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

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richardd

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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 !!
Ok, so digital is such a good way to go whether product or service. This is simply due to lack of physical material to produce the product or service. This saves in a ton of overhead, from storage, to COGS, to shipping, etc. You sell X units, you pretty much get 100% profit minus software maintenance.

Digital could also mean having an automated web site that provides more value than most others.

This doesn't mean you have to build or buy a business that sells software. You could sell a service that requires human resources to do the labor, but services customers through the web.

For example, if we pick landscaping, I know I need mulch in the spring and fall. I also need trees cut which could be used as mulch.

If I went to a web site that gives me prices for each of these products/services and that I could just schedule a time for it to be delivered or done, I'd go with that contractor. You see, I hate calling around and getting quotes. If the site asked me how many square feet of mulch coverage, what depth, what kind of mulch, and allowed me to upload pictures, and then either automatically it calculated the price, or automatically sent me a quote within 30 minutes, I'd probably be sold.

I picked landscaping knowing very little about you just based on your post. The reason is that you should consider your core compitency when looking at running a business. If you know it, you're ahead of the game. That's not to say that you shouldn't look at other unrelated ventures.

You should also consider looking into WordPress. That is a standard web development platform that is easy to use and build web sites fast. Google it if you are not familiar with it.

You'll also need to hustle to save capital. Capital will allow you to either start a new business, or like me, buy one. There are so many affordable ones to be had. The internet is teaming with business brokerage firms like Flippa and BizBuySell. Check them out and browse their listings to get a feel for what's out there. Sure good sites sell fast, and you may not be ready to purchase, but at least you'll get an idea of what's out there.
 

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21elnegocio

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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.

Where would you recommend me to go to buy an accounting software business?
 

MJ DeMarco

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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.
Just curious, why this approach? Have you confirmed that MORE LIKES = More Sales? More Profit? I'm just guessing that if you're going to spend $, it would go at something that moves the needle more directly.
 

Omni

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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?
This is a really bad idea. Likes are a vanity metric and the FB page organic reach is only going to go lower. FB Groups have much better reach, and you will have to hire someone to keep them engaged but it'll be worth it.

What you can do is run FB ads to a lead magnet where they enter their email to get a freebie. Then on the autoresponder, let them know about your FB group and provide value and eventually sell them on the emails and the FB group.

On the FB ads themselves, people will react to the ad and you can invite them to like the page, then you can go to your FB group and invite the people who like your page to join.

You'll get the likes anyway by running FB ads so don't run a like campaign. It's a vanity metric that's likely to hurt your bottom line.
 
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richardd

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Just curious, why this approach? Have you confirmed that MORE LIKES = More Sales? More Profit? I'm just guessing that if you're going to spend $, it would go at something that moves the needle more directly.
We generate a lot of traffic from our Facebook page to our web site, which generates more ads earnings for us. I'm still trying to understand the organic news feed that Facebook manages, and how our page likes affect that.

I need to reach out to some people to give me guidance on that. I also need to crunch the analytics to see what our ROI would be for purchased page likes.

@biophase had a good suggestion about driving users to our Facebook group. We will definitely do that since it's a sticky model. Once in the group, we can market to them for free as long as they're members.

So it really comes down to, should I do both?
 

biophase

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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.
Like what MJ asked. What's the point of getting to 500,000 likes. Is this just some number that you want to pay for?

FB page reach is slow low now compared to before. Compare your interaction of a post in the group vs. the page. What does it look like?
 
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richardd

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This is a really bad idea. Likes are a vanity metric and the FB page organic reach is only going to go lower. FB Groups have much better reach, and you will have to hire someone to keep them engaged but it'll be worth it.

What you can do is run FB ads to a lead magnet where they enter their email to get a freebie. Then on the autoresponder, let them know about your FB group and provide value and eventually sell them on the emails and the FB group.

On the FB ads themselves, people will react to the ad and you can invite them to like the page, then you can go to your FB group and invite the people who like your page to join.

You'll get the likes anyway by running FB ads so don't run a like campaign. It's a vanity metric that's likely to hurt your bottom line.
I "like" it! Such a great idea! I'm sure it's being used a lot as a strategy, but thanks for this. So simple, effective, and efficient. I'm going to implement this.
 
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richardd

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Like what MJ asked. What's the point of getting to 500,000 likes. Is this just some number that you want to pay for?

FB page reach is slow low now compared to before. Compare your interaction of a post in the group vs. the page. What does it look like?
We run a media/news business where we interview celebrities, are invited to red carpet events, openings, etc. We get influencers reaching out to us about posting on our Facebook page and web site because of our shown following. The vanity aspect of it leads to real business opportunities. I just took this over so I'm trying to get a better understanding of the relationship between our following and the revenue generated from that following. That revenue includes both ads earnings and influencer paid marketing.
 

Omni

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I "like" it! Such a great idea! I'm sure it's being used a lot as a strategy, but thanks for this. So simple, effective, and efficient. I'm going to implement this.
Cool, reach out if you have any questions. FYI - The email list is the most valuable part of this strategy because that's the one you actually control.
 
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richardd

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Like what MJ asked. What's the point of getting to 500,000 likes. Is this just some number that you want to pay for?

FB page reach is slow low now compared to before. Compare your interaction of a post in the group vs. the page. What does it look like?
I'll run some tests with the same postings in both our page and the group. Let's see what the results are.
 
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richardd

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Just to give some real numbers on our Facebook page. So we have about 250,000 followers. This generates about 120,000 page views on our web site a month. We get a CPM of $10, meaning that we earn about $1200 a month from ads due to the Facebook traffic. Let's say we do an ad spend of $4000 a month for page likes. We currently average one like for $0.16. So, for $4000, we'll get about 25,000 page likes. In 10 months, we'll acquire the 250,000 extra followers. Theoretically, this will double our Facebook traffic, thus doubling our ad revenue from $1200 a month to $2400 a month. So after 10 months, we'll have spent $40,000. At that point in time, it would take us 33 months to recoup this cost from the ad spend. From an ROI perspective, earning $1200 extra a month yields $14,400 a year, and therefore ROI = 36%. I currently cannot measure the business benefit from the "increased authority" conveyed with 500,000 page likes vs 250,000 page likes. I can say though that influencer advertising with us is becoming a reality due to this authority. So I feel the need to grow the Facebook page in any way I can.

EDIT: I forgot to take into account the earnings that we would realize over the 10 months of ad spend. Ramping up over the 10 months, we'd earn on average an extra $600 per month. Think of it like, $120 extra, $240 extra, $360, $480, $600, $720, $840, $960, $1080, $1200. So, $6000 will have been recouped by the end of the 10 month campaign. Instead of 33 months to recoup total cost after campaign completed, it would be 27 months.

And then of course when I get ecommerce implemented for that business, it should be doubly effective when utilizing organic Facebook traffic.

One more thing. An investment of $40,000 in ad spend, if it reaps an extra $14,000 a year in profit, will increase the business valuation. Simply put, if you saw a business that makes $14,000 a year, how much would you offer to buy it? Could you offer $40,000? If so, then that ad spend does not become a sunk cost.
 

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richardd

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Where would you recommend me to go to buy an accounting software business?
That's very specific. If so, then I would just Google "accounting software businesses for sale". I believe BizBuySell would be good place to start.
 
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richardd

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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
Jarrod,

Sorry I missed this. We have one primary developer, and I have a couple secondary ones. I'm pretty involved in making architectural decisions with the primary guy. He's very good, so I ask him if he thinks one way is better than the other. We maintain and enhance the programs. Recently we implemented a new licensing model. I built the web server piece that handles the licensing authorization, I built the .NET component that communicated to the server when validating the license from the customer PC, and he integrated it into the programs. We also discuss issues with the programs, to try to fix problems that have arisen. As for the dev team, they are all contractors used by the former owners, but I was free to continue using them, or not if that were my choice.
 
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biophase

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Just to give some real numbers on our Facebook page. So we have about 250,000 followers. This generates about 120,000 page views on our web site a month. We get a CPM of $10, meaning that we earn about $1200 a month from ads due to the Facebook traffic. Let's say we do an ad spend of $4000 a month for page likes. We currently average one like for $0.16. So, for $4000, we'll get about 25,000 page likes. In 10 months, we'll acquire the 250,000 extra followers. Theoretically, this will double our Facebook traffic, thus doubling our ad revenue from $1200 a month to $2400 a month. So after 10 months, we'll have spent $40,000. At that point in time, it would take us 33 months to recoup this cost from the ad spend. From an ROI perspective, earning $1200 extra a month yields $14,400 a year, and therefore ROI = 36%. I currently cannot measure the business benefit from the "increased authority" conveyed with 500,000 page likes vs 250,000 page likes. I can say though that influencer advertising with us is becoming a reality due to this authority. So I feel the need to grow the Facebook page in any way I can.

EDIT: I forgot to take into account the earnings that we would realize over the 10 months of ad spend. Ramping up over the 10 months, we'd earn on average an extra $600 per month. Think of it like, $120 extra, $240 extra, $360, $480, $600, $720, $840, $960, $1080, $1200. So, $6000 will have been recouped by the end of the 10 month campaign. Instead of 33 months to recoup total cost after campaign completed, it would be 27 months.

And then of course when I get ecommerce implemented for that business, it should be doubly effective when utilizing organic Facebook traffic.

One more thing. An investment of $40,000 in ad spend, if it reaps an extra $14,000 a year in profit, will increase the business valuation. Simply put, if you saw a business that makes $14,000 a year, how much would you offer to buy it? Could you offer $40,000? If so, then that ad spend does not become a sunk cost.
I highly doubt FB reach is linear. From my experience it drops as you get more likes.

Also it’s highly likely that FB reach will continue to drop in the future. It’s more likely that 500,000 likes will get you the same traffic next year as you are getting this year.
 
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richardd

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I highly doubt FB reach is linear. From my experience it drops as you get more likes.

Also it’s highly likely that FB reach will continue to drop in the future. It’s more likely that 500,000 likes will get you the same traffic next year as you are getting this year.
Yeah, reading up on this, competition for news feed space is growing and organic reach is declining. I like the idea of driving people towards our Facebook group, but I think growing our web site's forum makes more sense. The forum then captures way more repeat traffic and allows for direct advertising.
 

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Wow, this has to be the BEST thread at the moment on so many levels. Everyone loves a rags to riches story -- but nobody talks about the work to get there. (consulting, print shop, etc)

I'm a remote software architect with (5-6 weeks PTO) probably more time on my hands than most (that can go away anytime) - I built a .NET/JS app that helped my company process $30Million/monthly recurring (but making slowlane $). I have a ton of flexibility *at the moment* (not as much control).

So two questions:
1) you mentioned blogging was a waste of time -- did you mean from a financial standpoint?
[I started a blockchain site AND in process of taking on freelance blockchain dev on the side work to accelerate my personal learning on tech and marketing. CENTS grade is giving blockchain site a C range :p .] Part of me wonders if i'm being too boxed in "tech" but feel this could be a more "product opportunity" down the road as I understand more of it -- no plans on using Adsense :) ]

2) How much did your early experiences (like the print shop, blogging) contribute to your current business mindset/learning experience?

Dude you've been very generous with your time on this forum and really appreciate your thoughtful responses to everyone else here. So THANK you on behalf of all of us!! Best of luck to your future endeavors and raising your family!!!
 
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richardd

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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.
 

Clifford Starks

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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.
Awesome, glad you have come so far in your business venture!!
 
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richardd

Bronze Contributor
FASTLANE INSIDER
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This is a really bad idea. Likes are a vanity metric and the FB page organic reach is only going to go lower. FB Groups have much better reach, and you will have to hire someone to keep them engaged but it'll be worth it.

What you can do is run FB ads to a lead magnet where they enter their email to get a freebie. Then on the autoresponder, let them know about your FB group and provide value and eventually sell them on the emails and the FB group.

On the FB ads themselves, people will react to the ad and you can invite them to like the page, then you can go to your FB group and invite the people who like your page to join.

You'll get the likes anyway by running FB ads so don't run a like campaign. It's a vanity metric that's likely to hurt your bottom line.
I decided to promote our web site's forum using Facebook Boost Ads. I took the idea of offering a free something for people who register and post on our message board. Let's see how this does today.
 

pumpking

New Contributor
Sep 14, 2019
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Hi @richardd, and thank you so much for sharing your story... hugely inspirational.

A few quick questions if you don't mind:
  • What would you say to someone who is interesting in purchasing a business that follows the SaaS model, but who doesn't have any experience in software engineering? I guess the more general question is- should someone get involved in a business they wouldn't have been able to create from scratch?
  • What are your thoughts about using the Shopify Exchange marketplace for purchasing businesses?
  • Also I'm just curious- why did you sign on for another year of consulting, isn't that a large opportunity cost for you considering your success now? I.e. use the year to either scale up your existing businesses or buy additional ones- surely the 3-5 outlook is more profitable that way than your consulting work will be?
Thanks again
 
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richardd

Bronze Contributor
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@pumpking you don't need to be a software engineer to take on a SaaS solution or any other kind of software. As a business owner, I believe you should focus on managing, not doing day-to-day work. My blog/media news business is brand new for me. Sure I can write, but I was not well versed in the news cycle from an operational standpoint. Nor did I know how to handle celebrities, talent agencies, producers, etc, nor how to manage a staff of writers who have to deal with some of these people. I don't think I have it in me to build this business from scratch, but I'm running it pretty successfully, as we are on our way to having the best ad-revenue month historically.

I like Shopify as a platform, but I don't have much experience with the Exchange since I haven't been focusing on ecommerce during my business expansion.

I decided to extend my consulting contract because I don't think it will prevent me or hold me back from expanding current businesses. I'll have time. I should be able to work extra on nights and weekends. Besides, I can use that extra income as capital to purchase more businesses over the next year. Keep in mind, I work about 10 hours a week extra on my businesses. and 50 hours a week consulting.
 

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Reefsf

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Feb 24, 2019
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I do agree.
I'd not purchase an online business outside of FEI or empireflippers.

Make sure to hire a professional to help you during the DD phase.
Yes, stay away from both of these two companies, they over inflate and should not be a first choice.
 

pumpking

New Contributor
Sep 14, 2019
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Thanks for this reply. I'm encouraged to hear that it's possible to own a business without having the operations skills- there's one part I'm still unclear on though:

As a business owner, I believe you should focus on managing, not doing day-to-day work.
I guess where I'm lost here, is what does the management look like without deeper knowledge of the operations? Using your accounting software business as an example- imagine you're the owner but without the background in software / programming.
  • How do you know if your contractual software folks are doing a good job?
  • How do you know they are working on the right things? Who is keeping them accountable for burning down the bug backlogs to a healthy level on a regular basis?
  • If you want to have your team implement a new feature, how do you know their time bid for the work is accurate or inflated?
I'm a manager myself in my slowlane career so I know from experience that stuff like this creeps up if there is lacking accountability... pretty common with most all but the highest performing employees. Also, how to you ensure your software platform is up to date and meeting your users' needs- is there a feedback loop in place between your customers, your developers, and you? I guess on a feature level at least the hard core skills may not be necessary.

Thanks for answering- this is a new world for me which is exciting... also trying to keep my expectations realistic at the same time.
 
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richardd

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@pumpking

Ok your overall question is a good one. My answer is that you would probably want to have some IT experience before taking on a software business. But you don't have to be a programmer. There are a lot of IT workers who have experience doing technical projects. Project managers, product testers, business analysts, systems analysts , production support, etc are examples of non-programmers who have a background that would be invaluable when owning a software company. They have some insight into what it might take to fix something. Just bear in mind that I have no expertise in fixing cars, but I can somewhat know how much it might cost and how much time it might take to fix my car. That's from experience. I may get taken for a ride periodically, but if I have multiple mechanics to get independent quotes, I'll have a better chance of knowing when someone is over estimating cost/time. You shouldn't let that prevent you from considering purchasing a software business. You'll just need to do your homework and ask questions. I'm sure there are plenty of people in the forum like myself that you could ask... "My developer quoted me that it will take this long to fix. Is that reasonable?" We probably would be able to tell you if your developer is reputable or full of shit.

How do you know if the developer is doing a good job? Well, you probably will have a list of things that need fixing. You prioritize them. You get estimates on each fix. The developer should meet their schedule and stay close to the budget. And of course customers will either continue to complain or not after the software updates. Customers are good about complaining when your software doesn't work.
 

pumpking

New Contributor
Sep 14, 2019
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Thank you @richardd, your analogy to the car mechanic scenario was spot on for me and makes sense. Also, happily, I do actually have some familiarity with the IT world since my current career demands significant collaboration with software engineers and the IT leadership crowd, so although I can't write or read the language I can at least make a broken conversation work.

One other follow up question- outside of business marketplaces that have been mentioned in this thread- would one simply rely on word of mouth and/or "cold calling" businesses that you would be interested in buying? Is that how you came to purchase a blog (i.e. organic interest in subject matter, idea of possibly running the site yourself, contacting the owner and making a bid)?

Finally- outside of the info posted here- I'm wondering if there is a basic check list new people such as myself could reference for the due diligence phase. (I would likely hire an accountant to scrub the books since I certainly don't have the background skills for that).

Thanks again, this thread has been equal parts exciting and sleep depriving for me these last four or so days. :)

P.
 
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richardd

Bronze Contributor
FASTLANE INSIDER
Speedway Pass
Jun 11, 2017
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Thank you @richardd, your analogy to the car mechanic scenario was spot on for me and makes sense. Also, happily, I do actually have some familiarity with the IT world since my current career demands significant collaboration with software engineers and the IT leadership crowd, so although I can't write or read the language I can at least make a broken conversation work.

One other follow up question- outside of business marketplaces that have been mentioned in this thread- would one simply rely on word of mouth and/or "cold calling" businesses that you would be interested in buying? Is that how you came to purchase a blog (i.e. organic interest in subject matter, idea of possibly running the site yourself, contacting the owner and making a bid)?

Finally- outside of the info posted here- I'm wondering if there is a basic check list new people such as myself could reference for the due diligence phase. (I would likely hire an accountant to scrub the books since I certainly don't have the background skills for that).

Thanks again, this thread has been equal parts exciting and sleep depriving for me these last four or so days. :)

P.
I don't waste my time with cold calling. But there are forums that people list their businesses. Here's one that I contribute to on occasion. And since I showed interest, I get solicited with offers:


The forum above is specific to web hosting businesses. This is inline with my current web site backup business. I'm sure I'll continue going back to this.

For due diligence, my check list is the following:

1) Matching published sales/revenue with tax returns (if available), bank accounts, and merchant accounts.
2) Go back 2 years at least for financials.
3) Get records of most significant expenses.
4) Get marketing performance numbers life for Google Ads, Facebook, etc.
5) Find out what products/services they use for their day-to-day operations.
6) Get list of employees/contractors that you'll take over. Offer not to discuss when them directly until after closing.
7) Get list of employee/contractor responsibilities.
8) Get breakdown of customer sales. Better yet, get details/invoices for customer individual sales.
9) Try to get their accounting books.
10) Get any future projected revenue like recurring invoices.

I'm sure there are more, but those above are key.

I have to say, it may seem like a lot to do in order to purchase a business, but once you do one, the others become easy. Often times, the sellers are novice at going through the process, so they ask me lots of questions, and I walk them through what to expect. You start doing this, and you'll become well-versed in it as well. It should be exciting! It is for me. It changes the game for me, and I really feel it can change the game for many others on this forum. I see focus is on building new businesses, and I love the passion and drive that some people have for that path, but my process, albeit less sexy, can be much more effective in reaching the fast lane.

There is a recent thread about acquiring multiple Subway restaurants. I'm not a fan of taking on a franchise since it lacks control, BUT the theory is sound. You acquire 5 Subways, and each averages $40,000 in profit, so you're banking $200,000 a year. Not sexy but effective.
 

pumpking

New Contributor
Sep 14, 2019
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@richardd Thank you so much for your time replying to me.

I'm very much like you- I don't care if what I'm working on is sexy or not, my passion is firmly rooted in embracing the paradigm shift that the Fastlane book encourages and taking financial control of my life exponentially. Excited to get started!
 

1milclub

Bronze Contributor
Read Millionaire Fastlane
Jan 27, 2014
131
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I have reviewed all three pages, and so far I don't think I saw any reference to Dan Pena. @richardd , congrats on your success, but once you hear the following clips, you will realize that you have a potential to do 250 MIl - yes, Million - easily. Start thinking BIG. Of course, it depends on how big you want to be/go, but at least here is the way to do it - whether you want to do it or not is up to you.
No matter what, this will inspire many here.

View: https://www.youtube.com/watch?v=ayzl2tarmz0

View: https://www.youtube.com/watch?v=g5IKVA2W1zc

View: https://www.youtube.com/watch?v=gxs4PC-SiSQ

View: https://www.youtube.com/watch?v=ShxVtu_A95A


And many more other resources are out there.
 

arl

New Contributor
I've Read UNSCRIPTED
Aug 16, 2019
17
9
12
What a great read! Definitely inspiring. I have around €60k I was saving for a downpayment on a second rental property, but after reading this post it's really tempting to look for a saas.
 
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richardd

Bronze Contributor
FASTLANE INSIDER
Speedway Pass
Jun 11, 2017
62
296
161
United States
What a great read! Definitely inspiring. I have around €60k I was saving for a downpayment on a second rental property, but after reading this post it's really tempting to look for a saas.
I don't like real estate because of 1) ROI based on the principal that you invest with, 2) the debt, not that debt is bad, but you incur a lot of it, 3) the lack of financial flexibility due to having more debt, 4) the lack of mobility when having real property.

I like being mobile, so if I moved to Central America, which we are, or some other place for that matter, I would not be local to the property. But that's just me. If you like where you live, then having properties there might be good for you.
 

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