From 0 To $240,000 Per Year PROFIT In 18 Months (Acquisition Entrepreneurship)

[CareCPA]

I do all those as addbacks. I look for a strict operating expense vs non-operating and add anything that is discretionary. If it comes via a broker then the deal has a lot more addbacks. especially owners hours when they work 60 hours every week.

I agree with you a few these items are usually not required and I can trim them down to increase the net income. Still < 2 x is hard to find - I mean the ones with your 11 criteria in.

But I will try to look them more closely going fwd. Thanks for ya reply!

Or just start sending out lowball offers. There's a theory (especially in flipping real estate) that if 99 out of 100 people aren't insulted by your offer, you're doing it wrong. However, for that 1 out of 100, they just want out. And if you can make the selling process easy for them, they'll take whatever they can get (don't do it in a predatory way, but some people are just tired of dealing with their business and want to move on).

 

[doitman]

Not true.

Every deal on Empire Flippers is negotiable. The listings are quality listings so you might end up paying a little more for an opportunity BUT a big part of the heavy lifting has been done for you.

Remember this, a business is worth what someone is willing to pay for it.

Personally, I would stay away from Flippa but that’s just my opinion. The OP probably has a pretty good insight on separating the scammers from those who just want to sell and get out. I personally wouldn’t feel comfortable recommending Flippa unless your buying domains but again that’s just my opinion.

Congrats to the OP - definitely a great story!

Flippa does have a lot of scammers. I root them out pretty easily now. I was thinking about starting a new thread on how to do so.

At a high level, my rules are non-negotiable with the seller:

1) use escrow... Never PayPal or wire transfer.
2) have due diligence with screen sharing
3) government issued ID cross verified

Then I do a lot of social proof analysis.

I've been scammed a few times over the years, although not recently. Actually being scammed in the past gave me a healthy understanding of how many of these scams work. That insight protects me moving forward. The businesses that I've acquired this past year have been legitimate since I've taken them over.

 

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[doitman]

UPDATE: I successfully took over another business. I completed the purchase and hand over of a web hosting business. It adds $2000 a month profit to my bottom line. I've been handling all the tickets this last week or two successfully. I wanted to get a feel of the work load as well as learn the infrastructure. We will be getting a lot of web development projects soon as well. So I'm in the process of having my current off shore team take on these tickets for me. I also have a developer lined up to take on the web design projects.

I'm also in negotiations to purchase another business in the education niche. If that moves forward, I'll expand that out globally since it is focused locally. More details on that later, but I'm really excited about the scaling capabilities of it. And I wanted to implement that business for a while since it will work very well with one of my other businesses.

 

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[doitman]

I just read a thread from @V8Bill. It resonated with me. He basically discussed feeling rich when you make 2x your monthly expenses. I totally concur with this. His concept is actually the reason why I've been driven to get to $240K a year in profit. The amount is not arbitrary. My break-even is $120K a year in order to pay our personal expenses and taxes. Doubling that in profit, I definitely feel the weight of financial stress go away. New stresses have replaced the old ones, but those have more to do with business growth than anything.

Here are my benchmarks when it comes to business goals:

1) Classic financial freedom comes when you generate enough business profit to cover your normal personal monthly expenses
2) Financial escape velocity comes when your profit exceeds your personal expenses
3) Feeling rich comes when your profit reaches a certain multiplier of your personal expenses (for me it is 2x)
4) True financial freedom comes when your profit exceeds #3 above, and you can use this excess income to generate more income

These 4 benchmarks are what drive me personally. I've accomplished #1, #2, and #3. Now I am in hot pursuit of #4.

 

[Kevin88660]

From 0 to $240,000 per year 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.

Sounds like you are running your own private equity firm! Well done on your good result.

Maybe you will find this thread relevant or interesting.

HOT! - Taking over business from retiring baby boomers

In Singapore here there are a lot of profitable small business in the traditional industries. They are owned by baby boomers who cannot find successors. Their children are not interested in the business. I believe that this applies in U.S. as well. These business typical generates 10-20k...

www.thefastlaneforum.com

 

[doitman]

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.

 

[MJ DeMarco]

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

 

[doitman]

DECEMBER 1 UPDATE: Probably the last update for while on my online community. I officially set my monthly earnings record with $8134 for the month of November. I looked back at our GA traffic patterns since 2017, and normally we have a downturn in traffic in November and December while leading to big upswings in traffic come January. I reversed that trend considerably this year. I drove 591K page views for this past month. Last November the site did 351K. I did this by implementing automation using Hootsuite, vastly improving our social media posting. Moving forward, I'll be able to cycle through our evergreen content with simple clicks of a button.

This is monumental for me. I took a business that I bought for $80,000 about 6 months ago, a business that was averaging about $3500 a month in ad sales, and increased it to over $8000 in a month. I may not be able to reproduce this month over month, but I think we can do $7000 a month now consistently. ROI should be about 100%, meaning it will pay for itself in a little over a year after my initial purchase. None of this includes improving the site, and adding monetization beyond ad sales. I have a feeling 2020 will be a great year.

 

[John_Wick]

Update:

Completed the S&P of my 2nd deal. I think I have this deal in the pocket. It's 4X the size of my last deal. ROI >85%. About 50% of my salary income with a upside potential because the site looks like crap. My first deal only represents 7% of my salary income. This deal is so good that I am using tax loan (2.5% annual rate) to finance a good part of it. That will bring a cool 25% addition to my monthly income. I think it's worth the risk.

The thing that I really wanted to share is: greed and fear. For the past few days, I had a constant swing between these the two emotions. It's funny how I can feel "this deal is too good to be true I want more time to look at it" and "this deal is so good that I want to close it now" at the same time.

I literally read and re-read Richardd's post and previous PM response to gain more comfort. For example, where on Google Analytics should I dig into to see whether there is anything unnatural about the traffics, what pages are mostly viewed. I think my DD is diligent enough to reduce the risk of me buying into a complete scam.

I have a great ton of fear. I attribute my fear to ignorance and inexperience. I don't feel like I have a good understanding of how traffic, backlinks, SEO works. I know I'm paying for traffic and the cashflow that it brings. But, it bothers me not knowing how traffic works. I know good content and value is eventually what brings people together, but there seems to be a good amount of tech available to hack it.

Anyways, I am doing courses on Google Academy to get smart on this. Hopefully, I will grow more comfortable with online businesses. Maybe by the end of next year I could replace my another 50% of my job income by growing the businesses I acquire or making additional acquisitions...

For the first time... making money and doing deals feel so great that it's almost addictive...

 

[CareCPA]

Ah I see. My operation would become cost and time prohibitive if I structured it under multiple entities. Since my business models are pretty simply, I can subcategorize each sale under a different business unit. Similarly with expenses, although some expenses cross business units.

There may come a time where I may spawn off a business unit into its own corporate entity, but it would have to get pretty large. Honestly, I can't imagine at what point that could happen practically speaking.

A footnote here:
If you are planning to sell any of these businesses in the future, the buyer is likely to request financials and tax returns. If you have all your businesses in one entity, this can get pretty intrusive, and pretty time-intensive trying to reconcile the QBO account to the tax return.

It may be simple to you, but try convincing the buyer you didn't push extra expenses to a different website instead of the one being sold - they will automatically assume you're under-representing expenses.

 

[doitman]

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 CENTS 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.

 

[doitman]

UPDATE: I have been super busy @Doctor.IM. The year end has been pretty frenetic. Here's a breakdown:

1) Accounting software business has been going well. We are approaching tax season, so sales have been going well as expected. Have a software update shortly.

2) Online community is doing well. Not as great as last month where we did a record $8000 in ad sales. We are on target to get about $7000, so I'm very happy about that.

3) Web hosting and web site businesses are doing well. I hired a new tech person to offload all the ticket support. He's working out very well. Freed up tons of time for me.

4) Working on completing a big deal based on my standards. I'm finishing up DD on a job posting web site. The final price has been negotatiated at about $120K. Monthly profit will be about $11K. I negotiated owner financing of $30K paid out over 6 months at 5% APR. I also secured about $35K in financing from a lender to be paid out over 7 months. So my down payment will be $55K. All monthly earnings over the first 6 months will be allocated to paying off the financing portion. So by July 2020, we will be in the black for the job posting site fully paid off. That will mean that we will be clearing $30K a month in profit.

My family was planning on moving to Central America by the end of this year, but that had to be postponed to next year due to health issues. Probably summer 2020. By then we won't have to worry about money any more.

I caught my second wind after passing on another opportunity that I talked about incessantly in this thread. I just didn't have the drive to keep going. That month off freed my mind to be open to this latest deal. It is forcing me to continue consulting till March 31, 2020. And I did give notice that that would be my last day. But I have the energy now to keep going. My phone shows 94 days to go.

I think I talked briefly about why it has been so important for me not to be complacent, and keep driving forward to where we will be financially by July 2020. Right now, we are in great shape, and I could quit consulting now, but for me $30K a month profit is not an arbitrary number. Since our household expenditures are about $10K a month, having $20K a month currently in profit affords us financial freedom. BUT having $30K a month, although it may seem like greed, does a couple things for me psychologically and pragmatically.

Psychologically, just having an extra $20K a month over our personal expenses gives me peace of mind from almost any emergency expense. For example, in my lifetime, I've only had maybe 3 significant emergency expenses that took my breath away. Recently, I had to be hospitalized from a freak thing. I'm fine now and am fully recovered. But even with insurance, my yearly deductable caused me to pay $14K out of pocket. Another example, 10 years ago I was hit with a $20K unexpected tax bill. Luckily, I was able to work with the tax agency to get it down to $1000, but, man, did I freak out there. And a few years ago, one of our cars had to have its engine replaced for about $8000. So, you can see, with an extra $20K a MONTH, I won't have to worry about that shit any more. Those types of bills will become analogous to maybe something like buying a new microwave from Home Depot.

Pragmatically, the extra 20K a month over our monthly expenses allows me to expand my company perpetually at a pace that I am happy with. We can probably grow $100-150K in earnings every year from now on. And that growth can be exponential, limited mainly based on my time. I work maybe 2 hours a day now on my businesses. But you can imagine the more assets you acquire, the more work you will need to allocate for managing your enterprise.

 

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[StefVE]

Been active here before, but back now to share my story.

Have been looking around for an online business since September last year while doing a lot of reading about acquisition entrepreneurship. Had a budget available of kEUR 30 and had been looking around mainly around on Flippa because it offers businesses at a lower price range than Empire Flippers for example. This also means you get a lot more 'less mature' (or scammers) on there but they are most of the time relatively easy to spot.

After a failed transaction around December where the seller backed off because of second thoughts, I was able to get in touch with a guy selling his stake in a supplement business. He wasn't selling the full supplement business as it is but merely his 'role' (and accompanying profit share). He worked together with a guy having years of experience within the supplement industry as an (external) consultant where this guy taking care of production and fulfillment. The seller's role was mainly focused of selling the product online via a website and taking care of customers and marketing.

Eventually the seller offered me to sell me the business / his part for kEUR 20 where his share of the profits amounts to something like kEUR 1,5 per month on average or KEUR 18 per year.

Now we are six months later and I have been able to increase monthly net profit to around kEUR 1,7 so we are at a return rate of 100%. Nevertheless, apart from the financial aspect, I really wanted to get started with a business to learn about ecommerce and business in general to build up experience to use for future ventures. For this reason I am also investing more money into the business again than necessary to keep things running, just to check what works to increase sales. I am also outsourcing some of the work (front & backend development and copy-writing) I could actually do myself - I noticed YouTube is your friend here - while learning from these people with experience. This also made me notice I do prefer to focus on the overall strategy and building out the business instead of fixing all the details myself. This does cost me some more money than necessary on the short term, but might be a good trait if I would acquire more and more business and need to leave the details to other people.

This means that on weekdays I need only one hour to keep business going / get in touch with my freelancers if necessary. During weekends I just try to spend as much time as possible on whatever topic I am focusing on at that point in time in order to improve my knowledge and the business.

I know a lot of people would be hesitant/cautious to 'share' their business with a business partner but for me it works out fine for now and it let's me focus on the part of the work I am responsible for. On the same time, because of his industry knowledge, we are able to offer really high standard products which would otherwise be hard to get your hands on as a (small) business. I know this also accounts for some risks as we are dependent on each other but given that the return rate and the fact that this is also an opportunity to learn myself I was prepared to take the risk.

Now we are also planning a second website together to focus on a different set of supplements than these we are already offering currently but where we can still leverage part of our current customer base. After that, we aim for the end of summer, and if everything is running smooth, I might also look further to acquire another business myself to further diversify and increase my income.

I'll keep you guys updated and love to hear your comments in the meanwhile!

 

[doitman]

I love this and your hustle! This is ultimately my plan within the next 3 to 5 years!

Go for it. I wish I had done this 10 years ago. But if you haven't done so, start now. There are always ways to hustle for capital. And I'd recommend as soon as you have enough to venture into new businesses or scaling your current one, do it. Making money now compounds in business as it does in tradition financial instruments.

 

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[doitman]

UPDATE: This is turning into probably the best month for sales. We are on target to make about $27,000 in sales. Expenses will be around $2000. Separately, consulting income will be about $14,000 with no expenses.

All businesses are firing on all cylinders. Only negative is that my web hosting business is taking way too much time right now since I haven't offloaded the work to my team. I'm handling all the tickets, but documenting them so that when I do transition, my team will be able to refer to my documentation to handle most of the tickets. Helpscout is awesome!

 

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[doitman]

Thanks. Appreciation back at you for feedback and giving us a little of your story.

I'll clarify blogging. I mentioned that one of my businesses is blogging. I just hate writing. So when I realized I could outsource it, then blogging became useful, and it diversified my holdings. I just preferred higher volume leading to thousands of dollars a month in earnings. A couple hundred bucks is not worth it to me. With my business model, this works out well. Instead of building a blog from scratch which could take years, I just bought one. It's pretty big, has a brand, and can also be monetized more beyond the ad dollars that it earns.

To answer your other question, my past experiences with failure completely drive my strategy now. I know what to avoid for me. Granted, others may be excellent at marketing and creative at product development. So, they can go the ecommerce route, build a new business, and become successful. I never want to discourage those entrepreneurs.

I just know for me what I'm good at. And what I'm not good at. So my list of 11 things to aim for when acquiring a business was born of those experiences. Honestly, most of them should be self evident like profitability. Others originate from feeling the pain of the alternatives, like having full time employees, or having an office. But most of them, if not all of the 11, concentrate on steady income while limiting overhead.

 

[doitman]

Maybe I missed it, What are the sizes of business that you are actively targeting? Is it a size of revenue or size of purchase price? I've dug through a bunch of listings between $30-80k and nothing that seems exciting yet. Thanks for the thread and conversation either way!

That is the price range that I target. Currently I don't see anything of strong interest either. I was recently looking at forwardmx.io on Flippa, but the auction went higher than I wanted to spend on it. I was hoping to get it for $20,000, but it went up to $26,000. It makes about $1100 a month in profit and it's SaaS. That is around 50% ROI at the winning bid price, but it's revenue is trending down. So maybe initially if I were to have spent $26,000 on it, the ROI might have dipped below 50%. It did satisfy pretty much all my 11 criteria though. But then I spent the weekend reproducing the server setup to do domain email forwarding, and was successful. So I thought when I have some free time, maybe I'd just build it and become a competitor.

 

[doitman]

I haven't used it, but this is might be helpful: Our Due Diligence Reports | Centurica

As for the Capital, SBA loans from Byline bank seems to be very generous. They finance almost 90% to acquire service businesses (other banks may lend less as the software won't have real estate as collateral) , for 10 yr. at primt+2.75% or something close. Considering your criteria, the DSCR (Debt Service Coverage Ratio) will work out well and banks will be all over to loan you money. Remember, they are in the business to lend money

I honestly don't consider financing from banks. I do consider owner financing. The reason for this is simple. Adding a third party to a deal can jeopardize the deal. I'm sure one can imagine how much stress a person may experience when the bank or lender says that they're missing a form, or some regulatory requirement is not up to date, blah blah.

When you deal with just the seller, you have a ton of leverage, especially if you deal in cash. But it works well too to secure owner financing. This can be an advantage because then the seller will remain engaged as you run the business, especially early after the transition. And on occasion I need an answer from the former owner.

 

[doitman]

From my phone. This is my countdown to the number of days, hours, and minutes before I get to retire from consulting and the slow lane. I look at these numbers multiple times a day to keep me motivated.

 

[doitman]

Awesome to see someone finally looking at "Exit 69"

Thanks for your PM offer - so generous of you. I'll definitely pick your brain once I find something useful.

I did spend a few days looking through flippa but to no avail. Usually, they are asking for 30+x earnings, that's way too much that I was looking for.

Looks like you are established and you get the deals handed over to you, but can you tell me where to source "sites for sale"

Sites that I search for deals:

Flippa
BizBuySell
WebHostingTalk
TWorld

 

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[Tom A]

I have been watching the thread since first day. I love Richard's rules to select a business to acquire.
My target is to acquire one before the end of the year, with up to 25K down. Up to about 50K, with seller financing.

Man, I should add, I am almost worn out to go over the opportunities and elimination process. It is difficult to find a business that resonates and also fit your budget/skill sets you have.

Nevertheless, thanks much Richard! This has been an eye opener thread from day one!

Here is the list of brokers and websites I found that list businesses for sale. I am sure that are more out there, so please let us know if anyone is aware of any listing sites out there.

P.S. If you have any experiences with any of these, would love to hear your feedback as well.

• Centurica - Solutions for Buyers of Internet Businesses
• Empire Flippers - Website Brokers | Vetted Marketplace
• Expert Internet Business Brokers - 100% Internet Focused Business Brokers
• Business Brokers Selling Profitable Online Businesses | Latona's™
• Website Brokers that Sell Websites & Online Businesses, Selling Your Sites and Domains | Website Closers
• Acquisition Station - Website Brokers: We Sell Profitable Web-Based Assets
• Upward Exits - Online Business Brokerage
• http://www.appbusinessbrokers.com/
• FE International: Professional Website Broker
• Ecommerce Websites & Businesses for Sale | Buy and Sell Online Sites
• Flippa - #1 platform to buy and sell online businesses

 

[doitman]

SUPER UPDATE: I know this is probably getting boring to everyone, but yesterday was the 5th day in a row that we eclipsed our previous daily record for ads earnings. Over 28K page views and $326 earned.

I also got started on my new start-up. We are building an online academy/school that will host teachers and students with both one-on-one and master class sessions. I have a Facebook group of educators/teachers that has been building for years, and after reaching out to them on our new venture, we've gotten a lot of interest. Our main online community that I referenced above will provide the leads for students.

 

[doitman]

richardd, amazing thread. congrat's on your success, and thank you for taking the time to share.

Perfect timing for me personally as I'm in the hunt to buy a digital business, my criteria is similar to yours. However it's very intimidating to me. Your "playbook" has brought me to the 5 yard line. Now its time to punch it into the endzone.

I see why you like flippa, as most other sites are $100k plus business. For my first one I'd like to stick under that threshold but anything under $20k probably not worth the time.

Can you share your "vetting" process and / or checklist? Or did you use a particular site or company? There are 2 or 3 that are interesting to me, but now I need to start the vetting process.

Thanks again. Great work!

Yes, try over $20,000 on Flippa. For $100K businesses, consider more broker centric sites like BizBuySell.

For vetting sellers, Flippa does do some verification. I hate to say it, but really try to consider US/UK/AU/CA businesses. Second, ask for government issued ID. And try to find seller's social network accounts, and then message them independently without their knowledge to those accounts. Hopefully they respond back stating that they are selling their business.

I've mentioned this before, but concentrate on businesses that are priced approximately 20x monthly profit on Flippa. Super ROI should be considered with a wary eye. And look for businesses that have profit numbers for at least two years. Also try to get Google Analytics access. This should be mandatory. Start there, and then PM what you find.

 

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[doitman]

UPDATE: I got a new profile name, in tribute to Shia Labeouf. Look it up. If you ever need good motivation or a laugh, he's your guy. But in all seriousness, "do it" is my mantra.

My most recent transaction was a bust. Luckily we were able to unwind it, and I didn't lose much money in the deal. But it was stressful, to say the least, especially with the amount of money on the table. I won't go into detail about it, but I will tell you that I've learned a lot about improving my vetting process of business opportunities. I am much stronger and hardened by this most recent experience, and much wiser as well. Many sleepless nights on this one for the past month. But the ordeal is over, and it's time to move on.

While dealing with all of that during this past month, I did unify most of my businesses under one brand finally. My web hosting, web site maintenance, and accounting software businesses fall under one name, my US corporation. My contractors all now handle help desk tickets through our WHMCS system. It's all centralized now. My last step is to get the remaining customers out of Freshbooks and into WHMCS.

WHMCS is a great billing platform. I won't go much into this since it's a large topic. But if you do any eCommerce, you should check it out.

For the new year, I will be rewriting a lot of our accounting software products to prepare for mass marketing since we are one brand now. Also, since all of our customers will be in WHMCS, I will be able to "cross-market" all of them very easily, offering any of our other products and services. The trust has already been established and engrained. Lastly, I'll plan on launching an online school linked to our online community. It's a lot on my plate, but since my last day of consulting is March 31, 2020, I will have a lot more free time come April.

Retirement from the slowlane.

 

[doitman]

Sounds like you are running your own private equity firm! Well done on your good result.

Maybe you will find this thread relevant or interesting.

HOT! - Taking over business from retiring baby boomers

In Singapore here there are a lot of profitable small business in the traditional industries. They are owned by baby boomers who cannot find successors. Their children are not interested in the business. I believe that this applies in U.S. as well. These business typical generates 10-20k...

www.thefastlaneforum.com

I actually came upon your thread recently. And I had been reading articles about Baby Boomers / Business Owners trying to offload their life-long businesses. It's really a great model in my opinion to start or grow one's company. They've built the trust with their customer base, but no longer wish to continue, and I don't blame them. Good deals are to be had here. Interestingly, the customers that I've acquired give me feedback that we're doing a better job with customer support. The retired couple I referenced in my post here just wasn't engaged in the last few years.

I'll check out your posting more when I get a chance.

 

[ZCP]

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.

 

[doitman]

I have. But, just for one asset. They seller’s broker wasn’t interested in the offer and insisted at least 75% down payment.

I have been looking for a few deals - one was some sort of analytics and was bought while I was negotiating, one was a VPN business but decided to grow it more, one was recruitment and didn’t get back to me.

A couple others look less and less interesting the more DD I do.

My learnings are:
1. It’s useful to have your own investment criteria like Richard’s because then it reduces the risks of buying shitty assets
2. I think pure financial investment (based purely on ROIs) might be harder if one is not familiar with the business model and what customers are actually paying for. In OPs case, it seems most are strategic (except maybe the blog), and that the OP knows how to add more value. I guess eventually the more I look the more I know what makes more sense for me.
3. I think one might just need to be more resourceful in sourcing deals since everyone here is probably looking on Flippa. And, there are only so many people willing to sell their money tree because they need to fund another venture or need to focus on a singular project.

It’s been great learning though.
And, thanks to Richards offer for PM. It’s really amazing to have someone like you to offer guidance and updates to give us hope and keep trying.

John, I thought about publicizing where I go to find deals, like Flippa for instance, and then by doing so, it will create competition for me to land deals. That probably is true to some respect. But I don't think it matters to me if I lose out on a possible deal that someone else on here finds first. There is always another one that comes along. It's been happening month in and month out since I started investing earlier this year.

Interestingly, often times I'm strongly attracted to a deal with some mindset that I gotta have it. I have to remind myself that there is no deal that I really have to have. If I find one, I way more often than not get the deal done since I can act fast. Sellers love that.

I don't have to negotiate like, I'll buy your business for X times revenue or profit. Nor do I do an earn out mechanism. I rather have full control when I take control.

As for understanding sellers' business models, yes I find businesses that I have a pretty good idea how they make money. Most of it is standard stuff like selling a license or selling a monthly service or even ad dollars per 1000 views. The more complex business models I shy away from.

In the end, I still find deals on Flippa and other brokerage sites that satisfy my ROI requirement. I know it sounds like finding a needle in a haystack, but I find them all the time, and they are not hidden on Flippa or many of the other web sites.

PM sometime and I'll share with you some that I've found recently. I won't be investing in any right now or the very near future since I'm now so busy with these businesses and my consulting, but I'll show you nonetheless.

 

[doitman]

UPDATE: That online community just dominated yesterday. It eclipsed both daily traffic and ad earnings records. Over 25K page views for the day resulting in a whopping $303, blowing away the previous day's record. I'm not gonna lie to you, but I got to stop watching my Google Analytics throughout the day. It is addictive. Reminds me of when I used to invest in the stock market where I'd track my stocks every 5 minutes.

 

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[doitman]

UPDATE: Online community hit over $5000 in ad sales for the month. That was my goal, but with 10 days left, we should make it over $7000.

Also, I'm in the final stages of negotiating to purchase that other online business. It's been an extended negotiation, but I believe we have come to terms that we both can accept. The agreed price is $105,000. $65,000 down, 3 monthly payments for the rest of the $40,000 with no interest. Annual profit is approximately $80,000.

As a result, I may have to extend my consulting into the new year for cash flow purposes, but probably not past March.

 

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[doitman]

UPDATE: Online community just surpassed $6000 in ads earnings for the month. With 7 days to go, it's all but guaranteed to pass $7000 for November with a shot at $8000. My initial goal was $5000. I'll be moving forward with starting up an online school affiliated with the community. I have a group of teachers very interested, and hundreds of thousands of prospective students from the community to start with.