How To Sell Your Affiliate Site For 6 Figures With Justin Cooke
I can’t think of anyone more qualified to talk about selling websites than Justin. Justin is a co-founder and owner of EmpireFlippers, an Inc. 5000 company that helps people buy and sell websites. Whether that’s $10,000 or $1,000,000 deals.
For this episode, I asked Justin for his advice on selling affiliate sites. He’s already helped sell numerous affiliate sites for 5 – 6 (7?) figure sums, so it was a great discussion.
- Can you sell your sites ranked with PBNs? And how it works
- How to build your SEO agency in the most “sellable” way
- How to sell your site and what you need to think about
- How to buy sites to invest your excess cashflow
Listen to episode 16:
Daryl: If you’re looking to take your SEO business to the next level, you’re in the right place. With weekly interviews with SEO’s best from around the world, you can learn exactly what it takes to make money in this rapidly changing industry. This is the Lion Zeal Show.
Hey, what’s up guys? Daryl here, welcome back to another episode of the Lion Zeal Show. So for this episode I brought on Justin, from Empire Flippers; and if you don’t know who Empire Flippers are yet, then get out from under that rock because they’re pretty damn well-known in our industry.
These guys help people buy and sell quality websites, whether that’s FBA sites, whether that’s Infoproduct sites, CPA sites- anything you can possibly think of, they help you buy and sell websites. They’re currently listed in I think 5000 top fastest-growing companies in the United States. They’re also on track to do over $9 million revenue this year.
So they’re a pretty fascinating company, and we’re gonna go into the details of how it started and how it got to the stage it’s at today. But more importantly, what I wanted to cover in this interview is how people that listen to us now- most of you are SEO people, so you have affiliate people out there- I want to find out exactly what you need to do to build a site they can sell in the future for 10, 50, 100 thousand dollars’ profit by building up an SEO site and then flip it in the future.
So I have lots of questions about selling sites. We even talk about buying them if you want to invest further, and diversify your portfolio. But it’s a very, very interesting interview; I’m really excited to share this with you guys, and I hope you enjoy.
All right Justin, what’s up man? Thanks for coming on the show.
Justin: I appreciate it man, thanks for having me on.
Daryl: So for anyone that’s been living under a rock basically, that doesn’t know who you are yet, do you want to start with a little intro?
Justin: Yeah, so my business partner and I, my business partner is Joe Magnotti, we run a company called Empire Flippers, and what we do is we allow website and online business buyers and sellers to meet up and connect. So if we have someone that comes along and says ‘look, I have an Amazon affiliate site, making $2000 a month, I’d love to sell it but I don’t really know any buyers or I don’t know any investors that are interested in that,’ we can help them because we have a large audience of people looking to buy websites, online businesses, and assets basically.
Daryl: Awesome, and from what I’m aware, which is why I was really interested in bringing you on this show, is that you have a lot of sites that go through your marketplace that are affiliate sites.
Justin: Yeah, so we will help anyone sell any kind of online business, so that could be any commerce business, it could be FBA, there are Infoproducts, SaaS businesses- but we actually do a lot of affiliate businesses, particularly Amazon affiliates programs, some CPA businesses … but yeah, we can do anything, but we do happen to do a lot of affiliate sites.
Daryl: Okay, cool. So what type is it- you said Amazon, you said CPA …
Justin: Yeah, Amazon’s particularly popular, I mean ShareASale, ClickBank…
Daryl: It’s a trend these days.
Justin: Any type of affiliate sites, we can help you sell. The only types of businesses that we tend to avoid, I mean anything that’s scammy, anything that’s illegal obviously, but anything that’s like launch-based. So if you come to us with a personal brand, and you’re like ‘look, every twelve months I do this crazy hyped launch, and I’d like to sell my business,’ that’s challenging because it’s so tied to the person and their skillset.
Justin: So aside from that, we can do almost anything. If it’s making money, it’s making profit every month, we can help you sell it to a potential buyer.
Daryl: What about if it’s like garcinia cambogia, and this dodgy diet pill stuff? Are you still good at that?
Justin: Uh, yes, we do, we’ll do some diet pill stuff, we’ll do some things that maybe I’m not so hot on. My business partner is not a huge, let’s say he’s not a huge gun nut, but we’ve sold gun, ammunition-type sites and that kind of thing. We don’t really have a problem with that. I mean if it’s illegal or particularly dodgy, then we won’t do it, but yeah things that are like gray area, that’s fine.
Daryl: As long as it’s legal and not ridiculously unethical, by the sound of it.
Justin: Yeah, exactly, yeah.
Daryl: What sort of ranges are sites selling for?
Justin: Well, so it depends. If you look at- most of your listeners I’m sure are familiar with Flippa, right, which is kind of like the eBay for buying and selling sites. They do a lot of $200, $500 starter sites. We’re larger than that, so we generally do, maybe we’ll do a four figure site, especially like an Amazon affiliate site, but most of our listings range from anything from eight thousand up to just above a million dollars.
Justin: We’re just starting to break into kind of the seven figure listing space-
Justin: So most of our deals are done in the five and six figure range.
Daryl: What sort of sites in a seven figure range?
Justin: A lot of times those’ll be more involved businesses, a lot of times a lot of employees, they definitely have processes. Maybe part of their earnings are from affiliates, sometime they’re FBA businesses, which is the ‘Fulfilled By Amazon’ businesses. So we’re just starting to get some of those that are larger e-commerce businesses, typically, so not a lot of straight- as you would call it straight Amazon affiliate sites, a million plus. They happen, but those are normally like five and six figure websites. Normally the seven figure sites are a bit more involved.
Daryl: That makes sense. So I figure most people listening are running sort of Amazon and maybe some CPA stuff, but probably mostly Amazon affiliate sites. SO do you have any rough numbers of what sort of averages those sort of sites can go up for?
Justin: Yeah, so years ago Amazon affiliate site owners were lucky to get 10X to 12X, right, and that’s ten to twelve times the monthly net profit. So let’s say for example that you had an Amazon affiliate site making $1000 a month in net profit over the last six to twelve months.
You’d be lucky to get ten to twelve thousand dollars, but things have changed over the last few years and multiples have gone up as there are more buyers and more people getting into the space. So now you can get somewhere between 20 to 30 times the monthly net profit. So a site making $1000 a month in net profit will generally, on the low end, it’ll go for twenty thousand bucks, and on the higher end it’ll go for thirty, thirty-two thousand dollars.
The determinate between those is interesting. So, generally older sites are better than younger sites. So if you have a site that’s a year old, you’re gonna at the lower end of that multiple or that valuation range. If you have an affiliate site that’s three-plus years old, you’re gonna be at the higher end of the range.
If there’s less time involved, you’ll be at the higher end of the range. If there are no PBN links, you’ll be at the higher end of the range. So there’s a bunch of things that go into the valuation range, and depending on kind of where you’re gonna fall on that.
Daryl: Okay. But did you say, was it 20X, is that even with PBN links you can get like 20X?
Justin: Yup. So yeah, $2000 a month net profit site, let’s say it’s been doing that for six months, nine months, getting forty thousand on the low end is reasonable, and that’s with PBNs. A lot of times there will be restrictions, so the buyers will put restrictions on that, saying let’s do an earn-out based on making sure the PBN holds, or they will set up a deal where they pay you on a monthly basis to maintain those links. We’ve seen that happen.
Justin: We’ve seen deals where buyers will pay in perpetuity as long as the links remain in place. So there’s a lot of different ways to work that out. For the larger deals, if we’re talking like mid to high six figures, a lot of times the seller will include the PBN in the sale. So it takes some of the risk off the buyer, the idea that you might remove the links or there’s some problems later on, and they’ll actually include the PBN.
Daryl: That makes sense. One of the things I was thinking of, and I’m sure a lot of people mention this, is like if you’re selling a site that’s totally powered by PBNs, if there wasn’t a deal in place it could very easily drop the rankings.
Daryl: I’ve actually seen someone do this before, which is pretty unethical.
Justin: Yeah, for sure. We actually had that happen to us. It’s fairly rare, because obviously if you do that on our marketplace, it’s a small world, right, and you won’t be able to do business with us again. We actually had that happen where a seller sold the site, dropped the links after the fact, and was like ‘hey good luck to you.’ So we obviously passed the seller’s information, all the information along to the buyer, to have them follow up, but there’s not much you can do.
That’s one of the problems is kind of like it is the Wild West. You can contractually limit them, and then you can hold money back based on certain earn outs and areas, where like ‘you keep the links in place and it earns over a certain amount, that I’ll pay you 40% of the price over the next twelve months.’ SO those are some of the ways that buyers get around that.
Daryl: Does that happen often? Like with most Amazon affiliate sites, an example Amazon because I think it’s the most popular, when they’re selling are they getting all the cash as soon as the deal’s gone through, or most of it’s like earn out deals?
Justin: For the five figure sites, so let’s say any Amazon affiliate sites making between $500 a month and let’s say four to five thousand dollars a month, generally there’s not gonna be an earn out, it’s gonna be a straight up cash payment.
Justin: When you’re getting into like, even the low six figures, sometimes you’ll have earn out scenarios or you’ll have a scenario where this happens, where they’ll pay 70 thousand dollars up front, and then they’ll pay the 30% after, let’s say 30 days or 60 days of training. So it’s just, especially for like a new buyer or someone that’s kind of new to the space, it gives them a chance to make sure that you kind of pass the reigns over correctly and that everything’s smooth sailing, and then they pay out the rest.
So yeah there’s a lot of different earn out scenarios that can happen, but that’s usually for six figure deals. The competition for five figure deals on our marketplace is so high that if a buyer puts a lot restrictions there, then they’re not likely to get the deal. Some other buyer is likely to come along and swoop the deal out from under them.
Daryl: Okay, so what it sounds like, if you have a site that you’d sell in the range of five figures, you’d sell it pretty easily.
Justin: Yeah, I mean on average, of the sites listed on our marketplace, we sell- 90% of the sold deals sell within 30 days.
Daryl: That’s awesome.
Justin: So that’s 30 days from being listed on our marketplace to actually getting the money in the banks. So deals move pretty quickly, obviously the larger deals take a little bit longer, so anything like forty thousand to 150 thousand dollars move pretty quickly, the mid six to low seven figure deals are taking longer, obviously. There’s less people that have that kind of cash lying around. There’s a lot more people with 60, 80 thousand dollars to invest than there are with like 700 thousand dollars.
Daryl: That makes sense. I’m curious, out of the buyers that are buying, say, affiliate sites, are they affiliate-type people themselves, they understand this so they kind of leverage in higher cash flows? Like what sort of people are buying these sites?
Justin: Yeah, it’s super interesting. So the first is, we have some newbies, right, and that’s normally kind of like in the high four figure, low five figure range. They’re like ‘look, I’m new to this whole thing, I understand the Amazon affiliate program,’ maybe they have a couple sites themselves, but they kind of want to fast-track their learning. So their idea is like ‘if I buy a thirty thousand dollar Amazon affiliate site that has earnings right away, I can reverse engineer, I can use it as kind of a base for me to build more sites-‘
Daryl: Gotcha, just jump in the deep end.
Justin: Yeah. So that’s someone that has, that isn’t broke, they have a bit of cash, but they’re just looking to kind of like quicken their learning curve.
Then you have people that are portfolio owners, and they’re an individual and they own or have bought or have created for themselves multiple Amazon affiliate sites. They may be making 5, 10, 15 thousand dollars a month, and they’re simply looking for Amazon affiliate sites that will add to their portfolio.
Justin: So let’s say for example that I’m a buyer and I’ve got eight other Amazon affiliate sites, and I see this Amazon affiliate site for sale and they’re at let’s say 7% on the program. I’m already eight and a quarter, eight and a half, so for me that’s like an instant buy, I’m gonna immediately improve the bargining of earnings because I’m already at a higher percentage, so that’s a nice quick easy win for me.
Then I’d say at the other end you have the larger portfolio owners. These may be partnerships where, let’s say a three-person partnership where one person operates and the other two are like passive investors. You also have funds where there’s like maybe an operating group and they’ve brought in investors to invest in a larger fund or portfolio sites.
Daryl: Nice. That sounds interesting.
Justin: Yeah it’s super interesting. It’s a little more complicated, but there are some of those out there and they buy from us fairly regularly. The last person I’ll mention that buys are sellers. So we have some sellers with us that have sold, over time, several hundred thousand dollars’ worth of websites. So they’ve cashed up, they’ve got a bit of cash on them and they’re looking to deploy that cash.
They’re looking for interesting ways to invest the money, and what they find is ‘look, why don’t I take some of the money I’ve made selling these sites, and look for sites that have less opportunity than the ones that I’ve sold.’
So maybe they felt like that niche was capped out, or they did everything SEO-wise to that site that they could, but they’re looking on the marketplace and they find one that has plenty of opportunities, someone that has very little SEO done to the site or they feel like they could significantly improve conversion rates, and they invest 120 thousand dollars buying that site with a plan to build it out and expand it and sell it in six to twelve months.
Daryl: That’s really cool. That’s actually, I imagine that maybe some people listening that are in this sort of situation, where they’d be interested in buying affiliate sites and scaling up, especially ones that are lacking in SEO.
Justin: Yeah, I was telling you before-
Daryl: So I haven’t-
Justin: Yeah I was telling you before the show, some of your previous guests are kind of in that position, so Kevin you had on the show is in that position. You had Kurt and his business partner Matt Diggity, they’re in that position, so there guys out there that are basically using and following that model today.
Daryl: Yeah, that’s cool. So if someone wanted to go on to Empire Flippers now and they’re an SEO and they wanted to start looking for sites that had the opportunity for SEO, how exactly would it work? ‘Cause I haven’t used your marketplace yet, so-
Justin: Yeah, so that’s interesting.
Daryl: -would you have to see what it’s ranking for and everything?
Justin: Yeah, we do things a little differently because a lot of our sites are maybe newer or they’re prone to copycats, like if you go to a place like Flippa you can often see the URL, see all the details. Well the problem for that is, it’s not so much the seller that’s in trouble ’cause they’re selling the site, it’s the buyer. So if the marketplace is just open and anyone can see it, the end buyer is the one that may end up with a dozen copycats from other SEOs trying to copy the niche, right, so that can be problematic for buyers.
Justin: So what we did was we hid all the pertinent details, including the niche and the URL, behind a paywall, so to speak. So we charge a deposit to view any of the listings. SO if you go to our marketplace at any one time, we have between 40 to 70 different listings, and you can sort by how much they’re earning or how much they’re selling for, their monetization method, that kind of thing.
If you find one that’s interesting, that had the basic details seem about right and the price points right, then you can pay a deposit. Once you’ve paid a deposit, we’ll send you all the details about that business and then you can do your due diligence to see if it’s a good buy.
Daryl: Okay, that’s perfect ’cause that’s also one of the things to be worried about if you’re buying a site, if it’s been- it’s like, in the SEO world, buying expired domains. If the domain is publicly shown to the whole world, you don’t really want to buy it anymore because every SEO under the sun knows what it is.
Justin: Yeah and that’s one of the problems. We get somewhere between 50 to 60 thousand visitors to our marketplace every month.
Justin: We have more than 30 thousand email subscribers, people that are looking to buy, so it’s quite a public place to be listing so publicly. So it was actually our buyers, this is years ago, but it was our buyers that requested that we find a different way to do business. They were saying ‘look, I don’t want all these copycats, I’d like to avoid that, is there something you can do,’ and that kind of gave us our bright idea to ‘huh, maybe we should hide this behind a paywall, behind a deposit process.’ Now those deposits are refundable, you can put it on your credit card. Even if you buy the site, we’re gonna refund that deposit and you’re gonna wire us the full purchase amount. But it’s just a way to kind of weed out copycats, weed out scammers, weed out time wasters, and really focus in on the people that are serious.
Daryl: Okay, that makes a lot of sense. And I guess, this probably goes without saying, but like you guys handle the whole transaction and everything like that, so it’s totally secure and everything for everyone using it.
Justin: Yeah, so that’s interesting. Unlike just kind of a public marketplace, not everyone can list their site. So let’s say someone in your audience is like ‘look, I’ve got this $2000 a month SEO affiliate site, I’d love to sell it with you,’ then they have to submit their site to potentially sell with us and what we do is we take it through a vetting process. So that can take anywhere from a week to a maximum of three weeks, and we have our team dig through the SEO, we have them verify the earnings, we have them verify the traffic … So that’s one of the ways that we improve value for potential buyers, by verifying all the information.
So it’s not a guarantee that that purchase is gonna be great for that buyer or it’s a good fit for them, but it definitely improves the overall quality of listings. So we end up rejecting about a third of the people that go pay money to submit and list with us.
So that just improves quality overall, and then from that though, once the site is listed, then we handle a lot of everything. So there are a lot of tire kickers, there are a lot of like kind basic questions that we handle, and we’re promoting those things, we’re marketing those things to our social media audience, to our email list, to everyone, and then we start taking on depositors.
Once those people start asking more detailed questions, we normally will go the seller and say ‘look, here are some questions, can you answer this for us.’ If it’s a smaller site, let’s say under 50 thousand, a lot of times that’ll be it.
There will be some questions, some depositor will have questions, we’ll get an offer, make sure the seller accepts it, and the deal will be done, then we go through the rest of it. If it’s a larger affiliate site, let’s a 2 or 300 thousand dollar affiliate site, we’ll move on to something called the Buyer-Seller Call.
So let’s say there’s a depositor, they’re super interested, they want to get on a phone call with the seller, we’ll have one of our sales guys, either my business partner Joe or a guy named Mike, and they’ll actually set up a time for the buyer and seller to call.
They’ll call the seller beforehand and kind of explain who the buyer is and kind of what the call’s gonna be like, and then they kind of moderate and kind of get that call done. Sometimes you’ll bet an offer on that call, sometimes the buyer will have to go back and think about it, but afterwards, even after that Buyer-Seller Call, Mike or Joe will do kind of a recap with the seller to say ‘hey, here’s what I think went well, here’s what we can do on the next call.’ So it’s like really hands-on by our team, that kind of like just steps you through the entire process.
So to get to the end of the selling process, let’s say that an offer has been made, there’s some negotiation and the seller accepts, we actually handle the migration process, too. So what will happen is the buyer will wire us the money, once we verify that the money is in our account, we’re good to go, then we’ll start transferring the site from the seller to the buyer.
So with e-commerce businesses, where there’s inventory, it’s a little more tricky, but for an Amazon affiliate site we’ll basically transfer all the information to the new buyer, we’ll transfer over the affiliate links, make sure the traffic and the earnings are running smoothly, and then pay out the seller.
Daryl: Okay, perfect. That makes sense. So have you ever had some really bad experiences, where like someone sold a site and, say it’s relying on their SEO traffic, and then say a month later it’s just like totally tanked, like the rankings have just completely just plummeted?
Justin: Yes, so we’ve had- I actually had someone on our podcast, it was about three or four months, I think, after the sale where the site didn’t do well. It was like a 20, maybe 15 thousand dollar site, so there’s a podcast and I’ll give you the link to that, you can go listen, it’s interesting. But there are other ones that weren’t in a podcast episode.
In general, we have deals go bad less than 5%, so maybe 1 in 20 to 1 in 30 of the deals will go bad, and that can be anything from, let’s say on transfer there’s an update or something and there’s some kind of problem with the site. Let’s say that there’s some dispute or something during the transfer process or after the transfer process.
So yeah it happens, and that’s something that we deal with as brokers, and we try to do right on both sides of the parties. That’s one of the reasons I think our kind of transfer process is particularly good, because it’s better than relying on a third party that doesn’t really understand the business, they don’t understand kind of the business of buying and selling websites and online businesses. So it’s hard to kind of make your case with them, whereas I think we’re probably a bit more fair when it comes to that.
So it’s not a big portion of what we have to deal with, but it does happen and it sucks. It sucks for both parties.
Daryl: Yeah, but just, there has to be a small percentage, at least, that’s like that.
Daryl: 1 in 20.
Justin: Yeah, less, I’d say less than 1 in 20. It used to be about like 5%, and I was talking to Joe about this in our last strategy meeting, less than that now, maybe 1 in 20 to 1 in 30.
Daryl: Nice. Okay, so if someone wants to sell a site, you said you turn down around a third of them that go on your marketplace?
Justin: Say it again?
Daryl: If someone wants to sell their site on your marketplace, you said you turn down around one-third of them now?
Justin: Yeah, about a third of the listings, 30 to 35% of the listings that are submitted we have to reject, and we have to reject for a bunch of reasons. Maybe we can’t fully independently verify the earnings, maybe something wasn’t disclosed up front that we find later on, further down the process.
So let’s say for example that you say ‘this is the only site I have in this niche, this is the only one, this is the only one I have earning’ or whatever, and after digging into the vetting process, we find that you actually own other sites in the exact same industry and niche that you didn’t tell us about. That’s really problematic for us. Even if we could overlook that, right, what else are you not telling or what else did you not disclose? So we look for discrepancies like that, where the seller wasn’t straightforward.
Sometimes it’s not that, it’s like we can’t verify the earnings, so I don’t know for sure that the earnings came from this site versus another, and if I can’t verify that then unfortunately we can’t list, and reasons like that.
Daryl: Okay, that makes a lot of sense. So as long as your site is earning as what you say it is, and you can prove that, then your site will sell pretty easily.
Justin: Yup, that’s right, and in general, sites that are built to flip with like no real intent for longevity are more likely to get disapproved, or less likely to sell. So in general, when you’re building these sites, build them as if you were keeping them, as if you were gonna keep them for the next two, three, five years. So when you approach it that way from building the sites from scratch, they’re gonna be much more attractive and interesting to the buyers.
Keep in mind that a good portion of the buyers are people just like you, either they built sites, they’ve had some success there, maybe they’ve had more success than you, maybe they have much larger affiliate sites and they know the game really well. So you’re not selling- there are some newbs, there are some newbie buyers, but in general a lot of them aren’t. So build something that you yourself would be interested in, I think that’s the best advice.
Daryl: Sure, and what of the SEO stuff- I’m curious about this ’cause I’m an SEO, and most people that listen to this are SEOs. Do you do any checks on that before listing a site? For example, if someone was to use an automated tool and somehow magically rank with like ridiculously spammy backlink profiles, do you do any checks of that at all?
Justin: Yup. So we’ll use SEMrush, we’re using Ahrefs, and we’ll look for backlink profiles. If it was not disclosed that a PBN was used and a PBN was used, that’s generally a bad sign. Look, we can sell sites with PBNs, but they have to be disclosed because we disclose them to buyers. So if that was found to not have been disclosed, that’s obviously a problem for the seller.
We also use some other tools that we have that can find backlinks that are hidden from the site, but we don’t get into all the details of our vetting process for obvious reasons, we’d be providing a roadmap for scamming us and our buyers.
Daryl: Yeah, ‘here’s how to get in our system.’
Justin: Yeah, exactly.
Daryl: That’s cool. I’m curious, what sort of businesses or sites would you say don’t sell? That you list.
Justin: Pretty small. So long-term, overall, we’ve sold more than 95% of the sites we’ve listed-
Justin: -and that’s over the last four or five years. I’d say, more recently we’ve had a few larger sites that didn’t sell, so we had like a 1.1 million dollar listing that didn’t sell. So if you look at dollar volume, it’d be worse than that, but you look at total number of listed and sold sites, it’s really good.
So more than 95% of the sites we actually list. If they’re larger sites, the percentage will be lower- by larger I mean high six to low seven figures. If they’re smaller, meaning, let’s say a high four to even high five figures, the odds are really high.
Daryl: Okay, what reasons would you say there are, then, that sites don’t sell? Is just the bigger ones ’cause it’s difficult to find buyers?
Justin: That’s a part of it, for sure. So that’s one thing. A lot of times it’s very … let’s say there are very high technical requirements for taking over the business, or very specific domain knowledge, right, so if the site- let’s just say, for example, and this isn’t a real example, I don’t want to use those, but let’s just say there’s a very science-based site that, like, I don’t know, about dermatology or something, and it’s not just like SEO-written articles, it’s like very specific, like written either by a doctor or by someone who clearly knows what they’re talking about.
That’s harder to sell because A, there are gonna be less people that have an interest or have knowledge in this space, and then B, because people just are looking for something that’s easier. So if I’ve got, I’m a buyer and I’ve got a site that’s around home furnishings versus like very specific dermatology information, the home furnishing one seemed a lot more attractive, right.
Justin: Other ones that are very location-based, so we sold a business that had a requirement that you understand the real estate market in a South American country, okay, so …
Justin: That’s, it’s just a harder sell because we have an audience that’s worldwide, and buyers that are worldwide, and they’re not as likely to have an interest or want to learn about real estate in that particular country.
Justin: Or like an Australian business that requires you, has an Australian domain, doesn’t require you to set up an Australian company, let’s say it’s a 60 thousand dollar e-commerce business in Australia, it’s just not as attractive to an American buyer. So maybe an Australian buyer, but again you’re cutting out the pie- that’s why in general …
I mean, it is what it is, you can only sell the business you have, right? But if you’re thinking about building a business, not having those types of limitations on it are helpful. So having it be a business that can be run from anywhere, not having super specific domain knowledge, or if you do including the writer or content producer to go along with the business is helpful.
Not having it- if you’re gonna build a site, build it on WordPress, don’t build it on your own kind of CMS or build it from scratch on your own, because maintaining it would be difficult for someone who doesn’t have those skills or they have to hire a developer or definitely a webmaster. If it’s WordPress, most people can run a WordPress site.
So think about what appeals to the largest amount of people, and that will keep your buyer pool the largest and give you the best chance to sell.
Daryl: That makes a lot of sense. I was kind of curious, when you mentioned that I just thought of something new, is a lot of people listen to this, not a huge amount but it’s a decent percentage, that run agencies selling SEO services to local businesses and stuff like that, doing in the region of maybe 30 to 40 thousand dollars per month. How difficult do you think it would be to be able to sell an agency like that?
Justin: Yeah, SEO agencies are a little difficult. So we’ve sold an SEO agency before, so it’s doable. We’ve turned some down as well. One of the problems we run into when people bring their SEO agency to us to sell is that, and this may not be typical with your listeners, but we’ve run across them where a large percentage of the earnings are coming from one or two clients, and it’s just super risky.
So, to help with that, if they have long-term contracts in place to ensure that revenue will continue, that’s helpful. If you’ve really diversified your earnings across a multitude of clients, that’s helpful, it’s a better position. Again, you’re not gonna be able to sell tot eh widest group of people, they have to be some people that are SEO-savvy and have an interest in running an SEO agency, so it limits it a bit.
Justin: But it’s doable.
Daryl: Okay, I figure there’s a few people who may be interested in that.
Justin: Yeah, generally also you’re gonna want it to be- if you’re, let’s say it’s a one-man shop, right, and it’s you really kind of doing it, you’re doing the marketing, you’re doing the sales- selling that is gonna be much more challenging than if you have a few VAs, maybe you have a couple of employees, and you have processes in place.
So let’s say you have an onboarding process, and you have that documented, you have a team that does that, maybe your piece is like the intro call or kind of like the first and the second onboarding call, but that’s all documented pout and you have a team and process in place, that’s a much easier sell than ‘this is Justin’s SEO industry, and I do everything because it’s in my head and I can just kind of do it because I’ve done it so many times.’ That’s super hard to sell because there are no processes documented, you’re basically selling a job, someone else has to kind of like guess what your processes are.
So, especially if you have an agency and people and processes, you’re gonna want to document that, you’re gonna want to do that a good six months before you’re planning to list your business, and that’s just so that you can kind of- its gonna help your business anyway, it’ll help you find inefficiencies-
Daryl: Definitely, yeah that’s really good advice.
Justin: -it’ll help you probably improve revenue and profit margins, so it’s a good idea.
Daryl: Yeah, so basically make it as simple as possible for someone new to come in, that doesn’t know everything that you know.
Justin: Yeah, make it a business, not-
Daryl: A job.
Justin: Don’t be a contractor. Yeah, I mean it’s easy as an SEO to charge for your time, and then it’s easy to switch from charging for your time to making it, say, a monthly service, or they’re paying your retainer or whatever, but keeping it as if you’re a contractor.
So like you changed the way you’re charging clients, but you don’t actually change the way you’re delivering for clients, and I think that needs to change, too, to make it a sellable agency.
Daryl: That makes a lot of sense. Hey, as the last few questions and stuff, we’ll go a little bit longer, but changing the topic, I’m kind of curious what your background is before you got into running Empire Flippers.
Justin: Yeah, so my business partner and I, we ran a mortgage company previously, so we kind of like cut our teeth on sales there.
Justin: Yeah, so we were selling loans to people that were looking to take cash out of their home, looking to refinance, that kind of thing. That was during kind of the heyday, like 2004, 2006, and we actually- and this is interesting, before oDesk or Upwork or any of those kind of like virtual assistant tools, we had- we ended up hiring someone in the Philippines to help us, and we found her on Craigslist and started working with her.
She was doing some, like, reaching out and doing some kind of, like, work for us, and our mortgage company ended up going bust, we went out of business. But I remember thinking, it was like 2005, I remember thinking ‘wow, this virtual assistant thing, working with people around the world, is super interesting, that’s great.’
So after that we ended up, Joe and I both were mid-level managers at a local SEO company, so they’re providing local SEO services to florists and dentists and a bunch of local businesses. So we were working there on kind of the opp-side, and we did that for a couple of years until we explored the outsourcing thing.
Our employers at the time, we said ‘look, we’ve got a connection to Philippines-‘ we’re hiring people, if you come into this SEO company and you have a pulse, we were hiring you, because the company was growing so fast. We said ‘look, we have a connection to Philippines, I think we can bring on good people for a lot less money.’ So we explored that option with the CEO, CFO, they said it was a go. We started expanding the team in the Philippines, came out to visit, and then eventually set up an outsourcing company where we were, our previous employers were clients. SO we basically outsourced ourselves.
Daryl: That’s pretty cool.
Justin: We signed off our jobs, moved to the Philippines, and set up an outsourcing company.
Daryl: So your employers were your first clients.
Justin: They were out first clients. They-
Daryl: That’s really cool.
Justin: This is a side note, but we started adding new clients, right, but not as quickly as that initial client, our previous employer were cutting back. So they started cutting back on us maybe six months in, to a no-cut contract, which was just lovely.
We were placing them with new clients, but we weren’t growing, like we would take two steps forward, and then two steps back when they would cut people. We would take two steps forward and two steps back, and we never actually built out the outsourcing company as quickly as we would have liked, but at least it gave us kind of the opportunity to get back on our feet, in terms of entrepreneurship, start building another business, and it got us to here.
Daryl: Sure, that makes sense. What happened with the outsourcing company, then? How did that lead into today?
Justin: Yeah, so, when our employer, our previous employer now our client, started cutting back, we added new clients. But they were still maybe like 40%, 40 to 50% of the total revenue coming in, so they were still a major piece of us. And then they cut out completely, they said ‘we’re out.’
This is maybe a year in, and we were like ‘oh god, we’ve got these leftover people, they’re super sharp, they’re smart, they’ve been with us for a while now, what do we do?’ And we were like ‘well let’s keep them on and see if we can find new clients.’ But in the meantime we have to pay them. So we said ‘look, let’s find out if they can do something for us, and just to cover their salaries, just to kind of break even until we’ll get them replaced by new outsourcing clients and we’ll continue.’
So we started building AdSense sites, we started building small niche AdSense sites, and we spent- this is December 2010. So we started building these sites and we didn’t know how it was gonna go, but we started building them, and I started building them and then we kind of created a process, and our team started doing it, and then I think like February and March we were maybe ten thousand in the hole, in terms of money spent on content and just kind of getting things running. I was like ‘Joe, I think it’s working,’ my business partner, I said ‘Joe, I think this is working,’ he was like ‘yeah, but we’re already in the hole on this project.’ It was a side project for us, and so we ultimately decided ‘look, what if we can sell some of these, is anyone interested in buying these small sites that are making 200 bucks a month or 400 bucks a month … is anyone interested in this?’
So we listed them for sale, started selling them, and we realized ‘look, if we can sell these websites that we created, let’s say six months, nine months, a year after we created them, we can then take that money and reinvest it back into building more.’
So if I built, say 20 sites last month, and then 20 sites the next month and 20 sites … I keep doing 20 sites a month. At the point where I start selling them, I can reinvest that money and start scaling up the process. I can do 40 sites a month, and then 60 sites a month, and 100 sites a month.
So that’s kind of how we got started in this whole space, was building sites for ourselves. So we’re not-
Daryl: For yourselves.
Justin: Yeah, for ourselves. And that’s how we started selling sites. So we’re not just like, we didn’t just come in and say ‘hey, we can broker businesses and we’ll try to find our way in this niche.’ We were practitioners, right, we were site-builders ourselves-
Daryl: That’s really cool.
Justin: -built up an audience of people that wanted to buy our sites, and then over time the process we were using wasn’t as successful. SO it became less and less profitable, still profitable, but not as much.
Justin: So that opened the door for us to list other people’s businesses. When we were super-profitable, we were like there’s no- we wouldn’t have anyone sell their business through our platform, that’d be a bad idea, ’cause we’re making all the profit right now. But over time, as it became less profitable, it kind of opened the door to brokering businesses. So, we were looking at the numbers- I think in terms of brokered deals, in 2012 we did about 200 thousand dollars in sales-
Justin: -and then 2015, we did 4.7 million.
Daryl: That’s a big increase.
Justin: Big drop. I think this year, 2016, we’re on track to do somewhere between 8 and 9 million for the year, so it’s been a pretty dramatic ride.
Daryl: Nice. So when you first started it, it was just your sites you were listing?
Justin: Yup, just our sites. Joe and I were building them out, and then we had processes, we had our team, basically the team from our previous employer that were unemployed. So we had them building out building out these sites with us, and it was just our sites. We started off, we listed a few on Flippa, sold them for really low multiples because we didn’t know what we were doing, right-
Justin: -and then over time, after selling on Flippa for a while, we had buyers ask us what I mentioned earlier, they said ‘look, every time you list on Flippa, you’ve got an audience of people that are following you on Flippa, that are looking for your sites for sale, every time you list there you get a dozen copycats, just copying the niche and copying the site … can you sell to us directly, not on Flippa, but just sell to me directly without sharing the niche, without sharing the URL?’ We were like ‘that’s a weird request,’ like why would … and so we said ‘okay, I get it.’ So that’s when we started to sell privately on our own site.
So we said ‘look, we should start listing our sites privately,’ we had a bunch of people that were already interested, and they were happy to come and buy the sites from us without having to have it shared publicly.
Daryl: That’s really cool. At which point did you set up EmpireFlippers.com ans start using that brand?
Justin: So we started as AdSenseFlippers, ’cause were building AdSense sites ourselves, and one of the things that was, I think, unique about us is like a lot of other people would sell the process, they would give you a little bit of information, maybe show you a screenshot of earnings, and then try and sell you a $2000 course or something.
We were like, look, at the time we didn’t care, like the outsourcing company, even though it wasn’t doing fantastic, still paid the bills. It was our money-maker, it paid my salary, it paid Joe’s salary, and paid for everything we had. So this AdSense stuff, these niche sides, were just like a side project for us.
So we said ‘look, let’s create a blog, we’re gonna talk about it, and instead of charging, we’re just gonna give it all away for free.’
Justin: That really resonated with people. They loved it, they were like ‘wow, this no B.S., this is legitimate.’ We shared the process, all the money we were making, we shared the exact process we used, and people loved it. So we built up our brand AdSense Flippers.
Over time, we realized ‘look, we’re probably gonna be involved in things other than AdSense, it’s probably not great to have AdSense in the domain name, that’s probably not helpful, so why don’t we look to rebrand,’ and we ultimately ended up rebranding as EmpireFlippers. We started thinking ‘look, we’re gonna be helping people sell not just AdSense sites, but FBA businesses and e-commerce businesses and drop-shipping businesses, why not help people build online empires?’ So that was the idea.
Daryl: Makes a lot of sense.
Justin: I’m not sure exactly how much the domain matches what we do now. People always give us crap about the ‘Flippers,’ they’re like ‘what are flippers, man, aren’t those the things you swim with?’ So we have to explain that. But we’ve got a pretty good standing in the industry-
Justin: -people in the industry know us pretty well, so changing a brand, man, I don’t know … I don’t think I want to do that again.
Daryl: Yeah, makes sense. So would you say, and I guess this is true, would you say having the blog and giving away all the process and everything, made you the experts on the topic? So people trusted you to buy their sites.
Justin: Absolutely. So- and it’s easy to see this in hindsight, and we saw a bit of it at the time, but trust is hugely important when you’re doing online business, right? So if we’re very clearly talking from a position of being a practitioner, we were in it every day, when we would talk about keyword research with Long Tail Pro or, back in the day, Market Samurai, we clearly know what we’re talking about because we would go over all the details in depth, with screenshots. So people who were doing it knew we knew what we’re talking about.
So, yeah so I think it definitely helped kind of show that we were experts, and we could have- like short-term, we could have leveraged that to make short-term high-margin cash. So we could have done an eBook, we could have done a course, we could have done trip wires, we could have put people in a community where they’re paying, and we would have made money on that. But we were thinking ‘why not leverage that for something bigger down the road?’
We don’t need the short-term cash, our outsourcing company is paying the bills, we’re selling the sites anyway, we’re making money on that … Like why sell our trust that we’re building for short-term high-margin gains, when we can just kind of reinvest that over time and build something bigger? That was always our thought.
Daryl: Makes sense. Cool. So what is your team looking like these days, then?
Justin: So we run a really kind of interesting business. We have a team in the Philippines, which is where we started with the outsourcing company. So we still have the team, they’re all based out of Davao City, which is in the south of the Philippines, and we just hired two new people so we have 12 people there.
Then we have our management team, so there’s Joe and I, obviously, as partners. We have a couple other guys, we have Mike, who is in sales and he is from the U.S. We have Andrew, who is our listings manager, works with sellers, helping them get listed, helping them do the write-ups.
We have a guy named Mike, another Mike, Mike S., who is kind of like our sales marketing liaison, and then we have a guy named Greg who is our content manager, who helps set up podcast interviews like this, who helps with the content of our blog, does guest posts, that kind of thing.
So we have a unique situation in that we don’t have an office, not a permanent office, either for the team in the Philippines or for the management team. So rather than have an office, every three to four months we get together, it’s generally somewhere in southeast Asia. So in April, we got our whole team to Saigon, Vietnam and we rented out like a penthouse, a nice place that we could work and live from. We would work together for a month, and then we kind of went our separate ways-
Daryl: That’s really cool.
Justin: Yeah, and then now, where I’m talking to you right now, we’re in the middle of our August trip. So right now it’s August and we’re Phuket, Thailand. So we’re here for a month, all working together closely, and then we’re gonna kind of go our separate ways for a few months, and then we’re gonna meet back up again in November in Chiang Mai.
So every three to four months we get together, it builds kind of camaraderie, it lets us kind of establish our company culture, we get to work together and bond, I guess, and then it gives us the freedom of flexibility to kind of live wherever. So some of the guys went off to Europe on this last break, one of them went off to Columbia, and the we got back together here in Thailand. I think we’re probably gonna stay around southeast Asia for the next couple of months for the Chiang Mai thing, and then we’ll probably break from November to April. So I think some people are gonna go back to the U.S., some people are gonna go to Columbia again, we’ll just see.
Daryl: That’s really cool. I’ve seen the pictures of the villa, it looks absolutely amazing.
Justin: Oh yeah, that was our- so we just started this, this time, this is our first event we did. We did an event here in Phuket and we said ‘look, our whole management team is here in Phuket, why don’t we throw a party?’ So there are these ridiculously nice villas, ‘why don’t we rent a villa, bring some people down’- it was a thousand bucks- ‘bring them down here, put them up in these ridiculous rooms in this villa, do a mastermind, couple of presentations, have a night at the club and just have a really good time.’ Well it’s a great networking opportunity, and it’s fun. So we did that, since we’re all here, and we were like ‘it’ll be okay, it’ll be pretty good.’ But we had such a blast doing it.
We’re gonna do it again I think November. Rather than doing it in Chiang Mai, though, we’re probably gonna do it in Phuket again in the same villa, do it all again probably end of October, early November. We had such a blast. It was super fun.
We actually lost money on the deal, I think it was we had 15 people pay a thousand bucks, and I think it cost us like 18 grand or something. But we didn’t care. It was so- this was the first one we’d ever done, it was so much fun that we were like ‘yup, this is- it’s not gonna be a money-maker for us, but we’re gonna do it again just ’cause it was fun,’ it was good to get people in our space together, and the mastermind was helpful.
I think, we took from it we need to start doing some exit planning. So as we move up and we start doing the high six, low seven figure deals, we need to be more involved with them during the process. So start doing exit planning like twelve-month-out, nine-month-out, six-month-out, three-month-out kind of like meetups, and guide people toward the sale. We think that’ll be helpful, helping us land those deals and get … continue to larger and larger deals.
Daryl: Sure, that makes sense. I’m kind of curious- two final questions, and then we’ll wrap it up. The first one would be if someone wants to start building up a team like you guys have, ’cause I’m actually kind of curious in this myself, what would be some tips you’d give them?
Justin: So, I can say- first, let me just say Joe and I, that’s one of our skillsets. So we hired a bunch of people when we were in the U.S., we’ve hired a bunch of Filipino crew for our outsourcing company, so that’s something that we have pretty good experience with. Now we’re on our, like, seventh apprentice hire.
Justin: So, one of the advantages we have, at least with the model with the apprentices, as we’re doing today, is we have an audience. Just like you have an audience, your people that are listening to your podcast, that are checking out your site …
They’re like ‘wow, I love what you’re doing, I want to get on board with that, I’m stuck in a cubicle somewhere and, I don’t care, I’ll make a little less money, I want to do that, I want to do your lifestyle.’ So there are people that will probably take less money to learn under your wing.
We take advantage of that by saying ‘look, yes you’re not gonna make a ton of money your first six months, this is gonna be an apprentice role, but we’ll bring you out, we’ll make sure that you’re taken care of, your basic needs, you’re gonna make enough money to get by, and we’ll take care of you for the first six months but you’re gonna have to give us your heart and soul, so to speak. You’re gonna have to put a lot of work in and take your lumps.’
So we have this kind of like … I don’t know if it’s hazing, but you have to put six months of really hard work in and after that we decide whether you’re gonna join our management team. So, just to give you some advice on hiring, number one leverage your audience. You have one so you should leverage it. Number two, try to put roadblocks in place, because you get more people apply at the front end, so put some barriers in there to weed out the people who aren’t really motivated, and to cut out the people that won’t follow directions. So Easter eggs, things like that, make sure you mention XYZ in the title of your email, that kind of thing.
Once you’ve had them fill out all their information, you’ve verified that they’re kind of qualified in terms of the skillsets you have, when you’re actually doing the interviews, the Skype interviews or even in-person interviews … these people are all qualified by the time they get to the interview process, now I look for cultural fit. Are they a good fit within our organization?
Could we sit down and have a beer? If there was a disputer, if there were an argument or a disagreement, how would they deal with it? How would I deal with them?
So I care about those because we have a small team, and because there are things where we don’t always agree on, and sometimes we’re passionate about our disagreements, so I want to make sure it seems like we’re gonna be able to work that out in a professional and helpful way.
So in the interview I actually look for that personality and culture fit way more than I do skillsets, because they’re already close enough in terms of skills. So it’s funny you mentioned this, we’re actually gonna be looking for some sales apprentices to come out. I was working on editing a post for that, so we’ll have that out in a couple of weeks, but we’re gonna be hiring a couple of sales apprentices to come out and hopefully be with us in Chiang Mai in November. So that’s the plan.
Daryl: Okay, awesome. That’s actually super helpful, those tips. So final question and we’ll wrap it up, ’cause we’ve gone quite far. What advice would you give someone that is just starting out with building affiliate sites and they’re planning on selling it in, say, 12, 18 months’ time?
Justin: Okay, they’re starting off, they’ve got- they’re making a little bit of money already?
Daryl: They’re just starting out to build their sites, so not really.
Justin: Okay, so this is what happens to a lot of people, a lot of people that aren’t successful, is they start on one path, they’re starting with affiliate sites, and then they hear the latest thing and it’s T-Spring. Everyone’s doing T-Spring, so they’re like ‘ah, maybe I’m missing the wave, maybe I’m missing the opportunity, and people are selling these courses for T-Spring, and everyone’s talking about how they’re crushing it with T-Spring, maybe I should go do that.’
So then they go do that, and they get distracted from T-Spring because FBA is the hot new thing. Everyone’s doing Amazon FBA, there’s a new course out for it, they’re like ‘you know what, I’ve been doing this T-Spring stuff six months, not really having the success I-‘ so they just keep getting drawn away. People call it shiny new object syndrome or whatever, but I think it’s better to, with thought to it, to sit down and put blinders on yourself. Say ‘I don’t care what else happens, I’m going to be successful at this,’ whether it’s Amazon affiliate sites or it’s AdSense sites or it’s FBA.
Whatever it is, look, to get a general knowledge or a brief bit of knowledge about the different business models, pick one, and stick to it. There’s- it’s not like FBA is necessarily better for anyone over Amazon affiliates. People are crushing it with old-school business models, old-school stuff that’s boring and not exciting.
So it doesn’t have to be the latest and greatest and most exciting thing out there. People are crushing it with really boring, non-sexy niches, so I think putting blinders on yourself and really sticking to it is the best thing you can do.
Over time, and you know this Daryl, in our space … if you’re known as the blah-blah-blah guy, whatever that is- like, I’m known as the and Joe is known as the “Buy and Sell Websites Guys.” The fact that we do that for year after year after year just helps spread the word around. So right now, let’s say you’re the “Affiliate SEO Guy” and then next year you were like ‘I don’t really want to deal with affiliate SEOs, I want to do, let’s say CPA SEO,’ or if you kept switching it around, three years down the process that we’ve known each other, I’m like- they’re like ‘what does Daryl do?’ And I’m like ‘i don’t know, some SEO stuff.’
But if you’re the same guy for year after year after year, word gets around that you’re that guy, and I can refer to you as that guy, our peers or our friends or your colleagues can refer to you as that guy. You are the blah-blah-blah guy. So my best advice is stick to what you’re doing. If you continue doing it over years, people know you as that and it starts to pay off big time.
Daryl: Yeah, ultimately they all work, it’s just down to whatever you choose, and whatever that is just stick to it.
Daryl: Awesome, man. It’s been really fun. I thank you for coming on the show.
Justin: Thanks, man, I really appreciate it. Oh by the way, I should mention one other thing. We created something, I think it’s really cool, I think your listeners appreciate it, it’s called “the valuation tool.” So based on all the businesses we’ve seen over a long period of time, we get this question a lot, ‘what’s my website worth?’
For us to do that fully, we’d have to do a full evaluation of your site and have our team look at it, and basically you have to list with us. So to save the hassle, we created basically a valuation tool. People can plug in their business, they can plug in their earnings and details about the site- it’s all confidential, it doesn’t go outside of us.
People can plug in all their information and get a range. So it’s not gonna give you an exact number, and there’s no guarantee that it’ll sell for that, but based on our experience with selling hundreds and hundreds of sites, this is something we actually use to price and list sites.
So it’ll give you a range of, let’s say 30 to 36 thousand, it’ll tell you the low end and high end. So people can do that, if they have an affiliate site, they’re wondering what it’s worth and whether it would sell … I’ll give you the link for that and you can share that.
Daryl: Cool, man. And if anyone’s gone through this interview and like ‘wow, this Justin guy is really cool,’ where can people find you?
Justin: Twitter, man. I tweet at @EmpireFlippers. Obviously you can check us out on the site, EmpireFlippers.com. I also have a podcast, called the Empire Flippers Podcast, you can check that out with my business partner.
Daryl: All right, cool. That pretty much wraps it up. Thanks again for coming on, and hope you guys enjoyed the show, it was really fun.
Justin: Thanks, Daryl.
Daryl: All right guys, hope you enjoyed this episode. If you want to access the show notes and all of the links and everything that were mentioned in this episode, then head over to LionZeal.com, that’s ‘lion’ as in roar and ‘zeal’ as in z-e-a-l, dot com. All right guys, I’ll catch you later.