Losing your hard-earned money from buying the wrong business is truly heartbreaking. It’s not just a lost opportunity but also a wasted resource in terms of time and energy.
And we want to save you from it!
I had a rare opportunity to speak with Cody who lost 6 figures from buying the wrong business. He started young in the aviation world and worked his way up the career path until eventually becoming a 737 Captain for Southwest Airlines. After a four-year stretch doing humanitarian work in East Africa with his wife and four kids, Cody transitioned to leading several entrepreneurial pursuits and now works full-time as a stock and real estate investor.
We have talked about his approach to buying an ecommerce business, how he did his due diligence and what he learned, and what he would do again.
We also discussed why he would never go all in again.
Jaryd will also share his advice to those looking at buying their first business, insights on what you should be checking during due diligence for an e-commerce business, and how to allocate your capital.
Cody’s experience is definitely an eye-opener for first-time buyers. If you too would want to save yourself from this heartbreaking event, then don’t miss this episode!
Get this podcast on your preferred platform:
RSS | Omny | iTunes | Youtube | Spotify | Overcast | Stitcher
04:08 Why did you want an online business?
05:41 Why eCommerce?
07:23 He did everything by himself
11:20 What happened to the business you bought?
15:31 Due diligence
24:18 Everything went downhill
30:28 Thorough due diligence
32:36 Cody’s advice
Courses & Training
Courses & Training
➥ Cody purchased a drop-shipping business with consistent orders, but sales started declining shortly after he took over. He discovered that many traffic sources were unknown, which made it difficult to track high-converting sales. So in due diligence, take note of the traffic sources.
➥ Jaryd recommends having an SEO expert look at an e-commerce business before buying it. People buying e-commerce businesses should be careful because sometimes the numbers can look good on paper, but the returns may be high or undisclosed.
➥ Looking back at his Shopify store purchase, he realizes that relying solely on the seller’s Excel spreadsheet for financial information was a mistake. He thought he should’ve asked for bank statements or more verifiable accounting information to get a more accurate picture of the seller’s cost of doing business and how much profit they were really making. It’s possible that the numbers were misrepresented.
About The Guest
Cody started young in the aviation world and worked his way up the career path until eventually becoming a 737 Captain for Southwest Airlines. After a four-year stretch doing humanitarian work in East Africa with his wife and four kids, Cody transitioned to leading several entrepreneurial pursuits and now works full time as a stock and real estate investor.
This is a heartbreaking story of a man who lost six figures from buying the wrong business. Hi, I'm Jaryd Krause, host of the Buying Online Businesses podcast. And today our guest is Cody, who started out young in the aviation world worked his way up to becoming the Captain 737, Captain for a major airline. And after a four-year stretch doing humanitarian work in East Africa with his wife and four kids. Cody then transitioned into leading several entrepreneurial pursuits, and now works full time as a stock and real estate investor.
Now, I just want to say a massive hat's off to Cody, who came on the podcast and was very vulnerable and very brave in sharing his experience buying a dud business. And it is my massive mission to help people to not have to go through an experience like this, where Cody went all in on an E-commerce business, and it did not pay out very well at all. And that's due to obviously, not knowing what to look for when buying a business not knowing how to spot possible risks or not even knowing you know, these things even exist these types of risks, which is what I share in this podcast episode.
Firstly, Cody obviously shares his approach to buying his first online business why he decided to go into the E-commerce space, then we talk about what he did during his due diligence, what some of the things that he may have missed out on looking at and doing and being diligent in when doing his due diligence. And then he shares you know, what he learnt through the process and we sort of unpack the process of him buying this site, and how it came out not being a good investment, we also talk about, why he would never go all in again, and what he would do differently, and then I share you know how people could allocate their capital.
And what I suggest they do when allocate the capital when buying their first business, then I go on and share my advice on what people should be looking at and should be doing during their due diligence when buying not just their first business but buying any business and doing specially doing due diligence on an E commerce business. I share some of the things that we should be looking at during single source dependency, looking at Google ads, looking expenses, looking at cost for products looking at, you know the hats you need to wear as an entrepreneur for an E commerce business. And there's so much in this podcast episode around how to not buy an E commerce business and what you could do differently.
And I think that anybody that is looking to buy a business needs to hear this episode. It is incredibly valuable. It is at the expense of Cody and I just want to say again, thank you Cody for being so vulnerable and open and brave enough to share your story. Now before we dive into this episode, this is more relevant than ever. Make sure you go away and get my due diligence framework that I use and a lot of other people have used to buy businesses we've made millions of dollars and save millions of dollars through using this framework.
So, what I use and my clients use so make sure you go away and get this they can take the guesswork out of buying a business and can prevent a lot of what has happened in Cody story have happened to you when you're buying your first online business. So, make sure you get that go to buyingonlinebusinesses.com/freeresources to get that we've got some other cool things on that page you can get there too. Let's dive in.
Do you want to build or grow your content website? Niche Website Builders have helped hundreds of people take their content websites from a few $100 per month to over 10s of 1000s of dollars per month with crafted content creation buying age domains and link building strategies? These strategies have helped people increase their traffic, authority, monthly earnings and their website valuation too. Head to nichewebsite.builders/BOB/ to get 10% of any link building or 10% more from their content creation services. That's nichewebsite.builders/BOB/. I'll put a link in the description too.
Cody, welcome to the show.
Thanks. It's good to be here.
Jaryd Krause (4:12)
So, you reached out to me and it was interesting thing that you mentioned our thought let's just have a quick chat might not even be quick. But let's just have a chat and see where this goes in terms of how we can highlight some of the things that you may have learned through your experience buying your site because it didn't turn out. It wasn't the ideal story that I usually publish about in a podcast with one of my clients. It's gone away and bought a business and they've done all this sort of cool stuff. This is the other side of it. Let's open this up for discussion. First and foremost. Why did you want to buy an online business?
Yeah. So, I was looking kind of from an investment standpoint and you know, I wanted a ready-made business that was available and had been built up and I've run businesses before but more brick and mortar and service type businesses. And this is my first foray into an online business, but I wanted something that could run from anywhere, in the world. And that got me into looking at e-commerce and trying to find, just the right fit that I thought would be something I can manage. And, you know, that hasn't good cash flow and, and things like that.
So, I wanted to buy something that was established and set up already that had the systems in place that I could just take over and manage and enjoy the cash flow from it as an investment.
Jaryd Krause (5:40)
Cool. And why e-commerce? what made you choose e commerce? I guess?
Yeah, it just seemed like, some other investment type podcast and other things, you know, I had mentioned that there's more and more brokers out there that, you know, will help you to find, these ready-made businesses that, you know, act as an investment vehicle. And so that intrigued me, because, yeah, I certainly didn't want to get back into a business that was physically tied to geographical location. And so, you know, e-commerce just really appealed to me because of that.
Jaryd Krause (6:19)
Cool. So, there's a few different types of online business models that I like to explain, teach. So, you have content sites, then you've got ecommerce, and then you've got SAS and membership sites. So, the three main ones that I like to explain and teach do. What made you choose e commerce over, say, you know, these other types of business models?
Yeah, I looked at all the different types or, looked at several listings for different ones. And, to be honest, is the E-commerce has made the most sense to me, just having a physical product that you sell online and shipped to a customer, you know, just seemed pretty straightforward to me. And, I'm not much on the not a content creator, things like that, but dealing with, physical products and inventory and things like that made sense to me. And so, I feel like that'd be something in my wheelhouse, so that I can manage and make work.
Jaryd Krause (7:24)
Alright. And have you ever been a part of e-commerce business before? Like, have you ever known somebody that's run one? Or have you ever helped somebody that's run one before or run one yourself?
No. really didn't have any experience at all, and didn't know anybody directly that had done anything like that? Yeah, I'd seen the power of just digital marketing through a service business that, that I once ran back in Texas, and it's all just, Google AdWords, and people doing online searches for service or product, and if you know, if you're hitting the right keywords and the right market that, that works out, well, so I did have that experience, you know, I'd run while I had other people run it for me, SEO campaigns and things like that. So, I did have some experience in that, you know, just on digitally advertising something online and seeing the customers come in.
Jaryd Krause (8:29)
And so, what Where did you go with the process? Like, how did you go about trying to find an E-commerce business for sale? And then tell us, then we'll dive into the due diligence, all that sort of stuff.
Yeah. So, I started looking at different offerings, through a couple, three different brokers online that had listings for businesses for sale. And so, I was just looking for something that kind of piqued my interest, you know, I didn't want to get into something that, you know, had no interest in. And so, I found something, you know, just in the outdoors type segment and kind of appealed to me. And I did some research, due diligence, fun, NDAs for looking at several different things, and, just certain issues that came up. And so, I passed on several that I looked into on a deeper level, but then this one came up that.
It was something like, Okay, I've got a little bit experience that product and seems like it's a burgeoning market and then just doing the research seeing that customers are searching this product out. And so, it looked like, you know, good timing, for what it was and where the markets going for that. And the site had just enough age to it, you know, seemed like as credible then the numbers look good, you know, on everything, but they were reporting sales wise and growth of sales and, and all those things. So, I kept going forward to it with it and eventually made a full price offer and became owner of it.
Jaryd Krause (10:14)
Cool. Okay, good work on finding one. And now tell us about, I guess we should sort of explain a little bit about the business and where it's currently at now. And then we'll come back to your due diligence process, and maybe what you've learned through this process, because already, I mean, having a fair bit of experience and talking with people at first come to this space of wanting to make an income online, and sort of replace their income or have a different lifestyle where they can travel and stuff like that.
There's a few things and directions that people I believe that people should take that can set themselves up for success, that may not have been taken into account when you first started researching this, but there's going to be a fair bit more that I feel will be good to understand. After we explain where the business is that currently and also what happened and what you learned through due diligence. So, tell us a little bit more about like, where the business is, when you purchased it, or perceive where it was when you purchase it, and its performance levels now.
Yeah. So when I'm going through the verification process, and seeing sales come in, through the Shopify numbers, you know, and so it was easily verifiable to see, hey here's these, the numbers, the sales, you know, and just there, you know, history over the last 18 months to 2 years, and the numbers were really good, you know, that I mean, gross sales were coming in at, you know, 70,000 80,000, pretty consistently on a monthly basis, and these outdoor items are high ticket items.
So, what you kept out of that was definitely small on the percentage wise, but we're still, you know, definitely profitable on, you know, what, what's been reportedly spent on adspend, with Google and Microsoft.
Jaryd Krause (12:11)
Is it drop shipping product?
Yeah, it was a drop shipping type model for the products being sold. And, the numbers have started out strong, for the seller had built this site up, and then I was in the process of flipping it, selling it, you know, here probably 18 months after he had started it. And all the numbers look good. And he had orders coming in on a very consistent basis, and yeah, everything look good. And then so I had a process where I could take a look at the numbers and verify those sales are coming in.
And then after that process, then, you know, closed on the sale, and I got some a couple months of support from the seller, and then immediately just started seeing the sales drop, almost immediately. And then, as I started looking into it further, you know, I can see that a lot of the sales that were coming in the traffic source would be listed as unknown, or something else like that. So as is a little bit harder to track, you know, to say, Okay, well, these higher conversion sales that were coming in, where did exactly those come from.
To this day, it's still a mystery. This is six months later that, you know, after I bought this store, and you look back on past data from the previous owner, and it's hard to tell, you know, where was that traffic coming from at least the traffic that was converting at a higher rate, because with a high ticket item, these things definitely don't convert at a high percentage, which is fine, you know, because the average order value is, is high, but I've just seen that steadily decline, since I've had the business.
Jaryd Krause (14:15)
Sorry, I'm curious to see what your hindsight?
So, hindsight, I wish dug deeper into Okay, exactly, where are the conversions can be various, especially the ones that show up, you know, higher conversion rate, you know, where are those coming from? And, yeah, it was all right there. I just failed in my part as a buyer to do the due diligence that I should have to see exactly where these sales are coming from, I just saw, verifiable gross income and, in the numbers, I recovered from, without knowing exactly, you know, where are these sales coming from.
Jaryd Krause (15:01)
Yeah. And that's a tough thing. You know, it's like when you go to buy a site or a business, and you don't know, to look for that you just don't know. it's not like it's your fault as well. It's just that you didn't know. And that was a circumstance. So yeah, I mean, obviously, there can be some responsibility taken there. And, you know, educating yourself on knowing what to what to find out and all that sort of stuff. Did you? So, did you do the due diligence? Just yourself on the site? But do you have anybody help you?
I did have an SEO specialist person that I've used for my service business several years back, take a look just at Google Analytics and things like that. And then also just, you know, do some research on market and keywords, and for that particular type of product, and so they went in and, went through some things and said, Now that it looks really good, you know, is, you know, for his return on adspend, for Google Shopping and Microsoft shopping ads, looks good, you know, for the sales that are coming into the site that return on adspend look good, and it goes high, but it was converting it enough, you know, for these high ticket items to make the numbers work, at least on a spreadsheet on the net income.
Jaryd Krause (16:31)
Yeah, it's good. I think having somebody look at the site is a great way to go having an SEO look at it as good for why I see it being an E-commerce business, certainly having somebody be in E-commerce or have bought an E-commerce business or, you know, has some understanding of E-commerce in terms of it's good that they know some SEO principles, and they can see the ROI on the ads and stuff like that, which is really good. But maybe some more specialized eyes would have been good too good to have, looking at the listing at least.
So yeah. Some of the things I guess I'll just point out some of the things that can happen when we add this as a learning experience, everybody listening, is that when we're buying an E commerce business, our I see this so often, especially on some marketplaces, that are open marketplaces where people can list their own business for sale, not go through a broker, that these the numbers can be made look really, really good. And sometimes they may have sold a lot of a lot of products, but the returns may be very, very high.
And people may not see that when they're doing their financial due diligence. Also, the what you said the unknown purchases, who who's that come from? And why in my Judo framework, I have a very specific question that I like this the buyers of businesses to do, do you like to ask the seller during their due diligence, personally over a call is do they you know, do they make any money outside of the business? From their own personal relationships, their own personal network? Do they do they make any sales or income revenue from traffic and means outside of the business other than online? And that's a really, I think, a very, very fair and important question to ask.
Because sometimes we have these people that might sell a business in a particular niche, and they have a big network, or they have a career, or a previous career behind it, and they just want to sell it and they don't disclose that they had a lot of sales and traffic come offline, or they look like their online sales, but they get directly referred to the site and make sales that way. So that's something that we I think we shouldn't be very conscious of as well. There's a lot of things through the due diligence, we really need to check, like I said, the return rates also with drop shipping businesses, when things are returned, who handles those returns, in terms of who wears the costs? Is it the person who has sold the goods as in the business owner?
Or is it that if the product has a manufacturer's default, will the manufacturer who shipping those products out, be liable and then change the product and ship a new product out? I know, when I've had a drop shipping business before the one that I purchased is I had ensured that the manufacturer would reimburse or refund or exchange products if there was a manufacturer's defect. And that's something important to check when we're doing due diligence as well. Are there any other things that you think that may have been helpful to understand now that you've been through the process of, you know, doing due diligence on your own that any other insights that you have as well?
Yeah, I know, definitely looking back, because, you know, it's a Shopify store so I can go in and, you know, I mean, there's I can't imagine there's a way to fudge those numbers and so it looks you know, those numbers were high, look good look like a good value on You know, for the price he was asking, but then, but one thing looking back his cost of doing business, I'm just relying on an Excel spreadsheet that he provided, well where did those numbers come from?
And so I never thought to ask for bank statements or more, you know, verifiable accounting, tight issues that could say, Okay, well, yeah, he's bringing in this much, but how much is really keeping because I was just kind of going off of a spreadsheet, he that the seller provided the, there's a lot of room for error or just misrepresentation things like that, you know, I look at now and say what really was the true story, you know, behind this thing when I'm buying it, and so, I think even getting an accountant or attorney evolved, because this is a significant purchase for me, and, and I kind of looked at it more as a, an investor, rather than a business owner, I think is my issue, because the, you know, the number the return on investment looked appealing, I'm going off of, he's advertising, he worked on it about 15 hours a week.
I thought if I factor that in, and it's bringing in this net income a month, and that seems like a really good deal, you know, and, and on the advertised numbers, it was, but yeah, but was I really getting what I was paying for, and not doing my homework to verify those things..
Jaryd Krause (21:43)
The hard thing is, the hard thing is with the costs, if you don't know much about an E commerce business, how do you know what legitimate costs and what things should cost or what some of those costs should actually be that they have for an E commerce business, you should be looking at things like proof that the advertising is, you know, where they're advertising how much they're spending on advertising, looking at their Google ad campaign.
So, going into Google ads and looking at their campaigns, one of the things that may have had some misreporting is through only looking at their sales through Google Analytics. Because that can sometimes not be set up accurately, I prefer to get viewers access of the Google Ads account or the Facebook ads account or whatever it is myself, spending a lot of money on paid marketing myself, I'm from looking at an E-commerce business using paid ads. I think verifying the ads and having a look at the ads, seeing which ones are the performing ads is really, really important.
Also, what I like to say to people who are buying their first online business, if they're buying an E-commerce business is that if the business is heavily reliant on ads, and you're buying as a business owner, never been in E-commerce before, and never having run paid ads, or having the experience or the skills to run those paid ads, to maintain those paid ads, and or exceed the results of those paid ads. And there's a risk there or not. Maybe not having somebody in your corner that you can pay as a consultant to run those ads and get the same results.
If not better, then that's a risk of buying that possible business as well. If you're just an investor, and you don't have the skills yourself. So, there's one risk there that I like to highlight a lot of my clients that send me deals for E commerce businesses, the first question I ask is, have you ever run an E-commerce business? And have you ever run digital marketing on this platform? And have you got results? And if so, what were those results, and that usually is enough to deter people from buying an E commerce business, if they don't have the experience, and they don't know the expected results that they may get without the experience of running those ads.
So, I think that's something to consider as well. There’re so many variables. And as we unfold this, you know, these layers, there's a lot to an E commerce business. And a lot can go wrong through due diligence. It's, really hard to know what to check, right? Like, did me talking about Google analytics reporting versus looking into the Google Ads account? Did you did you know that that could be a thing? Sometimes people don't, right?
Yeah. And no like, so of course, once I get into it, then I realized how little I know, or what to look for. And so, and looking back, you know, I just I really have to consider, like, why did I buy this and, you know, I felt like it was a product, you know, I was familiar enough with and could get behind and get excited about, but at the end of the day, you know, then I figured out well, I bought this because it looked like easy cash flow and not because I'm necessarily passionate about e commerce and so and so I kind of shot myself in the foot right even before I started because bought a bit of a dud or definitely a dud. But then now that I'm in the middle of it.
It's hard to get passionate about something that's losing. And then also, that's, you know, that I figured out now very quickly is, you know, not my passion for work. I've definitely cut out for different types of investing and, and business type models, but probably ecommerce and drop shipping is not it for me, and to just in looking at those numbers. I'm seeing all the positives to the Drop Shipping model, and really didn't consider well enough. Okay, but what are the downsides of that drop shipping and things like, lack of control over inventory and lack of control over sometimes quality issues.
And then the, you mentioned, the return processes, and, you know, all the things that go into that. And so, I inherit all these issues, and then I inherit a bunch of angry customers, because some things have been, you know, left by the wayside, and that transition period. Yeah just thrown headlong into that with a business that starts losing sales right off the bat.
Jaryd Krause (26:21)
Yeah, it's not fun running an E-commerce business, that you bought out just being a rude awakening around. Sometimes your product is going to take a little bit longer, or it takes a little bit longer. And then it arrives and it's damaged, and the customer is already unhappy, because it's taken longer than expected. And just the customer. This is the biggest reason I sold my last ecommerce business is because I just didn't want to deal with that anymore. Especially like you said, with the manufacturer, having the control over when things will be sent out.
What how they will be sent, with insurance, with not insurance, if it's going to be damaged, how long it would take, you know, they obviously want to go the cheapest route. And that can hurt your brand and it can hurt your business, right? This is going to make them more profit, but it's going to be added an expense to you. Another thing to consider when we're buying an E-commerce business is two things single source dependency on supplier. So, if you buy a drop shipping business, and there's only one manufacturer for all the products, and they go out of business, or they decide to discontinuing your main product, then there's the risk that well, you can't sell your best seller and your revenue is going to be decreased significantly.
Another single source dependency is if you have just running Google ads, and your Google ads are very profitable. And they have been for two years. And you can see that when you looked at the Google Ads account, when you're doing your due diligence, the single source dependency on just Google ads is risk. Because what happens if Google changes their algorithm and your best performing ads don't work as well or provide the same returns that they were, which is why I think understanding market digital marketing and paid marketing in that channel is important.
But also having some diversification with some other ad spend in say, remarketing through Facebook, and maybe Instagram, Twitter, LinkedIn, whatever the product is best suited for whichever platform that may that may lend to that nation that product. So, that single source dependency is a scary one. Did you know what single source dependency was? before? I guess maybe mentioned in this discussion?
No, it seemed like, the site was doing so well off of primarily Google's little bit of a Microsoft Bing as well, but, Ennio course, he advertised that as a source, well, you can go through, you know, there's marketing to be done for social media channels and whatnot. And you don't know what you don't know. But, you know, it seemed like, you know, because I'm looking, he's got good customer views all over the site. And, and I just didn't know enough to know that, oh, well, you can go find those reviews to put up there that aren't necessarily from his actual customers.
And, not verifying some of those things, because, and then also even asking you, what's your returning customer rate and things like that, which are so key to profitability, and just things that once I got into it and started, you know, researching it, you know, that I figured out okay, well, this is what it takes to have a successful brand and, and to, you know, I think that's one thing I really failed at is that that idea of branding and, and that's a little harder, the drop shipping business, but it's still at the end of the day, you still got to have some type of branding to make it a successful site, or a store that people are going to refer their friends and family members to come back to and just seeing that those assets books weren't there when I bought it. So just realize any kind of box of cars that could fall down at any moment.
Jaryd Krause (30:06)
There are a lot of those things with drop shipping and running an E-commerce business that we may not expect every business we may not expect when we when we buy the business, which is important to understand. And this is why I think doing due diligence on a lot of businesses really helps us to understand what is involved in, in the businesses we end up purchasing. So, I guess I want to ask you, Cody, like, how many businesses? Did you go through a full, thorough due diligence? And what I mean by thorough due diligence is analyzing everything? How many of those business? Like how many times you need to do that?
Yeah, I probably only looked at probably three businesses, you know, including the one I bought, diving into the numbers and sales and sources and things like that. And then this one popped up kind of at the right price range and the right, income levels. And so, it was fairly newer listings. So, it seemed like it was a good deal. And I wanted to jump on it.
So, I probably rushed myself in the process, you know, get an offer in and snatch this one up, because, it was the bright, shiny one in my eyes that oh, well, this is, you know, I think there's a good market for this. And, I could get behind this. And so yeah, I just went down that path, you know, they can Oh, you know, it's an established business, you know, it's got verifiable, gross income. And so, I just went for it. And, yeah, but so that's, that's kind of how I ended up here.
Jaryd Krause (31:46)
I'm really sorry, I wish I had been able to help in this in this situation. It's my mission and my goal to help people, it really hurts to see that, you know, this happen to good people like you. And it can just happen through just not knowing, and sometimes we don't know what we don't know. And, now you're discovering the Being the owner of this of this business, you're like, wow, okay, those, there was a lot that you that you didn't know, right, and I just want to say thank you for being open and vulnerable and brave enough to share this with us.
Because there's so much in the learning curve that you by you sharing this is going to help so many other people and hopefully help you if you want to go again and buy business, if you have the strength to master that art of this, and or the strength to sell it, maybe change some of the things in the business that you have bought that can then kind of make it more profitable as well, what would you say to anybody that is a first time buyer, when they're looking at, you know, purchasing their first business?
Yeah, my counsel would be to seek out all the advice and education that you can get, you know, because the resources are out there, definitely, you know, because this there's more and more, you know, business, more of a marketplace for the buying and selling of these types of businesses, which is a good thing. I think, you know, that just provides competition and more transparency, but at the same time, you know, it's like any other investment, you've got to do your due diligence, and really take a good hard look and not be in a hurry.
Because, you can get yourself in trouble which is what I did, you know, I'm just seeing the value of, even if it's hiring outside experts, or people that really know what they're, they're looking for, and looking at, and you know, paying for that service, you know, pre by inspection, I'm not sure what you would do call it in this world. But I know that, you know, looking back, I wish that I'd really dove in and found, you know, people that have been down this road before that, know what to look for, what was the right questions to ask, and all those things that could have saved me a lot of a lot of heartache and pain. And but the good news is, I mean, because I've considered that as well, where do I go from here?
And, but if I had to do it over Yeah, I think I'd definitely start on smaller scale, and just to test it out, because this I went all in right off the bat with the first time, experience in this type of business and that was the wrong thing to do. I think there's something to be had for testing the waters, you know, finding, you know, a smaller investment and see how that works out and then grow it or scale it, you know, into something else. later down the road.
Jaryd Krause (34:49)
Yes, spot on. I don't think what I like to tell people is that if you have say $100,000 of capital, and that's 100% of the capital that you have, I don't think it's worth spending the $100,000, I think it's worth spending anywhere up to the $80,000. And I say up to the $80,000 80% range for having some contingency money. And then maybe if you do have, you can spend up to the 80,000. And you might buy one for 40,000, say, a content site, smaller site, and then work out if it's a decent one that you've may like, and then if it is, then you can buy another one.
And then you got that risk diversification. The other thing that does make it hard about this is that buying a $40,000 business versus an $80,000 business is a very general statement to take lightly. But more often than not, the $1,000 business will be twice as established twice as easy to run twice as profitable than the $40,000 business. And you may have less time that you need to spend on the income that you are actually making. So, what you've done, Cody is going all in it's made, you have less work and the possibility to earn more income.
But the rest of versification wasn't there. And, it doesn't matter whether you're you know, you had a hard investment that didn't go so well. I've been there. And also, you've had good ones done well, I've been there a lot. And doesn't matter whether it goes good or bad, you're still going to do things differently, and you're still going to learn to evolve. And, yeah, I just want to say thanks for coming on. And depending on what you want to do, whether you know, there's something I can do to help you with this business, grow it or help you one by one in the future.
If it's a possibility, maybe we'll tune in and record something in the future. If that evolves, and I'll keep everybody posted, if that does evolve. And yeah, I want to say thank you again, Cody for coming on and sharing.
I appreciate you taking the time to just listen, and it just helps kind of share the story. And you know, like I said, I hope it can help somebody else out, you know, to maybe prevent some mistakes I made and prevent some pain out there. And but, you know, we live and grow through these experiences and you know, it is what it is but yeah, I think you know, that just education and you know, podcasts and channels like yours is extremely helpful, you know, for guys out there like me that want to get into this, but yeah, you got to be careful just like anything else.
Jaryd Krause (37:29)
Thanks so much. Appreciate you saying that there's lots of resources out there and look as raw as it may be. I know this is the been the case in my life where I've had some real trouble in my business and businesses that have been struggling as hard as that time was in hindsight, I look back at it and go wow, that's that really helped me a lot in everything else that I have looking forwards.
It really helped me grow as a business owner and as a person so as roars this may be for you right now, Cody, which I have no doubt it is. Maybe in 5-10 years’ time we're looking back and we're like well, it happened for a reason. And that reason is where you're at in that future and that future version of yourself. So, thanks again, Cody, and we hopefully can I see you in the future doing some bigger abroad things.
Yeah, sounds good. I hope so.
Want to have more financial and time freedom?
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.
➥ Download the Due Diligence Framework – https://buyingonlinebusinesses.com/freeresources/
➥ Sell your business to us here – https://www.buyingonlinebusinesses.co/sellyourbusiness
➥ Get 1-1 voice note coaching with Jaryd – https://app.coachvox.com/profile/jaryd-krause
➥ Visit Niche Website Builders – Get EXCLUSIVE OFFERS here as a BOB listener
➥ GoDaddy (Website Hosting & buying domains) – https://bit.ly/3YiRkWV
➥ Page Optimizer Pro (SEO tool for optimizing web pages) – https://bit.ly/3wQCzin
Ready to get started?
Ep 221: What It Takes To Pull The Trigger & Buy An Online Business with Jaryd Krause [Podcast]
Learn what it takes to pull the trigger and buy an online business with Jaryd Krause. Get valuable insights in this episode!
Ep 220: AI Content The Good, The Bad, The Ugly & How To Make It Truly Valuable with Rad Paluszak
Discover the truths and myths about AI content and how to make it valuable with Jaryd Krause and Rad Paluszak.
Ep 219: [Case Study] From Flipping Houses To Flipping Websites with Gerardo
Is buying and flipping websites your future goal? Catch this episode with Jaryd Krause and Gerado to get started!