Ep 292: [Case Study] Acquiring A $4,600 P/mth YouTube Channel with 30% Growth with Jackie

Imagine acquiring an online business and growing at 30 % in just the few months that you've owned it. Hi, I'm Jared Krauss. I'm the host of the Buying Online Businesses podcast. And today I'm speaking with Jackie, who is a Buying Online Businesses graduate who has bought a YouTube channel.

In this podcast episode, I and Jackie talk about how she came to the online business space from looking at acquiring a franchise in the early days all the way up into ltong at buying a boring, offline business which a lot of people are selling these days, the risks, the time and the things that are involved with buying an offline business and why she transitioned into acquiring an online business.

v We do go into at length the type of business she bought, how much she bought it for, how much it's making, how much she's grown it, some of the things that we've done to grow it just in the work and a few calls, coaching calls and growth calls that I and her have done together.

We also discuss what she learned through the process of doing due diligence, how long it took her to find the business, what her acquisition strategy was, how she changed her acquisition strategy over time based on the market, and then her advice for people that are looking at buying their first online business. Now, there's so much value in this podcast episode. I'm sure you're going to absolutely love it. We do talk a lot about buying a business, of course.

And I have a due diligence framework that can help you buy all the different types of online businesses. You can get that for free. It takes the guesswork out of buying a business. If you haven't got that already, go to buyingonlinebusiness.com .com forward slash free resources. That's there for you. Now let's dive into the pod. Do you have a website you might want to sell either now or in the future?

We have a hungry list of cashed-up and trained-up bu-ers that want to buy your content website. If you have a site making over $300 per month and want to sell it, head to buyingonlinebusinesses .co forbuyingonlinebusinesses.cousiness or business, at info at buyingonlinebusinesses .com because we will likely have a buyer. Details are in the description.

Becky, hello and welcome to the Buying Online Business podcast. Thanks for coming on.

Thanks for having me. Super stoked to be here. I feel like a long time is coming. I've been watching your videos now for at least six months straight. looking forward to it. Yeah. Awesome. Thanks. So you bought a business. Congratulations. Thank you. Yes. Exciting. Yeah. Let's start from the very, very start. What got in your head that you wanted to buy a business? Like, how did you come across this? You find it somewhere else that you stumbled across me? Like, how did this happen? Like, why add some more assets to your collection? Yeah, of course. Everybody wants those assets. I would say there are kind of two parts, I think, to the question of why buy a business first? And that was kind of a longer road for me. I love building things. I think my personality kind of lends itself to being excited about building. DIYers watched out before I was building a business. I was renovating my home tensely. So whatever I have equity in, I love to build. Previously, I got close to standing up my own Jimmy Johns, gosh, maybe 10 years ago, which I think nobody would have recommended. I found out that most Jimmy Johns were failing in my area because the rent was too high. So I didn't proceed. I'm glad that didn't work out. And then my life took off and my career took off and that kind of became a secondary thought. And then this year, it just felt like the right time. The world was changing so much. my, exactly as you said, I wanted to diversify my portfolio and learn something a little bit new while also keeping my job in security. So adding with AI, with the world changing, with politics—it's all having that—an extra income stream on top of my salary and other assets just seemed like a great idea. And then the second part of that question is an online business. So honestly, I did not set out to buy an online business. I was reading a lot of things and there's a lot of content out there right now about buying mainstream businesses and otherwise. So that's what I had kind of set out to do: I was looking at landscaping companies. I was looking at car washes and laundry mats and you know, the whole gamut of what people are telling you to buy these days. And it was a little bit stressful for me because I saw a lot of risks for myself in that.

I have a newborn baby, so time is precious right now. And I was also really concerned about labor. I really felt in my heart that if I bought a landscaping company, I was actually doing due diligence on one of those companies. was watching another podcast focused on that. And that's where you popped up and started talking about the online business game.

And I thought, huh, that sounds kind of interesting. I don't know much about it. And I just started to absorb your content and thought, Okay, well, this gives me a little bit of freedom. I can do it wherever I'm hoping I can find something that can mold to my schedule versus some of these other nine to five businesses I was looking at. This is very much not that.

And the freedom it allowed just drew me right in. love it. Cool. So I will get with just everybody listening. We're going to get to the business that you bought. Awesome business. We're working on growing it now, which is great. It's good fun, actually. And there's a couple of threads I want to pull on there. You mentioned Jimmy John's. My assumption is that that's a franchise in your area.

Yeah. It's a sandwich franchise.

Yeah. I should have elaborated and I live on the East Coast of the United States and it was something I loved in college. came out of college and while I was working, I didn't have a Jimmy Johns that delivered to my house. So I thought, well, I'll buy one and stand it up here. And I got pretty close. I flew out and met the executives at Jimmy Johns, the franchise headquarters and was looking for property.

And then I was just starting to chat with other owners and they were really struggling with the rent prices. I live near a big city. The rent prices are high and you don't necessarily sell more sandwiches. So that was, and I think a lot of folks would say be cautious when buying a restaurant or anything like that. So was kind of a fast food or quick eats restaurant.

Yeah. Hospitality fast food is very tricky, but to compound that even further, I've had somebody come and buy like a roastery chicken franchise in Australia and they'd been running that for like a decade and they just hated their life because it was; they just bought themselves a job and they were basically working for the franchise. And so it wasn't just the rent, but it was also the money they needed to send to the franchise every single month for the branding and all that sort of stuff that they had no control over.

And it felt like they owned their own business at the start because they were buying it in their heads. They thought they were buying their own business, but they were basically just a cog in the wheel of a franchise realllly. think when you hit the nail on the head, you bought yourself a job. Those types of businesses often don't have the revenue or profit to hire their own manager or operator. So that has to be you. You're looking at a lot of businesses that say, sellrs discthey sellry earnings, but they're the manager. So you hamanagers. careful. And that's what I was doing. Think it's very wise that you spoke to a couple of other franchise owners and sort of found that out. I think a really good question to be asking is, What's the effective hourly rate of this business?

Sometimes people might buy a business for $50,000, and it might be making $20 ,000 a year or something. Maybe you're spending five hours a week, but it would be higher if you could afford a larger business. You might need to start off doing a bit more work in a business than you may expect to or want to.

But as you start to go larger businesses, your effective value rates typically start to get better. And I'm talking about online businesses here, not offline businesses. Now you looked at a bunch of, it sounds like you did DD on quite a few offline businesses, brick and mortar, construction, all that sort of stuff. How many businesses did you look at? What sort of drew you away from that other than the hours required? Like how many hours were required were typically, yeah, let's just pull on that thread.

Yeah, so I gosh, I probably looked at maybe 25 before I jumped ship to the online business game. And most didn't have a manager because my price point was a little bit lower than I think it would have allowed me to have a manager. So that was a sticking point. I do think it's a little bit easier to get funding for those types.

You have things that you can leverage for funding. Like if it has a physical building that it owns or machinery, you can leverage that to get a loan, which could increase your value, right?

So that was a little bit exciting that I could extend the value a little bit further than I could with an online business. But mostly what I was finding was that these are very small mom-and-pop shops. I would be taking on the full manager load while also probably having to work on it at a nine to five kind of cadence still, which I wasn't willing to give up my job for. have a great job.

But it was; I was looking for freedom, extra income and diversity. And I felt like between one, finding great help in these areas is really challenging in the United States right now. I know a lot of people are struggling to find people willing to do landscaping or work at a restaurant, things like that. That industry is really struggling and I didn't want that stress. If I had to make a rent payment on that, you know, brick-and-mortar space, I needed some security, and that was just too risky for me.

Absolutely.

There's a lot there; like you said earlier, there is a lot of content on how easy it is to buy a business, a brick-and-mortar business or a boring business. I would say a lot of people talk about boring business, but there's a lot more insight. Like once you open the hood, you're like, wow, okay, this is more than I've been sold. Yeah, exactly. And you're taking on a lot of risk, right?

Unless it's truly offline and you, maybe it's a made service or something where you don't need a central location. I had to start thinking creatively about how I was going to make that work. And two, there was never a situation where I felt like the system was in place and I could just step in as the leader.

It was going to take a lot more effort than. Absolutely. So you found me on a podcast and then started going down the online business route. What was your surprise and delight like when you started to look at online businesses? Where did you look and what was your discovery phase like that?

It was kind of why it feels like it's a whole new universe that opens up to you. felt that way when I was investigating just brick and mortar, boring businesses, the different vocabulary you need to learn to talk through deals and things like that. And then you move to an online business and there's a whole new set of things.

Right. So it was an incredible learning curve of the metrics used to evaluate a business or how to use Google Analytics. What, what do these things tell you? So the diy of it was pretty significant, not only the vocabulary, but I didn't really realize all the different ways you could make money online. Mean, talked about so many on your own podcast of, you've got affiliate, you've got advertising, you've got a product. It was almost like, okay, the possibilities just seem endless if you just start kind of working at it.

And that really got me excited. I thought, well, online, the exact freedom I'm looking for without as much risk—I won't say none, because there absolutely is—but to be able to stay where I am and not have to make any significant life changes to do this other than just dedicate my time to learning was huge.

When you say there's the same amount, it can be the same amount of opportunities in terms of growth as a brick-and-mortar business to an online business. Great. But when you have the equation of terms of lifestyle decisions and work hours and being tied to a location or not, think for most people; most people listen to my podcast and stuff. want a better lifestyle. And I think most people wanting to buy a business want a better lifestyle.

It's not so much about just more money. Like, more money is good, but lifestyle provides a far better ROI than money alone, I would suggest. So, sorry if you're saying. I'm just going to agree. I think that is the biggest draw. You don't want to add to the weight you already have. mean, just do; I just had a baby, right?

Honestly, it was probably the worst time I could have picked to start investigating all of this because time was just not there. You want to talk about frustration. But when I was investigating this, it's scary. You're putting up money that you saved for and you want it to stretch as far as it can go. And it was just a no-brainer for me on this. And two, you kind of mentioned, well, maybe the ROI is the same.

I almost feel like an online business has the potential to grow way beyond a brick-and-mortar business. The reach is just so much farther. You can just pivot yourself to target different audiences and advertising and all the tools. Now it's getting so much easier too, with new tools coming on.

And putting working together on the growth and how much easier is it to just create a product and service online than do that with a brick-and-mortar business where you might need tools and more people and a lot of more hands-on work? And it might be a lot more costly where we can just kind of like, we did a bit of research and we went and found some products we can create within a couple of hours just by setting up some accounts and things like that, right? It's a new revenue stream, a lot easier than starting to do another lawnmowing service or having to buy tools and all that sort of stuff.

Exactly. And now you have these services like Fiverr and Upwork, where anything you need, if somebody lets you down or maybe one of your standard guys who creates content for you goes offline, you've got so many options to look at to replace them. And that was also just another risk averted in my mind of, if I lose a key, person that helps me create on my platform, then what am I going to do? In a normal business, it might be really hard to replace a manager at a lawnmowing service, but here it's not. cheap too. Ltoo. The labor is very cheap online because you've got a price war basically because there are many people that can create content online. yeah, you've really got, if anything, like when I've lost people working, I've always upgraded my team. Typically, I've again, it's becau saide wha; you want.

And you know how to find somebody better; you know what you don't want. Yeah, it ends up typically being an opportunity. So how did you decide what sort of business model you wanted to buy in terms of the online business? Like, did you look at a bunch and decide like how did you work that out for yourself? Yeah. So that was also a journey. I think I went down the content website and only content website was my focus. And then I was just reviewing a lot of lemons.

All of them with the Google update, the growth trends were down. I just wasn't seeing anything that really got me excited. I did quite a few due diligence is on those types of content niche websites. And so then I was kind of just, I probably took a little, a couple of weeks where I just pause and said, okay, this, this isn't working. Maybe I'll start looking into, to SaaS businesses or otherwise maybe e -commerce, which sounded all of these have their own different learning curves, right? So it's kind of setting myself up to do that.

Then I found this YouTube channel and just kind of felt right. I didn't do due diligence on a lot of YouTube's at all. This was the first one, but I had to compare and again, had this kind of steep learning curve, but there was a lot of good things about it. was, kind of had three criteria in my mind overall.

And that was, I wanted it to be growing, which was proving really challenging for me at the time with content websites. I wanted to see clear ways that I could add value. The ones talked about on different revenue streams or if they don't have a website or a newsletter or haven't tapped into other platforms to link.

Easy, clear ways that don't necessarily mean it's a ton of work. It might just be posting somewhere else a year. So I wanted that kind of quick value add. And then for me personally, I wanted to have interest in it or it to be relevant to my career.

And this checked all of those boxes for me. So I thought, okay, well, now I'm just going to keep pulling the thread until I find a reason why I'll have to move on anyways and not buy it. And that just never happened. Even down to the deal negotiation, I negotiated pretty hard.

And I think I was all the better for it because I was willing to just walk away since it was, I'd been a little bit let down. You know, you get married to one of these when you do a due diligence, cause it takes so long.

right? And you heartbroken when you decide it's not for me. I had that mentality at that point that it would very well end up not being for me, but it ended up great. It's a really good lesson. I'm glad you shared that for everybody listening is that it is like for me, I can get due diligence on very, very fast because I've done it so many times, but somebody starting out, it's grueling to learn how to do due diligence and it takes some serious time.

And then when the more energy you've invested into something actually where you just want to have, be able to extract some ROI out of that, which typically ends up being how are going to do that? Well, let's buy the business. We've gone this far. Let's keep going. Let's keep climbing the mountain. But how do we know what's part like it's past that next layer of cloud?

it we could possibly die or is it going to be a green field? I think that's a really good thing to ask is like, what your mindset around. keep pulling on the threads to find reasons not to buy it. And then you went all the way through and you found that you could not buy it. you bought it. the energy.

This is a big one, right? With the energy of if I don't buy it, that's okay. You weren't like forcing to make the deal happen. They were trying to force to make the deal happen and you ended up winning on that end. I right? Yes, exactly. If I'm being honest, I would get so attached when I do, I would have all the excitement in the world for a business I was doing due diligence on because I would just get so in the weeds and start thinking about all the ways I could improve it and opportunities.

What if this happens? then when you will be when you own the business, this extra money only for a few hours and you're like, yeah, that's a very slippery slope. And I would always do the fun stuff first, right? Of what would the new logo be? If I read that looks so I can do the fun stuff in my head. But when I would do that, it would be very hard then for me to turn it off.

When I would take some, lot of self talk to say, look, this red flag, shouldn't just ignore it. It's a big red flag. And it took me a while to learn that. And once I did, and I got a little bit faster at due diligence, the process became a lot easier. In the beginning, it is grueling. think the first one took me at least 48 hours.

And that was a lot of all my extra dedicated time to looking at that and understanding what each block meant in that framework that you put out. So yeah, it was grueling, but totally necessary because then you can easily spot when something doesn't have a red flag and start to weed through the plethora of things out there.

Some of these sites have so many on them, but then you quickly learn, there's only a couple added every week and there's most of them might have some flags that would deter you. you've got to, you really have to craft your lens that you're using. Absolutely. So how many businesses do think you did do jildens on before you settled on the YouTube channel?

On the online piece, probably 20, it was probably a little bit less than the brick and mortar, but I felt like I already had the mentality down that once I got the lingo and I submitted definitely not anywhere close to that, to you guys to review, but having those kinds of tidbits of how you looked at traffic and stuff really helped kind of craft, okay, this is what I'm after, this is what I'm looking at and I could do them quicker.

And I would stop midway through and just trash it. No, this isn't gonna work. So it started to go a little bit faster. Yeah, cool. Awesome. Congrats. So let's talk about the business, the YouTube channel, how much do you buy it for? What's it making per month? How do you run it? Like in terms of like, what's the workload for you? What's the workload for your team? What does the team look like?

yeah. So I used empire flippers and I, they were asking about 180 ,000 for this YouTube channel. It's in kind of the construction, big looking at big projects niche. And I ended up offering 150 ,000 on it. and we settled at 155. So got negotiated down.

Revenue was sitting at about 5 ,500 a month and then 4 ,600 in net profits. Initially they were asking for like a 39 multiple and I got it down to a 33 multiple, which was great. And yeah, they had about a hundred thousand subscribers for this channel and some good things about it. A content team already in place and willing to stay on.

And I also had a little bit of an earn out clause, which made me feel just better. I know I definitely urge people to think creatively in their deal structure because that can quell a lot of your fears. As an example, I did initial buyout of a lump sum of a little bit over a hundred thousand of that. Then the rest of it after a month if we hit our target.

I did that based on a conversation I had with a seller of, he's trying to buy a house. He's trying to do it kind of soon. So being respectful of his timeline, but also wanting to kind of keep them on the hook to be available to answer questions. Or if something ended up really being askew, I didn't lose my whole cash on this. So that made me feel significantly better that one, he was willing to do that.

And two that I could come back and keep asking. absolutely. That's what we teach in the course is how to ensure that you can understand what the seller wants and give it to them and also allow yourself to purchase the business within the parameters of what you want to do with in terms of negotiation and risk, right? And yeah, so very well executed. And you gave him what he wanted. You knew what he wanted.

He wanted to buy that property. He was able to, and then you also kept him involved in the business, which is really, really important in terms of the relationship. So what did you set on the business and what's your relationship with the seller like now? We exchanged WhatsApp numbers.

This team is all over the world and so is he. So it was actually, he was so responsive during our kind of migration period and super comfortable. I could ask him anything now of, Hey, what do you think about this? Or why did you do it that way? And he would give me pointers on.

different topics I chose or, you know, the titles of videos and things like that. So it was really incredibly helpful to have, because like I told you, YouTube was frankly new to me in this journey. It just kind of almost happened to me and he was super helpful. And that's part of the reason why this worked out so well is I definitely urge people to have that conversation with a seller as quickly as you can, because that can often rule it out.

I had some great conversations and then I had some clear conversations that, okay, you don't really care about this. You took it, you tried to flip it, it didn't work out, here we are and I didn't want that. I wanted somebody who had really worked for it and this guy built it from the ground up and cared about it and that was clear.

I think it's pretty common to be honest. I'm sure you would have seen that a lot of sellers have just gotten to a point in the business they just don't care anymore or they built this thing just to sell it and they haven't really cared for it at all the whole way through and it's done pretty sloppily.

Especially, you know, those business under the 500k range. just, just trying to just get like, build this asset to sell it. And they've just butchered it together, I guess. And they get to the time that sell it. just sell over it. They just don't care for it.

Pretty common. no, definitely. And that was not the attitude I found, which was wonderful. When you're learning the ins and outs of a business of how does your team like to be engaged or how does this kind of type of content do if you're looking at a YouTube channel specifically, all of those things I was learning and to have him who had been doing it for the last, you know, the life of the channel was learn so much so quickly.

You're borrowing all of their knowledge if you can. And so the longer you can keep them on, the better in my mind. But earn out clauses, especially with online businesses are a little bit hard to come by. I think people are really looking for that quick fix, but I was lucky and at least got that initial month of a earn out.

Absolutely. In that price range for sure. So you bought it for 155, is that right? And it's making, I think when you message me, it was 70K a year or 100, you said 4 ,600 a month? Yeah, so I bought it and it was averaging 4 ,600 a month for that. I think it was actually an 11 month period that they put in there, but now it's making about probably 6 ,000 a month. So it's been going up kind of since we started our discussions back a couple months ago. it's, so that's been great. That growth has been pretty steady.

Awesome.

Yeah. So everybody listening, we started growing the business. So doing some coaching on growing the business. It's good to see the results that are coming in. thanks for sharing. didn't know that Jackie. That's awesome. I would love to just take credit, but I'm sure there's some good willed in the business from the previous owner that's helped it grow as well. Yeah. what I love about this business, when you said you wanted to grow it is the opportunity in it. It's a YouTube channel and they make all of their revenue from ads.

And they have no other products or services. They don't have a website. They didn't have a website and or an email list. And we started coaching and now you have a website. Now you have an email list that's slowly growing very slowly, but we're getting there. We'll build it up.

And also from our last call, just recently, we have three different products now, right? It's pretty exciting. Talk to me about how you feel about the opportunity for the business. mean, I'm so excited. And I'll be honest, I wasn't.

A hundred percent sure. knew that this business was growing. Like it said, it hit all my criteria, but at the end of the day, like you said, the only income stream it had was display advertising and it was doing great at that piece. had an audience, which I also thought how neat.

So how can you change? What else can you add? And I wasn't a hundred percent sure yet, but like you said, I think they're not doing any affiliate marketing there. They don't have a website or a landing page for anything. We Patreon newsletter, all these kinds of different ways to just keep adding to those revenue streams. And maybe at the end of the day, it'll be a product or more entertainment, or you don't know which one exactly is going to catch fire and lead you down a different path.

But the fact that there are so many different things you can do is really encouraging. And that's why I find it so exciting. It's an easy thing to work on. I think you asked me how much time I spend and the previous owner said two to four hours a week, which is true. You could do it for that, but it's so much more fun for me when it's, this is something that's yours and whatever you build into it or equity you make is just yours. And that's really exciting.

I think that's an easy thing to be jazzed about. Absolutely. I think it's super exciting. And most people that buy a business, they get excited about it and they spend more hours on it per week or per month than the previous owner because there's new blood into the business and new energy.

And it's really good for growth and opportunity and why not, right? Why not build these things that you're excited about, build that equity, and then you can slowly tie your hours back to what they were or even less than the previous owner as well, depending on what team and what work has been done by other people with systems. So when you bought the, terms of help and contractors and like, how does this content be created?

Who does it? Why? another thing I loved about this was there was a easy system already in place. I just as kind of a picture. You think, okay, you've got a thumbnail, you've got a script, you've got a voiceover, you've got the video. There's kind of a lot of different moving parts.

And the guy that I bought it from, it set up this kind of board where this is not sponsored, but a Trello board where you can just put in your idea. Somebody will write the script, it'll move over, then needs voiceover, move over, and then needs video editing and then a thumbnail.

You have your finished product and the team has all access to that board where they can see what's in their column to do and execute. I love that system. It's so easy to use and the content creators were all willing to stay on with the channel. So I haven't had to make any changes. You'll test some new folks to make sure you have backup or if somebody goes on holiday for sure.

But the team has been really easy. We communicate WhatsApp. They're all over the world, just like the the original seller was, Canada, Philippines, Hungary. So it's kind of neat to have just pieces of the world coming together to kind of help work on this channel. And it's been easy. It's been easier than I thought. And I really love that with when I'm diving into something new and learning all new everything of, okay, I'm building a website now I'm building a newsletter. I'm researching content to create and it's all new.

To have a team that's more importantly, that's functioning has been a huge asset to me. Congratulations. I'm really thrilled for you. I'm excited for where we can grow this channel, looking at it and being and working with you already on it. There's so much good stuff to come.

I want to ask you before we finish up for people that are looking to buy an online business and they've just started, what sort of advice would you give to them? Maybe one or two or maybe three pieces of advice.

Yeah, I would say I'm sure everybody's said it, but do be patient, it will come. And sometimes the best things come when you're most frustrated. I certainly got there. It is possible. I can speak for myself that I have a very young child and a full -time career and I'm able to do this and I find it easy now. So you'll get there, just keep plugging through. Don't skip steps because you might make an error that you regret later. But I would also say don't be afraid to pull the trigger. Nothing will have no risk.

just try to catalog the risks in your mind of what you're willing to accept. Because once you get those thresholds in your mind, it's so much easier to make that decision. When I knew I had a risk and that it was just display advertising with the YouTube, but I also saw that, gosh, well, if it's still growing and there's all these other ways to make revenue, then I've got a good shot. And so I was willing to take that risk. So just be clear with yourself about what you're willing to take a risk on what you're not. And that'll make it a lot easier.

Love it. Absolutely love it. Jackie, thank you so much for coming on. Massive inspiration for everybody else that's looking at buying an online business. And yeah, thank you. Congrats.

Awesome. No, thank you.

Got to get out there and tackle it, team. There's a lot to be had. Absolutely. Everybody that is listening, thank you for listening. When you talk about buying a business and due diligence, if you haven't got my due diligence framework, you can go away and get it for free. Buyingonlinebusinesses .co. For just free resources, check it out and we'll see you on the next one.