Ep 149: Why Buy A Profitable Online Business Instead Of Staring One with Ryan Condie [Part 1]

Imagine if you could skip forward 3-5 years in your online business journey, just from buying a profitable online business.

Instead of spending a whole lot of time, money, effort and energy just trying to start an online business and still run the risk of it failing. You see 90% of all startups fail and Ryan Condie shares why this happens in this podcast episode.

He also shares what mistakes he has made when buying online businesses and how he has been able to speed up his wealth creation immensely by following the right steps of acquiring businesses and then growing them. Rather than starting at ground zero.

If you want to buy a profitable online business and skip the 90% failure rate this podcast is for you!

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Episode Highlights

03:07 Welcome Ryan 

04:10 Ryan Story Condie’s story on starting out in the online business space

06:00 Buying Business VS Starting From Scratch  and which is better

08:51 Which idea is going to work in your startup

13:57 Buying multiple businesses and how it should be done

15:13 Jaryd’s philosophy when buying website businesses 

17:19 Buying a business is a transaction, how to not get emotional 

19:08 Ryan asks Jaryd what to do with a business he is looking to buy

24:40 Never buy a business based on opportunity alone

24:34 Jaryd is not a turn around guy, and why he doesn’t like that method

27:39 Ryan’s advice to first time business buyers.

Courses & Training

Courses & Training

Key Takeaways

➥ Ryan found out that starting a business from scratch is difficult, with numerous challenges such as acquiring a domain, designing a logo, finding product-market fit, sourcing suppliers, and creating content. Not to mention that he need to take many swings and that not everything will work out.

➥ Ryan shared that his success rate improved significantly when acquiring existing companies rather than starting new ones. He realized that he could identify good deals and effectively grow these acquired businesses. This shift in focus led him to prefer acquiring established companies over starting new ventures.

➥ When acquiring an online business, the real value lies in the learning experience of buying and growing a business, which is more valuable than the monetary gains. 

Ryan Condie

About The Guest

Ryan Condie focuses on acquiring, growing and holding online businesses for the long term. He has started 8 businesses where 6 failed and 2 succeeded. He has also bought 4 businesses and continues to grow these businesses whilst working as an M&A advisor at QuietLight Brokerage.

Connect with Ryan Condie

Transcription:

Why should you stop starting an online business just to make money online when you can buy one instead? Hey, this is Jaryd Krause, host of the Buying Online Businesses podcast. And in this episode, I'm speaking with Ryan Condie, who focuses on acquiring, growing, and holding online businesses for the long term. He started eight businesses, of which six failed and two succeeded.

He's also bought four businesses and continues to grow these businesses as an M&A advisor at Quiet Light Brokerage. In this podcast episode, Ryan and I talk about his story and how he transitioned from starting businesses to buying them. We also talk about how Ryan has been able to skip multiple years ahead in business just by buying websites, what that looked like for him, and how you can do that for yourself as well. We also talk about the types of businesses Ryan bought and why they had a higher success rate than actually starting them from scratch. We also talk about why starting a business is actually really, really hard.

And then we move into how hard doing due diligence on a website can be when you can actually become emotionally attached to a business you're looking at investing in. We talk about a bunch of things, like mistakes Ryan's made doing due diligence, mistakes that I've made. We also talk about why you shouldn't buy multiple businesses too quickly and what you can do instead. We also talk about a content site that Ryan asked me a question about on my podcast. It was absolutely awesome, and I want to thank him for that.

Ask me about a content site that he was looking at buying and what I would do if I were to buy it, or maybe why I should or shouldn't buy that content business. We talk about so much more in this episode. It's such a valuable episode. You guys are absolutely going to love it. Go away and enjoy. Today's episode is brought to us by Niche Website Builders, which is a company a few of my clients are using and have used for content creation and link building services.

So from keyword research all the way to uploading your completed article, We've also had Bob members on readymade affiliate sites built by niche website builders. So if you're looking to outrank your competitors content and build better back links, niche website builders and I have a special deal for you. Head to nichewebsite.builders/BOB. Do you want to start investing in websites?

Don't want to drop $20,000 on your first investment? Check out ODYS, where you can buy premium age domains to build a website on and add the ODYS done for you affiliate site package to help you grow your website and get seen. Instead of buying a crummy website that's been built to sell with no authority, buy a premium domain with built in authority, great SEO, and fresh, quality content for your website. Head to odys.global to check out their great deals.

O-D-Y-S-G-L-O-B-A-L. The link will be in the description too.

Ryan, it's been a long time coming. Thanks so much for jumping on the podcast, man. Thanks for having me, Jaryd. It's been a few months. It seems like it's been a couple of years, but it's probably only been a few months. Well, it may actually be more than a year. Maybe it is more like a year. Yeah. I can't even remember the last time. It must have been in 2020, to be honest. Wow. That's bad. Bad on my part. Sorry about that. No, it's all good. I'm excited to connect. There's a lot to catch up on.

I know, I know. We'll try and condense everything that we talk about to be very valuable on the podcast, and we have more time off here than great as well. But yeah, there's so much to ask. People that are listening, obviously, as you know, want to buy businesses. You know, in your profile, across the web, you said you've started a bunch of businesses, you've had two that have worked. Is it you started eight, two worked, and six failed?

Yeah, technically. So yeah, a little bit of backstory. I've done a lot of entrepreneurial things, from e-commerce to starting a candy factory in 2014 and building that up to tons of wholesale accounts. And I think it's in about 8,000 stores here in the US. So everything from e-commerce to content sites to, you know, the kind of brick and mortar traditional route where we're manufacturing candy with, you know, 100 employees and things like that.

Success rate than the ones that I had started from scratch. And a lot of, you know, some of those, when you start from scratch, you're able to kind of cut ties pretty fast and you don't end up losing too much. But I did start a business a long, long time ago with pickle balls, way before pickle balls were a thing. I don't know if it's big down in Australia, but it's just growing gangbusters like crazy here. And I ended up with 20,000 pickle balls in my garage at one point. So yeah, I have had success starting companies, but I have much higher success acquiring companies.

So that's why I just went all in on acquiring because I realized I could identify a good deal and I knew how to grow companies. And a lot of times I was losing all my energy starting something from scratch, and it would take me a year, two, or three to kind of get it going. And I just realized, Hey, can I just jump in at year three or year five? And yeah, so that was kind of how I got into buying businesses, and I stumbled upon my first one and said, Hey, I'm having way more success doing this than I am starting from scratch.

I just struggled; I mean, you probably have more success than me in the startup realm. I was just crap at it, to be honest, and Seriously struggled. It made a bit of money, but it wasn't really anything worth talking about. But that's why I want to, you know, that's why it's opened up. It's like, you know, why buy? You know, I want to hear your take on why buying Versus starts from scratch. Maybe we start with, Why is it so hard to start from scratch?

Yeah, so I would say, like, when I think about starting a business from scratch, Jaryd, it's like, you've got 10,000 problems, right? And it's like everything from, you got to get a domain and a logo. And these are simple things that you can do quickly, but it is just problem after problem after problem. And then you don't even know if you've got product market fit and then all the different things that go into finding if this works, right? And you might, it might turn out that your product is off. You have to find suppliers. You've got to, you know, that's just in the e-commerce realm.

You know, you're either finding the right writers or you're writing everything yourself, and you don't really know if it's going to work. You know, there are MVPs, or minimum viable products. I had to remember what that MVP was like to Get launched, but a lot of times, like most of those, you just take a lot of swings, right? You're swinging at every pitch that comes, and not everything is going to work Right. And so when I kind of switched the light on for me when I bought a business in 2012, That was my first business.

I had reached out to the owner directly. He, of course, didn't want to sell the business, Jaryd. So I just said, Hey, I've got a couple ideas for your business. And I just kept calling him every two weeks. And then, three or four months later, he's like, Hey, you seem pretty excited about this business. I'm ready to move on. Let's make a deal. Wow. And by that point, we had built up the trust. And after taking over that first business, I kind of stumbled upon it.

I realized if I had to learn what he was doing to manufacture the product, if I had to learn the design aspect, the site, and this is 2012 like you know, Shopify was kind of the thing but you know not as much like it wasn't as easy as it used to be if I had to do all those things I estimated that it would have taken me two years to get to the same point where he was at already and so I thought well I just saved two years of my life if not more by acquiring this business and so that's that's why kind of when that that light bulb turned on I thought wow if I can skip the first five years for this business, I just want to continue growing it from there.

So that was the first lesson. And that's kind of been the case for most of the ideas and opportunities that I've just been a part of is you can grind away at the beginning. And that is right for a lot of people, especially if you have zero capital. But on the flip side, to me, the greatest resource we all have is time, because we're not getting any more of it. And so if I can save two years of my life and get to year three in a business, I can save those first two years and add those on the back end.

Absolutely, I'd rather do that. So that's kind of been my mantra for starting. I also realized a lot of my friends are entrepreneurs, right? We hang out in a lot of the circles where we're hanging out and surrounding ourselves as entrepreneurs. We all have tons of ideas, and the hardest part is really deciding which one is going to work. Whereas if you're buying a business, there are turnarounds, and I think that's a special breed.

I'm not necessarily a turnaround guy. But if the business made money yesterday and has made money for the last three years, 10 years, whatever it is, I think I'm at least smart enough to keep making money tomorrow. You know, I'm not going to go in and break anything. And so that's kind of how it's been my approach. And I think on the flip side, too, the argument that we see a lot, Jaryd, is, well, why would anybody sell a perfectly good business? And the answer is that everybody has a different reason. I've sold lots of businesses, and a lot of them weren't that bad. I sold a business not too long ago that was growing 30 to 40% year over year. I just had to move on.

Half a year later, it was time for me to move on, and I wasn't putting that much time into the business anymore. I was putting in about five to six hours a week, but I was thinking about the business a lot. It was taking up a lot of my mental space, and so there are good businesses out there; it's just, you know, not always someone selling because the business is taking off and falling off a cliff.

That's a myth. Yeah, I totally agree.

A guy in my mastermind, You know, bought it for like 115k and then doubled the business about to list it for, you know, 200k or more, and everybody else in the mastermind is like, What are you doing? You've just worked with Jaryd to build a system that takes five hours per week. And he's like, Look, I just want the money for a property. I'm like, everyone's like, all right, cool. Do it like there are that many people out there.

He's got the skill set to do it again. You know, he can reuse that process. Yeah. Yeah. And that's the thing, like, he can do that again; he can sell, he can buy another one for a hundred K and then put that other hundred thousand into a property deposit. You know, and that's, you know, I'm glad that you said that you get that question.

Asking the questions to make my job easier. Because we're in the same space. We know the common questions, right? So a lot of things, I guess on that same note, like you're saying, like he bought the site for X and he's selling it for 2X. You forget that in the 12 to 18 months in between, he was still making money in the middle of it too. So that's the part I love is like, it wasn't that he set money aside and never made any money, and now he's making money only on himself. Yes, you do make most of your money,

especially in online business. On the flip side, he was paying himself at least some sort of wage or had some sort of income coming in during that process. So he was making his money back in the short term, and then, on the flip side, he's got this big exit that's coming. I think the real value is what you mentioned before is that year of learning how to buy and grow a business. like that can be more valuable than the money he made buying and selling. And even, you know, That's the value because that doesn't go away.

The money can go away. It's interesting you say that because I would say when you first start out, you're starting on smaller stuff because you think it's less risky. And ultimately, we all know that the smaller the business, the riskier it is of going to zero. But if you're spending 10 grand or some smaller amount on a business, it's okay if it goes to zero because it's usually not going to lose your house, end the world, or anything.

What I found with that too is that you have these stepping stones, and part of them is confidence, and part of them is your skill set. So yes, he's done this with one site. Now we can go back and do it again for the same size, or you can go bigger, but he's got the skill set because he did it at a level that he felt comfortable with, and everybody's got different levels. And so, you know, there's an acquaintance I know who sold his first business for like 10 K and then he sold four or five more businesses, and they've all gotten progressively larger, like two to three times larger each time.

You start doing the math and they start to get pretty interesting, but he's kind of worked his way up in that process. Yeah, congrats to him. It's really cool. Like that's where everybody is that's listening. Or wanting to get in this space is starting off like let's buy something 10 20 30 K or whatever You know, some people are at a different level. Maybe they can buy something at 80 or 100 Start there and then work on that.

I think if you buy too many too close together You make your job and life a lot harder for that Ryan, because I bought one business. Yeah, man, I bought one business and I was like, cool, I'm making this much money from this business, let me go away and buy another one. And I just thought about how much money can I make and how many businesses I need? That was my thought process at the time.

What, you know, why do you go down that track as well? Same thing? I think entrepreneurs get the shiny object syndrome or they're like, you know, like I have a dog and he chases squirrels. It's like, he's always looking for the next squirrel, you know? You do want to, so a lot of people probably listening to your podcast and listening to you Jaryd want to build a portfolio and that's great. I do, I think that's a great path.

That's the path I've gone down, it's the path you've gone down. But it doesn't help anybody out to buy a bunch of sites in a short amount of time unless you've got the team in the backend. You've got to be really buttoned up. You really want to run and operate that site for a few months, even six months, right? Before you start feeling like you've got everything under your belt and sometimes it's even a year.

You can build up that portfolio, but if you do it too fast, and I've seen people try to acquire three larger sites in three months, things kind of blow up and you don't have the right systems in place, and instead of just doing really well with one of them, all of a sudden you're doing really bad at all three of them. And that's exactly what you don't wanna do. So take your time and it's okay to pass on opportunities. I think it was Richard Branson who said once Jaryd that businesses are like buses, there's always another one coming. So don't rush into them, you'll find another site.

That is like saying this is the end all be all. So just don't rush into things. That's a good, really good piece of advice, Ryan. Thanks for saying that because people that come to this space—I don't know if you see the same thing—are like, Oh my God, I can make this much money, and it takes me one to five hours a week to run that business. Like, let's do it and miss so many things.

When they are excited through the due diligence process, they're trying to prove the business is a good investment. Like, oh, this is a good investment. I'm just going to do all the due diligence to make sure it checks the boxes. But I think that's a bad approach to have is proving the business is a good investment. I think what's better to do is to prove the business is a bad investment in your due diligence.

And if you can't, then you must buy or flip that on its head too. And that's something I haven't really thought about, but yeah, it's almost like if you can identify why it's bad, you can hurl and move on. Um, but I have seen this and I've done this myself too, where you get into and you're like, I put this much time or this much effort into the due diligence. And you start falling in love with the deal. I was just talking to a friend earlier today and he kind of fell in love with the deal and it just wasn't a good deal anymore.

And he decided, Hey, I need to cut my ties. Even though he'd spent a little bit of money on legal, spend some money on some his A.H. refs and some other things. And he just decided it wasn't worth it and it was better for him to lose out on maybe a thousand or two thousand bucks than it was to make this large purchase and have it then blow up. I always say it's like, you wanna buy the right business and the right site for you and the worst case scenario is buying a bad business.

The worst case scenario is not missing a business, the worst case scenario is buying a bad business that then all of a sudden you're, six months from now you're in big trouble this thing's tanking, so don't fall in love with a deal and it's okay to walk away from a deal that you thought was good, you put some time and effort into it, new information comes to light and you're like, this is not the best deal for me.

So good, like it is a transaction and if we get emotional, and I've talked to so many different people that you all know in the industry about the emotions that come up when we're buying a business, even if we are trying to be transactional and love him or hate him, depends on where you stand with this guy, because he's an oddball, but Donald Trump says sometimes the best investments are the ones that you don't make.

Yeah, I would agree.

It's funny, so recently I bought a new home, and my wife throughout the whole process, thank you, my wife throughout the whole process is, why aren't you so nervous and calm? And I'm like, I don't know, doing all these business deals on the side, I've just realized to remove all emotion. It's like, if we get it, great, if we don't, we'll find another house, you know? And she was not like that.

I was very emotional for her, and I was like, This is a transaction; that's it. Yeah. Yeah. Which is pretty special for you to be in that position, because I think most people think buying a home is a big, big emotional decision, right? But sometimes, I guess energetically, if you're not emotionally attached, that doesn't mean you don't want it as well, or that it's right or wrong to disregard it.

But I think energetically, sometimes the right thing is going to happen, right? Like if you're meant to buy the house or that business, it's going to happen without you willing it to happen with your emotions. Yeah. I think that's like saying, I wanted it to happen, but I was also able to detach and remove some of the emotion that was tied to it. And I think that's important too if it's okay to want it, but you're detaching yourself from it.

I don't know what other questions you have, but I have a question for you. And this could be helpful for audiences. So I just placed an LOI and an offer on a business. It kind of fell through and doesn't look like it's going to go. This was a content site doing about, I don't know, $50,000 a year, so we were paying about 3X for it. So 150. Not a huge amount, but we felt like there were some really good opportunities to grow this thing. It was tied to that person's brand. So I'm curious to see what you see.

Yeah, so it could easily be rebranded, but we were going to have to switch it from one domain to another and kind of do a little bit of a refresh there. I'm curious to hear what you think about those opportunities because we still like the business and the opportunity. We knew we'd taken some risk on it, but what do you typically see when you see a site that has, you know... It wasn't like it was a video or anything. It was like a course.

You couldn't replace them. It was more like their name was in it, but people weren't necessarily going to the domain, and we wanted to remove them and their face from the domain. So what are your thoughts on something like that? Man, that's such a good question. And thanks for asking that. I don't like to buy businesses based on opportunity.

I think it's just crazy because every single business has an opportunity. And in fact, what I like to do is when somebody comes to me and wants to grow a business, whether they bought it with me, built it themselves, or bought it somewhere else. They've got this gross strategy that they think is going to work that they've picked up from some podcast, YouTube channel, or whatever it is.

Business is the de-risking strategy is how do you de-risk that business and how do you listen to that business and tune into that business because life is giving us feedback and businesses are giving us feedback they're telling us what we should do more of what we should do less of and that's that's the best growth strategy for those types of businesses what's working in this business that you're looking at purchasing may not actually be changing the domain name because there may be hidden things that we can't see and it may not be actually removing that personal's brand.

It sounds like the personal brand isn't a big part of it, which is really good, but I like to really buy, not based on opportunity, but based on risks, and what are the risks of changing that domain over? You lose DR, which isn't a huge thing depending on, I mean, I guess this is the content site for content side DR, right? Then there's also the matter of all the backlinks, depending on how many good backlinks you have. There could be a good side to it if you change that domain and get a lot of spammy backlinks.

It could be a good thing, but you are going to lose authority because then you have to start your business from scratch in terms of who the target demographic is for the brand that you're starting. You're starting a new brand for the business, but you're selling the same product, right? So you found a product market; you want to know who the demographic is, but you've still got it. You've got to resell them under your new brand and your new domain, which to me is a risk. If you were to go away and spend $150,000, You wouldn't have to do that. You wouldn't have to waste your time and money on the changeover, and you could hold that business for one or two years and grow it without having to do those added things like what we may have to do if we're starting something from scratch.

Yeah. So, Jaryd, I'm sorry. There's a little bit of a delay. I was talking over you. No, that is super helpful feedback. And one thing I didn't mention was that we had a big portion of a holdback that was going to be paid in 12 months based on the revenue and whether it was going to be met or whether there was a big drop. So, like, we kind of protected ourselves a little bit that way. But I like what you said. It's like you don't want to buy something based on potential or potential opportunity because, ultimately, we were just talking about bus businesses like buses; there's a new one coming, so we could take that same effort we're putting into this site and actually put it into something else.

So that's super helpful. I just want to pause this episode for an immediate update. Online business owners and websites forever in 2022 will not be the same as in 2021, so you can't miss the Buying and Building Online Businesses Summit. This is a free virtual event, and we're going live on January 28th, 2022, with 12 world-class speakers, including the CEO of Flipper, Blake Hutchinson, Motion Invest co-founder, John Gilliam, e-commerce mastermind, Mike Jackness, SEO expert, Stefan Spencer, Godfather of content marketing, Joe Paluzzi, and many, many more. Don't get left behind when buying or growing your online business in 2022.

We're going live on January 28th. So register at buyingonlinebusinesses.co for the Forward Slash Online Summit. That's buyingonlinebusinesses.co forward slash online summit. The link will be in the description too. See you there.

This is the thing that people like, it's a good thing. I call us entrepreneurs, opportunity hunters, right? And I think it's a good thing to be an opportunity hunter, but it's a double-edged sword, really, because when we come to see a business that is not doing as well as, say, a 100K business that has fallen back a little bit in traffic and rankings, versus a 100K business that has a good solid trend, you may be like, All right, cool, there's an opportunity to.

This business that is declining was making so much more money before it started declining a little bit. It doesn't need to be a huge drop; it can be a slow decline over a year or two. You say, All right, I'm an entrepreneur; I've got the energy, I can make this work, right? Like you said at the start, you're not the turnaround guy. I'm not the turnaround guy either.

My goal isn't to, and this is going to sound weird to a lot of people, just buy businesses in life and make money. My goal is less stress and more time. Which we talked about before, like the best resource that you said that we have is time. And so if you're spending time trying to turn something around, it can be a total waste when you can spend the same amount of money on something else that's already got a good growth trajectory, and then you just tweak a few things that are already working 80-20 and focus on that.

That's my philosophy, and it doesn't need to be something that everybody needs to adopt. But that's the way I feel about it, and you could have made this work, right? You're a smart dude, Ryan. You've done this stuff before, But your time is probably better spent with your kids and your dog. Yeah, that's a good point. So maybe I don't feel so bad about missing out on this offer, so the buses will be the buses. You know, come through again, and you know, you find another one, You know, if you want an extra set of eyes on it or have questions, just, you know, let me know as well.

I want to pause, I want to pause the recording now just for yourself, Ryan, and the editor. I think what we do is release podcasts for 20 to 30 minutes. So how about we call that part one, and then we call this part two. Are you cool with that? If you're able to do an extra 20 minutes or so. Yeah, absolutely. Let's do it. Yeah, sweet.

So I wanted to ask you about some of the hard things that you've experienced when buying your businesses or even working with the people with whom you are now working with Quiet Light and stuff like that. What are some of the hard things that you see people go through that you've been through that you could have advised them on to keep a level head? Yeah, so I'll start with the ones that I've done and some of the mistakes that I've made looking back.

And then let me dive into just what I'm kind of seeing in the market and things to be aware of, or if I were a buyer, what questions I would ask. And so first off, I've done lots of different types of acquisitions, from e-commerce to content sites to kind of custom software, a variety of things. I probably have done more e-commerce acquisitions. And so I would say my background is more on the e-commerce side. Having said that, in e-commerce, one of the mistakes in really understanding the quality of the product.

So, you know, if you are looking at an e-commerce business, buy that product, get a free product from the seller, whatever you need to do, but use it. And if you don't know how to use it or you're not familiar with that industry, you've got to find someone who is and test that thing and test it and test it. And one of my businesses kind of came back to bite me a little bit because the stitching was bad and it didn't last as long, and that's why we're getting some bad reviews.

On the flip side, when I made the next acquisition, I tested it like crazy, and it came out perfectly. The stitching was perfect, and it was great. But just look at me taking over a product-based business. If you're going to, you need to test that product, and if you don't know how to test it yourself, you don't play that sport, you don't know how to use that baby item, or you don't have any kids, get someone who does and just try to break it. Because that was one thing that I had made some mistakes on.

Another thing I made some mistakes on was buying a website with any sort of custom code with multiple opinions. Because I have bought businesses that have some code debt in there, you're laughing. It's tricky, right? And I'm not technical, I don't know how to code. You know, it might as well be another language to me, right? You really want to get multiple opinions. And it's going to cost money during your due diligence, but you'll save money by buying the right business, hiring the right people after the fact, or bringing the right people onto your team if you get multiple opinions. And so for anything, there's a piece.

All-encompassing, it's not just code yet, but anything of the business that you're looking at that you don't understand, it could be Google PPC, Facebook advertising, SEO, content writing, whatever it is, bring someone else, hire them, whatever that is, even run a report so that during due diligence and then afterwards, you kind of know exactly what you're getting into.

And in that process of due diligence, Jaryd, what I typically do is have two or three people or two or three agencies or businesses do that report during due diligence, and I'm using that report as basically their interview process. And with one of my acquisitions a couple years ago, I thought this guy was going to be a home run, and I ended up getting two opinions, and the report he gave me was terrible.

I couldn't understand anything, it didn't make any sense. It was a terrible report. And the other guy that I kind of brought on at the last second, I still work with him, he is absolutely fantastic, and I use that due diligence process as like an interview process for you.

But I would say that some of the things that I've learned are, you know, if there's anything within the business, really dive into it. And that gives you an opportunity to interview other people who can then help you out after the fact. In terms of full disclosure, I'm a broker and an advisor with a quiet, light brokerage. You know, you can find us at quietlight.com.

I'm sure many of your listeners are familiar with a lot of our listings or whatever, depending on what you're looking for. I would say that one of the things I've seen people do is make mistakes without truly understanding the supply chain. And I know we're all kind of laughing right now. It's the end of 2021 when we're filming this, but that is a big piece that a lot of people kind of skim over and say, Oh, you've got a supplier; you're covered. I've had supplier issues before, and you've got to be on a flight and you've got to go wherever they're at, right?

That will make it a lot harder in 2021 to be able to just pick up and show up at a supplier chain, and for those types of issues, you've got to be really dialed in on where the raw materials come from, then hit the supplier, who then makes whatever you're making, and then how does that get to you, right? Or how does that get to the Amazon warehouse or your 3PL, your third party logistics? And you want to ask way more questions than you think in that space. And I have found that a lot of times people just kind of gloss over that, but if you're selling a supplier for it or there's only one supplier in the world who can make it, that's a lot of risk.

You know, supplier concentration is a big risk on the flip side. You know, if you can find another supplier in a different country or on a different continent, it can help offset. And, you know, you've got listeners all over the world, Jaryd. So I have a lot of businesses that have switched manufacturing from Asia and moved them to Mexico because, here in the United States, that's easier for shipping. You're just crossing a border. There are no boats.

There are no airplanes. There are a lot fewer taxes just based on how our governments get along better. I don't know, whatever. But I would say the biggest thing people don't understand is the supply chain. And I see it, you know, as an advisor, I try to be as clear as possible upfront, but we can only be so clear, and from a due diligence standpoint, most buyers aren't doing the correct due diligence that they need to, so I would feel comfortable now with making the mistakes that I've made and seeing how, you know, four or five containers fall off a boat in the middle of the Pacific Ocean.

I've had other friends whose supplier, uh, manufacturing firm, burned down. I've had other friends who've had suppliers just completely cut them out and say, Oh, we gotta, you know, we got an order from the North Face. You're gone. Like we're not going to work with you anymore. And all of a sudden, you're scrambling because you can't get orders in. So, I would say the most important thing is to understand the supply chain.

And you've got to have your second and third options lined up. Oh, I'm so glad that you said that. Single source dependency is such a big thing that I've learned from a guy named James Schrammco in Australia. He's a really smart entrepreneur. And it's not just people's source dependency on traffic from Google or traffic from Facebook ads; it's really about, you know, if you've lost your product from North Face because North Face came in and said, We're going to use this whole manufacturer business. Imagine that when you've just bought the business two months into it. That's devastating.

Yeah, you nailed it. You're exactly right.

I would say anytime I am looking at a business as a buyer, I always see myself as a buyer first. I've always been a buyer. I always approach things as if I were a buyer. The biggest thing is that you really want to understand where the bottlenecks are, where those dependencies are, because it's obvious with content that it's Pinterest or whatever, and where the traffic sources are. On the flip side, people forget about it; it could also be an ingredient. I've had people have issues with copper, right? We just couldn't get copper for a few months. So if your product was mainly copper, then you could be totally screwed. So you have to look at all these dependencies and isolate them, and it could be a supplier, it could be traffic, it could be an ingredient or a raw material.

But ultimately, there's a reason why a lot of these businesses are sold at a two to four X is, there's a lot of risk to them. It's not like Coca-Cola or IBM, which can weather some of these storms. These are smaller businesses. These are sub $2 million businesses. A lot of the ones that you and I look at, Jaryd, and there's a reason why you're paying a two, three, or four X for these things because there are these inherent risks with them. That is it for part one of this episode with Ryan.

In part two, there is so much good stuff to share. We talk about how you can actually get started buying and establishing businesses. What mistakes Ryan made when buying businesses, what mistakes I made, and what you can learn from us so you don't make those same mistakes We also talk about important things like, How much should you spend on your first business? Very common question. We also talk about what type of business you should be buying for your first business.

We also talk about what type of business you should not be buying, what you should do if you want to quit your job, and what you should do if you just want to make a little bit of extra money by buying websites. And then Ryan goes through and shares two examples of two friends of his, one who bought a business for five grand and one who bought a business for around 2.5 mil, and why they may be better businesses for each of those different people depending on where they're at in their own journey and how you can relate to those different stages in your own journey.

Ryan and I also talk about how we transitioned into working with Quiet Light as advisors and how Ryan and I actually worked out what skills we've been better at as entrepreneurs, what you can do to work out what skills you're better at as an entrepreneur, and how you can outsource those other skills that you don't actually like. So we also talk about at the end of the episode, what the current state of the industry is, how it's grown, and where it could be headed as well.

This is such a valuable episode, part two, so make sure you listen to it. But if you're actually serious about wanting to buy a business, Why don't I talk about due diligence so much? It's so critical to do due diligence really well. So make sure you go away and get my personal due diligence framework that I and my clients use and that has saved us hundreds of thousands of dollars in mistakes. So it basically takes the guesswork out of doing due diligence. And you can get that by going to my website, buyingonlibusinesses.com, for free resources, or you can click the link in the show notes as well. Thanks for listening, and I'm thrilled to share with you part two.

So stay tuned for that.

Want to have more financial and time freedom?

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Host:

Jaryd Krause is a serial entrepreneur who helps people buy online businesses so they can spend more time doing what they love with who they love. He’s helped people buy and scale sites all the way up to 8 figures – from eCommerce to content websites. He spends his time surfing and traveling, and his biggest goals are around making a real tangible impact on people’s lives. 

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➥ Buying & Building Online Businesses VIRTUAL SUMMIT 2022 –  https://www.buyingonlinebusinesses.co/onlinesummit 

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