 2 months, they have their $4000 + retain control of the business?

Now keep in mind for the example above where the legitimate seller lists the price at $40,000 with $24,000/yr profit ($2000/mo), you are getting estimated an ROI = 60%. For me, this is more than acceptable since my minimum ROI is 50%, and it is well within the norm of typical seller listing behavior.

Oh another thing. Some ROIs are better than others! Depending on the business type, a SaaS business with an ROI of 50% in my opinion will be better than an ecommerce business with the same ROI. Simply because of the recurring revenue model, instead of the B2C, one-time purchaser.
 

Bekit

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From 0 to $240,000 per year profit in 18 months

I've been a follower of this forum for about a year now, had read the Millionaire Fastlane book, and finally have decided to tell my story. About a year and a half ago, I found myself unemployed and with near zero savings, two house payments, and a second baby on the way. Things were so dire that I was contemplating bankruptcy. I had just lost my slow-lane job with one of the original big three TV network companies. Worked there for about 3 years making the mistake of transitioning away from my career in computer consulting thinking that having a job would bring a certain level of security. It didn't. Man, those were dark days.

I decided to go back to consulting. But this time instead of taking on just one client full-time, I took on a second, and then a third, and then a fourth. A couple of them, I was billing 40 hours a week, working at the client site for 1, while telecommuting for the other. Clients 3 and 4 were part-time, billing 10-20 hours a week for each but at higher rates, also remote. FYI if you haven't heard, businesses more and more are allowing the telecommuting way. So, if you hate going into your job, look for opportunities to work from home. They're out there.

Well I did this for the past year+, and life has been shit busy, but I saved up a ton, about $200,000 in a year. That felt good. I felt secure with a lot of savings, I had multiple income streams, and the second baby now walks and can feed herself. My wife suggested we invest the $200K in money market funds or CDs. Sounds good, right? Earn 2.3% APY resulting in a whopping $383/mo.! I love my wife, but not for us.

Investing in low-yield financial instruments, and working for someone whether consulting or full time. These are strong characteristics of the slow lane. I've always had an entrepreneur’s mindset. I wanted financial freedom from the daily 9-5 grind, or for me this past year, the 5am-1am grind, including weekends. Even though I had the high-paying clients, if you think about it, it's never good to have all your nuts in very few baskets. And you definitely don't want your schedule dictated to you as consulting can often times do. Besides, money was still tied to my time, and this current work schedule was unsustainable. So having a business seemed like the way to go.

How did I start a business that gives me the financial freedom and time freedom that I so desired? Funny thing. I didn't. I didn't start a new business. Oh, I created a new corporate entity initially for my consulting. But I'm just not creative enough, nor risk averse with family and kids to take a chance there. And besides, burning a year of my life working my a$$ off to roll the dice on a new venture. Nah. So did this mean that I just wasn't going to pursue financial freedom, and maybe instead continue the 100 hours a week work load? No.

About 6 months ago, I started looking at buying software/internet businesses. Why reinvent the wheel? The number of businesses sold on the internet is growing rapidly. Sure there's a ton of scams, get-rich-quick opportunities offered by fake sellers. There are a lot of businesses that the seller just wants out because of failing operations. There are businesses that are a dying breed tied to the old world, pre-internet. For example, consider commercial printing companies which as a side note I was an owner of one about 10 years ago. I'll get back to this in a moment. There are businesses that run in a saturated space like many ecommerce, dropship/Amazon businesses that may have once been profitable, but have lost their edge due to the marketplace. Oh, and blogs, need I say more. Lots of bad opportunities!

So let me quickly detour farther into the past. 10 years ago, I was the owner of a print shop. We had lots of B2B customers looking for printed material on paper. They were all local customers, who often times paid late since we invoiced at NET 30. We had employees running the machines to print and cut and collate and staple. We had leased printers and other equipment. We had leased store-front space. We had a lot of COGS (Cost of Goods Sold), namely the paper itself. Ultimately we failed, and went out of business. Simply put, sales decreased over time, the business didn't scale, the cash flow was shit due to late payers, the overhead was horrendous, and having full-time employees was expensive and such a burden.

Years later, I tried blogging. Tech centric since I'm a programmer. That was a waste of time. AdSense brought in a few hundred bucks a month. But since I don't like writing (even this posting is painful to me), it turned out not to be worth it. I tried ecommerce, AliExpress/Shopify drop shipping of apparel. Did OK for a few months, but then the sales dried up, and I had difficulty coming up with new products to sell. Hated that as well. Definitely not sustainable. So ultimately I failed.

Which bring us back to now. I say I failed, which I'm sure many of you reading this have done so as well. But I say that to make a point. Failure is not truly failure when considering what it really is. As humans, we all fail, probably every day in one form or another. Most of our failures are inconsequential. We break something. We say the wrong thing at the wrong time. We buy some product that doesn't live up to our expectations. But guess what? We adjust our behaviors to mitigate risk so that next time, we do better. Business should be treated the same. Choices that you make in business can be driven by experiences, good and bad. I have a ton of that, especially the bad.

So based on my past failures, I came up with criteria for what my next business acquisition would require. Here they are:

1) No full-time employees. Didn't want the headache.
2) Profitable. Of course.
3) Years of proven profitability.
4) Digital/software products or services. No inventory. No drop shipping.
5) Scalable.
6) No physical location. Allowing work from home without need for leasing office/store.
7) Flexible business. Caters to expanding product and service line beyond current offerings to customers.
8) Low weekly hours necessary for owner operation.
9) Instant credit card sales, vs NET30 or other delayed payment processing.
10) Minimal marketing.
11) Full control. No partnerships. Limit dependencies with external entities.

So, I'm sitting on my $200,000 nest egg from all that hard work. I'm researching businesses for sale. And I find one that is a software company that sells proprietary accounting software. Promising! I'm a programmer with tons of experience in accounting. The business has been operational for 30 years, with recurring clients going back 10+ years, and has been run by this one couple who are well into their retirement years but hadn't pulled the trigger. And guess what? This software business satisfies all 11 of my requirements above. Well, I send their broker an offer of about $200K with half of it owner-financed for 5 years. They accept. Done deal. The profit annualized is $70,000 with an initial investment of $100,000. ROI = 70%. Nice! Since taking over, I'm happy with the performance, and I only spend maybe a couple hours a week on it. I outsource the programming.

Why stop there? I know MJ preaches monogamy. But I feel you can scale your company multiple ways. 1) expanding your sales in your current product/service line, and 2) buying existing businesses to generate more revenue. The only limiting factor of the second is that you will hit a limiting threshold in time when managing and marketing your multiple business holdings. Hopefully by then, you have gotten to a point where you can hire managers to offload that work. In any case, I next took over... a blog. I laugh when I write that because as mentioned before, I hated blogging. But I'll give you a little secret. You can hire writers, which I have a whole staff of them.

The blog is more than just a blog with hundreds of thousands of viewers per month. It has an online Facebook page with a quarter million followers, and a Facebook group with tens of thousands of passionate people whose lives revolve around my niche. And I am one of them, also passionate towards the content that we generate. So, I placed an offer, and got it, trademark included. $80K. We make money working with an advertising agency that deals with handling ad fill. Profit after paying our writing staff has been about $3500/mo. So annualized is $42,000 profit/year. ROI = 52.5%.

Next acquisition. I bought a web site backup service. We have hundreds of customers that we perform nightly backups of their sites as well as make sure their sites are operational 24x7. I outsource that work to offshore for cheap, but excellent labor. I love the guys who keep this business going strong day to day. I barely do anything but accounting for this. Maybe spend half an hour a day. I got it for $35,000. And annualized we make $30K in profit. ROI = 85%.

And most recently I've assumed a web marketing business. This too has a team of contractors that do the heavy lifting. Premium one-word, business-specific, domain name that garners 30K organic traffic a month. Very little ad spend. We generate about $8000/mo. in profit, again annualized to $96K profit for an ROI = 240%. I haven't figured out why the previous owner sold this other than he didn't want to do it anymore, and wanted to concentrate on his other business. He's got rep. I did my research.

So here's the grand total annualized profit:

Accounting Software Business: $70,000
Blog and Online Community: $42,000
Web Site Backup Business: $30,000
Web Marketing Business: $96,000

Total Annualized Profit: $238,000

Mind you, since these ventures take up maybe a total of a couple hours a day for me to run, I am free to focus on marketing for growth, while keeping a couple of my consulting clients. I quit the one client where I had to go into the office, and the other remote client, I just quit because I didn't have time for them. So I work from home now. The consulting dollars gets me to $400K a year, but I will most likely stop consulting next year to completely focus on my businesses. And my family and I are planning on moving to Central America this winter, because we love it there, and hell, I can work from anywhere that has internet.

One last note on being a serial entrepreneur. I look for synergies between my businesses and any future acquisitions. Each of the four ventures that I now have complement one or more of the other businesses, so I can leverage/cross-sell amongst the lot of them. This specific business model is starting to gain traction. But one challenge for me is branding when cross-selling. I haven't figured out how to consolidate the brands most efficiently. Each has their own distinct brand that current customers trust. And future customers may gravitate to the current branding. So not sure yet, but it's a good problem to have.
Amazing success story. Gold post @MJ DeMarco ?

Thank you for sharing (especially since writing is painful for you). That is very inspiring.

I have to admit, I was reading your list and thinking to myself, "NO WAY. Does that even exist?"

I was also curious, because you said you didn't want employees, but then you bought businesses that had them.

So how did that turn out? Did you change your mind, or am I not understanding your criteria?
 
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richardd

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Amazing success story. Gold post @MJ DeMarco ?

Thank you for sharing (especially since writing is painful for you). That is very inspiring.

I have to admit, I was reading your list and thinking to myself, "NO WAY. Does that even exist?"

I was also curious, because you said you didn't want employees, but then you bought businesses that had them.

So how did that turn out? Did you change your mind, or am I not understanding your criteria?
Good questions! Here's my list again for reference:

1) No full-time employees. Didn't want the headache.

Software business only has contractors working on coding. Blog has contracted writers. Web site backup service has contractors for support. Web marketing business has contractors. No employees.

2) Profitable. Of course.

All, yes, as mentioned in the original post.

3) Years of proven profitability.

Software biz has been around since early 1990's. Blog has been around 2015/16. Backup biz for 10 years. Web marketing for 2 years.

4) Digital/software products or services. No inventory. No drop shipping.

All apply

5) Scalable.

All market to either nationally (US) or internationally.

6) No physical location. Allowing work from home without need for leasing office/store.

All work from home.

7) Flexible business. Caters to expanding product and service line beyond current offerings to customers.

Each I can expand software/service offerings.

8) Low weekly hours necessary for owner operation.

I work 2 hours a day total for all of them managing staff, and performing accounting.

9) Instant credit card sales, vs NET30 or other delayed payment processing.

All use Stripe/Paypal payment processing, or direct deposit for the blog.

10) Minimal marketing.

I don't do any right now to keep the revenue steady. Recurring business for all of them, except for the marketing biz, but that gets 30K organic traffic every month, so we get lots of business from that traffic.

11) Full control. No partnerships. Limit dependencies with external entities.

I have no partners. I don't require Amazon, Facebook, YouTube to keep revenue going. I guess Google will always have a huge impact on the blog and marketing businesses.
 

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Chicken_Dude

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Amazing job! You have really succeeded in creating your own investments and scaling those businesses.

I had a question about your consulting job: What kind of services did you provide, or in other words, what did your job consist of doing?
 
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richardd

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Amazing job! You have really succeeded in creating your own investments and scaling those businesses.

I had a question about your consulting job: What kind of services did you provide, or in other words, what did your job consist of doing?
I am an expert document management consultant. I build systems that for example process paper to digital records. This is typically used by large commercial and government organizations. I'm a Microsoft .NET developer.
 

Tony I

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Maybe spend half an hour a day. I got it for $35,000. And annualized we make $30K in profit. ROI = 85%.
Great ROI, Any particular formula you use to determine what a good sale price is? (multiple of profit, etc). Lots of the listings seem way overpriced.

This is without much extra work on your end correct?

Awesome job! Thanks for the thread.
 
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richardd

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I use a simple minimum ROI formula. Sale Price <= 2 x Estimated Annualized Profit. This is based on wanting at least 50% ROI. All 4 businesses that I acquired this year meet or exceed this requirement. In fact, 3 of the 4 are more than 70% ROI.

And yes, I spend maybe 2 hours a day on all 4 of them TOTAL. My contractors do all the day to day work. Note that I don't do any marketing right now, but when I start doing that, my hours will increase considerably.
 

JR

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Wow, want a fantastic read! Thanks for sharing this @richardd .

For your software business, as a developer yourself, how closely are you involved with the dev process? Are you enhancing the product or just maintaining and supporting current clients? Did the current dev team come with the purchase of the company or did you find them yourself? How big is the team?


Thank you
 
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richardd

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OP - congratulations, and thanks for sharing. This is a truly inspirational post for a number of reasons.

It highlights what is possible in a short time with some serious graft.

It's generic enough to be applicable to anyone prepared to put the time in to learn how to differentiate between a good buy and a bad one (i.e. it could work for any market, not just software).

While it highlights success, a 'diversified' approach like this mitigates the risk of subsequent buys.

Have you thought about helping others with finding and acquiring? Not as a broker, but as an expert - that aspect would for sure keep many from jumping on this model- perhaps that is another string to your multi-stream income strategy.

Thanks for the inspiration! May your success continue to grow momentum!
I hadn't thought about helping others in any active sense other that posting on this forum. I honestly wouldn't want to make money doing this. Leave that to the gurus. I offer my knowledge and experience for free. I have no plans nor wish to sell anyone anything here.

Besides what I'm doing I don't find special nor creative. Do people think this is out of the box thinking? Warren Buffet does this at a grand scale. It's highly publicized. The real key is not thinking "I don't have billions. Therefore I can't do it." Investing in already existing businesses is so mainstream. It's on TV all the time.

I just do it at a much more modest scale. Anyone can. I see businesses that go for $5000. They may make $200 a month, but ROI! You're not going to get that with a money market fund.

Searching for and buying businesses is streamlined and relatively easy to do. Common sense and logic when evaluating and purchasing is all you need, besides the capital.
 

Val Okafor

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I wanted to add a little to my original post. I've been fortunate to be highly skilled with a relatively high earning potential as a full-timer/consultant within the corporate context. If I just kept one gig going though, I'd be living pay check to pay check with my family's lifestyle. Since I decided to take on a second job (and a 3rd and 4th), I was able to raise capital, and then scale very quickly to almost a quarter million in yearly profit. This shouldn't discourage people who make way less in their full-time jobs. Hustle for the extra dough.

I came upon a web hosting business recently that the owner wanted to sell to me for $15,000 with about $22,000 in yearly profit. It would have worked well with my current web site backup business. I would just consider it a business expense to acquire 1000+ customers who I could then re-market our current products. But even as a stand-alone, adding an extra $20,000 yearly income to someone who makes a more modest living than I would be a very good launch point for them in my opinion.

Once you achieve this surplus in income over expenses, you achieve what I call financial escape velocity. The escape velocity is like a rocket going fast enough upwards to reach a speed where it achieves orbit around the Earth due to going faster than the downward forces can recapture the vessel.

In financial terms, you reach a point when your profits exceed your expenses which allow you to increase income/profits by reinvesting any excess money. At this point, you have realized financial independence, since you are fully in control of your income, and keeping your employer will no longer be a requirement.
I cannot thank you enough for this post. I share some of your backgrounds. I am a Programmer myself, even though I prefer the official title of Software Engineer and make high slow lane income with high cost of living - mortgage, kids, etc. I have been wrestling with the ideal transition path from Slow lane to Fast lane and no matter how I dice it, the options of Freelance/Consultant/Agency stares at me and I resent it because of its yet another trading time for money. I end up with this choice of building my own digital product which is taking forever.

My take away from your post is to treat Freelance as a means to an end. Thanks for sharing.
 
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richardd

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I cannot thank you enough for this post. I share some of your backgrounds. I am a Programmer myself, even though I prefer the official title of Software Engineer and make high slow lane income with high cost of living - mortgage, kids, etc. I have been wrestling with the ideal transition path from Slow lane to Fast lane and no matter how I dice it, the options of Freelance/Consultant/Agency stares at me and I resent it because of its yet another trading time for money. I end up with this choice of building my own digital product which is taking forever.

My take away from your post is to treat Freelance as a means to an end. Thanks for sharing.
That's right. It is the necessary evil to bridge the gap from slow lane to fast lane. You summarized it succinctly. I too thought about developing my own product or service, but it could take years without anything to show for it.

So why not short circuit that route with business acquisition? Someone mentioned it as a cheat code. It kind of is. The challenge is finding the right opportunities to unlock the fast lane with this cheat code.

I've read many articles saying quit your job to start your business. More recently I've been reading the ones that say don't quit your job, but start you business on the side.
I don't see as many say keep your job and buy a biz.

This third option can be the fastest and safest way to get to the fast lane. There are pitfalls like in anything, but hedging your bet while keeping your job seems prudent to me. Once you get to the fast lane, or pretty close to it, then you can say good bye to your job.
 

MJ DeMarco

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Awesome thread, upgraded to GOLD. Thanks @richardd for sharing and congrats on the progress !!!
 
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richardd

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Awesome thread, upgraded to GOLD. Thanks @richardd for sharing and congrats on the progress !!!
Thanks, @MJ DeMarco for your book, man. Very well written, and fast read. Gotta say that I actively apply a lot of things from reading it on a day-to-day basis. Probably the most important one is NECTS which you more effectively re-branded as CENTS. I listed 11 criteria in my original post, but if you look at each one, they address each of the five tenants in CENTS. I guess I just expounded the concepts to meet my needs. You have a great forum here.
 

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ProblemOd

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Thanks for sharing @richardd ! I'm looking to do something similar with the cash im sitting on from my current business.

Where did you find the businesses for sale? and what was the timeline like from finding it, due diligence, to actual purchase?
 
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richardd

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Today I'm tasked with growing my Facebook page for my blog. We have 251,000 followers. Our competition has over 500,000. That's my target. I started promoting the page yesterday with an initial ad spend of $20/day. Good start I think since I've registered 42 new page likes after spending $8. So about $0.20 per new like. I guess by that rate it will cost me about $50,000 to get to 500K page likes. I think that's reasonable. And these are targeted customers who love our niche. I'd like to get that blue check mark too for vanity's sake, but probably more importantly for increased trust, and higher traffic to our web site for increased ad revenue and probably more significantly increased sales when I go ecommerce on it. I'll report back on how my campaign performs periodically. Someday I'll work on our Pinterest, Instagram, Twitter, and YouTube pages. Anyone know of a good platform to post to all major social media sites?
 
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richardd

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Thanks for sharing @richardd ! I'm looking to do something similar with the cash im sitting on from my current business.

Where did you find the businesses for sale? and what was the timeline like from finding it, due diligence, to actual purchase?
Thanks! I found my 4 businesses on Flippa and BizBuySell. Usually it takes about a month or two from start to finish. If I weren't so busy, I could have closed in 2 weeks, where half the time was putting together a sales agreement, and the other half performing due diligence. For me, there is no need to rush it like that.
 
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richardd

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For Facebook ads in order to gain page likes, if I do an ad spend of $1000 a month, I can get maybe 5000 new likes. 60,000 likes a year. So it would take 4 years to get to half a million page likes / followers. I'm ok with that budget. The time horizon seems a bit long, but business is not a sprint. Although there must be a way to accelerate this process outside of allocating more ad spend. I'm open to some advice of supplementing the ad spend with something less expensive, and more efficient to get legitimate page likes. Anyone?
 

Rwill

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Brilliant, just to be sure your ROI is calculated over a 2 year return? It makes more sense for the evaluations I've found.
And the web marketing business, is it a page that generates its revenue just from advertisements placed on your website or direct traffic towards another site? Or is it a actual web marketing business with a team. I've found both for sale but wasn't sure if they were comparable in nature.
 
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richardd

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Brilliant, just to be sure your ROI is calculated over a 2 year return? It makes more sense for the evaluations I've found.
And the web marketing business, is it a page that generates its revenue just from advertisements placed on your website or direct traffic towards another site? Or is it a actual web marketing business with a team. I've found both for sale but wasn't sure if they were comparable in nature.
My ROIs are for a 1-year return. The web marketing business performs SEO services with a team. We currently don't do much advertising to get customers. They come to us through organic traffic and word of mouth.
 

biophase

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Today I'm tasked with growing my Facebook page for my blog. We have 251,000 followers. Our competition has over 500,000. That's my target. I started promoting the page yesterday with an initial ad spend of $20/day. Good start I think since I've registered 42 new page likes after spending $8. So about $0.20 per new like. I guess by that rate it will cost me about $50,000 to get to 500K page likes. I think that's reasonable. And these are targeted customers who love our niche. I'd like to get that blue check mark too for vanity's sake, but probably more importantly for increased trust, and higher traffic to our web site for increased ad revenue and probably more significantly increased sales when I go ecommerce on it. I'll report back on how my campaign performs periodically. Someday I'll work on our Pinterest, Instagram, Twitter, and YouTube pages. Anyone know of a good platform to post to all major social media sites?
Probably not worth it IMO. I'd concentrate on creating a FB group instead.
 
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richardd

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Probably not worth it IMO. I'd concentrate on creating a FB group instead.
I've been reading about this strategy on Facebook. Organic traffic has decreased from Facebook followers. Do you think it is that severe? I do have a Facebook group that has almost 20,000 members. I guess I could drive people there with Facebook ads.
 

Juan Pimentel

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From 0 to $240,000 per year profit in 18 months

I've been a follower of this forum for about a year now, had read the Millionaire Fastlane book, and finally have decided to tell my story. About a year and a half ago, I found myself unemployed and with near zero savings, two house payments, and a second baby on the way. Things were so dire that I was contemplating bankruptcy. I had just lost my slow-lane job with one of the original big three TV network companies. Worked there for about 3 years making the mistake of transitioning away from my career in computer consulting thinking that having a job would bring a certain level of security. It didn't. Man, those were dark days.

I decided to go back to consulting. But this time instead of taking on just one client full-time, I took on a second, and then a third, and then a fourth. A couple of them, I was billing 40 hours a week, working at the client site for 1, while telecommuting for the other. Clients 3 and 4 were part-time, billing 10-20 hours a week for each but at higher rates, also remote. FYI if you haven't heard, businesses more and more are allowing the telecommuting way. So, if you hate going into your job, look for opportunities to work from home. They're out there.

Well I did this for the past year+, and life has been shit busy, but I saved up a ton, about $200,000 in a year. That felt good. I felt secure with a lot of savings, I had multiple income streams, and the second baby now walks and can feed herself. My wife suggested we invest the $200K in money market funds or CDs. Sounds good, right? Earn 2.3% APY resulting in a whopping $383/mo.! I love my wife, but not for us.

Investing in low-yield financial instruments, and working for someone whether consulting or full time. These are strong characteristics of the slow lane. I've always had an entrepreneur’s mindset. I wanted financial freedom from the daily 9-5 grind, or for me this past year, the 5am-1am grind, including weekends. Even though I had the high-paying clients, if you think about it, it's never good to have all your nuts in very few baskets. And you definitely don't want your schedule dictated to you as consulting can often times do. Besides, money was still tied to my time, and this current work schedule was unsustainable. So having a business seemed like the way to go.

How did I start a business that gives me the financial freedom and time freedom that I so desired? Funny thing. I didn't. I didn't start a new business. Oh, I created a new corporate entity initially for my consulting. But I'm just not creative enough, nor risk averse with family and kids to take a chance there. And besides, burning a year of my life working my a$$ off to roll the dice on a new venture. Nah. So did this mean that I just wasn't going to pursue financial freedom, and maybe instead continue the 100 hours a week work load? No.

About 6 months ago, I started looking at buying software/internet businesses. Why reinvent the wheel? The number of businesses sold on the internet is growing rapidly. Sure there's a ton of scams, get-rich-quick opportunities offered by fake sellers. There are a lot of businesses that the seller just wants out because of failing operations. There are businesses that are a dying breed tied to the old world, pre-internet. For example, consider commercial printing companies which as a side note I was an owner of one about 10 years ago. I'll get back to this in a moment. There are businesses that run in a saturated space like many ecommerce, dropship/Amazon businesses that may have once been profitable, but have lost their edge due to the marketplace. Oh, and blogs, need I say more. Lots of bad opportunities!

So let me quickly detour farther into the past. 10 years ago, I was the owner of a print shop. We had lots of B2B customers looking for printed material on paper. They were all local customers, who often times paid late since we invoiced at NET 30. We had employees running the machines to print and cut and collate and staple. We had leased printers and other equipment. We had leased store-front space. We had a lot of COGS (Cost of Goods Sold), namely the paper itself. Ultimately we failed, and went out of business. Simply put, sales decreased over time, the business didn't scale, the cash flow was shit due to late payers, the overhead was horrendous, and having full-time employees was expensive and such a burden.

Years later, I tried blogging. Tech centric since I'm a programmer. That was a waste of time. AdSense brought in a few hundred bucks a month. But since I don't like writing (even this posting is painful to me), it turned out not to be worth it. I tried ecommerce, AliExpress/Shopify drop shipping of apparel. Did OK for a few months, but then the sales dried up, and I had difficulty coming up with new products to sell. Hated that as well. Definitely not sustainable. So ultimately I failed.

Which bring us back to now. I say I failed, which I'm sure many of you reading this have done so as well. But I say that to make a point. Failure is not truly failure when considering what it really is. As humans, we all fail, probably every day in one form or another. Most of our failures are inconsequential. We break something. We say the wrong thing at the wrong time. We buy some product that doesn't live up to our expectations. But guess what? We adjust our behaviors to mitigate risk so that next time, we do better. Business should be treated the same. Choices that you make in business can be driven by experiences, good and bad. I have a ton of that, especially the bad.

So based on my past failures, I came up with criteria for what my next business acquisition would require. Here they are:

1) No full-time employees. Didn't want the headache.
2) Profitable. Of course.
3) Years of proven profitability.
4) Digital/software products or services. No inventory. No drop shipping.
5) Scalable.
6) No physical location. Allowing work from home without need for leasing office/store.
7) Flexible business. Caters to expanding product and service line beyond current offerings to customers.
8) Low weekly hours necessary for owner operation.
9) Instant credit card sales, vs NET30 or other delayed payment processing.
10) Minimal marketing.
11) Full control. No partnerships. Limit dependencies with external entities.

So, I'm sitting on my $200,000 nest egg from all that hard work. I'm researching businesses for sale. And I find one that is a software company that sells proprietary accounting software. Promising! I'm a programmer with tons of experience in accounting. The business has been operational for 30 years, with recurring clients going back 10+ years, and has been run by this one couple who are well into their retirement years but hadn't pulled the trigger. And guess what? This software business satisfies all 11 of my requirements above. Well, I send their broker an offer of about $200K with half of it owner-financed for 5 years. They accept. Done deal. The profit annualized is $70,000 with an initial investment of $100,000. ROI = 70%. Nice! Since taking over, I'm happy with the performance, and I only spend maybe a couple hours a week on it. I outsource the programming.

Why stop there? I know MJ preaches monogamy. But I feel you can scale your company multiple ways. 1) expanding your sales in your current product/service line, and 2) buying existing businesses to generate more revenue. The only limiting factor of the second is that you will hit a limiting threshold in time when managing and marketing your multiple business holdings. Hopefully by then, you have gotten to a point where you can hire managers to offload that work. In any case, I next took over... a blog. I laugh when I write that because as mentioned before, I hated blogging. But I'll give you a little secret. You can hire writers, which I have a whole staff of them.

The blog is more than just a blog with hundreds of thousands of viewers per month. It has an online Facebook page with a quarter million followers, and a Facebook group with tens of thousands of passionate people whose lives revolve around my niche. And I am one of them, also passionate towards the content that we generate. So, I placed an offer, and got it, trademark included. $80K. We make money working with an advertising agency that deals with handling ad fill. Profit after paying our writing staff has been about $3500/mo. So annualized is $42,000 profit/year. ROI = 52.5%.

Next acquisition. I bought a web site backup service. We have hundreds of customers that we perform nightly backups of their sites as well as make sure their sites are operational 24x7. I outsource that work to offshore for cheap, but excellent labor. I love the guys who keep this business going strong day to day. I barely do anything but accounting for this. Maybe spend half an hour a day. I got it for $35,000. And annualized we make $30K in profit. ROI = 85%.

And most recently I've assumed a web marketing business. This too has a team of contractors that do the heavy lifting. Premium one-word, business-specific, domain name that garners 30K organic traffic a month. Very little ad spend. We generate about $8000/mo. in profit, again annualized to $96K profit for an ROI = 240%. I haven't figured out why the previous owner sold this other than he didn't want to do it anymore, and wanted to concentrate on his other business. He's got rep. I did my research.

So here's the grand total annualized profit:

Accounting Software Business: $70,000
Blog and Online Community: $42,000
Web Site Backup Business: $30,000
Web Marketing Business: $96,000

Total Annualized Profit: $238,000

Mind you, since these ventures take up maybe a total of a couple hours a day for me to run, I am free to focus on marketing for growth, while keeping a couple of my consulting clients. I quit the one client where I had to go into the office, and the other remote client, I just quit because I didn't have time for them. So I work from home now. The consulting dollars gets me to $400K a year, but I will most likely stop consulting next year to completely focus on my businesses. And my family and I are planning on moving to Central America this winter, because we love it there, and hell, I can work from anywhere that has internet.

One last note on being a serial entrepreneur. I look for synergies between my businesses and any future acquisitions. Each of the four ventures that I now have complement one or more of the other businesses, so I can leverage/cross-sell amongst the lot of them. This specific business model is starting to gain traction. But one challenge for me is branding when cross-selling. I haven't figured out how to consolidate the brands most efficiently. Each has their own distinct brand that current customers trust. And future customers may gravitate to the current branding. So not sure yet, but it's a good problem to have.
F*ck man I hope i can get to your level. Im running my Landscaping business and expecting i can make enough so i can buy or start off an internet company. Every time i read MJ book or see a story like yours I feel like i’m wasting my time and should just go for something digital. This year was horrible for me. I had a fallout with my dad then he got a heart attack. I had to sell my truck to pay bills and im not stuck with 5k in debt. So I been doing Landscaping to get out of my rabbit hole. The business pays me enough to live but i want to do better. Im done with having to trade time for money. Im tired if competing with me too business. Im tired of always dealing with penny pincher customers. What are some are some tips in becoming an online entrepreneur? What are trades or skills I should focus on. Creating people value is obviously important but i want to do so with my brain not my hands. Please any information you can provide will be appreciated. I don’t want you to tell me the hows. Instead guide me to the right information and I will figure it out. Im not as tech savvy as I should be for my age but god damn i will learn !!
 
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