Buying an existing online business? Here’s what you need to know with Jaryd Krause
00:40 – Episode Overview
02:11 – Why would you buy a business?
03:40 – How much it will cost me to buy a business?
08:49 – What would be an ideal size of a business you should buy?
11:45 – Would you buy a website that is not making any money but has traffic?
15:32 – What are the different type of business models that people buy?
18:19 – Is there a required type of skill set to buy a content type of business?
21:34 – What are some of the red flags of buying a business that people should be aware of?
27:34 – The Ideal age of a business you might want to consider
29:39 – Doing detective work to spot artificially manipulated traffic
32:03 – Good Niches vs. Bad Niches
33:31 – The three niches that people love to get into
35:24 – Thoughts on people buying dropshipping ecommerce store?
37:18 – Classic mistakes that people make in buying a business?
43:19 – Learn more about Jaryd Krause
Episode Overview
Ilana:
Hello, hello. Welcome Jaryd Kraus from buying online, businesses.com. I’ve invited Jaryd to come and chat with me. And he’s been very generous with his time, Jaryd is going to talk about, I guess, like the lack of a better word like the due diligence side of buying an existing online business. So we’re going to get into some nitty gritty, some specifics.
Who is this ideal for? Who is it not ideal for? The different kinds of businesses you could buy, and why you might consider it and all sorts of interesting stuff around this avenue.
So welcome, Jaryd, thank you for coming.
Jaryd Krause:
Thanks for having me. On. Ilana. It’s great. We’ve chatted multiple times, but we haven’t had a catch up for maybe two years or so. So I’m excited for this. Yeah.
Ilana:
Yeah, it’s been a while and a lot has happened, right? So your business really just focuses on helping people to buy online businesses.
And you know what, it’s something I have always had in the back of my head of like, should I buy an existing business? Or should I create one from scratch? And it’s always something I’ve kind of grappled with.
So before we kind of go deep into the specifics of if you are going to go and buy an existing one, what you got to look for, and all that kind of stuff. Taking the helicopter view of like, why would you even consider buying one in the first place? Do you want to kind of touch on that?
Why would you buy a business?
Jaryd Krause:
Yeah, there’s a few different reasons. A lot of people come to me and they want to buy, so they want to make money online. Basically, that’s their goal.
And I recommend people not to start an online business, like if you’re, it’s really important to understand your goal. And then the next is like, very general, understand your goal, and then work out the strategy.
Sometimes people have a goal and they choose a vehicle that’s not the best for them. For example, if their only goal is to make money online, why don’t you buy something that’s already making money online?
Ilana:
Right, a website that’s already making money online? Correct, right?
Jaryd Krause:
Because 90% of startups fail, right? I think there’s only one type of person that should start a business.
And that is a person that has a problem, a solution to a problem that can be about a product or a service, that they’re so damn passionate about that they’re going to be in business for 10 years,
in that, because 90% of startups fail, you need to go you need to be have the passion to go through the highs and the lows and the startup phase to be able to come out the other end and actually get an ROI.
So if your goal is just to make money online, why would you not save up some money and put your resources into buying something that’s already gonna provide you that goal a lot quicker without having to go through the frustration of possibly failing multiple startups before you get there?
How much will it cost me to buy a business?
Ilana:
Right. I think if I could sort of talk on behalf of a potential viewer or listener of this, one objection people might have is the valuations are a little bit crazy. And therefore, they don’t have the cash to pay this huge upfront.
I mean, okay, let’s just go straight to the end of like, what, let’s say, if I go by your advice, and my goal is to make money and I have a figure in my head, I want to make two grand a month from a website. What is that likely to cost me?
Jaryd Krause:
$80,000.
Ilana:
Right, $80,000?
Jaryd Krause:
$80,000, If you’re $2,000 net profit with a business model, that is typically the lowest maintenance and lowest work and effort. It would be around $80,000.
Ilana:
So that’s not a small chunk of change.
Jaryd Krause:
Yeah, I agree for a lot of people it’s not and then you’ve also got the other route, how long would it take you to start a business that’s worth $80,000 or producers $2,000 in net per month?
I tell you, I’ve tried to do this for many, many years. Right before before I actually worked out the formula of like, I started buying online business Since this business that I’m in now, out of necessity of like, passion for wanting to help people do what I had done, right and worked out the formula, but it took me a long time to earn an income and doing it with previous businesses. It didn’t, I just didn’t get there.
So, yeah, it’s your right, it’s, it can cost money to do. But you don’t need to buy something for $80,000, you can buy something for a lot smaller, you can start with $5,000, $10,000, and work your way up and go from there. So it depends on where you’re at, everybody’s at a different level.
Ilana:
Is that what do you advocate people to to buy a smaller site that’s possibly not generating $2,000 a month, but maybe 100 bucks a month, as as sort of like your kindling, really, and then at least the fires going that you can then add things to it to grow it to $2,000 a month, but rather than getting straight to that input, is that what you advocate or it depends?
Jaryd Krause:
Yeah, it’s like not one size fits all approach. Everybody has different different risk tolerance, and also has, maybe some maybe have some assets that I can lean on or not.
For example, if somebody has real estate or other investments, and they have enough cash to buy something, that’s a decent business, I would prefer them to go away and do that.
Because they’re going to have a better experience, not just dip your toe in the water, and possibly create a traumatic experience of having to work a lot, and having to manage a business that is quite smaller and, and really get it growing, I think it’s better to buy a great business that has low maintenance and low workload, because you’re gonna have a better experience, if you can afford to it.
And if you can’t afford it, if you can’t, I understand we need to start somewhere. And sometimes we just need to run the gauntlet and we need to go through the fire to build that grit muscle of I can, I can challenge myself and I can do hard work and get through it to a point where you can start to slowly buy bigger businesses.
So you could flip you’re like, This is the way I see it with real estate investing as well is a lot of people will start out they want to get into real estate and all costs. You know, composite, a bit of money begin to deposit and they want to build wealth fast. So the way to do that is flipping real estate.
The same with website businesses, you can start flipping, I don’t personally, I don’t like the game of flipping, because I’m a buy and hold and keep assets for a long, long time and get the good compounding from it.
And eventually, once people progress from flipping real estate, and they realize that is a short term game, toss a lot of time, money, effort and energy, they move into buying right real estate assets in residential.
And then they can move into bigger assets eventually into commercial which end up getting you a better return as well. So that’s why I see it with the order of how people can go through buying businesses. If you’re starting off with a small amount of money, start flipping them, and then build up to bigger assets that you can hold, draw cash from them and then buy bigger assets again.
Ilana:
So really buying a smaller one is just an avenue and a way to afford you to be able to buy a larger, more established one.
Jaryd Krause:
If your goal is to make money through buying businesses.
Ilana:
What would be somebody else’s? What would be another goal, I guess, a passion project or something?
Jaryd Krause:
It might be that they might like the end goal, maybe I want to invest in other things like maybe they just need to make some money to afford a surgery or something like that.
What would be an ideal size of a business you should buy?
Ilana:
What? So given that, what would you say is the ideal size to business to buy? Or is that an unfair question?
Jaryd Krause:
Yeah, it’s tricky, that’s a good question. I, the way I like to explain it is that say, for example, you’ve got 40 saved, so you’ve got $50,000, right, for example.
So somebody is in a fortunate position, they’ve got 50,000 doors, they might go on to dip my toe in the water and they might want to buy something for 15 $20,000.
Whereas they could actually buy something for 40,000 doors. The way I look at it is that this is very, very general without looking at and comparing actual businesses. But a $20,000 business is typically going to cost twice as much work and have twice as much risk and is half as solid as a $40,000 business.
So that’s why I typically push people to go to the range that they can while still having some contingency money. Notice I said if you’ve got $50,000 I didn’t say go spend $50,000 Because you want to have Some contingency money either for health, you know, crisis or those family crisis that may pop up.
And or reinvest reinvesting money into the business. So when you’re starting out, typically, it’s better to have some contingency money, not spend all of your capital, because then you can grow the business with a little bit of capital that you keep aside versus if you buy a $500,000 business, then you are making a decent net profit each month month, which are resources you can pull back into the business not needing to take capital out of your own bank account, for example.
Ilana:
Got it. So a $40,000 business, in your opinion, is worth way more than twice as much than a $20,000 business in terms of risk, time, and all that kind of stuff.
Jaryd Krause:
Yeah, most of us who want to make money online, that’s not really the goal. Okay, most people that want to make money online, their goal is lifestyle, right?
They want to get away from their job. And sometimes people will forget about the actual real goal. And they’ll go, I just want to make money online, and they buy something small and end up creating another job and another task, and I just really try to question people’s like, well, you can, you can have both.
And you can take, you know, make moves that set you up to get your real goal closer to not working as much than earning an income online.
Ilana:
Yeah, it would be the same theory really going back to your analogy of property, right, where, let’s say you want to buy, get into property and you you’ve got, you’re tossing up a $200,000 property property versus a 100,000, the 100,000 is not in a great location.
And you’re actually gonna have a lot more problems with it and vacancies, and it’s sort of not as good quality, whereas the good quality one in a great location and, you know, higher caliber, will actually withstand the test of time.
Jaryd Krause:
Correct. And think about if you’re flipping 100k property versus a 200k, property, 100k property is probably going to need a lot more in renovations, to get it to a really good market value price than, say, a 200k property, you might spend 50k on the 100k property and you might be able to spend 20k, on the two on the 200k property and get the same level of ROI after a flip.
Would you buy a website that is not making any money but has traffic?
Ilana:
Yep. I’m curious if you would consider buying a website if it wasn’t actually making any money yet it was just getting traffic.
Jaryd Krause:
So it then depends on what’s your actual goal.
So for your guys that may already have businesses, like people that are you know, your audience that is learning to try and acquire traffic, because I’ve already got a business is that can be a very smart move.
Right? If you’re, if your goal is to just make money online, and you buy something that doesn’t do that, how do you know that it’s actually going to produce a result of making money because typically, I believe a business, when we buy a business, we’re buying a system that produces the income that produces a result produces a profit.
Typically, if you’re going to buy something, it’s just generating traffic, they haven’t yet proven that the system is providing the result that you may want, if your goal is to just make money. They haven’t proven that that traffic actually turns into money yet, through maybe one source may be, it could be trying to sell an ecommerce product and not not be that traffic sucks. It might be that an e-commerce product is not right for the traffic, or the advertising or affiliate. affiliate products that you put on the site are not right for the traffic.
So it’s not might not have anything to do with the traffic, the traffic may be great. But the person that’s running the business hasn’t worked out the system to actually get the dollars yet, versus somebody that maybe in your audience is like, hey, I want to buy this traffic, because it’s my exact demographic.
These are the people that buy my product. I’m going to do a different strategy. My goal through buying a business is to use growth by acquisition. So they’re taking their marketing budget that they may spend on Google and Facebook are a portion of it. And they’re putting it in towards buying a business that has the traffic that they want that they can funnel into their primary business.
Ilana:
Got it as a complement to their existing website, perhaps correct.
Jaryd Krause:
So perhaps I’ll give you an example. Say you’ve got somebody that’s got a ecommerce business and they’re selling fishing gear.
They may go away and look at a blog that talks about fishing and how to fish how to tie knots and they make money through maybe having ads on the site and maybe some affiliate products and then they might buy that site and they may create the person who owns the ecommerce business may buy that site and create a bunch of articles around the products that are on there. phishing site and they publish it on that blog.
And they take traffic from that blog over to their ecommerce business. And the first blog that they make, they bought, it’s making money independently of itself. But it’s also helping this other business make a lot more money as well, because you’re getting traffic from one to the other. There’s other strategies as well like building an email list from the law for the ecommerce business. And there’s different ways I could go and we could that could be a whole chat in itself.
What are the different type of business models that people buy?
Ilana:
Let’s just touch on. So let’s say I’m, you know, what, I’m a listener. And I’m thinking, Yeah, this is something I’d really like to explore further of buying a well established website or business, what are the different types of business models, the main ones that you see people kind of have for a website that people might consider buying?
Jaryd Krause:
Yeah. All also it depends on what your goal is. So that’s a really important thing to always come back to what your actual goal, the when anybody comes to me is like, Jerry, I want to buy a business, they think that they need to buy an ecommerce business, because they think any online business is an ecommerce business, it’s not actually true.
That’s one business model. So we’ll put that one aside ecommerce businesses, one type of business model that you can buy. Then you have the other one, which I mentioned, which is a blog, that’s a content business, that will produce content, they can be in the form of YouTube videos, podcast or blog, like I mentioned before, and they will make money typically through ads, and or affiliate revenue, then you can have membership, I typically put membership businesses and SaaS businesses in the same were in the same sort of bucket just because they’re getting recurring income. And membership businesses have a lot to learn from SaaS and vice versa. So either a SaaS or a membership business.
That’s and that’s the third type of business model. Now, for somebody that wants to buy a business that is generating an income, so they can slowly start to replace their income from their nine to five, I typically lean them more towards buying a content business like a blog. The reason being, is because those businesses typically have less moving parts than say ecommerce business.
And typically the labor or the people that you can use or hire to run and help you grow the business is a lot cheaper, because there’s an abundance of those types of staff and virtual assistants. So that means that typically the profit margin is quite good on blogs and content sites.
So less work, less expenses, easier to run less stress, I typically lean people more towards a blog, if they’re brand new, then the other types of people, I would say, if you want to buy an ecommerce business, it’s worth having leverage, in the sense that you have like you would be a great person to buy an ecommerce business alone, because you understand digital marketing, you buy traffic for a living, and you would be able to really scale an ecommerce business because you could tap into it, you could make the ads better.
And you’ve got leverage, right. So those are the type of people that I would say, to buy an ecommerce business. And or a SaaS or membership business, you could do the same thing, you’ve got leverage there, or you’ve got some understanding of if it’s a SaaS business, and it’s software that needs some updating, and you are buying it for a cheaper price. And you understand that because you’re a SaaS developer, you can come in and you’ve got leverage there where you can grow it. So they’re the types of people that I would suggest buying those types of businesses.
Is there a required type of skill set to buy a content type of business?
Ilana:
Okay. What would you say? So let’s say you decide I want to actually buy content business, because it kind of sounds a little bit like I’m reluctant to use this term, but passive income or it’s more passive degrees of passivity, I guess.
it’s a relative measure, right. So let’s say you think, you know, I’m gonna dip my toe in the water. Let’s start with a content type business model to purchase.
Would you say there’s an ideal skill set that is required for purchasing that type of business? Really couldn’t? Is that something that anyone could buy?
Jaryd Krause:
I really think anybody can buy this type of business. The reason I know this for a fact is because I have people come like, if you just check out all the people that I’ve helped in all the interviews and people like case studies, they’re all people that are doctors, construction workers, nurses. I was a plumber, right?
Like All different types of people that don’t have any idea, like most people who come to me like Jaryd, I want to buy an online business. And I don’t know how to use email, I don’t even have Facebook. Those are the people that can buy blocks. Because when you buy a blog, it’s not like you need straight away, be constantly doing work and knowing how to do the work. You can learn the business over time, and usually they people learn it quite quickly. And then also, it’s quite cheap to hire help. So
Ilana:
do you think that inflates the price of these content sites? These blogs? Yes. Okay, so you’re paying a premium for that?
Jaryd Krause:
Yeah, the most premium that you will, the most premium business model is a SaaS business with a sticky Yes, sticky customer base, because their whole team is tied into using that tool or that software and or does take a lot of time and effort and energy to buy a new software and retrain the whole team and stuff like that.
So they’re very locked in, and they’re going to use that software for years and years and years, maybe even decades. And they’re already paying on an annual basis or a monthly basis continually. So you’re buying something whereas people already constantly paying for that they’re like the dream businesses for most people to aspire to.
Because typically, those ones are, you know, a million dollar plus sort of businesses around the 500k range, but they’re more startup ish. But yeah, they’re sort of the business that most people aspire to.
What are some of the red flags of buying a business that people should be aware of?
Ilana:
Interesting. Okay. What about if I decide? Yes, I think, you know, as I said, I’m gonna dip my toe in the water by a content site. If we kind of go into a little bit, I know you’ve got a whole due diligence checklist, which we I’m happy to provide in the show notes for people. But high level, what are some of the red flags that people have got to watch out for? If they’re considering buying? I guess any business or content business? Yeah.
Jaryd Krause:
So we’ll stick with current, we’ll stick with a blog.
So a blog is a website that produces articles. Typically, what you want to look at is you want to look at the traffic, you want to see if the traffic is trending up, down or sideways and understand why it’s trending in a certain way was it hit by an algorithm update, and understand what that algorithm update was if you want to try and reverse the trend.
So understanding traffic’s really important, understanding what SEO work has been done as well, and what hasn’t been done, SEO, being different types of SEO, you got on page, off page, and technical SEO, sometimes they may be technical aspects of the site that needs changing.
Typically, they can be done quite quickly, and with the help of somebody else, so I don’t focus too much on those, although there are some risks within it. But I also really like to lean into the backlinks to see if the link links coming from other sites are spammy links or toxic links and see if they need to be removed? If so you can do a link detox on that. I’ve done that on a site before as well.
Ilana:
Just for the benefit of our listeners, if you don’t know what a backlink is, that is a link that somebody from another website is linking to your website.
And I guess it’s sort of the fundamentals of SEO of how they rank people is by kind of like a popularity contest, really, of how many people are linking to your site. But obviously, the value of each link varies depending on the page authority or domain authority that has a website?
Jaryd Krause:
Yes, beautifully said. Yeah, exactly. So sorry for not mentioning that. But that’s yeah, backlinks are an important ranking factor and you can land authority, say if I have a backlink from, say, if
I’ve got a fishing blog, and Rex Hunt was still around, and he had a fishing blog. And he Rex Hunt for those who in the States are like an old school famous funny fisherman who says he had a very high authority website and link to my fishing blog that would help me learn some of his authority. Right?
Ilana:
And one of those Rex Hunt’s links would be worth more than 100 of them crappy links.
Jaryd Krause:
Yes. Correct.
Ilana:
it’s quality over quantity.
Jaryd Krause:
Yeah. So you want to do a little bit of backlink due diligence, something that I teach in my course. So then also checking the email lists if you’ve got an email list, understanding the health of it, how many people on the email list are actually active?
What’s the open rates, click through rates and stuff like that? You really need to be understanding the financials, guys, when you’re buying online business you need to get typically people are okay, we’re just getting a screenshot of the amount of money and the lack of the graph of the money that’s, you know, coming into our account, and an account, like an ad revenue account or an affiliate account.
That’s just a big No, no for me, I tell people that they need to get viewers access to all their ad revenue account, their merchant account, if you’re buying an ecommerce business, you need to get access to their merchant account like their Shopify account. Just viewers access, you don’t need to be changing things in there. But just to see what’s you know, what’s the return rate, refund rate on these ecommerce products being sold?
How much is the business making in January, February, March, April all these different months and change the dates and have a good look at it. Okay, so getting viewers access, if you can’t, they’re not gonna give you viewers access, you want to get them to do a screen share video recording with you on if you can, preferably, I’m going through different timeframes and logging in and showing you the financials.
So financials is a very, very important one, cross referencing everything that you see there with a profit and loss statement. Sometimes people will give you a profit and loss statement. That’s just an Excel sheet. That’s not good enough, they could have put any numbers on the Excel sheet. So I need to cross reference that with real proof.
Ilana:
Got it? And is 12 months worth of financials enough in your opinion?
Jaryd Krause:
For a blog? Yes. Obviously, you want to at least see that they’re making money prior to that. But we value a business based off 12 months.
I like to teach people to buy a business valued based off the 12 months. Sometimes brokers and their brokers are very, I don’t have a I don’t have got a nice way to put this. Brokers want your money. So they will value your business based on the best three months, or the last four months of the business where the business need the most amount of money.
And it might be in season. Right? It might be the high season for the business, that’s a no no for me to get the average monthly net profit over the 12 months, and then times that by the multiple, that the businesses that you feel the business’s worth based on the risk, I will talk about multiples in a second.
Last thing that I want to mention in the due diligence is competitive due diligence, you want to see where your business stands against other businesses out there that are ranked online, and what their business is doing really well. And not well. And then where is the site that you’re looking at buying? And what do they need to do to get to that level that of your competitors? Or if not outgrow them?
And how much time and money with that cost as well. So competitive due diligence is very, very valuable, not just when you’re buying a business, but hugely valuable when you’re growing a business.
The Ideal age of a business you might want to consider
Ilana:
Interesting. Is there an ideal age of a website or business that you would consider?
Jaryd Krause:
Yes. Not to buy anything too young. For a blog, under one year ecommerce business, probably not under two years. The longer a business has been around, typically the more stable it’s going to be. That said, if a business is 10 years old, which I’ve seen before, and the traffic’s just declining steadily over the last three years, you probably don’t want to buy that business.
Ilana:
It’s declining for a reason. Really.
Jaryd Krause:
Yeah, it’s been neglected, in terms of the content is no longer being published, or it’s outdated, old content. Or if it’s an ecommerce business, they’ve just stopped spending money on ads, and you just see it’s slowly declining.
Ilana:
But someone might argue that actually, they can give it a renovation and turn it around. I mean, there’s that sort of opportunity of what it once was and could potentially come back to.
Jaryd Krause:
Yeah, so take what I say guys with a grain of salt because I am biased, and I like to make people’s life easier. So typically, when people come to me, they’re like, I want to buy this business because they want an easier life, money and a lifestyle.
But sometimes there are people on the other side of the colonias like, I’m prepared to hustle, Jaryd, I want to work ridiculous hours until my eyeballs are popping out from looking at the screen too much. Or if you’re like me, when I was younger, I was like, Bring it on, throw it at me. I’m hungry. I will. I will just do whatever it takes.
Yes, there’s opportunity in that. So all risks, just like all problems or opportunities in the skies. All risks opportunities to grow the business as well. Yeah. It’s just understanding I, I typically tell people not buy those businesses unless they understand those risks, and have done it before or no how or have actually reverse the trend of a business like that by doing it themselves prior to
Doing detective work to spot artificially manipulated traffic
Ilana:
Going back to kind of what I was asking about red flags. Is there a way that people can sort of artificially inflate their traffic that you can kind of pick up through some detective work?
Jaryd Krause:
Yes, people can buy traffic from Pakistan, India, wherever I like right and And you can detect that. But if the site is mainly creating content for Ozzy or US citizens and most of the traffic is coming from India or Pakistan, you’d be like, well, this doesn’t make sense. Like it doesn’t add up, right?
Also, if the bounce rate is really high, meaning people go to the page, they’re not getting value, and they leave straightaway. Google detects this. And you can look at this through Google Analytics.
That’s how you check traffic is getting access to Google Analytics. And then also time on page as well. They track how long people stay on the page? If they’re only on the page for like, 10 seconds? 15 seconds, it’s like, the contents are not valuable. Got all the traffic going to that content is not is not the right traffic?
Ilana:
Do you typically look for the best like them ranking really well, organically and in search as the primary kind of good traffic source?
Jaryd Krause:
Yeah, definitely. For blogs. I prefer organic traffic from Google or search engines. And the reason being is because the intent of organic traffic is like I believe, as you probably have talked about so many times, yeah, organic traffic is like the richest source or where the buyer intends.
So higher, where they’re so much closer to buying the business, very poor at buying a product, sorry, yeah, of solving a problem that they’re trying to find out about through a blog. Yeah, most people that are scrolling through Facebook and Instagram, they’re not there to solve problems. They’re there to run away from problems.
Okay, so people that do a lot of social. And then when we will go to Google, they’re there to solve problems. We’ll find a solution and everyone bought a solution or product. Yeah. Yeah.
Ilana:
What about niches or for the American listeners, listeners niches, which I still feel really weird to say, I don’t know about you, Jaryd.
Jaryd Krause:
I just say niche.
Good Niches vs. Bad Niches
Ilana:
Yeah, me too. Are there any sort of good niches versus bad niches that you would that you would like, if it was in a certain niche that you’d go, Oh, my God, I’m not going to go near that, or good ones that you’d be like, Yeah, I want to be in this one.
Jaryd Krause:
Yeah, that’s a really good question. I teach people to buy businesses in Evergreen niches, right? Businesses that aren’t. So there’s not a like, a tell tale of like, just do not buy this niche. And only buy this niche.
It’s more of a like a category of niches, for example, really good niches, where people will spend money emotionally, right? Like, parents, pets, and sometimes hobbies, right?
They’re really good niches, that evergreen niches, the content is going to be evergreen, meaning you’re not going to always need to continue updating the content. So you’re buying an evergreen site with evergreen content, versus buying an ecommerce business selling fidgets spinners, or some type of reinvented playdough.
That doesn’t work anymore. It’s you know, that’s a fad. You don’t want to buy fad, gimmicky businesses that are just not going to be around for very long, because, you know, best ROI comes from long term growth and compounding and you can’t maintain, maintain those ones that don’t have the right. This is just no longer existent. You know, that’s not interesting anymore.
The three niches that people love to get into
Ilana:
Yeah. I’ve also heard people say the three niches that they love, health, wealth, and relationships. So that’d be something to consider as well.
Jaryd Krause:
I spot on Agree, there’s there is there is the thing with SEO online. With Google and what SEO is talking about called y m y L stands for your money your life. And typically the way Google ranks content is based on how good that content is. And based on authority. And where this happened before is like a health site didn’t have much authority and it got D ranked a lot of that content got D ranked by Google because it’s in your life. It’s in your life category. The value, or what they say in the article can change somebody’s life.
So they knit So Google is very careful about what content they rank high based on the authority that’s there. So they want to see people that have accreditations in relationships, accreditations, in health accreditations in other things, or able to showcase some level of authority. Right. For example, I teach people to buy businesses.
My authority comes from showcasing that I’ve helped so many people replace their income and then having links from a bunch of other people that are in similar space as well.
So we can get ranked high with content that we write about based on finance and stuff like that. But that’s only because there’s an authority in that.
If you’re, if there is no authority, then it’s a tricky one. Those are probably the top three good ones.
Thoughts on people buying dropshipping ecommerce store?
Ilana:
What are your thoughts on people buying a drop shipping ecommerce store? Be honest.
Jaryd Krause:
Yeah. Don’t do it. Don’t do it. I bought one for have. Yeah, yeah, I have sold it. Yeah, I got rid of it. It depends on the business. Most drop shipping stores don’t make it. And that’s why people try to sell them.
So that’s why there’s a lot of drop shipping businesses for sale that aren’t particularly that great. There are some that I’ve seen, you know, around a mil, half a mil for sale that were that they’re doing very well. And they’ve got a high profit margin.
Maybe they’re drop shipping exercise bikes, or one of those pilates reformer machines where the profit margins are really good.
Ilana:
Too bulky items.
Jaryd Krause:
Yeah, I’ve seen furniture, furniture dropshipping sites before that have worked quite well. Yeah. Yeah, it’s, it’s, it’s a tricky one. Because as you guys know, and your audience buying traffic, when you’re buying traffic, you want to make sure that you can get a good profit margin, right, you’ve got a good CPA, right.
And you also want to make sure that when you bind traffic, that the product is actually in stock. Sometimes when you’re using drop shipping, you don’t have the most accurate data on what’s in stock or what’s not in stock, because you’re not the order fulfillment agency, that’s somebody else’s. And you may be buying traffic to a product that’s no longer in stock.
And that’s just us as a business skill.
Classic mistakes that people make in buying a business
Ilana:
Yeah, definitely. I’m mindful of the time, so I kind of got us going to ask my last question, which is, what are some of the classic mistakes and pitfalls that you see people make?
Jaryd Krause:
Rushing? Okay, yeah. Rushing into buy a business. And yeah, just trying to try and get it done, and trying to just get into a deal as fast as possible because they need to make money fast.
That’s the biggest pitfall. The second biggest pitfall is the opposite side of the coin. is people not having the right mindset to get through the challenge of finding and buying a business. Some people may have the perception that, okay, buying a business is so much easier and starting a business. Yes, it is. But it still takes work, doesn’t mean that you like, I’m just gonna go buy one off the shelf, you’re gonna walk into this store, which is a broker, and I’m just gonna buy one that looks good.
Ya know, there’s so much more work that goes into it. And it’s not as much as starting a business. Because starting a business and actually making a profit can take years and years and years, buying a business, you can get it done in a short period of time. But it takes work and people just a lot of people just aren’t prepared to do the work or don’t have the mindset to understand that they need to tackle that challenge.
So mindset is a big one and rushing. Most of what I teach is mindset. And that’s any, that’s for any, anything that you want to achieve in life. It comes down to being able to overcome challenges and having the right mindset to do it and having the capacity within yourself to go the distance.
And the confidence, I would say, Yeah, that’s right, then the mindset. The mindset helps build confidence. So I have this thing called the three C’s to achieve, that I like to teach courage.
Courage comes before confidence. So if the goal, so we only really achieve, we start to really get results once we’re confident in something. Right. So one time a mentor said to me, Courage comes before confidence. I was like, Yeah, you need to be courageous enough to actually do the work.
And once you’ve done the work, for example, you’ve gotten I don’t know how much time we got. I don’t know if you want me to go through the full process.
Ilana:
That’s alright, I got time. If you’re willing to share.
Jaryd Krause:
Yeah. So he said Courage comes before confidence. And I said, Yeah, that’s great, but you can’t just snap your fingers and being courageous. It needs something to get you there to be able to become courageous enough to tackle that task. So that’s where commitment comes in. So my three C’s to achievement, commitment, courage, and incompetence.
And you need to go through each one of those. And I’ll give you an example. My goal as a younger Jaryd, is that school and I’m like, I want to be able to buy my first car. So my goal is money. I need money. All right. So I’m gonna go get a job, right? I’m gonna go work at Red Rooster to fast food chain, which is what I did. But I could, I had to be courageous enough to go away and do that job. Right?
What actually made me courageous first was I need to have some desire, I need to be committed to something. Otherwise, I’m not just gonna go away work at Red roots, I’m going to do nothing. So I needed that commitment first. And once I had that commitment, then I could be courageous enough to get the job, when I got the job, was like confident? No, I was. So I was like, 15, I was so scared, I didn’t know what I was doing.
Like, I had to learn all these things. And I was just like, I was courageous enough to just go through and be vulnerable, and not know anything. Only after I knew a lot about it, I was confident in my job, right. And I was running the show. And when I was running the show, I was closing the doors, I was making more money, because I was running the show. So my goal was to make more money.
And I only got that by going through a desire, getting commitment, being courageous enough to go towards that commitment. And then also, just staying with it being courageous enough to the point that I became confident. Once I became confident, then I started earning more money. And I achieved my goal through that.
And that’s the same with any, anything that we want to achieve, whether it’s buying a business, whether it’s starting a business, anything, the goal is to make money online, first, you need that commitment, to make yourself courageous enough to do the tasks.
And only once you’ve done the task so many times, can you become confident enough to understand how to buy the business.
And I think all risk comes from all risk is minimized by you know, understanding, understanding it more, right, and being confident. And that’s when you understand the risks, you can understand how to remove them, you’re confident nothing, then you can buy a business.
Ilana:
I like it, it’s very cool. I would completely agree with that, as well, as somebody who, you know, started my own business, not out of my choice, that choice was kind of made for me. And so sometimes, yeah, you’re just sort of thrust into the deep end, and you just have to swim. Because sinking is not an option, you know, hence the commitment. You know, it’s like, got to do it.
Jaryd Krause:
It’s, it’s also that three C’s to achievement is basically the hero’s journey story as well, right? Yeah. It’s like, we’re like, Ah, I’ve got to achieve this goal, then I gotta be courageous enough to do all these crappy tasks, and I’m gonna have setbacks and I’m gonna fall on my bum. And then I’m gonna pick myself back up, and then only I start to become more confident and more confident become goal achieved. Yeah, yeah, yeah. Then you’re the hero.
Learn more about Jaryd Krause
Ilana:
Very cool. Well, Jaryd, I am mindful of the time, I don’t want to take up too much of your valuable time. So thank you so much for taking the time out of your day to come and talk to myself and our listeners. Where can people find out a little bit more information about you, particularly, obviously, if they’re interested in getting some help about buying an online business and wanting to avoid some of the common traps, which I’m sure that space is littered with pitfalls?
Jaryd Krause:
It is littered with pitfalls. That’s why I have a job. People can find me at buyingonlinebusinesses.com. And yeah, just check out our podcast. We ranked number two best passive income podcast online. One on Pat Flynn. Oh, we like we’re chasing Pat. We got to get there. Look out Pat.
Ilana:
Jaryd’s, coming for you. Yeah, that’s awesome. Well done that’s real commitment, because that is a tough category to crack. So well done persisting at it. Thank you so much for taking the time. It’s great to chat to you as always, and I always learn a whole bunch. And you got me inspired again to buy an online business and maybe already have to reach out to you.
Jaryd Krause:
Awesome. Thanks so much for having me on. I really appreciate it.
Ilana:
Yeah, no worries. All right. Talk to you soon.
