Boomers & Seniors Buying An Online Business Through Flippa.com

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this is boomer income ideas calm and your host Dan Farnsworth I am welcome to this week’s segment of boomer income ideas calm today we’re going to be talking more about online businesses I believe that this is a solution for many of us boomers and seniors and so I’m doing a three-part series is the third installment today we’re going to be talking with Griffin sin and Joseph Karel of Flippa deal flow which is an online marketplace and with that let’s welcome Griffin and Joseph to the show welcome to the show thank you very much thanks for having us Ablett I’m really excited to have you guys on the show because I think that online businesses is something that can be very very powerful for our boomers and seniors if we just simply know a little bit more about it or if we have a better understanding of it so you guys are kind of a part of an overall series that I’m trying to do to put together so that I can really get a lot of information that helps us gain knowledge is that sound good yeah sounds great okay so flip a deal float give me a little bit of a background very quickly about what exactly you guys do how you do it is is Flippa and deal flow two separate companies or is that the same thing yeah just a few and hit on that yeah so so clip letta is our pork company it’s an online I marketplace a lot like eBay right so instead of selling an old tennis racket come on Flippa you can sell your website or your domain or your app now within Flippa it is it is a full-service do-it-yourself marketplace right so you actually would come with your website come to flip a start and auctions and our users can place bids on it with deal flow it’s a little bit different in that it’s a full-service brokerage so you have a broker who will actually take your business do due diligence on it list it for sale and handle all negotiations for you from the marketplace side you’re going to be doing that yourself on the deal flow side here you have a broker to do all that for you oh it’s kind of the primary ok I see so if you’re just actioning your side off if you’ve got some site that’s in place and it’s generating some income and you simply want to auction it off you can list it on flippa in the auction and you’re handling everything in the transaction yourself on the other hand if you are it’s kind of like a difference between a one-percent a real estate company in a six percent real estate company if you if you actually want someone with expertise to help you figure out how much it’s worth how to market it how to get the most out of you or your site you’re going to come to deal flow which is that brokerage right the hell no clothes mainly going to be focused on businesses that are going to sell for anywhere between you know 75,000 on up to eight figures if you have a business that’s you know in the 10,000 to twenty thousand dollar range the flippin marketplace is probably your best option if you have a business that’s more complex it’s got you know a lot of different kind of caveats to it maybe you’ve got inventory on site you’ve got about twenty thousand dollars in inventory you’ve got multiple employees across the world then you probably going to want to think about going through the brokerage arm because they’re going to be able to really help you sell that business a lot of people might only sell one business their entire life so going to a broker does this every day it definitely has some advantages when you’re talking about a more comprehensive a complex business okay on the on the auction site tell me a little bit about that if someone is selling their their site is there a reserve can they can they put it on that you know i’m going to start this oxygen but if i don’t get to this specific level then I haven’t hit the reserve and so I’m off the site and then maybe I’ll go to deal flow and have you guys actually list it and sell it how does that work yeah yeah yeah so you can start your auction at whatever dollar amount you want we recommend a dollar just because it gets a lot of interest and right out of the gates and you do have a reserve as well so let’s say and you know best-case scenario you sell your business for 50,000 but you’d be k selling it for 30 you put a 30 thousand dollar reserve and one sharp one sour bitter see that the reserve has been met though they’re usually a lot more aggressive because they know each and every bid at that point really counts and then also yeah we do have bio nose which you can see on the side of the listing and we also tell her our buyer base you know maybe hold off on setting it buy it now until the last day or two of the auction because at that point you really know where the interest levels are okay do you help the people in the auction site try to figure out what their sites are actually worth or do you just leave it up to them so it really depends and you can submit a valuation request to us and so if you are earning and I don’t know what the requirements are right now is it a thousand or more random on the 500 okay so if you’re making at least five hundred dollars net per month you’re eligible to get a free valuation from us and potentially and it would make sense for us to represent that business on deal flow but you know even if we don’t end up representing their site we’re at least providing them with evaluation so they can have some peace of mind and understand where the market value currently is for their business and we do have some sales assistants on the marketplace side so if you do have a fifteen twenty thousand dollar website that doesn’t quite qualify for deal flow we’ve also got account managers who can basically provide a deal flow sort of light service on the marketplace where they’ll help you through every step of the auction they’ll optimize your listing they’ll help you with negotiations but as far as who actually is in contact with all the buyers it’s still going to be you the individual not the broker that’s me that’s sort of the main difference dropshipping so there was a there was a product that was involved that these sites basically take an order and then it’s dropship from a warehouse which typically means that they’re they’re not actually purchasing the merchandise and inventory knit themselves they’re just having a dropship is that right yeah for these two okay whereas the the male health review is basically an affiliate site meaning that this person basically writes reviews and from those reviews the the readers are then clicking on some affiliate site and buying whatever the product that you know he’s describing at the time which is why he’s got ninety six thousand dollars in revenue and ninety three thousand dollars in cash flow is that right am i understanding that correctly yeah this has very minimal expenses um yeah so it’s I mean this looks like a heck of a business this is yeah this looks like the type of business that I would love to be operating because essentially it’s in place it’s got a base of readers already really all you have to do is just take it over and continue to write these reviews is that right or am i missing simpler no that’s correct yep what is the risk what’s the downside so for something like this your primary risk is going to be you know if traffic stops going to it or traffic really slows down and perhaps you don’t update the reviews as often as the previous owner was which could impact the SEO rankings and or the the rankings for this business which in return could you know DQ decrease the revenues and gear ultimate net profits yeah and so if you look at the traffic sources the top traffic sources organic search so it’s sitting about eighty seven percent of its total traffic comes from organic search so you have to kind of balance that right like the risk if that traffic source was suddenly gone tomorrow and we know with Google updates from one month to the next you might have rankings that are very solid bringing you a very stable source of income and Google does an update and all of a sudden you lose your entire rankings well when you got eighty-seven percent of your total traffic reliant on one single source to me that’s the biggest risk I would definitely if I was looking at buying this business do a lot of research on the backlink profile you know what kind of links are supporting this business and I without getting too technical links are a huge factor in search engine rankings so you would really want to dive into those links see you know are they high quality media sources are they links that come from websites that are very relevant to this space maybe there are other gyms or maybe they’re other male review sites those are going to be high quality links if they’re just blog comments and you know very poor quality links then the chance that this traffic source is sustainable is going to be a lot lower so I would do a lot of research on that and there’s companies out there if you’re brand new to this space center because a good one they’ll actually do full due diligence for you on a business like this and come back to you with the report and say hey here’s the main risk that we’ve identified here’s sort of what we think you should know going into negotiations and I would always always recommend that if you’re new to this space which I’m sure a lot of your listeners are right on get get some professional help in analyzing the business because on the outset like you said this looks like a very high quality easy to run business but again if you don’t have a lot of experience you want to really get someone into the process with you and help you evaluate that so what was what was the name of that that company again that you mentioned that does the due diligence yes so it’s a cinch Erica comm center ago okay so I I kind of look at that as a acquisition expert or in terms of real estate that would be the appraiser essentially it’s all right yeah and they’re also essentially making sure that the foundation is solid yeah if you kind of want to compare it to yeah to home buying so they’re really diving into the business and doing due diligence on your behalf and they’re going to say here you know this is a red flag this is a red flag this is red flag add this is our findings and they really just kind of you know provide peace of mind in that sentence okay great getting back this health of injury men’s health review I know it’s not your listing but typically how much assistance is given by the seller to the buyer I taking over that business and continuing on that path of success yes so we always recommend that there’s so if we’re going to represent an asset we have the seller essentially sign off and say I’ll provide somewhere between one to three months minimum of transition time and working with new ownership and but the ultimate amount of time is really negotiated upon that’s part of the deal terms when someone’s submitting an offer and so you know maybe the ask price on this is 95,000 and someone might say hey i’ll have you know i’ll give you 95,000 with that said i want you know 12 months of transition time working with you so even though it’s an all-cash offer apfel ask maybe you know the seller doesn’t have 12 months to provide with you know helping out new ownership so that really is you know one of those key factors that you have to figure out when sifting through different offers and to kind of go back to your question though yeah I’d say that the average amount of time is one two three months and you know maybe they’re spending 20 hours a week with each other on a very complex business if it’s not very complex maybe it only takes 20 hours the first week and then just a couple questions here and there I’m over the course of the next month or two well this guy I must have done a very good job at SEO if he’s eating eighty percent of his traffic through organic search so as you mentioned Joseph that can be kind of a two-edged sword it can be great because that’s all free traffic coming in at the same time you can be very vulnerable because something can happen to that algorithm that then pushes you down and really affects the ongoing business I noticed that you have something called submit a by request can you kind of give me an the anatomy of that take me through that process yes so a by request is sort of a new initiative that we’re running at flip up and basically the idea is to really turn the marketplace on its head so the when you show up to the the actual website you’re prompted to start selling it’s a it’s a marketplace where sellers can list their assets and we obviously have many many buyers that are looking for things but one of the historic challenges we have is that because we’re so large and we have so much inventory and there’s so many different things going on on the website it’s been somewhat of a challenge for buyers to find something that it really really fits with their criteria and what they’re looking for on again going back to my previous example if you have an existing business in the coffee space and you want to buy a whole bunch of other websites in that space um you want to be able to come on to flip it and look at just other coffee websites and so the idea with the by request is that we can actually leverage our nine hundred thousand users and ask them do you have any coffee sites so you come to us you fill out this by request and you basically say here’s my budget I’m interested in any websites that have to do with coffee I’m willing to close within 30 days and you know I want a website that’s making at least three thousand dollars a month it needs to get at least fifty thousand unique visitors a month and so what we’ll do is we’ll take that criteria will ball it up we’ll put it out in weekly newsletters will put it out on our social media and will basically tap our network to see what comes back in response and usually anytime we put out a by request we’re getting between 40 and 50 submissions that match that criteria so again going back to the coffee example we might get 40 to 50 coffee sites and within that there might be four to five that are very very solid matches so we’re having a lot of success with that I think Griff just got a pretty pretty nice six-figure business sold through a by request and so the basic idea is that fire comes to us you give us your criteria will put that criteria out to our audience and people can submit sites that match that criteria back to us on it really something we’re only focusing on at sort of the more than ten thousand dollars a range so if you’ve got a budget more than ten thousand dollars this is definitely something email us about email myself Griff will be able to help you out if you’ve got a budget that’s less than ten thousand dollars we’re working on a couple of product features that could that could potentially help you get that criteria to our audience but not something really doing at Ramona well are you able to help us figure out what we’re looking for and by that what I mean I’m 60 I come to you and I say you know I’m 60 years old I’m from the traditional world primarily online is something that I use but it’s not something that I really know a great deal about I’ve heard terms like affiliate sites and dropship sites and FBA sites and things like that I’m not sure what I want I’ve got about a hundred thousand dollars to invest I’d like to invest in something that will generate about a thirty percent return on that hundred thousand dollars on an annual basis I’m pretty good at writing I don’t want anything that I’m actually going to have to hold inventory for and how can you help me find what I’m looking for does that make sense that is exactly what we want that is the the perfect vision of a user we want to come and and ask us about my request because we can we can take that criteria we can go through we can say look you’re good at writing you’re interested in fishing or you’re interested in and some random niche we can go and we can literally find put some detail into the answers that in the criteria you’ve given us and we can put that back out to our audience and get you probably 10 15 websites that are a really good match within a day or two and then we can just continue the process we can go through each of those we can say hey you know how does this one look to you what are your problems with this one this is why we thought it would be a good match for you um it takes you know two to three hours a week we know that you only want to spend two to three hours a week so we can really go into the detail with you and help you through the process and yeah I mean prefer us that’s the best type of I request we can get so you will help me fine tune then in other words I just gave you kind of an overview but then you’ll you’ll kind of come in and help me figure out well yeah but do you like to talk about fishing or do you like to talk about airplanes do you like to you like to talk about furniture and decoration do you help me try to figure that out so then in their sleep you’ll need yeah there’s really only eight or nine sort of key data points that you really want to focus on and the first one is always going to be like site type which is you know is it an e-commerce site is the content site is it software as a service is it services which is you know just an actual service we provide maybe it’s on my marketing or is it a market place like flippa so there’s really only five sort of sight types and then there’s monetization methods well how does it make money is it advertising is it affiliate is it ecommerce if you’ve got really reasonable expectations really clear criteria and we can help you get there as I mentioned then yeah we’re I’d say we’re done pretty successful with this so far and i would think we can we could finding something that is a really good fit great you know i think that the biggest hesitation for most of us boomers and seniors is that we this is kind of an unknown for us as I mentioned we we know how to you know utilize the internet we know how to go to amazon and order something and miraculously it shows up two days later on our doorstep that kind of thing but we don’t know the code behind it we don’t know what hTML is we don’t know what C++ programming is we don’t know what how a shopping cart works all of those kinds of things what’s the minimum that I really need to know in order to get into this so that I’m so that I’m not just totally out of my league does that make sense it does yeah um that’s a very good question and I would say the majority of our buyers maybe not the majority but a good chunk don’t know a whole lot either well that’s so that’s encouraging yeah ABS absolutely and there’s really a lot of resources out there so perhaps you don’t know a whole lot about development and you find a site that requires you know almost two hours a day worth of development work on the site you can always find an outsourced certain tasks of the business so again if you if you don’t know how to code find someone who can code for you and their sites like was it freelancer freelancer com where you can you know already work yep and we can find these different individuals who are willing to work at you know you discuss the rates and everything with them and if it makes sense financially hire them up and you know set them up with a business and then that way you’re just sitting back in and hopefully the business is fairly passive at that point if you’re hiring a couple of freelancers and yeah and just collect your checks really are you guys able to give us an outline of what we’re going to need based on the the site that we’re looking at if I was looking at this men’s health review for instance would you be able to tell me Dan you’re going to need someone who can do some videos you need someone who can do some editing you’re going to need someone who can post a youtube and facebook these are the these are the things that you’re going to need and if you can do any of those yourself great if you can’t you’re going to have to realize that you’re going to have to go hire someone to do that so just be aware that part of your costs going forward is going to be providing those services that you can’t do yourself and here’s the list can you help us with yep yep so every business that we represent for sale we conduct a seller interview or we conduct an interview with the seller within that sella interview that we post on each listing and there’s like an operation section where the sellers really break down their day-to-day tasks the best way to protect yourself it really comes down to due diligence so so hire a company like cincher acha mm-hmm make sure that the business is strong and if there are red flags flush the out with the seller or or maybe you also get you have century kind of dive in deeper if the business ultimately does look solid make sure you understand exactly what the day-to-day looks like maybe you’re asking the seller saying you know hey can you run me through it you know a day in your life essentially no way you can really determine whether you have the technical expertise to be able to run with this business all right I think that’s a great answer one last question who is not a good candidate for an online business give me a profile the the type of person and I’m sure you’ve seen them as they’re coming through and you just look at that profile say this guy should not be in this in this in this business yeah not gonna do due diligence so someone who’s going to just buy with you know being sort of careless and just take all the claims at face value and just just buy it and believe it’s going to just keep pumping out money someone who thinks that passive income is true aggressive is truly passive someone who’s working a pocket website and kick back their feet and is definitely I’ve been working on flippa for three years and I’ve seen maybe a handful of truly truly passive businesses that don’t require any effort and even that has sort of a timeline on it at some stage you’re going to have to get involved so expect to work expect to put in the work because like we said truly passive opportunities are few few and far between Joseph and Griffin I really appreciate this time I think this was a lot of really good information and I’d like to keep in touch with you guys i’ll probably be talking to you about a couple of opportunities in the near future so do that thanks again for for your time and I look forward to talking with you in the future already thank you so much for having a standard yeah hey thanks for joining us on this episode I hope that you found it informative please check out the notes section for more links and relevant information and if you like what you’ve seen please make sure that you like us on Facebook also subscribe so that you’re up to date on a weekly basis of what we’re doing thanks again hope to see you next week you