Jaryd Krause joins us today from https://buyingonlinebusinesses.com/ – Jaryd’s been building and flipping online businesses for 4-5years and is an expert on due diligence and understanding what makes a good value business to buy.
He eventually realised it is a lot easier to buy and flip existing online businesses than it is to try and build one from scratch.
Today we chat about the best types of businesses to buy – (the answer is ‘it depends’). We also discuss how he funds his purchases and how he grows the businesses he buys.
Time is running out to save $500 on your India Sourcing Trip Tour – offer ends 31st January 2020 so head over to www.indiasourcingtrip.com to chat to Meghla and learn more about it. Jeff Bezos was in India recently and said “He also said the online retail giant expects to export $10bn worth of India-made goods by 2025, and that Amazon has already committed to $5.5bn of investment in the country.” If Jeff’s there talking up India’s potential, you should be there too.
- Please join the Australian Seller Family on Facebook TAS.com/facebook – it is a closed group and we’re over 1,000 people! That’s a big family! I have personally approved each and every one of you to join and I’ve knocked back a few hundred along the way!
- If you need help with your Amazon business, get in touch me by heading over the Australian Seller/chris – I’m starting to explore one on one coaching, get in touch for more details.
I do apologise for the audio this episode. It’s school holiday’s and the kids have been ‘playing’ on my computer which meant my normal mic wasn’t working
Transcript
All right, and welcome. back to another episode of the show. So let’s welcome Jared Kraus from buying online businesses is that a.com or a.com.au?
Jaryd Krause 3:08
a dot.com. And thanks so much for having me on.
Chris Thomas 3:11
Fantastic. Super excited to have you on. It’s a topic that I’m really passionate about buying and selling online businesses. So, of course, can you introduce yourself? What’s your background? What got you started on this journey of buying and selling online businesses?
Jaryd Krause 3:24
Yeah, sure. So my background, I was a plumber for many years, and I was just not liking it. Basically, I found myself running away from work, I’d quit and then go traveling. And I realized on one of my trips, I wasn’t running away from a job was running away from my life, which is quite date but true at the same time, so I decided I needed to go wrong. And the goal was to travel and I didn’t know how to do that and make money so I thought I had to do something online. So I literally did the old thing of typed into Google how to travel the world to make money online. And that is what got me started in the online space, and it wasn’t directly through buying sites, but building them myself and failing over and over to a point where I realized 90% of startups fail. And then I started buying. So
Chris Thomas 4:18
what kind of businesses were you trying to build?
Jaryd Krause 4:21
So I built a travel blog, which was quite hard. Everybody with a phone and internet connection was a travel blogger. Basically, in the end, everybody became a competition. So I segue it away from that and I’ll be able to drop shipping site and made a little bit money from both these but it just wasn’t sustaining the expenses that I had to travel. So I needed to buy something that was or do something that I could make more money and buying a site was the best option.
Chris Thomas 4:51
So how did you find out about buying stock because most people you know, they say something like Amazon or a drop shipping or memberships or or subscription something. And then just sort of go for that and try and build something on their own, on their own an email that you received. to buying an online business stumbled across. You’re right. I love
Jaryd Krause 5:10
Oh, no. So I basically came to a conclusion, or I saw a quote or read something that 90% of startups fail. And I was like, well hang on a second. Why don’t I skip that part and see if I can buy a business, if 90% of startups fail. So I went on to Google and type in see if I could buy you know, I know you people were buying these like brick and mortar businesses. But I wanted to be online so I could travel at this stage. And so I thought, I want to buy a website. So I went in to Google and started talking that up and up came flip out. And then that segue to me remote remembering that I’d spoken to or heard somebody speak about buying little websites from flip up, and then it just started to grow from there. Whereas started. Yeah, teaching myself how to buy these things.
Chris Thomas 6:04
So you’ve been able to build a portfolio of sites now, as I understand it, so how many sites you’re actually on?
Jaryd Krause 6:11
currently at the moment I have three websites.
Chris Thomas 6:14
What are your favorite types of online businesses to buy? Do you do affiliates or do you be stuck with drop shipping or is it a promise?
Jaryd Krause 6:20
Yeah, so I did great question. I did start with drop shipping because I that’s what I knew. I knew how to build a blog and a new drop shipping stores so I started drop shipping and bought one more the first site I have a ball I don’t have that anymore. It was a like a subscription. And I stuck I went to that one because it was just felt like less risk were you buying into a customer base who were paying on a returning you know, basis, right recurring revenue, so I bought that don’t have that anymore. And then I was like are I’ll drop shipping. I’ll get instructions. So I bought a drop shipping site, then I bought another drop shipping site. And so I had to drop shipping sites at the moment currently. And I’m looking to sell a couple of businesses and buy some some biggest sites in 2020 and beyond and just focusing on some some different things in 2020, which we may get to later but yeah, that’s what I’ve got at the moment. Then I’ve got my my business where it’s a it’s basically a membership as well, where I teach people to buy sites.
Chris Thomas 7:35
Cool. Yes, we’ll talk about that a little bit later. So but if you’re starting out again, what would you recommend is the best online business model to buy now, like if you’re a new seller, or a new buyer?
Jaryd Krause 7:50
So I really this is, I wouldn’t say that one size fits all in this space. I get a lot of clients come and say Magi what’s the best business model for me to buy? You know, it’s a first sight, I want to just buy the right one. And I don’t particularly feel that there is a right one for everyone. So I asked them a ton of questions is like what resonates with you most? Like do you understand the drop shipping model? Do you understand the subscription model, FBA affiliate? Do you understand content type sites? What? You know, what do you understand? And what do you feel that you would be more confident in or could build better skills in to grow, run and scale one of the sites? And we just go from there? And no, that doesn’t help the listeners listening to this. So what I’ll talk about is some skill sets that you may need that each business would that help. Yeah,
Chris Thomas 8:49
that definitely helps. Because I think it sounds like that’s a fairly common mistake for first time buyers is maybe that they buy a business that they don’t really understand the model.
Jaryd Krause 8:58
Yeah, and the work that goes She’s all with it too, you know. So a lot of people like content sites and membership, many membership or SAS sites, right SAS is software as a service and it can be subscription model. The reason people like these is because 10 Typically they’re less risk, raising a content site can be less risk is because it’s not so heavily reliant on spending a lot of money to make sales or to make income because it comes from traffic sources from social media, or different search engines. And the skills needed for that is to either be a good content writer and understand how to write good copy and get people to take action on affiliate links, or understand good ad placement and understand SEO which is search engine optimization. Now, this is for a site that’s kind of sub 100 k if you’re going to be the owner, and operator that you need to have those skills in your bag or you need to want to at least learn those skills to run that business. And any business that I’m talking about is kind of sub hundred sub 200 k for the skills that you may need because anything above that you can hire people in. So that that said for a membership or a SAS site is you want to maybe at least understand a bit about software to be able to understand if you hire people in or consultants to you know, fix bugs and stuff like that. And you also want to understand why people stay in a membership or stay in a community and how to reduce retention and get sales as well. So you understand a little bit of marketing as well drop shipping you want to be it’s heavily reliant on digital marketing. So, the margins you make apart portion of those margins will profit margin to make from drop shipping products will go into digital mass. Getting Started be paid ads on different types of platforms. So you’d want to be confident in digital marketing. And personally, I am very confident digital marketing have done very well with digital marketing myself, though, I do know that the platforms change and algorithms change a lot. So you either need to have somebody great on your team, hire somebody in or be willing to at least learn the tides and the changes with each which each platform that you may be using for that. So that’s the same with e commerce. You know, ecommerce is drop shipping is a part of e commerce. So you need those skills as well for us and so an affiliate site is a content site will keep that under that umbrella but for an FBA site for people that may be listing in FBA side is a Fulfillment by Amazon that’s also in under the e commerce umbrella box What you do with FBA as you buy products, and you send them to an Amazon warehouse, and they sell them for you on Amazon. Now, the skills that you may be, may need to be good at is products, understanding products and understanding why people buy those products. And also, you know, product development and helping, you know, work with people who are product developers, either in China or different parts of the world to make sure the product can be better and better. And then another really good skill to understand would be writing copy, and descriptions for these businesses. I know that you had somebody on your podcast and most recently that I have listened to pretty sure that we’re talking about different content and different ways you can sell things from FBA, which is an important skill that you need to understand or start learning and be good at or Hi, somebody and so I hope I kind of covered a lot there.
Chris Thomas 13:04
No, that’s perfect. Because I think it’s Yes, it’s definitely not a one size fits all. There’s no doubt about that. So what do you how do you recommend people grow their business? How do you grow your business? Obviously, you buy business for a certain amount of money. And then, you know, the idea would be to try and grow it. I guess you could keep it level bit. What’s your strategy around growing businesses? So does that depend as well on the top of business?
Jaryd Krause 13:28
Yeah, it certainly depends on what type of business but I’ll will give up a blanket structure or strategy for a lot of people and I think this is really important for everybody that is looking to buy a website businesses. First of all, when you buy it, is spend your time at least the first couple of months, even, you know, year understanding the business and why people buy it, buy from that business or work with that business and why people visit the website. Now, that’s really that’s an important part of strategy because sometimes people blast thoughts and I just, they don’t know anything about it. And they can end up making changes and destroy the golden goose with the golden goose is part of the business. So once you understand the business, or if you’re highly skilled, and you do understand the business, before you buy, buy, or as you take over, then the next step would be to prune. And instead of just adding more and doing bigger and doing better, I like to prune aside and take away what’s not working to let the other things you know, to be able to let the other things flourish and you spend more time and focus on those things that are working and eliminate those things that are not working. If you think of like the analogy or an example of a tree that’s a baby tree that’s trying to grow if it’s got weeds coming overlapping over the top of the Going to those things and allowing that to grow. And it’s actually holding back that tray. And that can happen with our business as well. So online to the next part of the strategy is to just prune the business on what’s not working. So you can open up more spaces and more focus to the things that are working. And then once you understand this next step would be once you understand what is working, then double down on it and get really good at it and put more time, energy effort and maybe resources into as well. And those things are the typical things that people talk about when they get to scale and grow a business which will be Hey, I’m gonna do some digital marketing and it could be content marketing, the and depends on I’ll cover three different ways that you could grow business. The first one would be I’ll stick to the membership subscription SAS business model, the first thing that I’d be doing is under Why people actually staying in that membership, and work on retention and asking them what they actually want and give that to them so they can stay a member. So sometimes it’s better to just retain the customers and the clients you’re already have, rather than getting more because it can cost less money, and it can cost less time and resources. So it’s been time doing that. Next, for the other ways you can grow a business is definitely with SEO. So search search engine optimization, particularly content sites, you could look at working on the SEO of the website and first protocol, our first port would be to prune, do some SEO, pruning, and then adding content and links. And then secondly would be a different type of marketing, which would be digital marketing or content marketing. And that’s where I would be looking to scale most of my businesses is once I’ve pruned and other Let’s do everything then really look at the content marketing or digital marketing.
Chris Thomas 17:05
So that sounds like that’s part of your due diligence and when you’re looking at a business you’re looking for the I guess the gaps the it 20 the opportunities and then getting in there and once you’ve understood it all to to update it and have a cry.
Jaryd Krause 17:19
Yeah, sure. Like the due diligence is such a powerful, a powerful process that some people really underwrite. The reason I love due diligence so much and I just read or write to my clients over and over again, just get so good at due diligence because the second and third order consequences from doing that makes you such a better online entrepreneur by doing looking at so many website businesses. You get to see what’s working, what’s not working, how different businesses the growing and you take away those skills or those strategies, ideas and put them in your toolbox and you can use a lighter, the business you may buy. So a big part of the due diligence is yes Looking at businesses and seeing what’s working, what’s not working, how you can grow them, and things that you could do differently before, if you were to take over the business, and that’s a skill, that’s a skill, like all skills alone when we’re born, we know nothing. And everything is love. So you can learn that skill as well.
Chris Thomas 18:22
Awesome. Do you buy distressed businesses that are, you know, declining and then turn around or do you buy businesses have a clear growth record?
Jaryd Krause 18:34
That’s a such a good question. And there are people that do buy distressed businesses. That’s a different, that’s a different ballgame. It’s a different strategy. If you’re really good at a particular type of growth strategy or scaling or understand that niche really, really well, then you definitely have an opportunity to turn around for myself. Hello. I don’t like to go for distressed businesses. And the reason being, is because I like to kind of understand the natural laws. If something’s already falling or declining and going down, it can be a lot harder to change that, right, change that natural law and change the direction of it. So for example, if somebody, you know, throws a book off a balcony, that, you know, an off the third, third level of a balcony, and you’re going to try and change the direction of it, you’re gonna have to be at the bottom, hold it, grab it, you’re going to have to be very focused to be able to grab it at a certain point, and then throw it back up. But imagine if you had a big business, right, and I know it sounds crazy, but imagine if you had like a piece of furniture that somebody’s throwing at, it makes it so much harder to turn that around, and sometimes maybe even more impossible. So I don’t look at the size of the business and got all maybe this one’s a little bit smaller. I could turn around, I’ll just stick away from it. Okay.
Chris Thomas 20:00
Yeah, it’s a great answer. Yeah. Is it a buyers market or a seller’s market at the moment?
Jaryd Krause 20:08
I love it. It’s a good question, in my opinion.
I believe it’s definitely a seller’s market like it’s a good time to sell your business right now, like in the start of 2020 it’s a great time to sell an online business the multiples are high, they’ve never been higher, in fact, for a for an online business, and yeah, it’s a great time to sell a business.
Yeah.
Chris Thomas 20:36
Well, let’s talk about multiples and how they work because I think people get confused about when they’re buying a business. They often think that they get kind of buying the company and and, you know, the volume entry or the you know, what I mean, what’s, you know, I know that with FBA businesses, for example, Amazon businesses that you’re basically buying on a multiple of what’s called SDA or seller discretionary Right. And that’s sort of all of the and it’s based on a monthly SD. So that’s after Yeah, what cost you the inventory and Amazon phase and you know, all that stuff, but it doesn’t include the FDA price doesn’t include things like you know, your accountants and your own time and especially the gross profit that you earn at the end of each month. So you know, how the multiples and valuations work for different types of online businesses?
Jaryd Krause 21:28
Yeah, I love that you sort of just just explain that for everybody because it saved me a lot of work there. I’m sure you’re spot on as well, like it’s, it’s it’s so true is that there’s ad backs and stuff like that. So that’s what I do call it sellers, discretionary earnings. You know, if you’ve bought a car that’s not included as an expense, and all that sort of stuff as well accounting fees and whatever else you’ve got going on. So, in terms of the different types of online business, This is it really the multiple changes depending on the level of risks that may be involved with each business model. So for a drop shipping business, the multiples at the moment average around the 24 to 30 ish months multiple. And that can be also for e commerce business that maybe even a little bit higher depending on if that is somebody’s own product, and they actually own it. Same with an FBA business around that sort of price maybe a little bit more. For an FBI business then particularly drop shipping because drop shipping, if you’re more reliant on doing the digital marketing yourself as with Amazon, they you can put money into marketing, they’ll help you get it put up high the search engine so that’s basically the multiple for the drop shipping and ecommerce type sites. For a guess the next would be sort of a content site, affiliate AdSense type sites, you’re looking at, you know, sometimes as high as anywhere from like a 32 to a 40. to multiple even. Yeah, it’s quite, it’s quite high. And then you and the reason being is because you’re not so heavily reliant on a making sales and be you’ve got a usually you’ll have a lot of traffic coming in from search engines, and maybe even social media, the more
Chris Thomas 23:39
so yes, isn’t it? I mean, if Google changes its algorithm or something you can use. I’ve heard heaps of stories where content sites or affiliate sites have been wiped out overnight by Google update, you know, so,
Jaryd Krause 23:52
yes, interesting. Especially in 2019. There was a big update. Where was that a lot of health sites and niches and different types of advice, I guess, or content or answers that Google was ranking that they no longer believe is the best thing to put in front of people. So yes, that it is a risk, certainly. And you can be wiped out, which means if there is, say, for example, a content site, and that most of the traffic’s it percent to 9% of traffic is coming from Google, then maybe it will have a, it will it certainly will have a smaller multiple, lower multiple than a content site that has, say 40% or 50% coming from Google. And then 10% coming from being and then 10% coming from Pinterest and the rest coming from different other social platforms as well. Just because that platform There’s no platform sensitivity there. So that’s how multiples can can change for sure. And then to for the last business model to select the SAS subscription membership type business model, the multiples that tech typically high we’ve seen last year, those were poor like up into the 50s 50 month multiple for some sites. And that’s purely because if they’ve got a really solid base of members that are paying on a recurring revenue, and they’ve got a good sales model, and you know, they can see year on year growth happening in diversified traffic and stuff like that, then that can really boost up the multiple. For myself, personally, I like to go by what Warren Buffett says, who’s, you know, one of the best investors in the world. He says it’s better to buy a wonderful business at a fair price than a fair business at a wonderful price. Well of Warren Buffett he made so he’s so good. Good health reading one of these books just yesterday. It’s it’s pretty, it’s hard text and it’s not super entertaining, but just there’s so much gold in there as well.
Chris Thomas 26:11
There’s differences between buying a smaller site sort of 20 to say 200 k versus getting out there ran over half a million up to, you know, above. What are the differences in your experience?
Jaryd Krause 26:24
Sure, it’s just I mean, with the businesses sub 200 700 K, they’re selling a lot quicker. And the reason being is because there may be micro private equity companies out there are people with that money where they can just go I like call this is a good add on business and they spend less time doing the due diligence. And it may be not as important to do really good due diligence because they’re going to use that business to grow another business they may have anyway, so they get Make that return back. So typically, with a smaller business, there’s less time spent on due diligence and you can move a lot quicker as you could imagine, those businesses are smaller and there’s less moving parts with a bigger business like 300 K, up to the 5 million range, there’s more moving parts. And, you know, if you, if you buy a bad deal, there’s more risk. So you just want to take your time, maybe you want to, you know, when you’re getting up to the million dollar range, you want to get, you know, financials verified by an accountant, you want to make sure you can do a proper SEO order may get done by a professional. So there’s different like, whereas you can get free tools or tools that you can pay for, for buying something sub 200 and do it yourself, because, you know, there’s less there’s less risk involved.
Chris Thomas 27:56
It depends if
Mr. Berman Yeah, absolutely. But yeah, I get that but like other SDKs are there so discretionary earnings multiples on a sub 200 k site higher or lower than a match be online website that you might buy?
Jaryd Krause 28:14
It’s a great question normally lower in in from what I’ve seen, it’s like, I know I said before, and that was a bit of an era, you know, the smallest thoughts are less risky, actually, I believe in my opinion that that they are more risky. It’s like, if you have a, you know, a teeny that’s cruising through, you know, the waterways as opposed to a boat or a ship, it’s a lot easier for a teenager to tip over than a ship, right? It’s there’s, you know, less risk for a bigger ship. So that’s why I believe that the multiples can go higher, typically for those businesses 300 or 200 k plus Yeah.
Chris Thomas 29:00
With a company out of the Philippines, it’s an investment fund that buys Amazon FBA businesses. And they, they sort of got that roll up model where they buy smaller businesses sub 500 K. And then during the process of combining all the products within those FBA businesses into a much bigger business that they can hope to flip for a lot high multiple. So it’s quite interesting how the different sorts of buying selling multiples are working at the moment. Yeah. So what about I guess negotiating a deal? I you know, you got to get something on the table. You’re thinking pretty seriously. They’re buying it when you actually start negotiations with the cell.
Jaryd Krause 29:39
How I start and I tell my clients is there’s a cold that happened that’s really important. It’s called the sellers coal. And that’s what we call it anyway is when you have a cold, the seller any ask about the business towards the end of the call, I like to just suss out where they’re at, and what they’re, you know, it’s really important for you to understand What they actually want out of the business out of the South, sorry. And so just ask that, like, it doesn’t have to be coming with some crazy negotiation or crazy deal that super complex, that’s going to be very beneficial to just use the buy ads, probably, in my opinion, not the best way to go. Because there’s two parties in the, in the deal here. And the more that you really look out the seller, the more that they can look after you when you buy the business as in terms of training and helping you get this thing, right. So I really decided to focus on and put relationships first, before a hardcore negotiation or deal. So I really find that important and that’s why we have a question. It’s like asking them like what seemed important for you to get out of the sell out of the deal. And just ask them hey, like, are you looking for? You want all your money? You know, would you prefer? You know, you want to structure your question a very good way by asking, you know, would you prefer a lesser amount for the business that I paid, you know, all cash and I just, you know, you got it wired straight to you, or would you like to earn a little bit more, and we do some sort of burnout or seller note
Chris Thomas 31:31
or
Jaryd Krause 31:34
seller financing structure?
Chris Thomas 31:36
Sure, maybe explain. Could you explain what that is for the listeners?
Jaryd Krause 31:40
Yeah, sure. So, say for example, there’s a site will just stick with simple numbers 100 grand shot, and then you have, you want to do an earn out so you offer a percentage of a down payment, and that down payment could be anywhere from 70% to 90%. We’ll stick with it. sticking the girl there, jump in. So you say I’ll give you 80,000 down payment for the business. And then over the next two to six months, I’ll pay the rest out per month, over over the next three to two or six months. So say for example, you just do two months of a stick with four months, right? You still owe another $20,000. So you say, how about we do, you know, you give me three training sessions, one hour training sessions, and over the next four months, I pay you $5,000 each month at the end of the month to to buy the business.
Chris Thomas 32:41
Okay, so that’s sort of Best of the idea there, I guess is to retain the owner within your world to make sure that first of all, sort of reduce your risk and review but also make sure that you’re properly across the business and that their experiences retired for a little while longer after the deal. Yeah,
Jaryd Krause 32:57
yeah, I mean, it just means that still Got some skin in the game. And you can through that time as well and helps you really build the relationship with the seller. And I’ve done this with my deals where I can still contact all the people that have bought my businesses from. Because I really focus on the people first, like the people, people have far more important than money, like far more important, I think this is something that’s key for people to understand is like, if, if you build that relationship with them in that time period, then you know, great opportunities can come from that light down the track and it may not be six or 12 months or maybe longer. But you know, say for example, in two years time you guys are trying to do this like have you tried this before? What work you know, simple questions. If you build a really good relationship, it really helps. So that earn out helps you build the relationship. Yes, it helps them keep some skin in the game as well. But it also Yes, as you said, it does reduce your risk because means you can buy a deal without, you know, you may only have 85 K and you got Wow, like I will this business will give me X amount and I’ll make X amount if I’ve got a second job or something, maybe not to be able to pay the rest out. And it can work that
Chris Thomas 34:18
way as well. Yeah, really good point, actually. So you can actually buy business for a lot less than you actually have. And use use the income from the businesses at once you’ve taken it over to then do the internet and pay for the rest of it as a really clever sort of structure always having want.
Jaryd Krause 34:34
Yeah, sorry. Okay, last question. Or Next question. I had a client who actually bought 50% of the business and, or 50% of a business and he came and said, Look, I’ll run business, all on all own 50% you own 50%? Can you just advise when it was just a great deal, like I mean, he bought 50% of the business. He’s doing the work. It was his first The only one who learn this learn the whole thing and, and then, you know, he had somebody that was skilled knew the business and could just advise and say yes, this is a good opportunity. This is what we could do. So what we couldn’t do, you know, it’s just a great way to go about it like this so many like you can get really creative with how you structure deals. And that’s what I like to do with with my clients anyway.
Chris Thomas 35:21
Awesome. You know, you mentioned before how important relationships are. I got a great bit of advice once you know they all sort of sales adage that people buy from people that they like, and someone I think might have a nice chap and when I was talking to him one day, he said that when he’s doing a deal, by the way, is Chapman is a fairly large online.
Jaryd Krause 35:43
He’s a micro promiscuity.
Chris Thomas 35:45
Yeah, yeah, I’m actually good nights with ice. Yeah, he’s good guy. But he was saying to talk me off air, that people also sell the people that they like so as part of the way that he negotiates is that he really tries to build that relationship. So that Can not only cut the best deal that he can, but also, you know, no one wants to do a deal with someone that’s been very adversarial and you know, want to doing lowball offers crazy stuff. So yeah, keep that in mind when you’re thinking about buying a business. And
Jaryd Krause 36:16
I love that because it’s just it means it can be fun and relaxed as well. And like, the more you look out to somebody else, the more they’re going to look after you, right, like what you what you put in, is what you’re going to get out. Yeah.
Chris Thomas 36:32
Funding your deals, how you do it you are you bringing in equity or private investors, or do you recommend to your students and your clients to bring in outside investment or is it a bank or do you use you bootstrap your deals? How do you how do you structure these deals? And how do you get the capital? Howdy, Reza capital be on the bottom?
Jaryd Krause 36:50
Yeah, so a lot of people come in with some cash I’ve got and then people that don’t have all the cash that they they want Avada is I can go and get funding means different lenders in America. For those who are listening for America, a lot of it’s quite popular to get an SBA loan. Also have a finance broker that helps some of my clients in Australia. And then also there’s the opportunity bringing in you know, a family members want to pop of the business, they can do that as well. I’ve seen some clients that have gotten some cash from other people in their close group relationship where they’ve done that deal as well. Yeah, it’s a good way to go, you know. Personally, I have bought my businesses cash at the moment where a lot we’re getting a lot of investors coming to us saying, hey, Jared, can you buy us the sites, run them, operate them and grow them, and we’re going down that direction as well. Because there’s just such a high demand. There’s a lot of people saying, hey, I want to get in this space has great returns, but I don’t know what I’m doing and it is a risk. If you don’t Know what you’re doing. So we’re going down that track, we’re opening up some, some avenues for investors to come in and we do the work and just take a small, small snippet and the rest goes to them.
Chris Thomas 38:13
That’s really cool. That’s a great model and sort of saying that the online business space buying and selling online business, there’s a lot more there’s a lot more savvy operators that are moving into this space. You know, I mentioned after rock over in the Philippines and you know, yourself and there’s a lot of people now that are starting to put these sort of deals together with other people’s money or they’re creating their own fund like Ace I think he’s gonna go public saying is near if he hasn’t already.
Jaryd Krause 38:38
Yeah, he’s got to these going public with as of the end of last year. Yeah,
Chris Thomas 38:43
crazy. Yeah. So just what maybe let’s just focus on the outside we’re talking about buying sites, what about selling them? What lets you know, when do you flip a site or what stage do you decide right of growing this business or it’s not working or what you know, when when do you pull up you know, business and try that you don’t get it. So
Jaryd Krause 39:02
I think it really I’ll give an answer for everybody and then I’ll give an answer for what I think’s best. A lot of people get to a stage where they’re just like, actually, I don’t want to own this business anymore and they sell it, or they get to a point is like, actually, I can’t maintain it. And it’s like, you know, maybe an algorithm changes happened or the digital marketing space change, they can’t get the results. So the cell at the end as well. Preferably, if you know what you’re doing and you’ve got help, or you’re smart operator, then the best time to sell a business is like when you grow it to a percentage or you grow to a range where you’re confident. You’ve you’ve done the best you can and you don’t feel that you have the skills, knowledge or power to take it to the next level. That’s what I feel is a really good time to sell the business. If you set a goal, and you achieve that goal, not to get too greedy and too greedy and pull more out of the business and just keep going, it can be good to just go, I’ve done my Dasha, I’ve, I’ve got the results I wanted out of the business, I’ve grown at this certain level and leave something on something on the table for the next person. Yeah. Which is helps you sell the business as well. It really does. Like when this still you’ve taken say, You’re really good at SEO, you’ve taken to a certain level through the SEO, doing great SEO work and build it up with good content, then you can sell it on to somebody who has an opportunity in the skills to take it to the next level with doing something else to the business. So that really helps to sell the business if you leave some on the table. Absolutely.
Chris Thomas 40:49
Yeah, I remember being asked once, what would be the three things that you would do if you weren’t selling the business to grow it and that kind of put me on the spot but it also gave comfort to the To the new owner that there was room for growth and there was you know, opportunity and a bit of a plan there. So you know, learning some of the title is super important. there any other sort of little tidbits or gems of advice that you could give to somebody who’s either thinking about buying a business or even selling one?
Jaryd Krause 41:18
Yeah, sure. The best advice for selling a business is get it prepared for sale lack there’s I don’t have the I don’t help people get businesses ready for sale but there are other people out there that do help them it’s not my it’s not my focus. It’s not my actual goal to helping people make a big exit. But I do know that if you’re going to sell your business you best off getting it prepared or preparing it to sell and that means i a, the cutting expenses or just ripping out the waves and showing people where it can grow like do some pruning. Leave some on the table and some great opportunities. Other people, but also make the business attractive, that’s the main thing is make the business attractive to somebody who’s going to buy it. So for example, if you’ve got a site and it’s taking you 40 hours a week to run, and you want to sell it because of that, then not everybody’s going to come into the space and go cool, I want a bit of a side hustle. I can’t they just can’t inspire a business that takes 40 hours a week to run. So look at getting some team involved. And, you know, optimize it or use some artificial intelligence or different tools to use to optimize the site and take some work off your plate and just really, there’s so many different strategies I could go on and on for days about that and make that make that site attractive. In terms of advice for selling. This is my forte, this is everything that I do with people and the biggest advice is just get really, really, really good at you diligence and understand you diligence. And also understand what your goals are both financial goals and your lifestyle goals and make sure you only buy business that is within those goals and make an investment that’s unemotional like the biggest thing that first time buyers do and I’ve spoken to so many people that have bought websites and myself included my first deal was an emotional one. My second deal was an emotional one because I bought in emotionally which is not the best thing for us to do. So having somebody that you can bounce ideas off be solid, be grounded somebody you can bounce due diligence off I think is really really important when you can apply a thought
Chris Thomas 43:43
that’s awesome. And I pointed out these are probably just struggling name was is having really good si peas or standard operating procedures to is a good place to be when you’re trying to sell a business. Yeah, it offers a lot of capital to buy that there are actually procedures in place so that if you go under Boss or wherever you be is or your assistance, you know, struggle and get sick, then you’ve got an operating procedure that someone else can pick up and hopefully easily follow and and pick up the slack.
Jaryd Krause 44:11
Yeah, great point.
Chris Thomas 44:14
I’ll just suck. No, I’m actually sort of trying to do that for my own businesses at the moment. Very slack. But that’s what happens. So,
Jaryd Krause 44:21
it’s so good to do so because you can have a business run without you when you do have good so you can, you can start to back yourself out of the corner and eliminate your need to do things because you know, you don’t need your staff to just come and ask you questions. 24 seven, you said this happens do this. Yeah.
Chris Thomas 44:45
Well, that’s the other thing you said, you know, often, I mean, I’m guilty of this, but just saying to myself, you know, it’s going to be just much easier and much faster if I do this myself, you know. But actually, it’s a lot easier in the end It says a lot more time when you go right Actually, this is something that I do more than once a week or once a day or once even a month sometimes. You know, I I just need to shoot a video or just jump on loom or or you know, can take something quickly shoot a video and how I’m doing it and you know, and then you know, might use a tool like otter.ai Yeah, I think it is we use that. Yeah, it’s awesome is now it’s a mixed age and it’s very, very accurate. It’s amazing I don’t know how it works but anyway seems to just do it like magic and then you can kind of credit transcription of your your audio that you’ve recorded said it there. And then just pop it up into like I use Google Sites just like a free way to build a kind of like a almost like an intranet but but it’s a free website that you can prioritize and invite people to, you know, to browse. So I’m going to cat this just jumped on the window
Unknown Speaker 45:53
as
Chris Thomas 45:55
school kids everywhere.
Jaryd Krause 45:58
I use Google as well for my Peace. And I didn’t even know but one of the team sent me a message the other day saying, Oh, yeah, we’re using order now for this and now. Cool. Yeah, that’s because the sap that URLs are set up and yeah, you’re on the you’re on the mock. That’s great. I’m glad that you brought that point up.
Chris Thomas 46:15
You know, where is actually that? Okay, Matt from a conference last year, late last year with a guy called Delphi mine who has a really interesting program called 52 ways. And it’s worth checking in. And actually, I was really impressed with that day. Yeah, so anyway, Hey, have you had we get in contact with you to tell me more about your business and your services? What have you got the
Jaryd Krause 46:38
show? So how most people will come and find me is through my podcast, buying online businesses podcast and I just like I just tell people to check it out and see if this is actually for them. Because it’s, it’s sometimes it’s not for everyone, and just see if it’s maybe a direction that they want to go down first and foremost, and then if it’s something that we’re interested in, they can grab a free resource and you know, do a little bit of work themselves or if they want my help, then they can jump in and become a part of the community. How that actually works to answer your question is that people jump in to the community. And they get my program where I teach them to buy a website, business, do all the due diligence, and also teach them how to grow it and scale it once they’ve bought up. A big fact that a lot of people love and this is why most people join the community is because I personally do due diligence reviews for people that do jump in the community. And there’s a certain protocol, I need to go to the send them to me and once they get sent, then I go through and do a due diligence review. And it’s just good to have somebody who’s doing that, you know, hundreds, maybe thousands of sites now that understands the judeans processing and really pick the holes of it. And I think the most important thing is to really understand the risk involved and see if you’ll comfortable with the level of risk. risk involved and understand what the possible downsides are. And that’s what I’ve gotten really good at over the years. And so that’s a big benefit to a lot of people, then the community itself is great, because a lot of people jump in and they create friendships. And when you’re in a network of people doing five, six and seven figures in business, you know, your network is your network. So a lot of people find a lot of value just by being in our group, and the discussions and the trainings, and there’s a lot of bells and whistles and stuff, but we won’t go into that now. Yeah, that’s, that’s what I do. And All right, well,
Chris Thomas 48:36
and we, so what’s your website in and we’ll put a link into the show notes. This is Episode 83. So if you head over to the Australian seller, calm forward slash 083. Hopefully, there’ll be a big audit transcript of
Jaryd Krause 48:52
what doesn’t always get it right. But it’s quite easy. There was your website and how do we how do we get actually get in touch with you so it’s a buying Online businesses.com so buying online businesses plural.com. And then you can just contact me from my contact page. Or if you find me on, you can type into Google or any social media, Jared Kraus. So Jay AR wide DK are a USC. And I should pop up and you can contact me that way.
Chris Thomas 49:26
Fantastic. Jared, thank you so much for spending a good 45 minutes or so with us today. I’ve listened as you as at least got something out of that conversation. And yeah, I think buying and selling websites is a really, really interesting space. So I’m grateful for your experience today and look forward to catching up with you again soon.
Jaryd Krause 49:46
Thanks so much, greatly appreciate it, Chris. Likewise.
Unknown Speaker 49:51
links and Show Notes for this episode can be found over at the Australian seller calm forward slash podcast. Don’t forget to subscribe on iTunes, Stitcher or your favorite podcast platform. Sign up to my email over at the Australian celada calm and I’ll send you a note each time I publish a new podcast episode. Thanks so much again for listening
Transcribed by https://otter.ai
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