Ep 150: How To Get Started Buying Profitable Online Business with Ryan Condie [Part 2]

How would you like to learn how to buy an already profitable business? Hey, this is Jaryd Krause, host of the Buying Online Businesses podcast. And in this episode, I'm talking with Ryan Condie, who focuses on acquiring, growing, and holding online businesses for the long term. He started eight businesses, of which six failed and two succeeded. And he's also bought four businesses and continues to grow these businesses while working as an M&A advisor at Quiet Light Brokerage.

Ryan and I talk about the most popular and commonly asked questions we get from first-time buyers who want to buy a website business. We talk about how much you should spend on your first website business. We also answer the question, What type of business should you buy? Then we go through and talk about what type of business you should not buy as well. We also talk about what you should do if you want to quit your job and then what you should do, which is a different strategy if you just want to make a little extra money by buying a website business.

And then Ryan goes through and shares some examples of two of his friends, one who bought a $5,000 online business, an e-commerce business, and one who bought a $2.5 million business. And why they would buy the right business for them at different stages of their journey, and what you should be thinking about when you're buying your first website as well. We talk about how Ryan transitioned into working as an advisor at Quiet Light.

We also talked about how Ryan and I worked out after many years, what skills we were better at as entrepreneurs and what we didn't like doing in our business, how we went and outsourced those tasks, and what process we went through for that discovery to actually happen for us. Then we talk about, lastly, how the industry has grown, how the buying online business industry has grown, who's in the space, where the big money's coming from, and where this space is headed.

This is such a valuable episode, you guys are absolutely going to love it. Before we get stuck, I want to tell you that Ryan and I talk about due diligence a lot. We talk about buying websites. And I don't want you to go away and risk your own money without knowing how to do due diligence. So make sure you go away and get my due diligence framework, which a lot of people have been raving about. It's what I use and what my clients use to do due diligence on businesses. And you can get that by going to buyingonlinebusinesses.com for such free resources, or you can click the link in the show notes and grab that for yourself to use as well.

Let's get stuck in. Today's episode is brought to us by Niche Website Builders, which is a company a few of my clients are using and have used for content creation and link-building services. They do everything from start to finish, so from keyword research all the way to uploading your completed article for you. We've also had Bob members buy ready-made affiliate sites built by Niche Website Builders. So if you're looking to outrank your competitor's content.

Head to niche website.builders.bob. I'll put a link in the show notes for you, but again, that's www.nichewebsite.builders/bob. Do you want to start investing in websites, but don't want to drop $20,000 on your first investment? Check out Odys, where you can buy premium domains to build a website on and add Odys done-for-you affiliate site package to help you grow your website and get seen. Instead of buying your crummy website, buy a premium domain with built-in authority, great SEO, and fresh, quality content for your website. Head to odys.global to check out their great deals. That's odys.global. The link will be in the description too.

I get asked this all the time. How much should I spend on my first business? And I have my own thoughts and opinions about it. But for somebody starting out, what would you say, or how would you answer them, Ryan, who wants to get into this?

Yeah, so probably similar to you, I get this question a lot, and a question that kind of goes along with it is, Hey, is this a good business? Is this a good site? And I would say, you can't approach things like that. How much should I spend on the first one? Is this a good business? I think there are a few factors. Everybody's got different goals. And as you said, you've got very certain goals, and a lot of them involve reducing stress and increasing income.

Sometimes they can. If you find something that can increase your income but also dramatically increase your stress, it's not the right business for you. So anybody who's looking to acquire a business, start a business, start five, 10 years from now, and say, looking back, what kind of business and lifestyle do I want? What kind of goals am I going to meet?

I've talked to a lot of people who just want to make an extra $20,000 or $30,000 a year on the side. They want to keep their job. They love their job. Well, that's a very different conversation than someone who says, I want to go full-time. I have three kids, and I've got these bills I need to pay. They've got to buy totally different businesses. In taking a step back, I say, Focus on five or 10 years from now. What are your goals for it?

That will help determine whether you should spend $20,000, $200,000, or a million dollars on a business because you’re trying to figure out, How do I hit my goals? And What's the fastest and easiest way to do that? And if your goals are, Hey, I want to quit my job and go full-time on this business, But I need X amount of money, you know, Don't go buy a five thousand dollar site because it's not going to be able to hit you that goal.

It might be a good learning Stepping stone, but you know that's how I approach it. So when I say, When does someone buy their first site? It's what they feel comfortable with, and maybe this first site is for learning and they're usually using it as a stepping stone; that's very different. I also think everybody has a different risk profile. I probably have a much higher risk tolerance than most people. I would imagine people might think the same of you too, Jaryd. So in that sense, if it's going to keep you up at night, it's probably not good business for you. Or if the amount that you're spending on this business is going to keep you up at night, you might want to rethink that because that goes to show it's probably not the best fit for you because nothing is worth it.

If you can't sleep for six months straight, that's not really worth anything. Because you're not going to operate well at home with your family. You're not going to operate well in business because it's so stressful. So I think there's a line. I typically say the smaller the business, the riskier it is, but the downside is so much less for the owner, the operator, and the buyer. So I would say there are a couple of different points, and people need to figure out what their risk tolerance is, what they can afford, what their skill sets are, what they're bringing to the table, and ultimately what their goals are.

A close friend of mine just bought his first business, and he spent $5,000 on it. He actually bought it from an Aussie and got the inventory shipped here and everything. He's loving life, and it was a great startup for him. I've got another friend who went big and wanted to go full-time in it, and he spent two and a half million dollars on the acquisition.

Those are two wildly different numbers, but they're both hitting their goals for what they're trying to do, and they're both okay with that comfort level. He's going to use this as a learning experience, and then he's going to roll it into the next one and the next one, and say two, three years from now, he'll probably be buying a lot bigger businesses, but for now, the right business for him is $5,000.

Yeah, it's a very hard question to answer, and that's beautifully said, Ryan. It is just so because you need to know your own personal situation, your risk tolerance, and how much capital you have at the time or how you can get access to it. You also need to know your skill set. There are so many things that are involved with it, and I think that's probably one of the biggest hurdles that everybody has when they're coming to this space is like what sort of business should I buy, how much should I spend, and how's it going to look?

And I guess that's something that you probably talk about a lot with people at Quiet Light, right? So I wanted to ask you about Quiet Light. How long have you been doing that? I didn't know, and when I found out, I was like, This is cool. This is really cool. I'm really, really happy for you. So tell us about Quiet Light, what you do, and all that stuff.

Yeah, you bet. So I've been with them for about a year. I was introduced to Quiet Light three and a half years ago because I bought a business through them. So I bought businesses through all the brokerages. All the brokerages have great pros for what they do, their niches, and everything else. And I hit it off really well with the Quiet Light guys. And let's see, about a year ago, they were looking to expand and add additional advisors, and I said, Hey, this sounds pretty interesting.

I'd become close friends with a couple of them, made some acquisitions and stuff through them, and said, Hey, this seems like the next fit. I also realized, Jaryd, that I was better at doing deals than I was at operating my businesses. And so I brought on a really phenomenal operator who can operate the businesses, and I gave them huge upside equity portions that are going in. And I realized I had a lot more fun doing the deals, being part of the deals, and putting those together.

So with Quiet Light, we're like a lot of other advisors, we help people kind of get an evaluation on their business, see what their business is worth, help put a package together, do a lot of direct outreach, reach out to our list to help find buyers, and kind of coach people throughout that process. I've been part of large and small exits, but what's really cool, Jaryd, is that it doesn't matter how big the business is compared to someone else's. If someone is operating a business, it's obviously meaningful to them, and that exit for them is life-changing. Maybe it's not retirement money, but it's life-changing for them.

And it's really cool to see just the different ranges. And it doesn't have to be a seven-figure exit to be life-changing for a lot of people, as you know, right? My first exit was not seven figures. And it was life-changing for me in the sense that it gave me the capital for the next business and gave me confidence in the next business.

And I see that too. So yeah, that's a little about Quiet Light. We are only online businesses. We do everything from e-commerce to content to SAAS to really affiliate with anything online. And yeah, I'm so happy to dive further into what we're seeing in the market, which is changing pretty quickly.

I would say a couple of years ago, it was kind of a normal market, and fast forward to the end of 2020 or 2021, and it just kind of started to explode. There's a lot of money flowing into these types of assets. It's kind of a new asset. It's not new for us and probably the listeners, but for mainstream, the main street in the mainstream world, these asset classes are relatively new, but there's a lot of money flowing into them. So, you know, there are a lot of businesses coming up for sale, but there's also a lot of money flowing to them. I just see more opportunities for people to find the right business for them.

Yeah, cool, man. Cool. That's great. Congrats on getting good operators! And I think that's one of the hardest things about being an entrepreneur is when you're a new entrepreneur, you've got to just do everything, and you've just got to make it because of that, I know this for myself from my own personal experience. I just thought I was good at everything.

And I just thought, I didn't really consider—and I wasn't—I'm telling you to be straight up—I was not good at all the things. I had to wear all the hats. And I was good at a few things. I was good at organization. I was good at identifying things and having these sorts of soft skills.

I was just in what people will call the hustle and grind, and I went through that process of working too much, burnout, and all that sort of stuff. But through that, I just couldn't identify what I liked—not what I was good at and bad at, but what I liked, which is far more important, I think, than what you're good at and bad at.

And I dare say that you probably didn't like running the business as much as doing the deals, right? So I'm interested as an entrepreneur. And I want to come to where the industry is headed with this, with the financing, and with the mainstream that's coming to it.

But I want to ask you, how did you go about working out what you liked as an entrepreneur—what you liked doing and what you didn't like doing—and how did you do more of what you liked and less of what you didn't like? How did you come across that?

I love that question. I joke that it's taken me to my mid-thirties to figure out what I liked, what I was good at, and all those things, right? Because a lot of times, it does take a lot of trial and error. And you're like, Oh, I don't like this part of the business. Oh, I love this part, you know? And having operated a lot of businesses, some with lots of employees and some with no employees, I realized I was okay at it, but not the best at it. And I didn't love it. I didn't enjoy it as much.

And so I think people will go through this, and it's a lot of trial and error. You start with what you're good at, or if you've got a career that you're working with, you have certain skill sets that you have that you can bring over to your new business or the business that you acquire. That alone, you pretty quickly. In the beginning, you may not have enough money or the business may not kick off enough cash to hire everything out, or at least the pieces that you don't like. But in the beginning, you were doing everything.

And I think that's why, so that you at least know who to hire, what it takes, and what that role takes. But after a while, you start to dial it in. And I don't know how to, someone else can find that out other than just going through it. And then all of a sudden, when you're doing aspects of the business, you're like, I am not a good writer. And I'm saying this for myself, I don't really enjoy it that much. And, um, it turned out that there were great writers all around.

Very happy to write. And so I employed them, paid them well, and that's kind of worked out well for me. Um, so I would say that's probably the main thing, and it's not like a cop-out answer. I think you just kind of have to go in and try it. Running an online business has so many moving pieces, and you kind of have to be wearing all the hats, and you'll know very quickly what you're good at, what you like, and what you don't like.

It's going to be different from business to business. You know, e-commerce has such a different skill set than content. Some of them merge, but sourcing and everything else are very different from finding good writers or writing good content. And so there are different aspects within all these different types of businesses. But I think you just have to jump in and figure out what you like and don't like. And I also think people can start with what they're good at.

What do people tell them they're good at? What have they been doing in their career up to a certain point? Are they good at identifying growth opportunities? They're also good at just maintaining and not breaking anything. All those things you're bringing to a deal, so that ideally you're bringing the things that you like and the things that you're good at to a business that needs those things.

To give you an example, I met Jaryd, a couple of years ago, and he's now a good friend of mine. He's awesome. And I met this guy, and he was a friend of a friend, and he was selling his e-commerce business. And I was chatting with him, and in about five minutes, I realized this guy was so much better than me. He was so far ahead of me. He was amazing. And after like five minutes, dude, let's just stop here. We're on a phone call.

And I was like, Can I just take you to lunch? Because I don't want to buy your business. But let me take you to lunch. You're so much better at e-commerce, all of my skill sets, I don't think I could add any value to this business. And that alone, like, allowed me to then start seeing where the opportunities were for me in particular businesses. And it wasn't that that was bad business. It was fantastic. But I just don't feel like I can do anything better than what he was doing.

So, you know, ultimately, you look back and say, Oh, maybe I should have bought that business. It was a great business, but, um, you'll run into people where you don't actually bring anything to the table, but that's a good place to start as, you know, what are you good at? What do you like to do? And you'll bring that to the business that you're looking to acquire.

Yeah, that's really good. That's a really good thing to think about. I think when you're starting out, you kind of just need to buy something that is at least the right amount of risk for the capital that you're putting in, work it out, and then realize what I like about it and what I don't like about it.

So one of the things that I guess I do for myself and that I've done for many clients in the mastermind is, Look, just write a list out of all the tasks, and then the tasks that you don't like, put them over to the next column, and then let's create a process in the system around them and outsource that. And then I see their business grow.

Not by doing anything else but just doing that because they're just spending the thing that they're good at and the thing that they like, and they just get better at it and they like it even more because they lean into it, and the business grows because of it, right? Sorry?

I'm totally stealing that, man. I'm going to do the same thing because that's such a simple process. I've also seen the same thing work well with due diligence. When you look at due diligence and you're looking at a business to acquire, look at every single task and every line item on the P&L and write a name next to it, Who's going to be doing that?

Like if it says, Content, content is your name next to that, or is someone else's name next to that? That way, you're not missing any tasks. But I love that it's a simple way to figure out what you're good at and then build processes and systems around what you don't like to do.

You know, I love business, but there are just some things in business in multiple businesses that just get me frustrated.

I just do not like it; that task is just like, get it away from me. I don't want that thing in my life anymore. And the quicker you get rid of it, the better your life becomes, the better your business becomes. It's just an important thing. And I think once you start, it's really hard to get to that point as an entrepreneur where you're like, Why am I still doing this? Like, you know?

But I also want to say to everybody who's listening, like, eventually you're going to go through this, and I go through this all the time. Still, you're like, Well, I don't trust anybody else to do it as well as me. Right. and that's okay. Like me, as I've had to grow with my businesses, I've had to say if that business, if that, if that other individual that I'm hiring, whether it's an employee or a contractor, can get 80% of the way there of how I would do it. And they may be doing it in whatever way works for them. That's good enough for me.

There's just not enough of me to go around. I'm going to run myself into the ground. I'm going to hate my life. And so they may not, they may do it better than you, which is very common, but they also may not. You may say, I'm the best person to be able to do this, but if it's not critical to your business, get it to 80% and then move on. Focus on those other areas because you'll grind yourself to a pulp, and that's hard as an entrepreneur.

The reason we become entrepreneurs is that we want control. We want control of everything, but that's also our demise, even though we need to release some of that control to free up our time or energy or move on to bigger opportunities. That's good. That's a really good piece of advice, Ryan. Let's switch to the Industry because bananas, man. That's the way to describe the last year Or two years, just the money that's coming in multiples.

For what I believe, some e-commerce businesses aren't worth that much, especially for people who aren't e-commerce entrepreneurs. I'm mainly leaning towards FBA. Yeah, I think it's just, I can see multiples going up. It's just that, like you said, it feels like a new opportunity to a lot of people with more money. But yeah, tell me what you're seeing and what you're predicting, because you're seeing different deals come through quietly. Yeah, I'll kind of take it back a few months.

So I would say, like, two or three years ago, say 2018, 2019, not a lot of people liked purely Amazon-based businesses. And Amazon FBA is Amazon fulfilled by Amazon. So basically, you have a brand or a product that you're selling on Amazon.com, Amazon.eu, or wherever you're selling them. So two or three years ago, these were not as popular. They were seen as having a very high dependency on Amazon.

You know, fast forward a year and a half to late 2019, or 2020 and early 2021s, earlier this year. A lot of times people started to realize that the backend of these businesses that were operating on Amazon were very similar, and it's true; they're the same PPC, they're the same paper click, and they're the same type of process to launch businesses and launch brands and listings.

On the backend, it's different, right? You have your sourcing that you're doing, So what a lot of people saw on the operational side was that it was very similar across the board. So in a very short amount of time, I think Jaryd has raised $11 billion across dozens and dozens of companies to buy these Amazon brands. And so it's funny because a couple of years ago, nobody wanted them to fast forward. It was like these things were just going gangbusters, and the multiples were increasing dramatically. A few things have happened within that, right?

But just some overall trends. And Amazon FBA is a great space to be in. It's a great business to be in, but you have to be comfortable with the risks and with giving a lot of control to Amazon. I have built, bought, and sold my own Amazon FBA businesses, and that's a level of comfort that I'm okay with, whereas other people aren't okay with it. And so there's a lot of money flowing to the space, but as more money flows to the space, you'll have the demand kind of go up, like demand goes up and the supply's going to go up because a lot of the supply is saying, Hey, this is a great time to sell.

So a lot of times, it will start to kind of even out a little bit. Those multiples for Amazon, FBA businesses have gone up. They've gone up more compared to, say, 2019 or early 2020 numbers. But I would say they're starting to level off a little bit. There's still a lot of money flowing into space. There are the big, famous ones that have raised billions of dollars, but there are dozens, if not a hundred or 200 more, that have raised, say, a million to 10 million, which doesn't sound like that much.

Out and buy anywhere from five to 10 of these Amazon brands and run them and operate them. So I personally think that there'll be a rollup of rollups, and some of these other companies will start acquiring others. And a lot of what they're trying to do is take the good brands on Amazon and try to get them into retail, right? How do we get them into the pharmacies, the corner stores, and the Walmarts of the world, right? I think that's a great path. I think a lot of people are going to be successful at it. I think a lot of people aren't going to be successful at it.

We talked a little bit earlier about the supply chain and some of the issues you run into there. You know, if you have supply chain issues with 10 SKUs, Jared, you've got a problem. You know, you've got 10 SKUs. If you have supply chain issues across 100 companies and 10,000 SKUs, you've got some serious issues, right? So you also have to keep in mind that these, you know, they call them aggregators because they're aggregating Amazon FBA businesses, and they have to be able to operate them.

They have to be able to run very difficult and complex processes like supply chains on the backend. And so most of the time, it's very easy with Excel or Google Sheets to be like, I'm going to buy a bunch of companies. It's a lot more difficult to operate them. As you know, you've operated businesses. So there's a lot of money flowing into the space. I would also say that it's a whole lot easier in theory than it is in practice, as everything is. So it'll be interesting to see what happens. I'm starting to see those levels drop a little bit. We're starting to see other types of buyers come into play.

We have Amazon, the government program of SBA loans. Those are starting to come back in. I would also say it's probably not the best time for people who don't have any e-commerce experience to try to compete on the bigger side. I would look at some of the fringe ones where there are a lot of Amazon or e-commerce businesses for sale and look for the ones that don't necessarily fit the mold, but there's still a lot of opportunity there. So hopefully that kind of brings your listeners up to speed on what's happening.

This market is changing so fast with all the money raised. I don't know where it's going to be in three months. Well, I'm going to have to do a follow-up because It is so different than it was three months ago, 12 months ago, and two years ago. It's changing pretty fast, but Yeah, and I think ultimately, if you've got, When I think about valuing businesses, this is kind of like a blanket statement to say that Jaryd is someone I look at a lot of businesses, and you and I might look at the same business, and it might be listed at, say, a 3X.

You look at the business and say, Hey, that business is actually worth three and a half or four times as much because I know how to grow this thing. I have all the right tools. I've already got the right team. I might look at that business and say, Oh, I don't like this part of the business. I don't like that part of the business. I would never pay more than two times that. And I don't think either of us is wrong. There is no right or wrong answer. It's about more of what I bring to the table in terms of my skill sets as a team, and what you bring to the table.

And so if someone just because you're in a bidding war or looking at a business and say I don't think that the business is worth X It's it might be to somebody else right and a lot of times a business is worth what someone is willing to pay What I mean by that is either you need to figure out a new business to look after or you got to figure out different value adds that you're going to bring to that business because if the market rate is X and You're below that you're obviously not bringing the right amount of value to be able to see what the market rate is but at the same time.

Don't get yourself in trouble by trying to overpay because if I overpay because you Jaryd thought it was worth three and a half X, it's not worth that to me because I don't have the right skill sets that you have. So when you're valuing a business, there's the market rate and if you're below it, it's probably not the right business, but if you're always below it, you don't have the right skill sets or network. Wow, wow man. Yeah, we'll have to do a follow up on where the industry is heading, but I can't not end on that piece of advice.

Good. Where can we send people, Ryan, to get in contact with you if they wish to? Yeah, so you can find me on, letsbuyabusiness.com. I'm on Twitter, Ryan Paul Condie, C-O-N-D-I-E. That's probably the best place. You can find me on LinkedIn at Ryan Condie. So I'm kind of all out on the interwebs, you'll find me. Awesome, Ryan. Thanks so much for coming on and we'll chat again soon. Thanks, Jaryd. Appreciate the time.