I'm going to go from bankruptcy/£240,000 personal debt to a life of freedom using Facebook ads.

[Kevin88660]

I had my bankruptcy interview today and I certainly wasn't looking forward to it.

Hopefully, there will be no long term restrictions like extensions to the bankruptcy term of 1 year or a property transfer I did 18 months ago.

I've not done anything misleading or fraudulent so I shouldn't have anything to worry about. One of my creditors actually asked the trustee to look into my Father's house thinking it may be mine because we have same name. Nice try!

The trustee said because I'm not currently earning he will contact me again in two months to see if there's any excess income to pay towards the creditors. There won't be.

I see the fire in you. Having 20 years of experience surely you are not naive to think that good things will come easy.

Take care of your health and good luck!

 

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[Bobby_italy]

Who said she was making the wrong decision? I said I don't consider it great money and it's something I personally wouldn't do. And I'm saying that even now when I've just filed for bankruptcy. I didn't say it was the wrong decision for her. It's the wrong decision for me.

I'm also not saying to my Wife's face I don't think it's great money nor my friends. The same as you wouldn't say to your friend that his Wife wasn't attractive. You may think it but you wouldn't say it to their face.



Humble has nothing to do with it, I can still appreciate that my wife is a slowlaner and has earned regular income but don't share the same views. I've contributed just as much over the last 20 years to our income as my wife has. However the last couple of years I took a risk to benefit both our lives and it didn't work out. I would go back and do things differently but I don't regret taking the chance of trying to change our lives financially for the better so that we can both have more freedom.

Do you know what I think about when I go to sleep at night? I think about how to surprise my Wife by meeting her after work, booking a nice restaurant and then telling her that my business is now doing so well she can reduce her working hours or stop working altogether if she wanted. That she now has a choice.

That day will come.

The only reason I brought salary up on here was to emphasise what MJ says in his book about not trading 5 days of your life in exchange for 2 at a job you don't like for 40 years. Also to show what's possible.



Thanks. A lot of people quit before they make it. They go and get a job forever. Not me. I'm prepared to get a job/drive a taxi short term if need be. Long term employment isn't for me in the same way entrepreneurship isn't for most slowlaners. There's no right or wrong. Only that you remain true to your beliefs and philosophy. I'll keep trying until I'm on my deathbed.

Good on you man, you genuinely seem like a nice guy and I'm sure that you have what it takes to make it.
Also about the taxi license I'm very fascinated, to get it in Italy you have to spend 180/200k which is insane if you think about it, I envy you so much having the freedom to do such things without the country punishing you for taking action!
How much have you made until now with your agency?

 

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[LiveEntrepreneur]

Ok, where do I start with this? This is long so i'll break it up into smaller more readable posts. Your time is valuable so I hope you can get something out of my story.

Yes you read it correctly, my name is Paul and at the time of writing this, I'm £240,000 in personal debt and on the verge of bankruptcy.

If my story prevents just one person from making the same mistakes I've done then this will be worth it. This will also help me document what I'm going to do to fix it.

I opened a computer repair shop in 2000 (aged 20), and at the time I used to buy and sell computers but didn't know how to repair them. So I taught myself. Business was good for the first few years but instead of thinking of ways to grow the company I decided at aged 22 to buy myself a brand new Mercedes (£34,000). I paid a £10,000 deposit and put the rest on finance. Mistake number 1. (Not the finance, buying the car!).

To be Continued.......

Just read your whole story, sorry to hear about the tough situation. Thanks for sharing all your insight, the mistakes that you mentioned on personal debt I feel is really important, how we should spend our money once we receive it. I wish you all the best man.

 

[Simon Angel]

Good to hear you've gained some traction, keep it up man. Pay per show is ingenious.

 

[Paul David]

Good to hear you've gained some traction, keep it up man. Pay per show is ingenious.

Thanks. Still very early days, probably going to only put 10-12 clients live for the first month. I want to see what the profit is looking like at the end of the month. Iron out any issues that happen and then I can scale knowing it's worthwhile. Any problems with these clients will be duplicated with anymore so I think it's a sensible choice.

 

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[Paul David]

Hi Paul,

Read your story on how you went from running a PC/laptop repair shop since you were 20, then moving into the e-commerce world of eBay/Amazon and now looks like you're into lead generation, which is something that I've been playing with myself since December last year.

Props to you for ploughing on and moving forward, no matter what happens.

Correct me if I'm wrong, but from what I understand, you're essentially running a commission-based marketing service, where you do the advertising for a chosen business and only when your referred customer makes money for them, that's when you get paid.

It all sounds well and good, except as I can see from the above, there's a lot of running around in circles trying to establish what happened to the leads and getting paid for them.

This is the reason why I've been trying to implement a more traditional approach of managing service-based clients where I charge a fixed monthly fee for my service (running Google Ads) and the client also covers the advertising spend.

In theory, it's an excellent setup, where I run ads to my own landing page, generate leads via phone calls directly to my client and he takes it from there. I don't get involved with customers, I don't care how much the clients make per job, so my only focus is on getting relevant leads.

Unfortunately, I've been struggling to secure a single client with this model, so I can't say it's been successful, considering you have 28 clients and I've got 0.

Similar to how you don't charge anything upfront, I've been running free trials for my prospects by offering them my service completely free of charge, including the ad cost, for the first 4-5 customers and then I would get in touch with the prospect and try to close them for a regular monthly package, assuming everything went well and they were satisfied with the calls.

This hasn't worked too well, as they are all happy with the leads coming in, because my lead quality is excellent and they all convert well, but clients are not too keen on paying the ad cost and my service fee on top. As a result, I feel quite burned out trying to find new clients with this method, as I keep spending money doing trials, but in the end can't take it further.

I'm also working with service-based businesses (specifically cleaning) and after reading your posts, I started thinking about how I could implement your strategy and only charge them after a job has been completed.

This immediately raises the question of trust, because your client could lie about the exact number of jobs secured from calls or about the amount charged per job. Then trying to work out a commission rate that would work for both parties sounds like another big pain in the backside.

I'm amazed at how you're running at a profit after subtracting your ad costs, but I guess if you're dealing with businesses where the average sale amount is quite high, then it might work out well, although the CPCs are also higher in such niches, so while you earn more, you also spend more on ads.

Do you think your model would be a viable option when working with cleaning companies? Quite often these are 1-2 man businesses, where there are no fancy booking management systems, so automation might be an issue....

Anyway, would be great to know what you think in general about this model that you're currently running.

My business model is pay per show - So I get paid a fixed fee as soon as the lead shows for their appointment.

There's absolutely no chance I'd ever suggest a business model whereby the success of it is based of the actions from a non employee.

My job is to attract and qualify the leads (my clients are useless at this) and once they arrive then it's my clients job to close them. I get paid regardless. I have had a couple of my clients saying the lead came in and just wanted to think about do I have still have to pay you? Or the lead came in and bought a package but then has just called me and asked for a refund, do I still pay you? The answer to both is YES!. There are numerous reasons why things like that happen, all outside my control.

When I onboard my next clients I'll re-iterate that's the case. They have to have some skin in the game at least. If they run an advertising campaign they'd have zero guarantee of getting any return or anyone through the door. My program does 3/4 of the work, if a lead has made an effort to turn up for an appointment they are obviously seriously interested in getting the service done. If a business owner cannot see a benefit in that then I won't work with them for long.

I work on a fixed fee, so even if the lead comes in and pays £520 (which happened the other day) my fee still remains the same. So it swings in roundabouts, my clients are used to looking at profit on an individual basis - ie I made x amount from this lead. The hard part is educating them to say stop looking at my leads like that. Have a look at how much you've made in total after 30 days.

Yes I believe the same model would work well for cleaning companies and that niche was something I'd considered, even as an additional stream of income.

Even when I was doing monthly retainers I'd always bundle the ad spend and my fee together. And I'd pay for the ad spend using my own American Express business card to redeem points then. Rather than saying its x amount in ad spend and my fee is the x amount. Just give them a single price. And you pay for the ad spend using that money.

I know someone who does marketing for carpet cleaners (mainly in USA), he's doing monthly retainers and he's up to $100k a month now. Either pay per booked appointment or monthly retainer would work well for that niche.

You need a specific offer on the front end - So let's use carpet cleaners as an example. You'd run an advert and offer 3 Rooms for carpet cleaning for $150 lets say. 4 Rooms for $200, 5 Rooms for $250. Then every lead that comes through choose what they want and maybe even books an appointment for the day they want. You know then your client is making at least $150 worse case scenario.

 

[Blackman]

Thanks for explaining how it works in detail, Paul.

The reason why I mentioned cleaning companies as an example, is because it's quite easy to convert leads into buyers in this market, since the sale amount is quite low, so most people are not too fussed about doing research into companies, making difficult decisions, etc.

If I refer a call to my client, then there's a 80-90% chance that the call will turn into a booking/purchase.

So just to clarify, your clients only pay you a fixed fee per showed up lead, and the ad spend is fully covered by yourself, correct?

I wonder how you came up with the fixed fee figure to charge per showed up lead? Is it based on an average sale value for a business and you must've negotiated with clients to establish that figure?

Following your carpet cleaning example, the services start from around £20-30/room, and obviously every call is different - someone could be after cleaning the single carpet in the living room and someone may want all the carpets in the whole house cleaned.

So would your fixed fee be something like £10 per job? After deducting the ad spend, surely there won't be anything left for yourself?

Just trying to see how I can apply your model in my current niche. Unfortunately, no matter how many free trials I do, guys running cleaning companies are hesitant spending money £400-500/month on advertising without knowing whether it will work for them or not.

 

[Paul David]

So just to clarify, your clients only pay you a fixed fee per showed up lead, and the ad spend is fully covered by yourself, correct?

Yes that's correct.

I wonder how you came up with the fixed fee figure to charge per showed up lead? Is it based on an average sale value for a business and you must've negotiated with clients to establish that figure?

I was already running some ad campaigns for clients on monthly retainers so I had a good idea on the price points. Yes every client knows the show up fee. It's not a negotiation, I tell them the price if they want to try it for 30 days, they can. I had one potential client saying I'll pay you £30 and if they take a package then I'll pay you £60 etc. Sorry doesn't work like that, that model simply wouldn't work. Imagine trying to scale it!

Following your carpet cleaning example, the services start from around £20-30/room, and obviously every call is different - someone could be after cleaning the single carpet in the living room and someone may want all the carpets in the whole house cleaned.

So would your fixed fee be something like £10 per job? After deducting the ad spend, surely there won't be anything left for yourself?

Using the carpet cleaning example the offer isn't for one room, the offer is 3 rooms for a set price. If you want that offer you click the book now button.

So you work out an offer that A the customers want, whether thats 50% off something or 3 areas for x amount. and then B you work out how much it's going to cost to attract those customers, how much your client is making and you then work out a figure for your fee.

In my niche, it's a treatment so the lead needs to get at multiple sessions for best results. So my clients could have a lead come in and pay only £20 for their first session, and have to pay me £60. So they are £40 down at the point but now they've got a client who needs at least 5 more sessions at £40 each (first one is discounted) and offer them various other treatments in future. Alternatively a lead may come in and pay for all sessions in one go and get a discount. And this can be anything from £180-999. I still get my £60.

Once the lead has been into my clients, I never contact them again. The lead is their customer for life.

 

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[Paul David]

Sometimes the bankruptcy could be the best way to start over. Consider the options you have and pick the one that makes the most sense for you. Try not to be too attached emotionally to the house, especially since like you said you don't have that much equity there. Talk to a lawyer about possible options.


If you need any help while you're learning facebook ads, I'll be happy to help and jump on a call from time to time and answer your questions.

Thank you. Much appreciated. I will take you up on that offer at some point in the future!

 

[Paul David]

In the UK you can file for an IVA. During an IVA:
- a third party company negotiates your debt with creditors
- a large chunk is usually written off by the creditors
- you can remain in control of a company

If you want to keep your company, an IVA may be the best solution. If you go for bankruptcy, you can't control a company (for so many years, can't remember how many)

Yes, I've looked into IVA, it's similar to negotiating myself with the creditors. You can't be a Director of a Limited company for 12 months after filing for bankruptcy.

 

[rpeck90]

In the UK you can file for an IVA. During an IVA:
- a third party company negotiates your debt with creditors
- a large chunk is usually written off by the creditors
- you can remain in control of a company

If you want to keep your company, an IVA may be the best solution. If you go for bankruptcy, you can't control a company (for so many years, can't remember how many)

Is this similar to a CVA?

 

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[Paul David]

Appreciate the story!

For your new company, did you validate the product well before hand?

You failed sure, but you learned a lot too. And your tenacity is admirable. Just keep going, eventually you'll make it. Cut the 'I wish I wasn't me' thoughts out of your head. They will undo you. You took risks because you know eventually a risk you take will pay off far greater than whatever slowlaners are doing.

The money you owe the bank is not something to feel guilty about. They're a major bank. The money they lent you didn't exist before you borrowed it. It costs them nothing.

The peer to peer lending is harder sure, but they're making money too and I wouldn't feel bad either. Pay it minimally while you work on the new business!

Thanks for your reply and kind advice. For my new product, I have priced it at the higher end of the market and only have 1 competitor at the price point. They are doing extremely well.

 

[Guest12120]

They are doing extremely well.

How do you know if they’re profitable?

 

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[Paul David]

How do you know if they’re profitable?

They launched 3 years ago now so unless they're playing a really long game using VC money they must be making a profit if spending $80k a month on Facebook ads.

 

[Paul David]

Do you see a pattern?



What are you going to do better than they are?

Do you know their margins?

Do you know this market?

Yes the pattern is clear.

My product is off different design and I’ve also added a matching accessory included in price.

I know the exact cost my competitor is paying for their products as I have spoken to their actual factory in China. They couldn’t provide me with the specifications I needed as they had exclusivity agreement with my competitor so I use a different factory.

I’ve been researching this market and products for the past year.

 

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[Paul David]

Have you validated the different design with your market and that they care about the accessory?

It’s not possible to validate the design without actually launching the products.
I’ve had great feedback about the designs since launching however.

The design is more of a personal preference rather than product differentiator. For example what I think is a nice pair of shorts you may completely disagree with.

The accessory is more to add extra value and it actually didn’t cost me anymore by including it.

 

[RazorCut]

Facebook ads could be losing money and just a customer acquisition tool. Do they sell other things? Sell on other channels?

You just never know.

Good point but I would guess @Paul has already made a purchase from them and gleaned all he could from their funnel process and followups. If not he's missing vital information and I think he's too smart for that despite previous indiscretions.

Paul, how are you estimating their monthly FB spend?

 

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[100k]

I’m not selling batteries anymore! And I only ever tried to sell them for a short period of my twenty year story so I think you may be getting your wires crossed somewhere.

I sold power adapters for the majority of my time alongside a computer repair shop but also tried other similar niches. I have now exited all and the niche I’m currently in is completely different to anything I’ve done before.

Sorry I meant power adapters or whatever it is that you're selling (to me it seemed like you were always selling the same thing).

My mistake. Seems like you've got some plans that you want to see through to the end. So let me just wish you the best of luck. Was just trying to help.

Have a good day.

 

[Paul David]

Other than having a family... your situation sounds eerily familiar! While you've received some fantastic advice on the business front... I'd like to talk about your psyche. Some powerful & deep stuff you've told us there, so congratulations on that. Since you're a Go Getter, I doubt Depression could be it.

However I recently read a book from Dr Gabor Maté who works in the downtown core of Vancouver in Canada, and he clearly explains in his Book In the real of hungry ghosts that un-diagnosed and untreated ADHD can wreak havoc due to the brain founding numerous ways to heal itself. If your debt was generated solely due to your business, that might not be you. But if you have an habit that you can hardly control... and made this debt ballooned up... then that ADHD right there! (mine is food) He also wrote another book called scattered mind more guared towards ADHD that I didn't read yet.

But if beside it there's something that you literally can't control by however means you tried... then ADHD might be it! My way of coping was with massive amount of food. But due to being a bodybuilding expert, I was able to never get obese even tough I was eating a lot. My intellect simply delayed the inevitable... and you seem wayyyy smarter than me... so it might apply to you as well. Please keep in mind that I'm not a doctor, so this might not apply to you. In my case, thanks to my bodybuilding route, I went the supplement way instead of the pharmaceutical way to solve my issues. PM me if ADHD applies to you, and you'd like to try what supplement I'm taking!

But if you do have undiagnosed ADHD... you can't fight this without mediation (supplement in my case) Got nothing to do with you... but your brain is finding whichever ways it can get at it's disposal to heal itself. A battle against the Brain is a battle that cannot be won without reinforment. It sucks... but hey there could be worst!

Whatever you do... make sure to get checked out!

Thanks for taking the time to reply.

Yes my debts are due to personal guarantees I signed for business loans and overdraft. For lots of years I made money but the last 4-5 have been a struggle and where the debt has risen.

 

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[Paul David]

One of the biggest challenges i'm struggling with at the moment is my mindset.

Working from home all day whilst everyone is out of the house gives me a lot of time to think. Too much time in fact.

At the moment my whole daily routine is filled with anxious, negative thoughts mixed in with periods of positivity. I can literally have a good half hour and a bad half hour.

I wake up in the morning, check my email for any orders from my eCommerce site. If there isn't any (which there hasn't been for 3 days now) I'm on an instant downer. Thoughts of this isn't going to work, why is it working for others but not me etc.

I look out the window and it's raining heavily. Another downer. I then internally scald myself that I have failed in earning enough money to be able to move abroad where it's warm and sunny most of the time.

I have someone doing my facebook ads at the moment as it nears the end of his retainer. I haven't looked at any stats for a while now. Why? because i don't want to see how much i've lost on ads so far without being profitable.

I'll have to log into my bank today to transfer some salary (which is nowhere near enough) to my Wife's account, i'll be on another downer when i see how much is left in my account. Sometimes i cover up the amount (i know there's enough in there for now) but just don't want to see the bad news.

I get butterflies inside when i hear the letters come through the letterbox. If it's got my name on it then it's someone chasing me for money.

I know this type of negative mindset isn't doing myself any favours at all.

I've been listening to mindset videos from the likes of Bob Proctor to try and get over this. However in one of his videos he said that anxiety is caused by fear and the polar opposite of fear is faith. Both require belief in something that hasn't happened yet. However i believe that's only partly true. I've got anxiety because i'm staring at a financial abyss. The true fact is if my website doesn't get traction soon, or i get facebook clients or try and get a job i'm going to lose my business and go bankrupt.

It's a certainty if these things don't happen. Whereas on the otherhand i can be faithful of my new website taking off it's nowhere near as certain compared to bankruptcy and not being able to support the business going forward. So it's ok Bob Proctor saying this type of thing but in reality it's not correct. At the moment i'd say there's a 90% chance i'm going to lose everything and 10% chance that i'm not. Looking at the situation i'm in.

Is it any wonder i'm anxious? And instantly trying to think positive doesn't fix that.

On a positive note i'm still alive, got two kids and a loving wife. And today i'm going to set up funnels for facebook ads to get some clients. I only need one or two to keep the wolf away from the door. I'm also going to push past my fear of seeing the bad ad results on my campaigns so far and start implementing what i've learned.

 

[GSF]

I'll have to log into my bank today to transfer some salary (which is nowhere near enough) to my Wife's account

Where's this salary coming from, do you have a job/income?

 

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[Paul David]

Where's this salary coming from, do you have a job/income?

I have my company yes. Not making any profit at the moment however.

 

[1step]

You don’t have the cash/time to do two things! Why are you trying to help people run ads and run an e-commerce company?!

Stop with the e-commerce company and just find clients to run ads for. It will be much cheaper for you to go that route. With e-commerce you have to worry about product costs, shipping etc. and there are many more costs you have to factor in that could lead you to lose money that you cannot afford. Just stop it with e-commerce for now and get out of debt!

Also if you’re a Facebook ads expert (I’m assuming since you feel you can charge others) why is someone else running your Facebook ads?

I have my company yes. Not making any profit at the moment however.

Why are you continuing to spend your time on this? You’re $250,000 due to running poor e-commerce companies and now still a company you haven’t profited off of... just stop with e-commerce for a bit, get some clients and get some money coming in

 

[Paul David]

You don’t have the cash/time to do two things! Why are you trying to help people run ads ad run an e-commerce company?!

Stop with the e-commerce company and just find clients to run ads for. It will be much cheaper for you to go that route. With e-commerce you have to worry about product costs, shipping etc. and there are many more costs you have to factor in that could lead you to lose money that you cannot afford. Just stop it with e-commerce for now and get out of debt!

Also if you’re a Facebook ads expert (I’m assuming since you feel you can charge others) why is someone else running your Facebook ads?


Why are you continuing to spend your time on this? You’re $250,000 due to running poor e-commerce companies and now still a company you haven’t profited off of... just stop with e-commerce for a bit, get some clients and get some money coming in

My e-commerce store has only been live for 9 weeks. This is the direction I want go down and has massive potential. Also it doesn't take all day to run facebook ads for it and some instagram/social media posts.

Someone was running my ads because it wanted a fresh pair of eyes on my ads account as it was the first time i'd run one. Since then i've been studying facebook ads day and night and the logital step is bring in clients to generate income.

I can't just stop running the eCommerce company as i have thousands of dollars worth of stock sitting in a warehouse in California that I need to sell.

 

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[Paul David]

This is insanity.

Let's just pretend you are successful and able to make profit on your products. Then what? I have been in e-commerce long enough to know it requires a TON of cash, who is going to lend you money to take advantage of the "massive potential" How are you going to continue to fund re-orders without going even further into debt?

I'm going to fund re-orders from with the profits from the sales. My background is eCommerce, I successfully sold millions of dollars worth of products for 15-18 years before a couple of bad decisions really set me back. Plus some silly spending on personal things.

My background isn't actually facebook ads.

I'm not dropshipping. I've got 1900 products in stock which when sold will bring in $40,000 profit if we meet the target CPA. This is plenty to re-invest.

I have seen an e-Commerce store in the last 40 days go from 0 sales to $40,000. With 30% profit. I've already done a lot of the funding work - products, website, photography, etc. Any future costs will be for advertising only.

 

[Guest12120]

@Paul David Did you manage to lower the cost of traffic (CPC) and get the conversion rate up?

I see that you're running the same creative that still takes people to the collection page instead of the product page. You don't even give your potential customers a chance to see your offer (product page). Most of them just bounce from the collection page.

 

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[1step]

I've got 1900 products in stock which when sold will bring in $40,000 profit if we meet the target CPA. This is plenty to re-invest.

What price point are you selling at? What's the CPA goal?

 

[Paul David]

@Paul David Did you manage to lower the cost of traffic (CPC) and get the conversion rate up?

I see that you're running the same creative that still takes people to the collection page instead of the product page. You don't even give your potential customers a chance to see your offer (product page). Most of them just bounce from the collection page.

At the moment I have some re-targeting set up for lookalikes of people at different stages. The creative is the video which goes to the collection page.

Well that's what the guy has done, i'm taking this back over shortly.

 

[Paul David]

What price point are you selling at? What's the CPA goal?

Sales price is $59 for US customers, target CPA overall (cold, warm, hot traffic) is $20

 

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[Bandex]

I'm pretty confident that I could negotiate a settlement figure of around £8k-£10k with HSBC. The other main creditor which is a peer to peer lending group will be more difficult however I'm pretty sure if I make an offer of £20k-£30k or tell them I'm filing for bankruptcy they may (and should) accept. The lending company would go to the people who've loaned me the money and present the offer to them. If it was me and I had to take £20k-£30k or nothing I'd have to take the money.

So there are options to possibly get the debt down to £40K or something even though yes on paper the debt as it stands is significantly more than that.

Be realistic, the bank and that lending company aren't in the business of losing money, and your low ball offer won't cut it. They'll aim for the whole lot and when you can't deliver they'll collect the insurance.