Ep 243: [Case Study] Buying A Business Making $2600 p/mth Online Vs Acquiring A Location Based Business with Fred

Jaryd Krause:

Don't get sold a dream that does not match the reality of owning a brick-and-mortar business. Hi, I'm Jaryd Krause. I'm the host of the Buying Online Businesses Podcast. And today, I'm talking with Fred, who is a Buying Online Business graduate who had previously wanted to buy a traditional brick-and-mortar business to get out of the job as a plant manager and have more time independence and location independence, but realized that those businesses, the traditional businesses that he was sold, would cost him 50 hours a week. So he turned to buying an online business; he bought a great content website, and he continues to grow it.

Now, in this podcast episode, we talk about Fred's reason for wanting to buy a business and why it wasn't matching, obviously, the traditional brick-and-mortar type of business, why he decided to move into online businesses and his experience with online businesses in the previous years prior to coming to this space of buying online businesses.

We talk about due diligence a lot in this podcast as well. So if you haven't got my framework, make sure you get it. There'll be links to that in the show notes. It's free, buyingonlinebusiness.com/freeresources. It's what Fred has used to buy a business. And we talk about how long it took him to do due diligence, how much due diligence he needed to do to get to a point where he could execute on a deal and know what a good deal looks like versus a bad deal, versus the business that isn't right for him.

We also talk about emotions, the emotions that he went through, and the projections he had by trying to sell himself into buying the first, second, or third business. And then his relationship with us doing reviews on his business that he submitted to us and how that changed and evolved his education to help him buy a better business rather than buying the first business or the first three businesses that he submitted. And we talk about how that's pretty common for most people when they're looking at buying their first business and what projections can do to create failure for yourself.

So then we talk about how long it actually took him in terms of time, not just inputs, to buy the business. And then we move on to talking about the business he bought. He shares the niche, he shares the price, he talks about the negotiation, and then we also talk about what he's doing to grow the site.

And he also has a bunch of things—mistakes that he made after purchasing the site—that he wants to share, or that he did share and warn people about what not to do and what to do instead.

We also talk about the training period and how you can negotiate a good training period to set yourself up for success. I also share what you should do once you buy a business and what changes you should and shouldn't make. And last, we talk about the advice that Fred has for somebody else and his peers that are looking at buying a business for the first time as well.

There's so much value in this podcast episode where I share a lot of things around mindset, emotions, investing, and where beginners trip up. And Fred shares a lot about his experience, where beginners trip up and what he learned through the process. So I'm sure you're going to get so much value. Let's dive straight in.

Do you have a website you might want to sell either now or in the future? We have a hungry list of cashed up and trained up buyers that want to buy your content website. If you have a site making over $300 per month and want to sell it, head to buyingonlinebusinesses.co/sellyourbusiness. Or email us at [email protected] because we will likely have a buyer. The details are in the description.

Fred, hello, and welcome to the podcast.

Fred:

Hello, Jaryd. Thank you. Thanks for having me on.

Jaryd Krause:

Firstly, congratulations on the deal that you have finished and closed. That's super exciting.

Fred:

Yes, thank you so much. It was nice to finally get it done. And now we've had the site for almost two months.

Jaryd Krause:

And you did just send me a chart of the growth that you've had from the site as well, which is super exciting. Let's dive into that towards the end. And I want to talk about some of the things you’ve been doing, growth strategies, and all that sort of stuff, because I know that you've been pretty active. But let's start from the start. Are you working at the moment? What do you do for work?

Fred:

Yeah, so I'm a plant manager. So I manage a manufacturing facility—a pretty large facility with about 400 people in it right now. And just getting to the point that we've been working on second sources of income and we have some rental property, it was time to think about, do I want to be tied to a plant that runs 24/7 forever? So I am starting to work on some Plan B items.

And I had actually been looking at some brick-and-mortar businesses for quite some time. So I took some classes and was involved in trying to find the brick-and-mortar business to purchase and I went under LOI for a few businesses as well. But I was never able to find something that I felt comfortable with. Unfortunately, what I found is that with brick and mortar, until you go under LOI, you don't really get to do the DD.

The DD is very difficult because, with the websites, you actually have data that you can look at. And the business, once you go under LOI, you can finally see detail and then you find that it's not exactly what it was sold to be.

Jaryd Krause:

Yeah. There are some brokers that do require you to sign an LOI before you can get a prospectus and a lot of data. But if you know the website URL, typically they do share a few things to make you a bit more comfortable before going ahead and signing an LOI.

And I guess for people listening, the LOI normally freaks a lot of people out, right? Like where they think if they're going to write a number down on what they intend to buy the site for, that they need to settle, and that contract of sale needs to come through at that price range.

When you're buying brick-and-mortar businesses, is that the same thing for you? Did you feel the need to possibly purchase the business at that price and how was that process for you?

Fred:

With the brick and mortar, you got a broker's pro forma that you were working off of. And until you took the next step, you really didn't know all the details. So when you finally get serious about it and dive into it, after you spent hours and hours investing in researching this particular company, you start to find out once you get the real books in your hand that they're just not what they were made out to be, unfortunately.

Whereas with the websites, you're able to go and use tools like Semrush and Ahrefs, get access to Google Analytics, and actually see data upfront. And now you still have to be able to verify income, affiliates, and things like that, but you have a lot more access to data than you do, I think, with a brick and mortar business. At least, that was my experience.

Jaryd Krause:

Yeah, cool. And so, as you sort of alluded to before, you don't want to be running a plant; you want to be a plant manager forever. What's your big why? What's your end goal? What are you wanting to achieve?

Fred:

The biggest achievement would be just being able to spend time the way that I choose. And I don't picture myself on a beach, sipping Mai Tais. I don't think that would be a lot of fun for me, but I would like to be able to do that if I choose and am able to pick my own hours. And if I want to go see my kids—I have four children. So if I want to go fly out and see my kids at college, I'd like to be able to do that more freely than maybe I can today.

So the long-term is just freedom. My wife and I like to travel. And so being able to go spend a few months in different countries and spend a few years just traveling abroad opens up those options.

Jaryd Krause:

Yeah. Is that what you realized? Because I don't know, I see a lot of marketing for people to buy boring businesses and brick-and-mortar businesses and buy them with no money down. And what I find is that a lot of people are looking at buying traditional businesses and they want that financial independence, but they also don't want to be tied to a location. And they also want some time of independence and not have to go to a certain location there.

And then they get sold on maybe a course with some clever marketing from somebody that can buy a traditional business with no money down, which is mostly not the case unless you are buying like quite large assets, like tens of millions of dollars’ worth, and you have some funds from different places that you can put in. Maybe it's not your own cash, but it's pretty rare.

Was that the case for you? You realize you want this income, and you don't want to be tied to your job and then did you realize, damn, I need to change this approach a little bit to suit your goal? I've found that pretty common.

Fred:

Yeah. I mean, what I do now is have other managers report to me. And so I manage the financials and the output. So I'm used to managing other managers. And that was the thought that, well, I can buy a boring business, like you say, and then I can manage a manager from abroad or from anywhere that I want. I won't have a lot of touch time. But what I found is that that's just not the reality in the price range I was looking at.

I was looking at maybe $1 million to $3 million. So I would be getting an SBA loan. I would be personally accountable for it. And it would end up being a 50, 60-hour a week job anyway. And that doesn't meet the goals. I would be financially on the hook and my time would be gone. And I would find it very difficult to be able to pull away with that much money invested and the liability as well.

Jaryd Krause:

Yeah, it's funny. We get sold that you can earn a business that earns passive income, and you can earn money while you sleep, even if it's brick and mortar. And then a lot of people realize, yeah, you're buying yourself a job.

I had somebody who was looking at buying a traditional business. They bought an online business, like, “Damn. This is really good.” And then they started looking at comparing that to another brick-and-mortar traditional business in their location.

And they just never ended up getting around to it because we would also look at it and be like, Well, is this within alignment of your values and within alignment of what you actually want to achieve and the life that you want to live? And it just wasn't the case.

So yeah, there's a lot of clever marketing out there on buying businesses with no money down, where it's easy and it's a boring business. But when you look under the hood, it's a very different case.

Fred:

Yes, absolutely. Absolutely. So I think I made the right choice. I certainly don't want to get caught in a 50, 60-hour second job.

Jaryd Krause:

Yeah, that's for sure. And so what was the process of you going, “All right, I want to buy a brick-and-mortar business"? How did you discover the online space? How did you make that transition? Was it a thought that you thought I needed to get online or was it something you saw?

Fred:

I mean, I had the experience in the past online. I had built some websites before for a church that I went to, and I did a couple others as well. And I helped a guy with an internet forum that I managed for him, and I added ads to it.

So I had been exposed to it, but it had been like 15 years ago when you could put some keywords on a white background with white text and it would actually start to rank, and people could find it back in those days. I wasn't scared of the internet or technology, but I was watching, and I believe it was a YouTube video from Barnett that you were on. Was it David Barnett? And he interviewed you.

Jaryd Krause:

David Barnett.

Fred:

Yeah, David Barnett. And the light went off. Oh, maybe I'll look into this. And I had heard Flippa mention it a few times and it sounded kind of scary and like an eBay deal where you don't even know what you're going to get. But once I started to look into it and said, you know what, if I can get linked up with someone that can help me learn and make educated decisions, then I could feel comfortable.

And that's exactly what happened with your program is, yeah, I can go out, I can Google search and I can try to learn on my own, but not having the experience, I don't know what I'm reading. Is that accurate information or not? It all sounds accurate. But being able to have somebody that I can trust—that's priceless, really.

Jaryd Krause:

Yeah, shout out to David. He is a great man. And if there was anybody that I would trust to help people buy a traditional business, it would be him compared to all the other people out there. He's just such a straight shooter, a really nice guy from Canada, Dealmakers’ Academy. He's really good at what he does.

Yeah, cool. So it's quite different. I mean, it's quite different buying an online business, but there's also a lot of similarities in terms of due diligence. What did you learn that was a bit different when buying an online business versus a brick-and-mortar business through the due diligence phase?

Fred:

The single-source dependency took me several DDs before that got through my head. And I kept seeing the responses from yourself or whoever was doing the DDs about single-source dependency. And it took two or three for it to sink in.

You don't necessarily see that as much with brick and mortar. If it's been there for 10 or 15 years, they probably don't have a lot of single sources anymore. They've got their business model figured out. And some of the websites may only be two years old, and they may be single-source dependent, and that may work fine until there's a change made, and it could go to nothing, or it could double. And I wasn't interested in that. So I learned a lot by trying to see what's a reasonable single-source dependency. What are they?

I had submitted some DDs where the site was completely monetized on sponsored articles on the site. And I thought that was okay, as I'm reading it. I'm looking at the numbers, and, oh yeah, that's a great idea. In hindsight, that's probably just a race to the bottom. It would be going down over time, I would imagine. Or I had looked at one—

Jaryd Krause:

Yes.

Fred:

Yeah. I was going to say I looked at one that was very dependent on the branding of the person that was running the website and thought, Oh, we'll just put another person in place. And you may be able to do that, but you may lose it all. And if you're spending $50,000 or $80,000 on a website, I don't think that's a reasonable risk to take.

At least it wasn't for me. So your team was able to point that out multiple times on that one. In this case, it was Pinterest, and it was based on one person. So are you sure that's a reasonable risk or not?

Jaryd Krause:

Yeah. This is the funny thing, that when people submit—well, you go through and you learn on the course, like the BOB course, how to get all the data and how to get all the information and put it into the framework. It's based on your goals, your guidelines, and all that sort of stuff. And then you start submitting it. And that's when another level of education happens, where we point out things that are business specific.

So I still talk about it in the courses, right? We talk about personal brand dependency. But when it's like you're thinking about, I'm going to probably buy this business, and we point out the risks—when you submit your DD, just for people listening, we review DDs, due diligences. And then we point out those risks specific to each business that are not something that we can teach to all general businesses. Not every business has sponsored posts, and not every business has single-source dependencies.

But then you start to realize the real risks. And often it takes you multiple due diligences to go, “Yeah, okay, I get the risk now.” And especially when you're about to part with your cash, you’re like, “Ooh, don't quite understand it.” We explain it a little bit. How did you find the process of the reviews? And, yeah, tell me more about that. Was that a big part of your asset selection? Or do you think you learned more through the course?

Fred:

It was the DDs, but I don't think, without the course, I would have had the framework to understand. Because when I submitted a DD, particularly at the beginning, I was already emotionally invested in the businesses that I sent in. I had already decided this was the perfect business. So I had to be able to overcome that emotional decision that I'd already made without enough information to make it. And so that was a big learning experience.

And then the second piece of that was that the responses I was getting from the DD didn't tell me the answer. They asked me to question my assumptions and that made me think. And now you have to critically think because I wasn't given the answer. And I'm not going to learn. We're not going to learn if somebody just gives us the answer. We have to work through it and come to our own conclusion.

And that's what happened after three or four. So I was pretty hardheaded, so it took a while, but I didn't buy any at the same time because, as I remember the second one, I was just, “Well, forget this, I'm just going to buy it anyway.” And that would have been a huge mistake. I mean, that business did eventually sell.

Jaryd Krause:

Yeah. It's such a good thing that you mentioned that. Because of the two things that you mentioned, most people do come in and they're like, "Oh, I've already got a business ready. Can you just review it for us?” And they're just so emotionally attached to it.

And this is the scary thing that I talk about in the mindset at the start of the course, where the scary thing is that when people look at the business, they sell themselves on the business. And then what they do is they picture themselves owning the business and they project and picture themselves what their life would be like, like owning the business and then owning maybe two of those or growing it. And they build this projection and this ideology of this life that they would have by owning that business.

And that's when it can be hard to get that feedback. So I'll take my hat off to you. It can be hard to get that feedback from our team saying, “Well, hang on. Look at this, look at that, ask deeper questions around this, understand this a little bit more.” Because there is a risk there, but all risk is minimized by education. So educate yourself enough to see if it's something that's worth taking on or not taking on.

And that's the key thing is people have that—I’m generalizing, but some people come in and submit their DDs with the level of expectation that we're going to tell them whether they should buy it or not. But the reality is, we're not here to rob you of an education. We're here to teach you how to value businesses yourself.

Because if we just told you whether to buy it or not, you could buy it, and then you might not understand those facets and those parts of those risks enough for you to change them, de-risk or minimize that risk, and grow the business once you've purchased it.

So it's such a key piece of the pie that it would be easy for us to just say, “Yeah, buy the business,” or “Don’t buy the business.” And in the short term, though, it would be easier for you guys as students. “Yep, cool, I'll just buy the business.” But it will be so much harder long term and so much more stressful as a business owner. What are your thoughts on that?

Fred:

I agree with you. Because if I were to buy that business based on just what your team said, then I've almost not even taken ownership or accountability for making that decision. So now it's someone else's fault that I decided to do this, and I wasn't able to handle it. I think we have to make that decision emotionally and intelligently for ourselves.

It'd be like at work, if I walk by a piece of equipment and I hear a squeal, I don't tell the maintenance manager, “Hey, you need to go over there and fix the bearing on the right side of the machine towards the bottom.” I say, “Hey, is this a normal sound that this machine makes?” And then, “Huh? I don't know, I'll look at that.” And then I leave and then they discover for themselves what's going to happen, and they learn from it.

But the same thing, I think, is true for your team. I really appreciate them not saying “Yes, go” or “No, stop.” It was, “Have you thought about this and this and this?” And now I'm accountable for my own decision. So I appreciated that.

Jaryd Krause:

Yeah. Awesome. Thank you for that. It's just a way that we're trying to help people facilitate putting on that Sherlock Holmes hat and investigating it further for themselves, really.

Fred:

Right. I'll be honest, the first few felt like dream crushers, right? It was that little island in Thailand that had great internet reception and there's great business from there. And yeah, yeah, nope, no go.

Jaryd Krause:

Yeah. I'm glad you said that because it's not just the projection that you have that gets squashed and crushed, but it's also the first few that you submit; typically, the first one that somebody submits is like 99.99%, which is not the business that they're going to buy.

So it's not just the projection that people have and then already selling themselves the business emotionally, but also those first few due diligences you do. You put so much more time into those because it's the first one you're doing and you're still working it out. So you are more invested in it than, say, your 10th due diligence because you've done it a lot. You've done your 10th due diligence a lot faster than the first one.

And so you have this—I think we get this attachment. We get attached to “I put so much work into this; it has to pay off; it has to pay off, and the ROI needs to be there.” But the ROI, if we're thinking short term, yeah, we need to get the ROI from that. But the ROI doesn't come from that first due diligence. The ROI comes from all of the due diligence and all of the time that you put into the first one, the second one, and the third one.

That's where the real ROI comes from, because that's the education that you have to take with you after you've done your 10th DD, your 12th, 15th, 20th, whatever it is, and you purchase that one. Because then you've looked at so many more businesses, and you've learned so many more things about risk and growth strategies that you can go away and use for yourself in the business you end up purchasing.

Fred:

Absolutely.

Jaryd Krause:

So yeah. How did you come to the conclusion of the type of business model that you wanted to purchase? How did you come to content sites over e-commerce or SaaS?

Fred:

Yeah. Probably like most people. When I first started looking into it, I thought it was e-commerce only because I just assumed that's how you made money online. I didn't realize that a content website with some ads made more than $20 or $30 a month or something. So it didn't even cross my mind that it was even possible.

So e-commerce I knew was a lot of work—inventory, managing vendors, some of the things that I'm involved with today—and I just wasn't interested in that side of it. I did look at SaaS for a little bit, but I don't have the technical competency to be able to do due diligence on something like that. And I'm pretty hands-on, so I would want to be able to verify what I was being told. And so the SaaS stuff that I did look at, I wouldn't be able to feel comfortable with.

And I did look at a few that were subscription-style services, which I thought were great as well, but I just didn't find one that I felt comfortable with as far as they were used. The ones I looked at anyway were kind of industry-specific, and they had someone behind them that was an expert in that industry.

Now, if one came up in the industry that I worked in, that might have been something I felt comfortable with, but they just weren't a category that I thought I would be able to add value to for the receiver of the subscription.

So content is where it ended up, and I looked at quite a few content sites. I think I submitted probably six or so. I did a lot more than that. I found nine of them in my folders that I had done full DD on and done extra work on, so I had multiple files that were associated with them. And then I got to the point that maybe the first DDs were 12-plus hours easily. And even then, they weren't that good.

And I got to the point in the end that you would notice it within 30 minutes; you could pretty easily see that there's no way that this is going to work out. And so I got to the point where I was on Flippa, Motion, and Empire Flippers, and I was refreshing every single day looking for new stuff because I had already looked at all the old stuff, at least at a high level that was content based.

And then I started seeing sites that would sell. So I'd see something, and I'd go to that, and I'd do a DD. I'd get so far and go, “That’s pretty decent, but I don't like X and Y.” And then you would start to see them sell. Like, “Oh, okay, so maybe I was right that that was decent. It just wasn't for me.”

Until finally, I found this one. But in all honesty, it's like the abundance mindset, I guess you would say, that if I wouldn't have bought this one, I'm sure there's one that was probably even better that I didn't get the opportunity to buy because I bought this one first.

Jaryd Krause:

It depends. That's a hard one to say. But the way I would look at it is spiritually that you bought this one, and because you bought this one, it was meant to be. And life happens for us. So yeah, I'm 100% certain you made the right move.

And I'm glad that you mentioned that it took you 12 hours to do your first DD. And I'm glad that you also mentioned how much due diligence you did. You submitted six and you did nine that you didn't submit. So for the first one, it took you 12 hours to do your first due diligence; that's really good for people to note.

Because they get in and they have this ideology, again, a projection that I can just go away and find a business, get some data, chuck it in the thing, send it to the team, and they'll give me a bit of advice on whether to buy it or not.

And the reality is, it takes work. And it takes people 12 hours; you probably didn't do that in one full day. It typically takes people a week to do their first due diligence. And that's so normal in our community. And I like to talk about this to set expectations for people because they already have projections that it could take them a very short period of time because, hey, I can do DD on a business within an hour. But how many have I done? I've done a lot.

So there's that piece on that time projection of how long something might take. But also, people might have the time projection that, all right, I'm going to start this course and this program. And within three months, I'm going to own a business or I'm going to buy a business. And/or maybe in six months, I'm going to buy a business. Or within a year—at least within a year—I'm going to buy a business.

The reality is, for what you did to get to 15 due diligences, sometimes it might take people six months or nine months to be able to get to that point. Because they might have young kids at home. If they've got a partner and you and your partner are working and then you've got other things going on, it might take you a lot longer to do due diligence. That 12 hours might take you two to three weeks to do your first DD, right?

So it's really good to talk about that level of expectation that people had, like, well, if Fred can buy a business in four months, maybe I can buy one in three months, four months, or six months at least. But the reality is that your life situation might not be the same. And we shouldn't count hours; we should count inputs. And those inputs are how many DDs you did.

So for you, because you've got kids in college, you probably have more time than when your four kids were roughly home. So roughly, how long did it take you to get to the point that you purchased—starting the course and the community with the purchase? Those 15 DDs

Fred:

I think that was about four months. And I went through some spurts where I would put in a lot of effort up front. I tend to be pretty intense about hobbies or anything I grab a hold of. So I would spend two, three, or four hours sometimes in one night working on it. And I would get burned out after a week or two and slow down. And then I would jump back into it and ramp back up again.

But I'm blessed that my wife doesn't work outside of the home. So I don't have to cook dinner. I don't have to take care of the kids. We've got a dog and we've got one kid, a senior at high school who's still at home. So I'm able to play per se more than many people might be able to.

Jaryd Krause:

Yeah. Yeah. That's cool. That's cool. Four months is awesome. Congrats. That's really good. And so you bought a content business. If you're open to sharing, how much did it cost you, and what sort of industry/niche?

Fred:

Yeah. The niche, I would say, would be home and garden. I paid $95,000 for the site, and I paid a 36 multiple in six months, which I didn't feel super comfortable with. However, the site has been growing over the last year. And just thinking from the owner's perspective, I'm using 12 months when the site has already doubled in 12 months.

They just weren't going to accept that offer. I believe they were asking for a 105 for the website, which was, I think, closer to a 40 multiple. I don't believe it was worth that based on the other sites that I looked at.

I went in and I offered them 33x in the six months, which was like $85,000 or $86,000. And it was an informal offer. I had developed a relationship with them. And I just told them. I was just honest. And I said, “I really liked the site. I just don't feel comfortable in that range.” I said, “I'm looking at like a 33 multiple.” They did the math themselves. And I just said, “I'm looking for something in the 33 multiples, and I think we're too far off. So I'm going to just move on to the next site.”

And they responded back and said, “No, I don't think we're that far off.” And then we were able to settle on the 95. And then we made it happen. It took maybe two weeks to work through the process of closing. And then the fun begins.

Jaryd Krause:

Yeah. Awesome. Awesome. Congratulations. So on that, I think you said you settled at 95. Is that right?

Fred:

Yep.

Jaryd Krause:

Yeah. And so how much was the average net profit over those six months that you were basing that multiple off?

Fred:

I believe that was about $2,600 a month. Just shy of $3,000.

Jaryd Krause:

Yeah. And where did you purchase this one from?

Fred:

This one came off of Flippa. And the person that was selling it is actually a company and they have multiple websites, some that they keep and then some that they build up a little bit and sell. So it's an actual company that does this with a team. In some ways, that made me feel uncomfortable. In some ways, that made me feel more comfortable.

One of the nice things is that we've continued the relationship. So as part of the purchase, as I told them, I just didn't have the experience yet. And so they agreed to meet with me one hour per week for two months to go through the website and to go through the strategies that they were using or would use. And they're literally walking me through how to use Google Search Console, how to do the queries and how to look for keywords.

Every week, they asked me to pull up Google Analytics, AdThrive, and Google Search Console and look for anything that changed that went up or down. And then they helped me look at why it went up or down. So they'll have me do various searches and try to see why it happened and understand it so that I can take action if I need to. So it's been a really good relationship. I enjoy working with them a lot.

Jaryd Krause:

That's exceptional. One hour a week for two months is a lot of training. It's more than average. And especially from people that are monitoring the site closely and growing multiple other sites, yeah, you've definitely done quite well with that. So congratulations on that.

Fred:

I mean, I'll tell you one story.

Jaryd Krause:

What did you find that was probably hot?

Fred:

I was just going to tell you one story with that particular group, that right in the beginning, I had to transfer domain ownership and I decided to stay with the provider that they were using. And they were using a provider that had a dedicated server. And it was a... What do they call it? Self-managed or—

Jaryd Krause:

Like hosting?

Fred:

Yeah. Yeah. The hosting itself didn't have a webmail server or service on that server. So I had to add a Google Mail account through Google Workplace. And I had to add that, go through Cloudflare, and change that direction. And when I did that, I broke the site. So the site went down. I didn't even know it went down.

I couldn't get the email to work. The site was down. And then I get an email from their CTO. They said, “Hey, Fred, by the way, the site's down. You might want to go look at that.” And then that broke—

Jaryd Krause:

So you changed the DNS settings, did you?

Fred:

Yes. Yeah. I messed it up good. And the company that hosts the website ended up paying him to go fix everything. And in the end, I asked him, “What did I do wrong?” And he said, “Well, you didn't do anything wrong. It can just take a couple of days, but I have some tricks that I can force the DNS to go through quicker.” So he added it up in 15 minutes, but it was a $300 mistake for me.

Jaryd Krause:

So it cost you $300 to have him resolve that.

Fred:

Yes. That was like his normal fee. But it was worth it because—

Jaryd Krause:

Yeah. And this is the scary thing. When people crash a site—well, that's the thing. I guess one of people's biggest fears is, “I'm going to buy this thing and I'm going to break it.” And look, you can break it and it's okay because it’s always typically repairable and you pay somebody a couple of hundred bucks and that stress is gone and it's resolved.

Typically, you can reach out for support. You might be learning this in hindsight. You can reach out to support, typically with a hosting company and then they'll resolve it for you by going through support tickets and stuff like that.

But to get it done fast, you can throw some money at it. And typically, in the grand scheme of things, if your site's broken and it's one day and a couple hundred bucks, it's not the end of the world, really.

Fred:

It feels like that.

Jaryd Krause:

That's typically the worst-case scenario that can happen with your site.

Fred:

Yes. Yes. And I have a list of other mistakes—

Jaryd Krause:

Thanks for sharing that story.

Fred:

—if you want to dig into any of those.

Jaryd Krause:

Yeah. Let's definitely dig into some of those mistakes. Before we dig into some of those mistakes, what do you think was the hardest part of the journey of buying this business or buying a business that people should be aware of to sort of get ready and prepare for?

Fred:

I think we've already talked about it. I think it's that the initial due diligence that you submit is breaking through that emotional barrier on the first few. Because after that, the emotion went away.

And you mentioned this in the training. It’s like you're trying to prove—you're rejecting the null hypothesis; you're saying, “I'm not buying this site unless I can find a reason to buy it” instead of the opposite direction. Or you start from, “Oh, this is perfect.

I'm going to prove it wrong” and start the opposite way and say, “This site, there's no way this will work.” And when you look into it and go, “Oh, you know what? There's nothing that I can use to exclude it. So this is a good choice.” But it's emotionally a different place, I think, coming that direction instead.

So the hardest part is probably the first two or three. Once I understood that, then it was just finding the right site, which did take some time.

Jaryd Krause:

Yeah. Yeah. Love it. Love it. Yeah. We definitely covered that. So let's, I guess, dig into some of the other mistakes that you've made that we can learn from and that people can learn from.

Fred:

Yeah. So because I've done some websites in the past, I felt more comfortable than I should. I never used WordPress, so my old websites were all in HTML. So I literally wrote them myself. I did them myself. There was no GUI at the time. You might be able to get a template that somebody has built or something, but it was all HTML.

So in my wisdom, let me say what might be a good example. Keywords. There are some words that can be two words or one word. Like a lawnmower, I guess. Is lawnmower one word or two words? Those are different keywords for Google. So if the site is optimized on lawn [space] mower and you change it to lawnmower, one word, it may have consequences.

And so I went through, and I found some misspellings and I went, oh, okay. I will just do a search and replace all of these. Unfortunately, some of those were in the slug. They were in the slug. And I didn't understand that the slug was actually the HTML title.

And so I broke probably 20 pages. Most of the top 10 pages for the site, I broke them. And then it took several days to realize—with the help of who I purchased the site from—what had happened. So when we met and were looking at why the numbers were dropping, we started going page by page. And then we found, oh, why'd they go to zero? And then I remembered what I had done.

One of the other learnings from that was that, as you're making changes to sites, keep a log of what you're changing. So that, in hindsight, you can figure out why it got better or why it got worse. Because once I dove into it, I'm making hundreds and hundreds of changes. There are 212 articles.

So I'm doing grammar checks, doing some formatting, trying to make it a little bit nicer, adding spaces, adding bullets, and doing all these things. And if it gets better, I'm not ever going to remember what I did two weeks ago because I have a list on a page now. It's a hundred long things—small changes that should be insignificant—that I made. So yes, I broke all the slugs.

Jaryd Krause:

Yeah. Which basically means, for somebody listening, that when you change the slug or the title, Google won't recognize it as what it has been ranking for. So they'll try to re-rank it somewhere else and you won't get the same positions and traffic. So it's an interesting thing to do.

But I think what you learned from that is really good. And what you alluded to and talked about before is going through with the team and seeing what changes you've made and how that has impacted the site negatively or positively. And that's the best way to grow any business. v And when I say business and life, it's the same thing. What I put in my body—what works for it, what doesn't work for it—and continue to do what does work and eliminate what causes damage—to the site, to your health, to your business, all that sort of stuff. So that's a really good lesson. You got some other ones in there that are some cool, interesting ones, too?

Fred:

I think those are the big three. The slugs breaking the site, the email debacle where I broke the DNS—those were the biggest ones. There are still a few that I'm struggling with, and I'm having some issues with misspelling specifically. What is it? Like if you take a plant and say lily, lily is L-I-L-Y.

And if you find a page that’s L-I-L-L-Y and you change that—like right now, Google is having trouble figuring out how to index that page, so it's got the correct spelling and the wrong spelling and the slug and now it's confused because I messed it up two weeks ago and Google still hasn't figured it out and I keep messing with it. So it was just making it worse.

Jaryd Krause:

This is what I typically tell people when they buy a site. They’re like, “What do I do? I've got to grow it all. Let's jump into action mode.” And typically, the first thing is just learning the site, doing nothing for a little bit and understanding how it works and then making some small changes but having somebody on your side that's helping you with it.

You've got the seller, which sounds really good as a sounding board and an expert. It's really valuable to have somebody on your side to help you with changing things on the site and growing it. So what are your growth plans for this? I've seen that the sites have already grown. What you shared with me before is that you're going to achieve the highest income month for the site in its existence.

And so you bought a great site. You bought it when it was trending up—all the signs that we look for in a good site when we are purchasing it. So you've stacked yourself up; you set yourself up for success, but I'm sure you have some growth plans. What are you looking at doing to grow this?

Fred:

I mean, the first thing that I'm doing right now is trying to optimize what I've got. So I'm currently not adding content. I'm making grammar changes. I'm looking at competitors that have articles on the same topics and seeing how they did it versus how this site is doing it.

So trying to get the foundation in place, trying to get a good flow of when there's a blog post, what the order of how do you water, plant, or prepare the soil, all in the same order on everything before I start ramping in more content.

But I would imagine that over the next couple of months, I'll start ramping up content. I have two writers that have E-E-A-T already on board who have written articles for the site in the past. And so both of them can do up to an article a week if I choose. And they both have websites of their own. They write very good articles and they're hobbyists. So that's what they do.

So I will turn them on; they're ready to go once I can give them good direction. I need to be able to give them good direction and I'd like to optimize the site for the user. The site's a little bit dated. There's some things with the menu bar and just kind of how things flow and how many clicks a user would have to click on to get to the answer that they're looking for. So I would like to optimize those things and then start adding content on top of them.

I don't see it going towards heavy affiliates or anything like that. I'd like to keep it as an informational content site. We are starting to build an email group that only has like 40 emails on the list. When I turned it back on, it was up to about 40, but it didn't have any when I bought it.

So doing some kind of easy weekly story or something to raise interest from people, whatever is going on, when you plant something, maybe you take a bunch of pictures of it, or you till your garden, you take a bunch of pictures of it or you find a new tool that works well. Maybe there is a small affiliate opportunity.

But I'm just trying to make it a good quality, informative website so that when Google does their updates, it's not going to be affected by them. Hopefully positively affected. Because, I mean, there’s nothing more annoying—like now, you go to the internet, and you try to find an answer, and you run into all these affiliate sites.

And you're trying to find one that's done by a person who actually touched that item and that's what I'd like the site to be. Someone that you can trust who has experience in the field and they're not even trying to sell you anything. There are no intentions of selling.

Jaryd Krause:

Yeah. And that's so good that you're focusing on value. Well, there are people who will explain how to do something and they've got three different products they may use; it doesn't matter which one you choose. It's just like, Hey, this is the one that I use.

You can choose whichever one you want. You don't need to use these ones. You can research your own. Without the attachment to the sale and trying to make money straight away directly from those affiliates, yeah, you're just focusing on value and that's really good.

With email marketing, when you get people on your list, you can set up a branding sequence and put them through a branding sequence. Make them feel quite happy to be on your list. Set an expectation for them. And then what you can do is just repurpose the content that you're publishing, give them little snippets and drive traffic back to your site. But you're also adding value to the email list without them having to go to your site.

And that's good for branding. It’s good for value adding. And then eventually, when things come down the line, you can start doing some email marketing strategies with products and different things like that. So yeah, cool. Congrats. That's really good. How do you feel about the whole experience of buying this site?

Fred:

I'm still a little bit nervous. Like I mentioned before, I'm looking at the site a couple times a day. I'm looking even though the previous owners told me not to look at these metrics every day. I just can't help it. So I'm looking every day. Even my wife will look over my shoulder and say, “What are you looking at that for?

He told you not to look at it every day.” But I just can't help it. I'm watching very anxiously. Watching very closely and trying not to react to noise, I guess, is what I'm trying not to do. But with just that unknown, I feel more and more comfortable with it.

Jaryd Krause:

Yeah. That's great. You mentioned that to me when we just jumped on before we hit the record button. You asked me if I had seen my sites have any impacts from the changes over the weekend and stuff. And I was like, “Look, I don't check that often, to be honest.”

Because I'll just share. I like a long-term strategy and I know that if I'm focusing on value and content and putting it out there, then I'm going to win. I don't need to react to changes. Because sometimes a change may be a little bit of a dip and then we go away—and I've learned this in my own life personally.

I need to change everything. And I change everything, and I make things worse, or I make it so much more of a drama when I could have just left it a little blip, a little dip, and then it could come back, and I've just totally gotten in the way.

Yeah. It's a tricky thing, though. I totally get it, Fred, where you've bought something and you want to make sure it's good and you just want to make sure it's a success and you're monitoring it regularly. It's a pretty normal thing. Eventually, you'll start to get bored of looking at it every day.

Fred:

It won't be as shiny anymore.

Jaryd Krause:

Yeah, exactly. Exactly. Cool. Fred, well, other than what we've shared, do you have any things that you'd like to share with everybody who is looking at buying their first business? Any words or other words of wisdom that you haven't shared?

Fred:

I mean, I think the words of wisdom would be that due diligence is more important than you can imagine in the beginning. And even in the beginning, when you are doing DD and you start to see a site that's not going to work out, complete it anyway. Because you're going to learn more.

And then, in my opinion, when you start to see sites that start selling that you've looked at, it starts to calibrate your eye even better. Like, “Oh, okay. That one actually had value,” where originally you're looking at sites that may have been on there for three months.

And then, of course, as we talked about being cautious about changes in the beginning, Probably leave it alone if it's been running for several years and doing well. You don't need to touch it in the first week and try to break everything.

And then that network, I think, is extremely important. The better your network and the better support system you have behind you, the better you're going to be because you don't have to make those decisions alone.

And then the other thing is the escrow process, at least through Flippa. And I would imagine the brokers seem very safe to me. It was a lot more comfortable than I thought it was going to be. So I was relieved by that. And at least with Flippa, they were emailing me. They were contacting me the whole time, even without CC in the cellar, asking how things were going. Am I getting everything I need? So it was a better process than I thought it was going to be. I expected it to be more like an eBay purchase than what it was. Flippa did a great job, I thought. Jaryd Krause:

That's awesome to hear about Flippa. I went to a Flippa event a couple of months ago and they've definitely made some awesome changes and just really focused on customer support and better assets on the marketplace.

So yeah, I love that you shared that. I love that you shared what you learned about due diligence and networking. And also, I love that you just came on and shared so much through this whole chat. So thank you so much for coming on, Fred. I really do appreciate it.

Fred:

You're welcome. Absolutely. Anytime

Jaryd Krause:

Everybody is listening; thank you for listening. We talked a lot about due diligence. Fred is really forcing it home. And if you guys don't have my framework, which Fred used to buy this business, go away and get it. buyingonlinebusinesses.com/freeresources.

It takes the guesswork out of knowing what data to get and then you can back that up with education through the community if you want to join. If you don't want to join, that's totally cool. You can just keep listening to this pod for free.

And what I would ask you, though—I don't really ask you guys to subscribe. I’d love for you to subscribe. I'd love for you to leave a review. I think this is the first time I've asked people to do that in about a year and a half, Fred. So hopefully, we get some reviews. Hopefully, we get some subscribers. And thanks for listening, guys.

Hey, YouTube watchers, if you thought that video was good, you should check out this video here on 2 Types of Websites Beginners Should Buy. Or check out my playlist on How I Made My First $100k Buying Websites and how to do due diligence. Check it out. It's an awesome playlist. You'll enjoy it.