Thomas_Smale_How_To_Buy_And_Sell_Profitable_Businesses.mp3

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Hey, fastlaners, this is Ryan Daniel Moran with a really special exciting episode of Freedom Fastlane. Today we're really going to be talking about being on the fast lane. I'm going to be interviewing Thomas Smale. Now, I wanted to have Thomas on because he has become one of the leading people on a topic that was fascinating to me a few years ago, which is buying and selling businesses. Now, I'm currently selling one of my own businesses. I'm selling my yoga brand. And that deal will close any day now. We're just working on the final details. But Thomas specializes in helping people buy and sell online businesses. Now this is something I was fascinated with a few years ago. In fact, one of my full time or close to full time things was buying and selling websites and showing other people how to do that. And now I'm doing that with Amazon business businesses and physical products businesses and dare I say real businesses. So I wanted to have Thomas on because he has been in the buying and selling businesses game for a few years now and it's evolved. And the reason why this is so important to getting on the fast lane is because you can literally walk into a business, buy something that's insanely profitable and just build and scale from there. No more building from scratch. And that is one of the biggest hangups that new entrepreneurs have is building something from scratch. Well, you don't have to do that. You can step into an existing business and start growing it from there, provided that it is a good financial decision and it's something that you're going to be able to grow. So we cover all of this and more with today's interview with Thomas Smale.

Welcome to Freedom Fast Lane. Today I'm joined by Thomas Smale. Thomas, thanks for hanging out with us at Freedom Fast Lane.

Hey Ryan, thanks so much for having me on.

Hey, Thomas. We've connected because we apparently ran in the same circles a couple of years ago and didn't know each other. I used to buy and sell a ton of sites and recommend that as a business model and you've been doing that for years and years and now you have an agency that does that. Would you tell us a little bit about that process of how you became kind of building an agency out of something that at least I just saw as something that was a money making venture for me. You turned into an actual legitimate business.

Yeah, so I started out in 2009, like online, just messing around, I think as most people do when they start out with no real like directional plan and then 2010 I started more seriously buying, buying, selling sites for myself. So at the time, I didn't have clients, and I was really buying small sites. So hundred dollars, 200, and then flipping them for like a small amount of profit. So I wasn't making much, but I was maybe like doubling or tripling my money. And then in the middle of 2010, so May, I launched an ebook on site flipping, which at the time did really well, got really popular, had a couple of thousand sales, and off the back of that, people then started approaching me with bigger sites, saying, hey, you know how to sell sites? Why don't you sell my site for me? And then it just kind of fell into it by accident, which created a brokerage service where I'd sell it for them and get paid a commission. And it just so happened as time went on, that became quite a consistent cash flow for me. Whereas buying and selling myself, especially if you don't have much to invest, is quite difficult to scale. The cash flow is quite lumpy. So I found brokering was a service that people wanted at the time. There weren't that many brokers out there, and those that were out there weren't particularly good. So I had a pretty good opportunity to break into the market. And as the years have gone on, it's just kind of built up from there. So pretty much doubled our revenue and headcount for the last four years.

All right, so I want to take this from the very beginning, because obviously I have a lot of experience doing exactly what you just outlined. And I bought more sites than I sold because I saw them as investments. You know, where else could you buy something for 4 to $5,000 and have a monthly check coming in for 500 bucks? You know, 10% a month? That's unheard of. But it was the type of deals that I was getting. So I want to know, first of all, are deals like that, do they even exist anymore? And if so, where are you finding them? And where are you sourcing the deals that come to your brokerage?

Yeah, certainly think it's a little bit more difficult than it was maybe four or five years ago to find those really good deals. The market certainly matured. The demographic of buyer has changed. I think four or five years ago, it's difficult to find kind of legitimate offline investors who are looking at online assets. Whereas now, if you look at the kind of buyers we deal with, these are guys who have a background in investing. They're not online guys like I was at the time, kind of just a college kid. With, with no cash, just messing around. These are guys who are legitimate investors and they see online in the web as a, as a legitimate investment vehicle.

So I mean to find deals, I'm sure they're still out there. I think they're certainly harder to find. There's significantly more buyers than there are sellers. So I think the days of the opportunists, like the site flipping or whatever you want to call it from 2010, those days are somewhat dead. I mean there's certainly still profits to be made, but I think the, the profits these days, if you want to make money buying and selling for yourself, like, like I do, just to kind of keep the, keep the skills sharp and make sure that actually still know what we're doing as well as offering, offering a brokerage service. I feel the potential is really in buying not necessarily a site that's undervalued, but buying a, buying a good site that's a good fit for me or my team skills and then improving that site. Rather than looking for that one amazing deal, look for that amazing fit instead. And that way you actually find significantly more opportunities that are viable. Rather than hanging around trying to find the deal of the year when there are thousands of other people looking for exactly that same same deal.

I want to dive into that a little bit more. But first I want to ask a little bit about what it is that you're looking for when you are acquiring or selling a business. What is it that actually makes a purchase viable to somebody who is a legitimate investor? You know, back in the day it was, it was purely the site's making this amount of dollars and people would take advantage of that. They do a launch and then sell it as like it was a legitimate business. When all they've really done is a launch and gotten some cash flow today, I imagine that it's matured. So what is it that buyers are looking for from a return basis and from a viable business standpoint to actually invest money in an online business?

Yeah, that's a really good, that's a really good question. I think you actually hit the nail on the head when you were talking about say in 2010, a lot of people would launch a site, it would have two months of profits and then it would get sold. What the more traditional investor that's come into the industry is looking for is a sustainable cash flow that's still going to be there in 2, 3, 4, 5 and so on years going forward. So rather than looking for something that might have made a little bit of money and then there's kind of stopped. They're looking for something consistent. So the revenue and the profitability of the site or blog or product or software product or whatever. It is still that the primary driver of value, but also sustainability is important. They need to see that it's been built up in a sustainable way as well, so they can see a future of the business.

So for example, if you had a site that went really popular for a couple of days on say Facebook and then died down, then that's not quite as desirable as a site that's been getting 100 visits a day for the last two years from say Google or something sustainable like that.

And then from there it really depends on the buyer. I mean there are a lot of different buyers out there looking for different things, but almost exclusively people are looking for something that's profitable, something that's sustainable.

And ideally saying that's like a legitimate business model that's not going to die out. So they need to see sustainability in the revenue, sustainability in the business model, sustainability in the traffic, and also sustainability in like the legalities as well. Especially on bigger deals, buyers are going to really dig in to make sure that you're not selling a product or service that is kind of in the gray areas. Whereas I think back in 2010, the difference back then was almost anything went, lots of things got bought and sold that were probably not particularly legitimate nowadays. The market certainly matured. The kind of buyers out there do their due diligence. So I'd say that's the main way it's changed. Rather than just kind of the opportunity of saying that has made money, it's saying that will always make money and that's what buyers really want.

So my, my perspective has always been from the buyer side because I want to acquire as many cash producing assets as possible. So from the buyer's perspective, what type of return should someone be looking for? What elements make for a good site purchase and what should someone expect to pay as far as multiple goes on the profit that they'll see from an investment?

Yes, I mean in terms of return, I mean, I guess that also ties in with a multiple. So I mean your average buyer is going to want to see a return between 35 and 50%, I would say on average, which works out to a multiple between two and three times net income. And then on top, one thing you got to remember that a lot of people kind of forget about is that you've obviously then got to run the business. And usually when you buy a business that's sold on what's called seller discretionary earnings. So that's effectively net profit, but does not include what the owner's been paid. So let's say you buy a site that on the outset looks like it's a 50% ROI, which obviously compared to any other kind of investment classes is superior. You need to remember that you have to count in the cost of your time to run that business. So it may well be 10 hours a week or 20 hours a week. So depending how much you value your time, that can reduce the ROI down. Which is why I guess the difference between said business that sells for three and a half or three times and two times is kind of how passive it is. So someone will happily pay a three times multiple for a business that takes two hours a week versus that same business that might be. They're going to pay two times if it takes 20 hours a week. Sure. So I would say yeah, anywhere between two and three times is where I would say 85% of sales full.

Okay. So that those are still from an ROI perspective, absolutely astronomical. Which is what attracted me to this as a business model. The thing that led me into other investments as well was the fact that I had a certain personal capacity for how many online businesses that I could handle. But I'm sure now you're seeing the more mature investor enter the market and be able to handle a large scope of different businesses, almost as a portfolio of web businesses that their teams are running. Are you seeing that as the case? And if so, do you have any insight into what types of.

Deals are most attractive to that type of. I guess an aggregate investor. Somebody who will buy something just for the cash flow and automate it as quickly as possible.

Yeah, that's a good point. I think when started like four years ago, there were very few companies out there that ran portfolios and had any sort of infrastructure. The vast majority of buyers at the time were kind of one man bands. They might have had some, some freelancers. So like you say, scaling beyond the number of hours in a week for you is difficult. These days there are more and more, I guess more traditional investment type fund models coming in who will buy sites or portfolios of sites and continue to run them with a team in place. I mean, in terms of what works, I've seen quite a few different companies consistently buy. I would say the one thing that's consistent across almost all portfolio buyers is they will either buy consistently in one specific niche or they will buy one specific business model. So they need to see some synergies across their.

Kind of group of sites. It's rare to see a buyer who say, buys more than five sites in total if they're completely random and there's no connection. So for example, I've got a buyer who loves to see sites with organic traffic and content because he's got huge team of writers, cranks out about 5,000 articles a month so he can buy a site that might be run by a single person who can only write one article a day, and he can crank that up to five articles a day without a problem. And then you also get buyers out there who are just looking for SaaS businesses, they're just looking for e commerce businesses, they're just looking for blogs. So there's all sorts. But I think the key for the portfolio buyers who have been successful is building a team who specialize in either a particular niche, particular business model, or somewhere where there's some sort of connection across.

The portfolio.

Okay, so I want to squash a myth here because what we're talking about here is not, we're not talking about just an opportunity for the average Joe on the street to get a passive income stream, although that does exist. You can buy a web business instead of starting it yourself. So if you're a new entrepreneur going, I just want a business, I don't know what it looks like. You can certainly buy plenty of businesses and run them a few hours a week and have, and have respectable incomes. But you're also, just to clarify, you're also seeing larger investment firms come in and purchase attractive deals and pay more than they would have sold for, for a few years ago. Because now you're. They're seeing them as legitimate cash flow businesses that they're running and holding on to for the income.

Absolutely. And I think that's the main, that's kind of the key semantic difference there. You're now calling it a business, whereas I think so we might describe it as an online business now. Whereas four years ago people were buying websites. So while they may well have been pretty much the same thing in terms of what you're actually buying, people now see them as a business, whereas back then it was really just kind of a profit opportunity for people. I kind of saw it as a way to make a quick bit of cash, but never saw the websites I was buying as a business. So I think investors, as time goes on and certainly legitimize the market to the stage where I guess they are legitimate investment opportunities and real businesses versus before it was very much kind of the wild west. There are A couple of people doing it, but no one was really seeing it as a sustainable way to build up a portfolio.

And from, from a cash flow perspective, what are on the high end. Give me some of the more high end deals that you're, you're seeing transacted right now from it. From a cash flow, cash flow perspective, meaning what is the type of cash flow that is actually going to attract the, a larger investor and what types of, what types of profit are some of these businesses that are being bought and sold producing? I want, I want the person who is on the sidelines going, I've got cash on the sidelines looking for investment. I'm into, I'm in, in for a new business. I wanted, I want them to hear what type of cash flow is available for their money when they're sitting on the sidelines looking for a business to buy.

Yeah, so I mean we do a real range of sales. So I mean the smallest site we sell might be 10, 20K all the way up to the seven figure range.

Meaning 10 to $20,000.

No, sorry, sorry. I'm talking in terms of asking price. Okay. So a business anywhere from 20k up to a couple of million is a pretty fair range for us in terms of where the investors are looking. The guys who are building portfolios, the vast majority of them are looking in the six and seven figure range. I do have a couple of regular buyers who buy slightly smaller sites as well. So they might go anywhere down to 20 or 20 or 30k if it's a good fit for their portfolio. So let's say they're at buyer who only wants a content site that relies on search traffic. They don't really care if it's 20k site or a 200k site. But generally speaking, the more formal investors are looking maybe $200,000 and up. To give you an idea, I mean just before Christmas we completed the set. I mean I can't disclose the exact asking price but I mean we have it on our site at 1.025 million. So just over a million dollars. And that was making annually 340,000. And it took the owners around 10 hours, 10 hours a week to run.

So pretty much kind of a three times multiple 35% ROI with yeah, maybe five to 10 hours a week of work. And the majority of that work was while they're obviously skilled guys building the site up to where it was when they sold it, it was relatively hands off. The buyer who bought it, not particularly tech savvy, had bought.

Smaller sites before. But had never bought anything of that size. So it certainly didn't involve any specific skill to run it at that stage.

What are the sources of that type of income? I mean if something's making 325,000 and is selling for just over a million, what, what's the source of that income if that somebody who's not particularly tech savvy is comfortable investing that type of money?

Yes. I mean for this particular business it was mainly affiliate income and AdSense income, which for almost any buyer they're going to be comfortable with because it's a relatively passive source of income and there's no Expertise, I mean AdSense, there's no expertise required at all. Affiliate income, a little bit more. Because obviously you need to understand getting like the right products, working with the right networks, getting the right payouts, but they already had pretty, pretty good business model lined up. I mean we also deal, we deal with all sorts of businesses. So maybe e commerce businesses, SaaS, businesses where it's kind of the sale of a software product. In those cases they might be a little bit more technical. The kind of buyer you're attracting has a more technical background. Whereas in the case of this particular business, if it's affiliate AdSense, almost anyone can buy and run that business. Whereas a software business requires a certain type of buyer.

So are these blogs that are ranking in Google, are they help me and the audience understand a little bit about how somebody would evaluate if they could take on a site that was producing that amount of income. I understand that it's coming from ad revenue or you know, from affiliate sales, but what's, let's dive into that a little bit more about where the traffic comes from and what type of sites are really able to be taken over by somebody who might not be a tech savvy person.

Yeah, so I mean I'd say in, in general, while it's not impossible, paid traffic, so pay per click or anything along those lines generally quite difficult to sell to a buyer who's new to the industry. It tends to require someone with a little bit more experience if they're going to buy something with paid campaigns. So this particular business was, got a lot of organic traffic and also got a lot of traffic from social sources so like Facebook, Twitter, etc. And it really relied on posting good content on a regular basis and then the nature of the good content and the readership and kind of following it built up, kind of did the work for you. So you, you'd make a post, it would go out there, people would Share it on Facebook, people would tweet about it, people would share it on Pinterest and then it would naturally rank quite well in, in Google. So that was quite a good, it's kind of a good business for someone who doesn't really know what they're doing in terms of online because there really wasn't that many moving parts for them. The good content kind of does the job of getting promoted for you. So almost anyone can run that business model. Like I said, pay per click a little bit more difficult.

Any sort of paid traffic could be quite tricky. I mean I've seen all sorts of different traffic sources over the years, but I'd say the most desirable would be organic traffic. People like the idea of kind of posting good content and getting.

Use the term lightly. But free traffic from Google.

Anything that involves sharing is always good. So if you've got the kind of site where you've got.

Users who are going to share your content, that's always desirable with buyers as well because they know that they don't really have to do much work beyond posting good content. And then people will kind of do the hard work for you and share it.

Now what about product sites? Are there any sites that are being transacted where there's an actual unique product being sold? Like an information product on Amazon Business? Anything where there's something unique to the business. The reason I ask this is because when we're talking about ad revenue, I still interpret that as, that's more fluid, as a cash flow business. As a cash flow, a cash flow source. But we're talking about unique products that to me feels like a real business, like something that would really attract myself or attract an investor. So are you seeing those types of businesses transacted too?

Yeah, absolutely. I mean we see products either come through, they might be a unique range of physical products, a single physical product. They might be software products are very popular with our buyers, whether that's a one time sale product or like a recurring SaaS type business.

So yeah, it could be unique in terms of a physical product. They could be reselling a physical product on some sort of like dropship or license agreement with a manufacturer. So we do see those come through. I mean a lot of traditional offline investors do like buying e commerce businesses and businesses with physical products.

I just feel like it's easier for people to understand and explain if they get a physical product that goes from like a warehouse through a fulfillment center to a customer. So that's, that's a model that almost everyone can Understand?

Sure.

It's the kind of thing you can explain to your, your parents or your grandparents. Whereas I think like a software product or an ad based site, the average person on the street doesn't really get that. Whereas everyone knows how Amazon works for example and they kind of get the idea of someone pays money on your site and gets sent a physical product. So yeah, E commerce, anything with.

Physical products, always popular, especially with newer and kind of buyers with an offline background. Software products and SaaS businesses are popular, but more with industry experienced buyers rather than the first timers kind of getting in it for the first time.

Now you said something interesting to me before we recorded this call, which was that you will intentionally overpay for a business or overpay compared to what someone would consider market value for something that you know you could add a significant amount of value to. Would you comment a little bit on what you mean by that?

Yes, I mean when, when I started out and kind of when you're in the industry as well as you probably know when you, if you found a good deal, you could often get that deal without that much competition you might, it was almost possible to buy sites for less than a year of income. Right. Four years on the industry, significantly more competitive. There are a lot of buyers out there and there's, I mean a relative lack. There's quite a big gap between kind of supply and demand. So the number of legitimate, like profitable sites out there is relatively minimal in comparison to the number of buyers. So for every, I guess for every site that goes out there's 100 unique buyers. So if you're only ever willing to pay kind of market value or just below, you're not going to get very many unique, very many deals done. Whereas what kind of my perspective and like approach to business is if, if I see something I like and I think I can make it work or improve it, then why not pay it? Even if I have to pay a little bit more than the market, if I can, let's say it's an ad based business and I know I can improve the ad, the ad placements to double revenue overnight. Why not pay more than the person next to me is willing to pay, they don't see any improvements in it. So I may well pay. I mean I bought a site a couple of years ago and I think I paid almost five times annual income, which I mean even through my own brokerage that's high. I don't see very many sales of that level. But I saw a site I knew I could Improve it. I knew I was overpaying, but I was making it a no brainer for the seller. He was always going to sell that business to me. I paid more than I should have, but it meant the, this, the kind of buying situation never went competitive. There was no risk of other kind of buyers looking at it. And in that case, I believe I quadrupled revenue within pretty much a month and then sold it for quite a nice profit about a year later.

So it's the same reason why if you're in health care, a health care, another health care business will pay twice as much or three times as much as someone else will pay because they know that they can use your customer list to bring in new revenue into their business. It's a synergistic exchange. So you're looking at the assets that you have and how can you add a tremendous amount of value to a business? And if that's the case, then you'll pay more than the average dude on the street who doesn't have the same assets that you can leverage because you know you can quadruple the revenue in a month's time.

Yeah, absolutely. And while on paper I might not have got a good deal, if you actually look at it, at the end of the day.

I felt like I got a good deal. The seller certainly felt like he got a good deal and the person then bought the business down the line also also got a good deal because I got kind of a bigger and better business than it was before. So in that case, I'm more than happy to overpay as a buyer. I mean, obviously the vast majority of my work is as a broker, but when I'm buying, when I'm dealing with buyers, I'm always advising people to stop getting fixated on price. I think a lot of buyers, especially those who've been around for years, are kind of stuck in their ways and they'll only pay up to a certain multiple, they need a certain roi and they tend not to really see the growth that could be there. Maybe it's just me being young and naive, but I'd much rather take something on and improve it than kind of sit on my principles and never buy anything for an entire year or two, which you see quite a lot.

So let's talk about the seller's perspective for a minute. From a seller's perspective, what types of things does someone need to have in place in order to make their business or their website more attractive to a high level buyer? Are there things that someone can do before they List a site for sale that can garner a higher purchase price than if they weren't to do those activities.

Yes, I mean, it does largely depend on the type of business model. I mean, I'd say in general, if you kind of go through like a list of things you do from a buy perspective, they want to buy business that easy to take over, and there's not necessarily worried about moving parts. But they don't want to be in a position where there's any like, deals in place or any kind of payment processes or anything like that that they can't take over. So you want to be in a situation where, let's say you've got a payment processor and you're using, say stripe to collect payments. You want to make sure that the buyer can continue that relationship and not have to worry about kind of accepting payments for the product or service you offer. Let's say you're selling a physical product. They want to make sure they can take over the supply relationship.

I mean, you get a lot of deals like that. And what you find is that quite often, especially in small businesses, a lot of kind of agreements are made on kind of handshakes or they meet in person. So if you do have a deal with a supplier or anything, make sure you get it in writing. Because from a buyer perspective, they're not going to invest say $200,000 in your business if you're in. The agreement with your supplier is kind of a handshake agreement where you met them in person once and there's nothing actually physically in place. So make sure you've got actual agreements in place. Same goes for staff. If you've got freelancers, why not get them to sign a contract saying they'll work X number of hours a month for X dollars a month. That's the kind of thing so from a buyer that if they know they can take over that business, they don't have to worry about the existing staff, they have to worry about payment processing, they don't have to worry about your supplier.

So everything, all the moving parts, make sure they're transferable. And if you've got handshake agreements, get on paper because a buyer is not going to give you money unless they know they can continue that.

Make sure whatever you've got, like the business itself is going to look or can be explained to be sustainable for the next few years.

So let's say, for example, you've got a blog about iPhones. There's no point making a blog about iPhone5 or selling, say iPhone5. Cases, well, it might be possible in the short term. You need to prove that business can be sustainable in the long term.

So yeah, future proofing or whatever you want to call it, make sure that you build your business with the future in mind. While short term profits are great, if you ever want to sell the business, you need to make sure that you can explain to a buyer why that's going to continue to.

Kind of grow or sustain itself. Another thing that I actually see, I really don't see that much and it's a bit of a shame because it's a really simple thing for people to do. And so many people, regardless of the size of site, anyone can do this. And it's really like 101 marketing, but building just an email list of any sort. There's so many people out there who have websites that have lists of tens of thousands of people and they never even bother emailing them. So it's a really quick win. Anyone can set up an autoresponder. It takes an hour, just send out the odd email. Even if it's just an email once a month to let people know you're still alive, that is like a good value add from a buy perspective because they can see that.

You'Ve only got people who want to listen to what you're talking about. You've got the sustainability there. So if you've got, say that the iPhone business I was just talking about, if you've got a mailing list who are responsive, then it's quite conceivable that when a new product comes out, you can sell it to the list. So from a buyer perspective, there's less risk to them because they know they can keep selling products or service or even a content business even sending more kind of posts to people. If you've got a list, it's such an easy win and so many people just don't do it. I don't know why. I think people are lazy and they don't like setting up in the first place, but you can do it quickly. There are so many cheap tools out there to help you and it's really not that difficult to send an email once a week, once a month, once every two weeks.

I used to say these were my favorite deals. If you could just. If you could find a site with an underutilized list, you can immediately make that profitable and infinitely more profitable. There's no limit to what a mailing list could make. So if somebody's got a large list and they're, they're unused, that's an immediate value add that we can get to start getting roi. I once bought a. These deals aren't as common anymore, but I once bought a product. It was a Digital product on ClickBank with a sales letter written and a customer list of 19,000 people for $750. It was, I mean that's ridiculous. That's a, that could be a six figure figure a month business. And I bought it for $750 and I didn't have to do any of the hard work. Where do people find deals now, Tom? Where, where are people going to find profitable businesses that have been vetted that some dude in his garage didn't fake the numbers for? And where, where are they finding them so that they can feel good about purchasing them?

Yeah, that's a, that's a good question. I think back in the day, one of the, one of the issues were your, your real options were flippers. Around back then you had various marketplaces, brokers, both as kind of brokers as a business model hadn't really been legitimized. There were some brokers out there doing bigger deals, but if you were looking in say the $10,000 to $200,000 range, you didn't really have much choice there. And one of the problems over the years is the nature of an open marketplace is not really regulated very much a wild west. A lot of people found that buying direct from marketplaces, they were getting like ripped off. People were faking screenshots, all sorts of kind of issues like that. I mean, over the years I've seen hundreds of different types of scams. So you've got to be very careful when starting out, which is part of the reason brokerage as a business for me has been very successful. While we obviously can't legally say yes, we've done the due diligence, this business is legitimate. I see thousands of businesses, thousands of businesses a year and take on less than 100. The vast majority of time I won't take something on for due diligence reasons. So if you did buy through us, while I can't legally say it, it's a pretty good chance the business is legitimate. So a broker is always a good opportunity. You've got to be a little bit careful though, because there are not all brokers will actually do that due diligence for you. Some of them are literally just out there. I mean, I guess the purpose is to sell the business for a seller. So some brokers will be less concerned about the legitimacy of the business. They're more concerned about Getting it sold and getting it paid. So if you've seen a broker that's been around for say three or four years at least, seems to be growing and seems to have a good reputation, that's a good sign. Brokers under a year old is a little bit more risky because you never know what they're kind of what they're up to and what their reputations like. So I mean there are, there are brokers out there. There's a lot more volume going through brokers these days than there may have been three or four years ago. From there, I mean, there's still a lot of deals done privately. That's the unknown number. No one knows how many deals get done privately. But a lot of, lot of big, a lot of big buyers will just cut out the middleman altogether and go directly to sellers. But generally speaking, I mean, there are so many buyers out there that they really have to get quite creative of where they, where they sell. Whereas if you're a seller, I mean, to be too perfectly honest, like putting my unbiased cap on, if you have a good enough business, you should just speak to a broker. There are good options out there. A broker is almost always your best option. Whereas for a buyer, not necessarily you're not going to get, you're not going to get the deal of a century through a broker because you're going to be competing against for a particular listing, say 100 to 200 motivated buyers who have the cash, who like that particular business. So the odds of you getting a really good deal in terms of multiple are slim to none. Whereas from a seller perspective, that's kind of what you want versus trying to sell it yourself where you might only reach 10 potential buyers. A broker gives you that reach, whereas from a buyer perspective, it's the complete opposite. You could potentially be speaking to. If your approach sites cold, you potentially be speaking to 10 sellers where no other buyers are dealing with them at all. So from a buyer perspective, I expect that's where the good deals are still going on.

So at least that's what I'm thinking.

Why don't you tell take a minute or so to explain exactly what your brokerage does and how people could be a part of it, either from the buyer perspective or the seller perspective.

Yeah, so we are primarily a sell side brokerage, meaning when people come to us, our clients are the sellers of businesses. So our process. From a sell side perspective, you come to us with a business. Anything online we sell doesn't necessarily have to be a software business, doesn't have to be a blog, doesn't have to be a content site, doesn't have to be e commerce. Pretty much anything selling online we'll look at. If you come to our website, make an inquiry. You generally deal with me or one of the team initially. We do some data gathering on your business. We look at the financials, we look at the traffic, we look at the trends. I always work through a free valuation. So it's very much no obligation from the start. Once you got a valuation for the business, we then figure out a plan for you. So some people may well say, okay, my business is worth a hundred thousand. Yes, I'd like to sell for a hundred thousand. I would like to sell now. Some people might say, hey, no, actually Thomas, I want to get 150,000. So in that case, I might give them a growth plan for the next six months. I'll say, hey, look, I've looked at other successful businesses like yours. I've dealt with similar owners. Here's what you should go do. People will go away. Some people may say, hey, Thomas, that's ridiculous. Stupid valuation. I don't want to work with you at all. Which is fine, no hard feelings.

So from there, if we take it on, we charge sellers a commission on a deal. So it's usually 15% can go lower for bigger deals. So if it's a million dollar deal, you might expect to pay 10%. So kind of tiers down. We will run the whole sales process from start to finish. We will put together sales materials, we will deal with buyers, we'll answer questions from buyers, we'll help you prepare the contract, we'll work you through due diligence. So we kind of handhold you the whole way. It's not like a kind of like an ebay. You don't come to us, we don't just list your business and then let you do it all yourself. We really are kind of a full service.

And then from a buyer perspective, if you want to kind of inquire on some of our listings, if you go to the website, which is feinternational.com.

You'Ll find our buy section. You can sign up to our mailing list. We have a free book to teach people about buying sites. I think it's 80 or 90 pages, it's completely free. It's pretty detailed on how you can buy. So that's a pretty good introduction. You can read our blog. We're certainly this year investing a lot more into regular content on buying businesses, selling businesses, online, business in general. So yeah, between those, between those three, you should be able to find a way to contact us. And regardless of even if you're looking to buy in a year's time, it's still worth jumping on the mailing list and having a browse to see what's out there.

Cool. Well, this is one of my favorite investment strategies and it's something that, you know, a lot of people who want to be entrepreneurs can take as an opportunity option for jumping, jumping the curve majorly to go from wanting to be an entrepreneurial entrepreneur to actually having a business producing regular cash flow. And the ROI is higher than it's going to be in just about any other business. So it's something I recommend, it's something that I participate in. Thomas Mail thanks for hanging out with us. Thanks for inspiring, educating and applying, empowering us to live more extraordinary lives. Keep on changing the world.

Thanks Ryan. Thanks a lot.

So this is a business model that I personally participate in, I personally recommend and it's something that I often encourage people who have some funds but want to be entrepreneurs and don't want to build everything from scratch to look into it is worth looking into what types of businesses are available because they cash flow immediately. There's no zero to 60. You just jump into something that's already moving at 60 miles an hour and you push down the accelerator. There's obviously due diligence that needs to be done. It needs to be something that's in your wheelhouse. It needs to be something that is going to grow over the long term. It's got to be something that you can maintain and hopefully is, is in your skill set. It also needs to be in a business that you actually want to be in. So these are things that you need to consider. But it is a model that I recommend people who don't want to do all of the grind work up front. Now I predict that this is going to become popular in the Amazon community probably in the next year. People are going to be building and selling businesses here in 2015 and the e commerce trend is going to continue to grow because they're real businesses that are scalable. So I predict this year that buying and selling Amazon businesses is going to be just as popular as buying selling websites is now. So if this is something that, that is of interest to you, we'll be talking about it more here on Freedom Fast Lane because it's something I'm doing right now. I'm selling one of my Amazon businesses right now. I'm also looking at acquiring Amazon businesses as are some of my business partners and associates. So we'll be diving into this more. So make sure that you are tuned in to future episodes of Freedom Fast Lane. Of course, you can ensure that you're tuned in by going over to itunes, searching for Freedom Fastlane and hitting a subscribe. Or you can just look in the top business podcast. Look for Freedom Fastlane or that handsome dude named Ryan Daniel Moran. And make sure you subscribe. Thanks for listening to Freedom Fastlane. I'll see you in the next show.