The Quiet Light Podcast

Learn the skills and methods you need to turn your online business into a powerful profit engine that you can sell when you want, for the price you designate, to the buyer you choose. Our hosts Joe Valley and Mark Daoust, along with leading M & A, ecommerce, SaaS, marketing, and content experts, will share their decades of experience to give you the tools you need to buy, scale, and exit an online business on your terms. The Quiet Light Podcast is your best source for actionable insights from innovative and successful entrepreneurs who have built, bought, and sold online businesses. If you want to benefit from the most successful strategies and thought leadership to propel yourself toward your goals, look no further.

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Jul 7, 2020 • 38min

Priceline's Former Controller Talks About the Three Pillars of eCommerce with Matthew DeWald

Jun 3, 2020 • 54min

Persevering Through a Painful Exit with Brian Lejeune and Janine Do

Today’s episode is another show about incredible exits. We got the chance to speak with Brian Lejeune and Janine Do. They chat with us about their intensely difficult exit and the challenges they faced. Tune in to hear our chat with Brian and Janine about their experiences as entrepreneurs. Topics: Brian’s typical entrepreneurial journey. How Janine’s parents influenced her career. When they started to see sales. Why you shouldn’t get stuck on branding on packaging. Why there are no excuses for working less. When to consider the exit process. Why Mastermind groups are important. How much Brian and Janine made on their exit. Logic over emotion. How their level-headed nature was key to their success. Their emotional response to their exit. Transcription: Mark: All right Joe, I know that Jason Yellowitz sold your business. I actually sold Jason's business before he came on board as a broker at Quiet Light Brokerage. I often referred to the story of selling Jason's business to potential sellers to explain that sometimes when you're in the process of selling and getting closer to that closing date, anything that can go wrong will go wrong. And that happened with Jason's business. His business that he was selling these baby gates and dog gates. It had the worst three day period of sales in its history and of course, the buyers started freaking out; understandably so. This happens with deals sometimes when you're in that due diligence period where all of a sudden all hell breaks loose and you kind of have to figure out what's going on. I know you just went through an incredibly painful exit with a client who had that sort of scenario but it worked out. Joe: Yeah, and it wasn't painful for me necessarily because I'm at arm's length so it was okay but, Janine, I think stopped eating at one point. It was that incredibly painful. I remember I was at eCommerceFuel down in Fort Worth this year and we were about to close and something went wrong. And I don't want to give the details away here in the intro because you've got to listen to this. What could have gone wrong; went wrong and to the nth level; this is like deal killer, account close, things are over kind of gone wrong but Brian and Janine; the owners of the business, remained level-headed. Even though, like when I called him from the ECF event trying to cheer him up and like, hey, how's it going today? We got over this hurdle and I could hear it in his voice something else happened. Like he was kicked when he was down on this second hurdle that we had to get over and it was incredibly painful. That aside, these two are incredible people. They are pharmacists by trade. Janine has her PhD and she comes from a family with six children, five of the six have Ph.D. They’re immigrants. They lived in the projects in Roxbury, Massachusetts and it’s just an incredible story all around; incredible story, incredible exit, incredibly painful with light at the end of the tunnel. And they're actually now under LOI buying another business so it's a full story. They launched another brand, another business before they closed this transaction and so they're already generating another income stream and now they found an opportunity where they're under LOI buying another business. And that's really within 60 days of closing the last transaction so it's an incredible story all around. Mark: That’s fantastic. Let's get to it. Joe: Hey, folks. Joe Valley here from Quiet Light Brokerage and we've got another Incredible Exits episode here. We've got Brian and Janine Lejeune on the call. Welcome, guys. How are you? Janine: Good. How are you, Joe? Brian: Very good, Joe. Joe: Now, listen, we normally call this Incredible Exits but I want to change that for this episode. We'll call it the Incredibly Painful Exit for you guys because there were certain components of it that were incredibly challenging and painful. And I think at one point, Janine, you might have stopped eating if Brian was telling the truth. Janine: I stopped eating and I stopped sleeping. Joe: Well, good. Let's get a little bit background on you first. You guys are both pharmacists by training, I believe, right? Brian: That's right, yeah. Janine: I’m the one with a doctorate degree though; he's only got like a normal degree. Joe: So I need to call you Dr. Janine? Janine: Yes. Joe: Dr. J, how about that? Brian: There's just more responsibility that comes with that. I keep telling her on the plane when they if there’s a doctor in the house. Joe: It's a Ph.D., right? Janine: Yeah. Joe: So I have a father in law that has his PhD and he said it just stands for piled higher and deeper. Janine: Yeah, that sounds about right? Brian: Yeah. Janine: [INAUDIBLE 00:05:28.7] loan debts when I graduated. Joe: 200? Janine: 200,000 yeah. Joe: How incredibly painful, have you paid that off with the sale of your business? Janine: We're going to. But right now with the stock market doing some fun stuff we’re putting some money there. Joe: Cool. Good for you. All right, well, let's get the background and Brian, let's start with you. Because honestly, Janine’s story is much more interesting so I just want to get yours out of the way. Brian: Yeah. Joe: What's your story background; the business history, offline business, and then online, I believe, right? Brian: Yeah, so pretty typical in the entrepreneurial journey. I’m kind of been dabbling in a lot of things for a lot of years. I went to college, came out, and became a pharmacist. So that was the path I took but even in college, I’m kind of always entrepreneurial and just always looking for other opportunities. I think about maybe two years into pharmacy I started saying, okay, I don't think this is quite what I want to do for the rest of my life. So I started looking at businesses; looking at local businesses. I bought my first business when I was about 26, 27 years old and it was a tanning salon. I knew absolutely nothing about the industry. I was honestly just looking for a business. It was five minutes from my house. I learned as much as I could from it and kind of grew it to a really nice level where I was actually able to leave pharmacy completely. And I left pharmacy for about seven, eight years, and in that span opened up other salons, pulled some partners in, did some distributorship. I did a lot of like brick and mortar type stores; bought some, sold some, but have never sold them at the correct time. Always kind of passed its peak like oh, we should sell or something's going wrong with a partner and always getting out not at the ideal… Joe: A little too late. Brian: Yeah, so that was a big thing that looking at what we did that was my one goal. Like, let's do this at the right time. You never know when the perfect time is, but you just don't want to do it the wrong time. Joe: True. When did you jump into the online space? Brian: Online in terms of jumping in probably not until like 2014, but a lot of little things here and there; trying to start blogs, trying to sell things on eBay or whatever. But that was very, very small. It was always kind of like, oh, what can I do next? What can I do next? But 2014, 2015 I kind of found the Amazon space… Joe: Was it before or after the young lady sitting beside you, the two of you met? Brian: Yeah, so before. But honestly, I owe a lot to her because I didn't really get super deep into it until she came along for sure. Joe: Well, she does have her Ph.D. She's a lot smarter than you are. Janine: I’m obviously smarter. Brian: It just takes me a little longer maybe. Joe: Let's hear a little of your background, Janine. And do me a favor and just tell everybody about the generation before you because I think you've got a fascinating family story as well. Janine: Yeah, sure. So my family came here in 1989. My dad was 35 years old at that time; seven kids, pregnant wife, no money, no English whatsoever. Joe: What country did you come from? Janine: We came from Vietnam. Joe: Okay. Janine: Yeah, So he fought with the American soldiers during the Vietnam War. He was of course against the communist people so they put him in jail. Things were just getting pretty rough for us back there and we got the opportunity to come to this country and he decided to take the chance. So he came in at ’89. He was 35. He’s making minimum wage, raising a family of probably more even seven kids in random age; so fetus to, I think 17 or 18 years old, maybe even a little younger than that. Joe: Any idea how much money the family had when you came to the country? Janine: Oh, yeah, nothing. Not even like a ring that's worth anything. Besides the clothes on our backs, we’ve got nothing more. My mom didn't own anything that was worth anything. No heirloom ring or just nothing like that. So we rely a lot on government help at the time. We spent 10 to 12 years in the projects. Joe: In what city? Janine: In Roxbury. Joe: In Roxbury. Okay, I spent some time up on Mission Hill myself. Janine: Well, you know the police station and radio station? Joe: Sure. Janine: So I was five minutes walking distance from the police station. That's like the highest crime-ridden place you can think of in Massachusetts. Joe: Wow. Janine: That’s where I grew up. Joe: And you did this and managed to have how many PhDs in your family now with all the siblings that you have? Janine: Oh, so we have a dentist, four pharmacies, three bachelor degrees, and one masters; so [INAUDIBLE 00:10:27.4] more than one. Joe: A true incredible American success story. That's incredible. No excuses to my kids are now your kids that are second, third, fourth, fifth-generation Americans that don't want to do the hard work that you guys did. Janine: Well, it’s tough to teach them and I don’t know how to impart the same wisdom on them that my father did for us. But when I was little he used to tell me if we see someone who was homeless on the street he was like do you see that? If you don't do good in school, that’s where you’re going to end up and it freaked me out. And I actually believed him. I actually believe him so we are always doing that in school; every one of us. So I was top in my classes on like grade school. Joe: Wow. And you still married Brian? That's amazing. Janine: Yeah, and I don’t know how this [INAUDIBLE 00:11:15.4] tricked me into in. Joe: All right folks, I know these guys pretty well at this point. We've gone through a lot together so, yes, I like to give them both a hard time because they give it back to me as well. All right, so your online entrepreneurial journey; and you were obviously a pharmacist. You have a PhD but at some point, you and Brian met. Did you already have online businesses before you met Brian or did you jump into the space when you guys met? Janine: Yeah. So since I was like 16. My parents opened a restaurant and that's when things kind of got better for my family. And so I saw the opportunity of having a business would mean. I mean, literally, he opened a restaurant and two years later he was out of the projects. He bought a house. He bought this brand new Lexus. Somebody has always want to fall on time. So from that, I see the incredible opportunity of owning a business but I also saw how much it consumed my parents. So they were always there. That's all they talked about and they're literally there; sometimes my dad is there at four in the morning to make this broth that takes six hours to cook. So I see how much it consumed them. So I saw the opportunity in business but didn't like the brick and mortar aspect of it. They were always gone. They were always there. So I stumbled on eBay when I was 18 years old in college. So this is 2002. I was struggling with money, so I looked around my room; whatever was worth selling, I put on eBay. Whatever I can get, like ten bucks I would do it because; you know a college student, typical story. That's kind of how I got into the whole online space and I just never left. I saw the opportunity. I was trying all kinds of things over the next 15 years. I did a feel at marketing. I tried selling cellphones. I tried selling used sports shoes. I did affiliate marketing; just all kinds of things and they made me a decent side income but just not enough to replace a full-time job. And then when I became a pharmacist making over 100K a year, it became harder to justify that $20 or $30 I'm making on the side business. And then I met this guy who told me about FBA. I didn't know anything about it. It was the first time I heard of the word private label. I have no idea what that meant so he explain it to me. We bought ASM. I think you had ASM3. So we got that and that's how our journey began. Brian: It was that private label route that really kind of changed things. Both of us were always selling other people's products or always looking for that next thing to sell whereas it was like, okay we can develop our own brand. And I had sort of done this in the tanning salon world where like we were private labeling back in early 2000s a line of skincare that we would bring into the salon. And then we started doing tanning beds and we basically brought some tanning beds in from Italy. We put our own name on them and we started selling them to other salons. So I've kind of been familiar with it but the Amazon thing really opened my eyes to kind of like okay, we can do something really big. The volume is incredible. Get a good product, get a good brand, and just try to blow it up and fortunately, it worked out. Joe: And you learned both the initial stuff through ASM3 I think you said it was. Brian: Yeah. Joe: That's a while ago, right? Brian: Spot on. Joe: Several years ago and many variations since then. If somebody is new coming into the space and let's say they're a pharmacist working and listening to this podcast right now, what would you suggest they listen to; courses that they take, masterminds that they join, anything that you can recommend? Janine: I think the most important thing is to take action. There are a lot of courses out there right now and I remember I heard one of the guys spoke on stage and he was like; so this is speaking to the ASM crowd who all paid and all wanted to be there and he said, I know 95% of you here today aren't going to take action. I sat there and I thought to myself, that's so weird. Who the hell spends that kind of money and that kind of time to go there and not take action? I thought there's no way that that's true because I knew that there's no chance in hell that I wouldn't be taking action. But then over the years, I learned that he was right. People just aren't taking action. They buy these courses and then their brand is kind of like they took it off as some I did it, kind of the same thing with when someone signed up for gym membership in their brand [INAUDIBLE 00:15:42.9] release of you actually going to the gym, even though you didn't and all you did was bought the membership. It's like a psychological experiment I read about so much will buy courses and in their brain is checked off as, hey, I did it. The most important thing is just really to take action. Joe: No matter which course, whatever it is just take some action. Figure it out, get started, and learn from that experience. Okay. So the business that we worked together on that you sold through Quiet Light is in the electronic space. Is this the largest business that you had gotten off the ground and launched? Brian: Yes, definitely. Joe: Okay. All right, let's talk about that process a little bit. When did you first launch this particular business? Brian: So that would have been the last quarter of 2016. Joe: And did you use any particular tools to research the niche; like a Jungle Scout or a Helium10 or anything like that? Brian: Helium10 at that time. Joe: Okay, do you recall how much your initial order was; how much you spent on the first batch of products? Janine: 1,000 units so that would have been… Brian: About $10,000. Joe: Did you have the money in the bank for that or did you have debt and use a credit card; what was your financial situation then? Janine: Well, at the time I was working overtime whenever I could so I literally sat there and mapped out how many hours can I work overtime and how many hours did I work and all that money gets put into the business. Because I could justify to myself that I’m not risking my “own money”, this is extra money. So I was starting over. I was doing like sidestep. I was doing all kinds of crazy things. It was like the second order that I had to use credit card and some of these loans. Joe: How long did it take between; well, let's actually back up, when you got the first 10,000 units… Janine: 1,000 units. Joe: 1,000 units, $10,000, how quickly did things take off for you? When did you start to see sales and then how quickly did you go? Janine: It just started selling. Brian: Yeah, that one started selling really good but it's a little bit unfair to call it like that's when we started, because both of us had products before that time that we’re marginally successful in the sense that they would sell but neither one of us could make the products profitable. So we got to decent volumes of we could sell 15, 20, 25 a day type of thing but spending more on PPC than we were getting in and it never kind of went over that hump, whereas with the electronic product that actually Janine launched, it was up to 20, 30 units a day almost immediately. So it was kind of we got sat there and we're looking, okay, what do we do next? And she was trying to figure out because there wasn't a big bank account that had all this money ready to go to invest. So she says, okay, I think if I buy a thousand now and then I save up and I buy a thousand, and she had literally a whole path of what she wanted to do. And we sat there… Janine: At an ice cream shop. Brian: We’re at an ice cream shop and I said, no, that's not how you do it. You need a hundred thousand dollars. We need to do a big order. Like that’s it. This product is going to work. You could see it. It just didn't take a lot of effort. It got bigger and bigger every day. And then it was loans and credit cards and scrounging. Janine: I thought he was insane. Joe: He won that argument? He won the argument of more like spend a hundred… Janine: You know I’m sitting there and I’m like where are you going to get a hundred thousand dollars; like what kind of overtimes do you think I can work? And at that point, I’d already quit my job but I knew that he was right. And this is why our partnership works really, really well. He already knows how the business road works whereas I'm kind of new to it. And this is whether you run a brick and mortar like a tanning salon or online, the principles are the same; the cash flow principles, how to allocate money, how to leverage debt. Those principles don't change no matter what business you're in. And I agree with him, even though it never occurred we would do it. He brought it up and I thought he was right. So I literally spent one day because when you apply for a loan, credit cards will know about it and they're more like three reject to you. So I had one day off of work. I sat there and applied to every single credit card that I could think of and applied to every single loan that I could think of and I scrounged around between credit cards, new credit cards, and a cash loan I was able to come up with a hundred thousand dollars. Joe: Wow. You actually pulled the trigger and raised a hundred thousand too. So we have a lot of people that say, how do we raise capital? How do I buy a business and raise capital? You just found a hundred thousand dollars through cabbage and multiple credit cards just like that. Brian: And I kind of told her, I said money is not the hard part. That's the easy part. I think we can all figure out a way to get money, whether it's borrowing from family if you have to or credit cards, whatever. The hard part was done like she found the product. Joe: She found the product so getting to the point where you buy product. Brian: Getting the money was always easier. Joe: Okay, that's interesting. I'm mentoring some students at a local college here and they had a hard time finding money to incorporate. And they need to listen to this podcast and do what you guys did. Brian: Yeah. Joe: I said to them, I said look around, just sell something, you need to do it. Come on. Brian; And I think a lot of people get stuck on I have to set up this first, I need a corporation, I need a logo, I need business cards. And all of that is way overrated. I think people use that as sort of a stalling mechanism. They need to get things set up, they need to be ready and it's not true. It's sell something first and figure out the other stuff after. Janine: Yeah, I think I was at a million dollars before I had a corporation before I was properly set up, before like a lot of things. I don’t even have a domain, I didn't even have a .com. I know you e-mail sequined, I know e-mail list, I didn't have a brand, didn't have a Shopify present, I didn't have any business card. I know a lot of people to keep asking me for one and our packaging was literally this box that had that background on, had a bunch of textbooks, and then on sit Cinderella on it. It looks like someone just kind of like threw something together… Brian: It was just the stock box from the manufacturer. Joe: And just for the record, Cinderella had absolutely nothing to do with the product folks. Janine: Nothing at all. Brian: Yeah. Janine: My point is sometimes you get stuck on these things. Oh, I have to get the packaging right, I have to design this, I have to design that, I have to get a domain, I have to brand register and all these things. I didn't do any of them until I’m already well over a million. Brian: All of it is important but if you get stuck on doing that before you actually have something to sell… Joe: You have to get out of the game. Brian: Long path, exactly. Joe: I'm curious. You had said you'd each tried multiple things and you didn't get past 15 or 20 units a day. Were they all in the same Seller Account as this one or separate Seller Accounts? How did you manage that aspect of it? We’d always recommend separate brands for separate seller accounts. Brian: Yeah, so at that time we both had our own seller accounts. But then the one that we ended up building with was the one she had set up. And there were multiple products in there and they were… Janine: Totally unrelated. Brian: Totally unrelated. A lot of like; it became like test products so like we finally found the one that stuck and then that became the brand and sort of just slowly fades out. Joe: And the rest faded away. Brian: Yup. Joe: Okay, so the biggest challenge you would say is actually finding the right product and getting it to work, and don't let yourself get stuck in the gate trying to get to be perfectly set up before. Janine: Yeah. That and also, I don't want to our story to make people feel like, oh, I need a hundred thousand dollars or, oh, I need 10 grand otherwise I can't get started. That's totally not true. If I hadn't had four products that failed, if I hadn’t had four products where I spent all my time; all the things I learned; photography, how to talk to freelancers, going to Fiverr.com to hire people, how to write a good listing, how to use Helium10, how to use all kinds of software; I learned all of that but all of those products that cost me like a dollar, a dollar 20 cents. I only started with a few hundred bucks. That's when I learned all of those skills so when the right product comes along, I'm ready to go. And I think that's contributed a lot of our success. I imagine if my very first product was a successful product maybe I wasn't ready for it and maybe we wouldn’t have gone the trajectory that we were. So even if you have 200 bucks to buy something that cost a dollar or two and you may not make money on it, do it. Joe: Education; right, you're learning along the way. Janine: That 200 bucks is worth it. Joe: Okay, so lots of failure or enough failure or mediocre success before you head to the home run; the seven-figure eventual exit, so to speak. So you found a way to raise money, not an issue for you, as the business continued to grow were there challenges with cash flow management trying to keep up with more and more inventory demands? Well, you don't have a job any anymore Janine, you have an income. Talk to me about those challenges and how you overcame them. Brian: Yeah, there were definitely challenges but it became; so she had left her job, I was still working for about a year. I left in the end of 2018 so now neither one of us are working in pharmacy but during 2018 when the real growth really started to happen, it was always a struggle to order enough to grow because we're growing 30%, 40%, 50% month over month. It wasn't slowing down so it was always trying to stay one step ahead with inventory. We use Amazon lending extensively. So, I mean, we started with the smallest. They offered a thousand-dollar lone, we took it, and then every time we paid it off, the loan got bigger and bigger. Joe: Do you always have to wait for them to offer or is there a way that you could… Brian: Yeah, and as far as I know, the offer is the offer. There's no getting anymore. Joe: So you take it, pay it off and then you're going to get a… Janine: Yeah it was really stupid. The first loan for a thousand dollars I would have done anything for us. We were already doing; I can’t remember the exact number, but at least maybe 50 or 60 grand or maybe even a lot more than that. So I remember looking at it and thinking to myself, what the hell is this going to do? Why is Amazon giving us such a cheap ass loan like a thousand bucks? But we took it and it went to 10 grand, it went to 70, and it went to 300,000, 500,000. It ended up over 800,000. It just gets bigger and bigger. Joe: Wow. Janine: So if you get an offer even if it’s 500 bucks or $100, take it. Brian: Yeah, and they’re short term loans so they're expensive to have on your books, but it allowed us to fund the inventory and fund the growth, and it worked out well. Like going back there would be no other way to grow the company too. So when we sold it was almost at five million a year. Joe: Okay, let's get to the niche itself and the incredible painful exit as opposed to just incredible. It's incredible, no question about it. The whole story is amazing and inspiring and hopefully, it's going to get people in that starting gate to getting out of it and taking some actions; looking around the room and selling whatever they have to, working more hours. I mean, when I was a kid, I was complaining that I didn't have enough money. That was kind of to the millionaire next door, the best friend of my parents. I never know that they are, but they were. And I worked for the company and instead of staying I’m like [INAUDIBLE 00:27:34.5] where I said at some point I was in the room complaining I think probably as my parents were playing Chinese checkers which they do. And he said, just stop your whining. There's plenty of work. Just go work more hours. There are lots to do. Work more hours. And that's exactly what you did Janine. You do the math on how to work more hours so that you can fund that $10,000 purchase. So no excuses, people, if you want to be an entrepreneur, that's what you got to do. All right. So why the electronics space? It's a space that we talk about in terms of risk and that's risk of obsolescence and again, it took me a long time to learn to pronounce that but it means that there's a fear that the product will be outdated someday in the future with changes in updates. So why the electronic space, what attracted you to that? Brian: I don't think there was a lot of thought as to that we want to go into electronics. So it just came from product research and finding a good volume product that didn't seem to have a ton of competition that seemed to be somewhat new in the marketplace with already a lot of volume. So it kind of checked all the boxes that we're looking for. Also, there's a lot of training and there's a lot of categories, there's a lot of products, there's a lot of things that they tell everybody to avoid. We tend to; especially now that we've developed a better skill set around this and we have more confidence… Janine: We do the opposite. Brian; Yeah, we do the opposite a lot of times. Don't always avoid because guess what? I mean, the space is already crowded but the things that everyone is not avoiding, everyone's in those. So the ones that they say don't avoid and maybe it's an oversized, maybe it's electronics. If it still seems like a good opportunity, go for it. Joe: Take it. Brian: Yeah, I don't like to use like a definitely do not do this. Joe: All right, so launched in 2016, 20 million in revenue before you ever incorporated, at what point from your experience selling too late; at what point did you say to yourself, okay, we're going to exit this. We're going to talk to me, talk to Joe, talk to somebody, and learn about the process of selling the business. How long was it and how far in advance do you think other people should consider the exit process or the training or planning, as it's called? Janine: Well, they always say they won, right? Joe: Nobody ever does that. Brian: No. Janine: No, no one does. Brian: I think as soon as you know that you have a business. So, I mean, it can't be day one because maybe that's never going to go anywhere but as soon as you sort of maybe feel traction, you've kind of built the brand, it's still growing, and you see like an upside to it maybe start planning. Definitely from the day one keep your books good. That was a major thing. Joe: Remind me, did you use QuickBooks or Xero? Brian: We used QuickBooks. Joe: And did you outsource to a bookkeeper eventually or do you do that yourself? Brian: Eventually. So we're doing it. I was doing it myself and then when we sat down with you, that was kind of one of the things you helped us with. Joe: Okay. Brian: So we used CapForge and they were awesome. So they went back and had to recast all the books to the accrual method. So that was a little long, tedious, painful. Joe: Yup. Brian: It’s probably more expensive doing it that way than to just keeping it correctly from the start. But, yeah, I think just planning is always better, of course. So as soon as you think you have a business, I think you should at least have it on your radar because who knows? I mean, we're all in this to make money. You own a business to make money and if selling it is going to make you money, that should be part of your plan. Joe: Yeah, so one of the things; I would just try to shift everybody's mindset. Everybody's always called it plan to sell your business the day that you started exit planning, flip it, and call it training because you're learning. You're constantly learning by your failures and in launching new products until you hit that right last one that launched a seven-figure exit. Think about the exit planning as training as well. If you're going to run a marathon, you've got to train for it or you're never going to get out of the gate. You've got to learn about the process. You're listening to this podcast so that's a great start. Get a valuation. Look at other listings and how they're valued and how the packages are put together. Train as much as you can. Don't make it your sole focus and your mission, but make it part of your overall business plan and operating your business so that you can eventually exit before you get burned out and things turn the wrong way and it's too late to exit at a strong value. Janine: I think the idea was initially planted in our heads when we had our initial conversation with Ezra on our mastermind group. And then that brings me to another point, the importance of having a mastermind. Brian and I are always a part of masterminds. Sometimes we’re in two different masterminds. Right now I'm in three different masterminds, but having a group of people that you can talk to is like super-duper important. So Ezra we talked to him, he planted the idea in our head. We connected with you to get the initial phone call with you. I love that you were not fishy at all. It was just very informative, very casual when we got to talk with you. And we got off that day and we decided, yeah, we're going to do this. But it took us six months to get everything set up; all the books probably correct but it's never too late. Brian: And like you said about an education, going through the process, I think allows you to learn how to run the business better anyways. So even if you were to keep it, you should be in a better position after going through it. Joe: I agree 100%. Brian: Even going through the sale there were things that we learned. So during due diligence, it's like you get asked a question or someone else organizes information in a different way and you say to yourself, oh, I wish we did that before. But now guess what? We’d do it next time. So our next business, we set up a little differently because of things we learned by being exposed to the process. Joe: Right. Did you make more money on the exit than you made while you were running the business? Brian: Yes. Joe: 50% of all the money you ever made, 90%? Brian: Cash flow is a funny thing. So there was a lot of money flowing through our business but in terms of what you end up with yeah, I definitely think the exit; I don't know what percentage, but yeah, a big amount of what we actually ended up with was from the sale. Joe: Total earnings. Janine: Every month I’m like where's our money? Brian: Yeah. Janine: We had Like 300,000 to 400,000 monthly sales so I was like where’s all that money? Brian: Yeah, we'd laugh as we'd wire money. We’re like the Chinese they're taking all our money. I’m like why do you keep sending it to them but yeah. Janine: So the exit is when the cash came down and it definitely… Joe: And it comes at a lower tax bracket too. Brian: It does which is incredible. Joe: Very, very helpful. All right, let's talk about the painful part of the exit. So we were a couple of days away from signing an asset purchase agreement with your buyer. The CFO of the company bought your product and his wife plugged it in and it started to smoke and catch on fire. Janine: I don’t think it caught fire, it just smoked. Joe: Just a smoke; okay a minor technicality. Brian: Yeah, and not a few days before it closed it was literally… Janine: The day of. Brian: The day of that we were supposed to close. Yeah. Joe: When details in your life are incredibly painful, you remember them very, very well. Brian: Yeah. Joe: You guys can remember exactly where you were when you got that e-mail or phone call, I imagine, as well. But we overcame that. We were able to sort of get over that hurdle; get around that hurdle. Can you address how that was overcome? Brian: Yeah, the exact how so we had a lot of confidence in our product and in our business and we didn't feel that the buyer had that same confidence. And I think that's normal, right? So they don't know exactly what they're getting. There’s always going to be maybe some reservations, especially like you were talking to electronic product obsolescence, safety hazards type of thing. But we had kind of built it, we had huge volume, and, of course, we had problems along the way that we were always able to overcome and solve. And every time we overcame them and solve them, the company just continued to grow and grow and grow. So all that I felt was like, I just need them to believe in the product. And we kind of really structured the deal to make them feel a little bit more comfortable. We were willing to take a little bit more of the risk on some contingent payments but we're completely willing and confident do that because we kind of know where I think this product will go. And the company that bought it I think can grow it way beyond where we would. So we just needed to kind of instill into them that we're confident so we'll take some more risk and I think it worked out. I think it was a really good negotiation. Joe: Yeah, I think they've done well with it. They started to grow it immediately after closing. And with COVID more people are staying home and more people are buying that particular product anyway so it's a double whammy for them. So what would you did was shifted some of the risk into contingent payments, meaning that you got paid three months out if things were stable or six months out on another payment. And you also shared some statistics, too, though, in terms of the total number of complaints you had in that regard. Brian: Right. Joe: And then I think they did a little research in terms of looking at other similar products in similar categories and seeing that complaints were pretty similar and in some cases even higher. Janine: Even major brands had the same problems. Apple, Google, and Samsung that fiasco with the cell phones like [INAUDIBLE 00:37:55.6] with the batteries exploding on airplanes or something, it's not unique to our products. Brian: Right, and I think that's what we just needed to kind of work through to make them feel more comfortable. Joe: And you did it with logic and level emotion. You didn't go off the rails, you didn't scream and shout, you didn't… Janine: Well I did. Joe: Well you did that with Brian, you didn't do it with the buyer. Brian: Yeah, I'm very patient and I don't give up and I knew that it could be solved and it was something we could overcome. I was confident that we could... Janine: I thought it was over. Brian: Yes. Janine: Honestly, I wasn't eating. I thought it was over and this guy is very level headed. He sat on his computer, thought about it, sent out an email negotiating, and they accepted it. Joe: They did. They love the logical approach and that you put some risk on you. At the end of the day, you're still going to get paid out but you said, okay, look, I'm going to take some risk just to prove to you that this is not an issue, But the next problem, wow, it's almost one that you could never be able to overcome. So I remember I was at eCommerceFuel down in Fort Worth and I took my phone and checked in with you, Brian, and I’m like hey man how are you doing? You were like, yeah, I'm not so good. I'm not so good. I’m like come on, we're getting close. We're almost there. He's like, well, we just got hit with an IP infringement and all the ASINs are down or all the top ASINs are down. Brian: Yeah. Joe: So someone else ended up getting issued a utility patent on… Brian: Design patent. Joe: Design patent on the primary SKU; you’re hero SKU essentially because you had pretty much a hero SKU here. How did that feel? Janine: So this happened on the same day that we were supposed to sign; again like we can't even make this up. I remember waking up that morning to an e-mail from the buyers saying hey I’m looking forward to closing today at two o'clock or something like that. Brian: Yeah. Janine: And I saw my other e-mails from Amazon that was sent at five o'clock that morning to tell us our ASINs are down. That literally happened within seven hours the same day. Brian: Yeah, so it was sort of like we got this other problem behind us. We're feeling good and literally the business; I mean this couldn't have been any worse because it went basically to zero. And they took down every SKU except for I think two or something like that and they weren't top-selling SKUs. So I think we went from like $12,000 a day to about a thousand dollars a day overnight and no path to see it being fixed. Joe: None, whatsoever; it was a patent issued by the US government. Janine, did you say those emails came in from your buyer and from Amazon within about seven minutes of each other? Janine: Seven hours. Joe: Seven hours of each other. So seven hours and the loss of seven figures; pretty painful. You're pretty down and basically like you got kicked somewhere that would hurt really bad. Brian, I'm talking to you. But again, levelheadedness, you reached out to your Chinese manufacturer. You looked at the dates, you looked at the history, you looked at whether or not this is patent was issued legitimately or fraudulently; meaning the guy didn't fully share everything with the US government; the US TPL that he should have. What did you find when you did all that research? Brian: So he had sort of, after the fact, applied for a patent. So we had the product selling in the marketplace first, but there were others so it was shortly after us where there was maybe five or six of us all selling similar designs, same exact product. It never even really crossed our mind that it was a patentable thing because we didn't design it. We purchased it as a private label thing, had our logos put on it, did the packaging, yada, yada, yada. So did this other buyer, so did lots of other buyers. About a year; so after we’re already over a million dollars, he applied for design patent. The path he took was… Janine: Sketchy. Brian: Yeah, a little bit devious; claiming rights to something that he really didn't have rights to that was prior on this space but none of that sort of matters in the Amazon world because he did actually get granted the patent and Amazon is not going to rule on whether or not that pattern is valid or not. One thing that I did quickly was contacted some of our other competitors. So almost immediately I think we emailed… Janine: They were also taken down. Brian: Yeah, so we tried to reach out to our competitor that took us down, but then got no response. And I reached out to other competitors and we kind of all worked together. We're all doing our own research. We all had our own lawyers. And I think that little pact that we formed, in the end, helped as well. Because it was a lot of us working together, even though we're competitors, we kind of all had had one thing to solve. And yeah three weeks; I mean, this was a lot worse than the first thing so this one actually took a lot of time. Janine: 14 days. Joe: It appeared by all imagination as something completely insurmountable. Brian: Right. Joe: But you did, you banded together with your competitors. You also reached out to your manufacturer to reach out to them and put a little pressure on them as well. And you eventually got in touch with the patent holder. I’m cutting this short a little bit and telling the whole story because it's long, folks and it was painful. A lot of e-mails back and forth, a lot of negotiations, a lot of okay, I'll think about this and I'll get back to you and then not hearing back for days on end. Brian: And I got on the phone with them. I actually was able to speak to them and tried to work it out as just two businesses competing in the same world. It didn't seem like it was going anywhere. It wasn't working, but it did. Finally, cool heads prevailed. Joe: And so at one point, that conversation led to, okay, I will allow Amazon to put your stuff back up and that's good. So your stuff was back up and selling on Amazon, but your buyer really wasn't willing to close because that issue was still out there, that this person had the patent and they could shut you down at any time. We worked with a buyer who was very good about being patient, understanding, and all this. A lot of buyers would have just walked away. In this situation, they hung out. They hung around. They trusted you guys. They saw the commitment you were willing to put in by putting some risk on your side. And they said see if you can work it out. We're good. And one of the other things that you did is you said, look, we will backdate this asset purchase agreement. Let's go ahead and get the APA signed contingent on getting a mutual release of the ability to sell the product now and forever on any platform and being able to transfer control of that right to sell the product as well but backdate it. I think we ended up closing in March, but we backdated you said effective, I think January 31st as far as the asset purchase agreement. So you are essentially managing the business, not taking any money out of it, and if we were able to close the transaction, you essentially had ended up managing it for the buyers for 45 days or so. So, again, you're putting yourself out there saying, look, we're here, we're going to fix this and it's yours as of that date back there but we're going to run it until this problem is solved and we did. We ended up with a mutual release letter. There was the strangest possible clause in a legally binding contract I've ever seen. We won't go into the exact details, but the buyer's attorney said, I don't think this is enforceable. And I said, really?! Absolutely just a little clause that this person needed to make himself feel better perhaps in the afterlife and we don't know if you could enforce that in the afterlife or not. But the key is that that you worked with him closely to accommodate his personal needs and your own personal needs and you got through it. You remained level headed. And at the end of the day, you wound up with a seven-figure exit. I want to know how you felt not when we finally got that release letter but I want to know how it felt when that first wire eventually hit your account. Brian: Yeah. Janine: It couldn't have; so right now we’re going through COVID-19, I don’t know if you remember, but on March 17 was when the stock market dropped by 20%. The whole country woke up and the stock market was down like 20% or more and that was the same day we got our seven-figure finally hitting our bank. Brian: Yup, this couldn’t have closed at a better time. I mean it put us in such a good position. Obviously, we'd been waiting for it for a long time so it was a relief but timing was just incredible. Joe: Although the buyers seen a spike in sales because of… Brian: I mean, we, of course, follow it very closely. Janine: Oh my God I font know how they are doing it. Brian: I think they're up over 100%. I mean, they're growing. It's awesome. They're growing the way we thought they would. They have the capital behind it. They've got a good, strong team to put behind it. So, I mean, we know… Joe: Are you excited for them. Are you glad; you just said it's awesome, are you...? Brian: Oh, it's so awesome. Yeah. Joe: Right. So, folks, that's the mentality that will get you a better value and a better deal and a better transaction. Because Brian and Janine ran this business and created something that would be great for a buyer to take over. And a buyer saw that took it over, and now it's up over a hundred percent. Yes, COVID is having an impact but even without COVID, it would be up substantially. That is absolutely the right mindset to have. Brian: Yeah [INAUDIBLE 00:48:35.2] Like that brand even if we potentially could grow it to, say, 10, 20, 30 million dollar brand, I honestly don't think we wanted to. Like that wasn't our goal. We didn't want to have to leverage ourselves to get there. Take the extra time. Janine: Things were getting scary. Brian: Yeah, like we built the business to be kind of a lifestyle brand. We travel all the time. We have a lot of flexibility. In order to take it to the next level, we knew that we'd have to sacrifice a lot on that. Janine: Probably more people or more agencies, things that would mean that we need to spend more time on it and that wasn't our goal. Brian: Right, so to see them be able to do that, of course, we would love it. We'd still feel that same pride that it was ours and we built it. She was always like this is my baby I don’t want to give it up. Janine: It was my baby. Brian: But you know you kick the baby out of the house eventually. Joe: You have a new baby. It's got seven figures. Brian: Yeah. Janine: And we are in the process trying to buy another one. Joe: Right. Yeah, so you guys did something smart that is interesting. When we were; was it Blue Ribbon? Yeah, we were at Blue Ribbon Mastermind in St. Pete and you had already; we hadn't closed on this yet, we were still working out the details and you had already launched another product on Amazon. Brian: Yeah. Joe: On a separate seller account you launched something new. And I think at that point you're already up to 20 or 30 sales a day which I think is brilliant. This business model that you're in has you be able to build, sell, repeat, build, sell, repeat, and continue to do it with the skillset that you have. So I think it's fantastic. It's the exitpreneur process; you all know about the book. It's a little plug for my book but it's brilliant. I'm so excited and pleased for you guys. It's been a privilege, honestly, getting to know you, spending some time with you out in Seattle. I mean, you got to meet my son. We had lunch together with Bronson and then getting to spend more time down in the Blue Ribbon Mastermind. Congratulations. It was fantastic what you guys have done and I hope that people hearing the story from both your angles and approaches will inspire some of them to look around the room and sell something others to have the hutzpah that you had to raise $100,000 because you knew you had a winner; pretty incredible all around. Any last thoughts or words of wisdom that either of you would like to share with potential listeners, both buyers and sellers of online businesses? Janine: Well, Amazon is kind of like a world where we are kind of secretive about what our product is. Some of us won't even divulge what our category is. And it's like that for a reason but it doesn't mean you can't have a Mastermind, it doesn't mean you can't network with people. And that was one of the most important things that we did. And also going to the process that we did with IP infringement made me realize, you know what? We’re not companies competing against each other; we were all families, we have kids, we have a mortgage. All of us are the same so a lot of these black hat strategies where you're kind of doing something to get a competitive edge by sort of burning that person; you know, really just don't do it, because, at the end of the day, you're hurting a person who's probably just like you married with kids, probably with a student loan or a mortgage; you don't know. And I think we got through to the patent holder with our issue because we made him see that and he's also a family guy; a religious man, of course. And I think getting to know them and seeing that we’re just another family just like him that's how we got through to him. Brian: And some of his actions were when we got on the phone, we were actually able to talk about this. I couldn't so much fault him exactly for what he did, because we're all business people. We're all kind of doing things to get an edge and that's what he felt. He felt he needed to get an edge. It's almost hard to fault him for that but it was making him realize that hey, we're not some Fortune 500 company. We’re just like you. We’re working out of our house. We have a family. This is our business. Joe: And at the end of the day, he saw that because… Brian: He did. Yeah, so we have… Janine: We were lucky. Joe: Yeah, you took care of each other as competitors and rivals and gave each other the opportunity to continue to grow in business. Janine: Yeah. Amazon is so big. There’s room for everyone. Joe: Agreed. Brian: Yeah, there definitely is. Joe: Guys, I feel like I could honestly talk with you for another hour and a half. Maybe we'll have you back on with your next incredible exit but thank you so much for sharing your story and giving me the opportunity to work with you. Brian: Thank you, Joe. Janine: Thank you, Joe. Resources: Quiet Light Podcast@quietlightbrokerage.com

May 26, 2020 • 42min

Writing Press Releases for Ecommerce Businesses with Norm Farrar

On today’s episode, we talk with return guest, Norm Farrar, about moving into the world of PR. Norm loves to create standard operating procedures for even the simplest of tasks, but finds that it streamlines life significantly.He owns a company called PR Reach and uses various SOP’s to run his business. Today, we discuss how to get more organic traffic through PR. Tune in to hear our discussion with Norm. Topics: Norm’s experience with Ecommerce. Why his company still does press releases. The benefits of a press release for Amazon sellers. The importance of consistent press releases. The popularity of his webinars. Blogging and keyword stuffing. Brands for which PR works best. What to do when your keywords drop in ranking. Checking in on competitors. Transcription: Mark: For a long time, Joe, I had a number one podcast recording that we've done on our list of all time. It was with Shakil Prasla and so I thought I would have a reprise and I would bring back Shakil and it didn't do as well. I mean it's still a really good episode and I recommend people listen to it. It was on how to hire CEOs. Your challenger to my number one episode back then; I know that you have the number one right now, but your challenger was Norm Farrar, who had an amazing story, and you brought him back on to talk about moving into the PR world and over the traditional world. Joe: Yeah. Let's just get it clear that a long time as in your case, it was, what, two or three days. So in your world, that's a long time. But in the rest of the world, that's not very long at all. Shakil Prasla, a great guy, if you haven't listened to that podcast, folks, please do. Shakil is a longtime friend of Quiet Light’s and just a good all-round human being. But yeah, Norm Farrar came on to talk about SOPs. Who would have thought that the audience would have gravitated so much to SOPs? And Norm is in the top 10 for a long time. He had SOPs on how to make coffee. He has SOPs on how to create SOPs; SOPs for VAs to hire other VAs. It was very, very thorough, made his life and the ability to run multiple businesses much, much easier. And Norm is an old school type of individual. He helps a lot of eight-figure Amazon sellers and seven-figure Amazon sellers with a third prong approach to rankings. The first being, people do sponsored ads, second, a lot of folks do search, find dime, many chat, things of that where you get into a little gray or blacked out stuff. But Norm does PR for a lot of folks. He owns a company called PR Reach and he finds that the third approach really helps when somebody has a listing that's doing incredibly well and somehow gets hit by competition and the organic ranking start to fall. And they go on to on a monthly subscription to do PR work to keep that organic ranking up. And he finds that it works with social media influencers; they reach out to social media influencers to get links and even online magazines and news outlets as well. It's a great story, great information, and it's a bit of throwback. People think, hey, this is an online world, online business, we shouldn't; we don’t need PR, but it definitely works and Norm talks about it quite a bit in the podcast. Mark: You know, I think this whole idea of PR, especially from a buyer standpoint, is really important because when you buy a business, there's so many opportunities in that first year or two years for PR opportunities to be able to go out and get some really good juicy links, help out the SEO get some natural exposure and get that ROI back up. So it's an exciting and very relevant topic to be talking about for anyone who's looking to buy a business or recently has bought a business, use that, and use all the changes that you're making to get PR. Let's listen to what Norm has to say about that. Joe: Hey, folks, Joe Valley here from Quiet Light Brokerage. And today I have somebody on the podcast that's been with us before. Norm Farrar covered SOPs and he was in the top ten for a long time in terms of listeners on the Quiet Light Podcast. Norm, welcome back. Norm: Hey, thanks for having me. Joe: It’s good to have you here. The beard still looks as long as it ever was. Norm: And it’s filling in from the hamburger burn. Joe: I remember hearing about that. That's right. Today, we’re not going to talk about SOPs, we're going to talk about something old school or at least what seems old school, which is PR work and your company PR Reach and helping Amazon sellers, e-commerce entrepreneurs, content developers, or SaaS companies all reach more people and get more organic traffic through PR. So let's jump into that just before we do, though for those that didn't hear your epic podcast on SOPs can you give folks a little bit of background on yourself so they understand who you are and what you do? Norm: Yeah, sure. I am an old dog in the e-commerce game. I go back to the early 90s. And by the mid-90s, the first website was up for a Fortune 500 company that we developed; helped develop and then got into some manufacturing and manufacturing facilities were in the US, and Canada, Taiwan. We outsourced in India back in the 90s. And then now we have a factory that we own and operate in China. So you can't own it, but we have a general manager and people working it for us; it’s all our equipment. And that right now, by the way, we're producing travel wipes. So just coincidentally, it wasn't planned that way. We've had it for about a year; a year and a half, but we're working with that right now. I got involved with sourcing and logistics and Amazon like this was a perfect storm. So what we're talking about today actually is everything, it's the logistics, it's the e-com, it's all elements of getting onto Amazon. And one of the components; very important components is the press releases. So when that happened and when I got involved with Amazon brands and helping other brands, I always used press releases, nobody really were; unless I think it went back a few years ago at Amazon and press releases went hand in hand. And then there was some bad press and people just weren't using them right and they kind of dissolved. But I kept using them. I did it properly and kept crushing it so I bought a press release company. Joe: Just the introduction and the old school that you're an old dog in this business, it feels very much like there are not enough old school techniques that are in play today. Having an 800 number, having the ability to have your customers call you and communicate with them and especially when they're checking out and they're confused and things of that nature. It works and that's; I'm old school, I used to own a radio direct response media buying agency to market all my products on radio before I went 100% online in 2005. So I'm an old dog as well. The PR stuff just feels like and seems like old school but it's important in many ways that I think a lot of online entrepreneurs are not using today. So why don't you explain what the heck a press release really is and who sees it and how it works and it's not just, again, for Amazon sellers necessarily, but it can help people with an online business or any kind of business, for that matter? But go ahead and define what it is and how it's out there and who it reaches. Norm: Sure, so it's not a public relations company. We'll get people calling us and wanting us to promote their event or create something for them; earned media, that's not us. We work with those types of companies. So a lot of people get those mixed up. We have press releases and it covers an event or a benefit or a feature or something newsworthy about a product or service. And what happens is a press release is written and then it's put through a distribution channel. The distribution channel could be to; right now, it's usually online media, search engines, content providers. It could go through print channels like periodicals, news magazines, trade magazines. But in today's society, we have a lot of influencers and bloggers and journalists that get on the bandwagon and two and pick it up through maybe a Twitter feed or something along those lines. So it's completely different. If you were to take a look at it, there are really three types of press releases. There's the traditional press release which takes care of all the online, but it also goes out to the print magazines, periodicals. Those are typically more expensive and I would only use those if it's a launch or if it's something that you need to have out there. It will get you the most exposure however, it's the most expensive. You're looking at around $750 to $2,500 for that type of exposure. And then you have which most people know, which is the online press releases, well, depending on the service, it's strictly that. It’s just online. It's going out to inaudible[00:09:52.9]. And there's the third type and this is the one I recommend and that’s… Joe: What kind of businesses are going out to the second type? Norm: Oh the second type is going out to, it could be Washington Post but it's there online. It could be CNN, Fox News, any of the NBC affiliates. So it's everything online and it will go out to the search engines so they'll pick it up. Google will pick it up; Bing. The next one just adds an extra element and that's the social component. So it will take it. It will share it with Twitter, Facebook. That press release will also pick up a lot of journalists so you can go through typically, HARO, they have 55,000 journalists. So a company like ours has that on the list. We’ll push it out to HARO we'll get the response back. We'll push it out to influencers and bloggers. So if you're in a specific niche, usually it's typically fine to do the social media press release and that's very inexpensive. It could be $100, it could be $300 but what you're getting is national exposure. And if you get the right press release company with the proper distribution; I'll get to that in a second, that's really important, but if they produce a video. A video allows you to repurpose everything, so just… Joe: The videos are linked within the press release or its part of it itself? Norm: Yes. Usually most press releases you can embed a YouTube video but I'll get to that in a second. Joe: Okay. Norm: With some press release companies, you can do a video, just a regular video that it's a second script. It's not what's written, but it's for an anchor to read. So it looks very similar to what you would see on the news. And then you can take that and you can make that your third of link. So the problem with microbrands in e-commerce is that they have no authority. Joe: What's a micro brand? Norm: A microbrand is these small private label brands that are trying to be something on Amazon. Joe: Do you mean they're doing 25,000 a month in revenue, 100,000, a million? Norm: They can even be a million dollars a month, these are just brands that are… Joe: They’re not a Nike, okay. Norm: And they don't have that type of money behind them, but they have to get exposure. And the problem is most microbrands; and you could even say, you can expand this out to law firms or dentists or chiropractors who are just getting into the business, but they don't have a name. So they need to get that authority. So how do you do it? You do it through a press release. And you can take that press release and repurpose the written press release through social media. You can take the video and put it through social media or put it on your YouTube channel. But get this, you can write an article; a blog article that's going to get Google exposure, and you put that into your content in the blog article. So when people come to it; when you go to a blog and you're on somebody’s site, you don't know these people. You don't know the company. But if you see something that's even showing that it looks like it's authority; some sort of authority, people will take it as they will start to feel trust. Joe: I got you. Well, let me ask sort of a silly question here, but what is the ultimate purpose of the press release? So let's just say we've got and let's target it, so I'm an e-commerce entrepreneur, 50% of my revenue is; I've got one of these microbrands, but I'm selling both on shops via Amazon. What's the purpose of a press release? What's it really going to do for me? Norm: Okay, so it depends if you're an Amazon seller or an e-commerce seller. First, there are two different types. The first thing it’s going to do is build trust and authority. You're going to be able to take your store and you're going to be able to show it on 500 different media outlets. This is if you get a good one. If you get a good press release distribution company, they're going out to the CNN, the FOX News, the FOX affiliates, the NBC affiliates, they're going to get you the content placement like on Market Watch or through Reuters or through Yahoo! Finance. Joe: But it's out there and then they choose to pick it up and it becomes a link on their site or something like that. They could ignore it completely as well, right? Norm: Yeah, if they find it spammy they can ignore it and if you've got a crappy, cheap, free press release distribution company, you're going to get what you pay for. Joe: Okay. Norm: You're going to go out to small town USA and nobody's going to see it. Joe: Okay. So the purpose, again, is creating authority and creating influence and credibility with your brand? Norm: Yeah, I was doing a webinar and the night before I was looking and doing some keyword research and we were working with this pet product and the whole from Chewy Amazon.com, Amazon.ca, Press Advantage at that time; that's another press release company, every single spot on Page 1 was filled up with our brand. Joe: Wow. Norm: On Page 2 every single spot except one spot was filled with the brand. Joe: From the press release that you created? Norm: Yeah. Joe: Okay. Norm: So it's not you can't do one press release. It's like one radio advertisement, it just doesn't work. I put out a press release; a minimum, and this is before I bought the company. I put out a minimum of one a month and if you're not doing at least one a month, then you're missing out on it. Joe: And how much is that going to cost somebody that's doing the social media and the newer stuff or really somebody that is trying to just build more organic traffic and authority and their own reputation with a micro brand, as you call it? Norm: Yeah, you might not even get a lot of traffic, but what you're getting are those links and you're going to rank on Google for this. I’d give you an example. So just like the press release I was telling you about just a second ago, we went out and we were looking at launching a press release 24 hours before this webinar. And by the time the webinar started, 279 keywords; ranked keyword phrases were ranked on Google, and 179 were on Page 1 and 131 were number one. Now there were a lot of horrible combinations, but there were some beautiful ones that's not true. And I'll give you an example, those people that are in the pet niche, Bully Stick. So Bully sticks launched Bully Sticks Amazon Number 1 and it lasted for quite some time. Joe: I’m sorry to interrupt, an example of a webinar where you are talking about your product or helping people understand what to do with their pet in this case, the ultimate goal is to get more people to attend the webinar, isn't it? Norm: Well, the webinar was just showing people about press releases. Joe: Okay, I got you. Norm: How it affects and so now going back… Joe: But you had more people come to your webinar to show them about press releases because of the ranking system. Norm: No, this was just another webinar. It was another webinar group that wanted to talk about launch and rank on Amazon. Joe: I got you. Okay. Norm: Anyways, if you do that you're going to start to see; if you do this once a month, you're going to start to see your brand more and more and more out there. You can start targeting more keywords. And so that's the brand side and that's just like listening to a radio ad. If you hear it once, you're only going to remember it slightly. Joe: So for a company like Quiet Light Brokerage; I'm going to get selfish and I keep interrupting, I'm sorry. I’m going to get selfish on this Quiet Light Brokerage should we be doing a press release every time we sell a business, should we be doing a press release every time we publish a new podcast? Norm: You should be doing more than that. Joe: Okay, which should we be doing? Norm: There is a way to get sort of a one-two punch and that's you create a blog article, you put that onto your website and this is for e-commerce as well, you talk about; now you write it as a blog article which is completely different than a press release. Press release has to have a newsworthy title, blog article are the five reasons why. Joe: Okay. Norm: So you launch the blog article first about what you just did, then you take the press release; you have the writer or whoever is doing this for you, link over to your blog article. So now the press release goes out and it's linking back to your website. It's linking back internal link over to your blog article. Google loves it because they love knowledge and education and it's a newsworthy item. They love it. And you've got the extra juice coming in from the blog article, which, again, it's not a sales-y blog article. It's talking about the five reasons why. So to give you an example for Amazon, you've got a natural, healthy, grass-fed bully sticks; keyword stuffing. Healthy, grass-fed, natural bully sticks provide nutritious snacks for elderly dogs. On your blog article, it's five reasons why bully sticks provide or why you should be feeding elderly dogs bully sticks or something along those lines; completely different angle. When you do that, you get a one-two punch. Joe: It reminds me of link building really but you're getting organic or legitimate links that are related to the article that you're publishing and the information that you're sharing. Okay, so when it comes to the press release itself who writes them? Norm: Usually most people try to get it on the cheap thing inaudible[00:20:34.1]. Joe: How do we; who writes it, when it's written well who writes it? Does your company have writers? I mean I've written an article. When I first launched my e-commerce business back in 2005, I wrote every article every month and they were just horrible until I had enough cash flow to hire a professional writer. I'm not going to write a good press release. So is that part of a service that's out there, do we have to find somebody on Fiverr or Upwork or something? Norm: You could but usually the press release writers that you'll get are article writers who say that they can do press release. They don't understand how it works. So yeah we do have about 20 writers. Joe: It's part of our service then as well. Norm: Yeah, it's part of the service. If you do want to submit a press release that you've written we’ll distribute it for you. But if you do that, you want to make sure that your title is optimized. It's not the links; like there's a lot of press release and we have no links. It's the title. And if it's properly optimized, that's where you get about 80% of your ranking. Joe: Okay. Norm: Just in the title. Joe: And when it gets to the companies that are out there that may pick it up, the news agencies, for instance, do they actually have human beings looking at these press releases and looking at the titles, or is there some sort of botnet scrapes and picks the ones that makes sense for them and whatever's newsworthy? Norm: I'm pretty sure that it's just some sort of algorithm that allow them to; I mean they would be bombarded. There might be, I don't know. But if you're going over to some of the majors, I know that we get a lot of kickback whenever; for example, some people will try to sneak through a promotion. You're not allowed to promote so they'll have a delay on their website. So we capture their website and five seconds into it, 10% off will pop up. Well, that'll automatically get you kicked off of a lot of the majors out there. And it also depends on the category. So Amazon sellers have abused supplements so a lot of the premium networks are either it's hard to get a supplement published. You can, but you're going down to the second tier networks now. And you're seeing that with; oh, what's the other big one? It just happened. There are; like supplements is the biggie that we're getting kickbacks on right now and we've got other networks that we can use but because it's been abused, they're very cautious on them. And they're also cautious on like if you're doing a reverse mortgage like there's a whole list that you can see. Joe: Okay, what type of microbrands work really well with PR? And I understand it's one part of the marketing department, so to speak, doing PRs but what kind of brands or micro brands work best? Norm: Okay, so I'm going to back up a bit. We started talking about the branding side of e-com. Well, now let's talk about how the Amazon seller can use it to promote themselves. How can we get them to sell more and get recognized? And that's with multiple press releases during a very short period of time. So you've got a product. It doesn't matter what the product is. You put out multiple press releases. The press releases are linked back to rebates. So rebates are effective way right now for any Amazon seller to show momentum depending on the network, high-quality buyer score, it's very natural, verified purchase, and you can rank very quickly. Joe: A rebate for those that are not as familiar as what in the Amazon world? Norm: It’s a full purchase buy that you're buying either through a network or through an ad on Facebook or there's a lot of ways of setting it up but people are getting 100% free merchandise. Joe: Okay. Norm: And typically they'll be told, hey, go search this keyword. They go search the keyword, they buy the product, and then they get reimbursed somehow by either an Escrow account, PayPal account, or something like that but by doing that with the press releases, I find that the stickiness of the rank is probably double, if not triple. Joe: Is the rebate talked about in the press release? Norm: No. The rebate is done separately and then the keyword that's talked about or is being used in the rebate is in the press release. Joe: Okay, so how do you avoid potential penalties from Amazon? That's kind of the search, find, buy methodology, that's against terms of services. How does this get played sort of above board to make sure that somebody’s seller account is not going to be suspended or shut down? Norm: It's not against terms of service to provide the product. So I was at a conference and there were Amazon execs in there and we were talking about this before I did my presentation. So every brand does this type of promotion. Every single big brand does it. Amazon provides free products. So all we're doing is providing free product. We’re not talking telling them to go and leave a review. We're not telling them to do anything like that. They're just buying the product. Joe: Okay. So they're searching for a keyword, they buy the product, they’re going to get 100% rebate on that purchase and they get to keep the product so it's kind of nice for those folks. But those particular purchases or the searches for that keywords is stickier and it helps the organic rankings inside of Amazon. Norm: Yeah, and we've seen it. We've done it with a knife; a chef's knife, and we did three different ways. We did it with just rebates, rebates and press releases, and just press releases. Each time we got them to rank with each of them but the best by far was with rebates with press releases. And the reason why that also works, I think Amazon; I don't have the actual reason, but I think the reason it works is because Amazon loves the authority links that you get from a press release. So your press release is going to link back to your product listing. You're going to put your product listing in there and all of a sudden CNN is linking to it, Washington Post, Boston Herald, Miami Globe. Joe: Can you give me an example of a keyword that somebody would be searching for in terms of Bully Sticks? Norm: Yeah, sure, natural Bully Sticks. So in the press release we would have natural Bully Sticks, in the rebates we would tell people to go and type natural Bully Sticks. They would go see it and then they would buy it. Now, in the press release, we're talking about natural Bully Sticks and the natural Bully Sticks, that press release is linked back. There's one link that's going back to your Amazon product page. So as long as you have a link back to your Amazon product page, you're getting all these links from all the media companies. That's why that works. Joe: Okay. All right on to the other question, which is are there any particular brands and categories that work best for press releases or certain types of press releases, or does it not really matter? Norm: It really doesn't matter. If you're local, it works the best. If you want to geo-target something; again, it could go back to Amazon and they notice that there's lots of sales in areas around Fort Lauderdale that are under 350,000 people. You can target that press release by putting let's say natural Bully Sticks provide healthy digestion for elderly dogs in Fort; or not Fort Lauderdale but something that has some city that has under 350,000. If you do that, you can nail it. So you could do that with a chiropractor, you can do that with a lawyer, any service that's out there. If you've got a charity or you're trying to get the word out about something and it's in a specific area. Oh, it's golden, you'll be able to reach number one in all sorts of search terms very quickly. Joe: Are you finding micro brands, when they launch new products, which hopefully they're doing on a regular basis to keep their business growing, is doing PR something that they should or can be doing with each product launch and it's going to help those keyword rank? Norm: I talk about press releases and content marketing a lot and I'll go and I know there's one event that I went to, it was a small event. It was about 50 people. So we were saying that, hey, look at this, it’s what you can do. These are all smart people. Show them examples. Example after example what we were doing and how we achieved it. And I think one person took us up on the offer to get them going on a press release. And this is what I find is the norm. It's not the shiny object. It's not that app that everybody wants to talk about. So people forget about it and like we talked about just a second ago there's no one specific service or product. It really benefits everything. And the people that are doing it properly have always been doing it have always succeeded. The people that do it wrong and go for the cheap and just don't listen to the guidelines they do it wrong. They're the loudest. They’re the squeakiest wheel. New sellers or new businesses come online and they say oh press releases don't work. I didn't spend money on a company because it doesn't work. Joe: You bought it because it works and it's profitable. Norm: I bought it because I do it every single time and for the last 20 years, I've been using press releases. Joe: And you're helping other Amazon entrepreneurs succeed as well. And so is the answer yes that when somebody is launching new products, that they should consistently do press releases or should they be doing is it yes and that they should just be doing press releases all the time. Norm: Well, you're hitting; I say, yes, I'm a little biased because I want to build my brand. But if you're doing the product launch yes, of course, you do that with the rebates. And then you continually grow it if that's what you want to do. Like, let's say you're looking at natural Bully Sticks and you noticed that it starts to drop, you're in Helium10, the keyword drops. What do you do? You launch maybe a couple more rebates, maybe one press release until you see it come up again. Joe: And that works well, consistently. Norm: And we're talking about high eight-figure salaries that are using this technique that are working it all the time, they're maintaining it. So once the campaigns are done, they're watching it, maintaining it, and hitting the keywords when needed. Joe: So if it's working for high eight-figure sellers, is it going to work for high five or six-figure sellers as well or seven-figure sellers? Norm: As long as they use the formula and the formula is very simple. So, again, on a launch and rank, we can figure this out for you but if you go over and you use a tool like Helium10 and it gives you like the Cerebro module that they have you put in, it's called a reverse ASIN tool and you get the information, you take a look at buying keywords. It's not browse; I should explain that. Browsing keyword is like dog treat, dog chew. Pet owner doesn't know what they want but in Bully Sticks they know exactly what they want. The Bully Sticks is really high. There are 200,000 searches a month; hard to work with. But if you go to natural Bully Stick or organic Bully Stick, then you've got keywords that are manageable and you can start applying the rebates to. When you look at these; if you take a look at the giveaway side of it, you take about one-third of it. So in Helium10, there's a column that says giveaways. If it says 100 then do 33 and see what happens. And there is another trick to this and I don't want to overcomplicate it, but we take those keywords, natural Bully Stick, we call that a primary long tail and we create a silo from that. And let's say it says a thousand giveaways, which you probably would, we'll go and we'll take the natural Bully Stick, we'll put it in to find more. So again, in Helium, it's advanced filters. We put natural bullies. We hit apply and then we'll see every term, keyword term that has natural bully, six-inch natural bully, 12-inch natural bully. That way we only have to take a fraction of the amount that has natural bully in it. Those keywords, those long-tail keywords move up almost instantly and it bumps the natural Bully Stick primary. Joe: Yeah. Then you're not spending as much PR dollars, I would imagine. Norm: Not either. Joe: Yeah, that's just what I used to do in my old paperclip days back when it used to cost 26 cents to rank on a keyword like colon cleanse, and by the time I was done inaudible[00:34:18.5]. Hell no, it’s probably $10 now. I sold it. Who knows? Yeah, there are different approaches for sure. Cost-wise, look, you're talking about eight-figure sellers doing this on a regular basis. They've got people that focused on keywords and look inside a Helium10 using Cerebro as you talked about. But for somebody that's really just starting out or somebody that; I recorded another podcast yesterday with somebody that had an exit and our original call was 24 months ago and I had to be the bearer of bad news, which is, listen your business is not worth what you think it is because it's trending down. You've got to hold on. You've got to fight here. And one of the things that they can potentially do is PR and fight. But if they're trending down and money's tight and they're worried about it, is this something that somebody can afford if they're doing a million dollars a year in revenue and they've got 15% to 20% profit margins? Norm: Well, the first thing for any new seller is they've got to be properly capitalized. So if you're going into this, you have to understand what your marketing budget should be and you should be looking at it as jumping into it with two feet. If you're going into plastic shoe stretchers and you've done your research and you see that most of the plastic shoe stretcher people out, there are three-star reviews that they only can sell $3,000 a month that is probably not a good idea for you to do press releases and rebates. If you go into a competitive product or even a mid-search volume, I'm going into it with two feet and what the clincher is proper competitive analysis. Go and check out what your competitors are doing, see what the search volume is, and then you've got to do an investment. And I don't care if it's; like for us we do three things. This is off-topic, PPC, rebates and press release, and Amazon posts. If you're not doing those three, you're not optimizing your listing for your sales. So anyways then I have to jump into it with two feet. I don't have to spend cash that I have to use for groceries, but I can start by doing a smaller launch. You don't have to go in with 100,000 bucks. You can do a small launch, like maybe four press releases under a hundred, depending on the keyword, but under a hundred units and you're off to the races. And if you continue the momentum going, then you're going to be picking up. So here's what we do. We’d start off with main keywords. So if it's Bully Sticks and then we'll stray; I just did this one for carving knives or for Chef Knives. So we started out with Chef Knives, got them up like number one to number three, number one to number six for chef knife, kitchen knife then we spread it out the next month to sushi knives, carving knives and now we've got this really wide base. And over a period of one year and three months, we've got it rock solid. We've nailed it down for this company because we're constantly spreading and making it wide. Most new sellers, they look at going after the most competitive terms and they spend either on PPC or rebate's just through the nose they're bleeding money because they're just not doing it right. They've really got to know what they're doing. Now for press releases we let people go out and do their own rebates and go out and do their own press releases. And then they come back and they cry that it didn't work, this sucks. Well, let's take a look at your listing. If I had your listing on page one and we got you there and it's terrible and you've got iPhone photographs in your listing; everything is just its terrible. Then you're not doing; you're not winning the Brady bunch. If you can't win the Brady Bunch, which is beat your competitors, go out and use PickFu or whoever and do a split test then you're priming your listing to be optimized. And all what we're going to do with press releases and rebates is get you to the listing. We're going to get people to the listing. Joe: Can you tell me about your onboarding process in terms of somebody that is thinking, okay look this guy Norm sounds really smart. I want to have all three prongs here and press release is one of them. Do you have an onboarding process for somebody that really has no experience in this whatsoever, what is it like? Norm: We had to get that going because we were getting that type of experience. So we call it the AMZI concierge. So we'll go in, we'll do a complete listing on it and we'll tell you what you should improve. We can help you. We can help like with the manage listings. We can help with photography. But it's up to you. And then if we look at them there are many listings we look at and go oh, this is awesome. We'll let you know. But it's about a $300 cost and it's the best $300 you'll ever spend because at the end of it, we'll tell you no or we're going to give you the green light. And if we give you the green light, most of the time it works. It works well. Joe: I got you. Okay, this has been great Norm, how do people learn more about PR Reach and that concierge service and reach out to you to get more information? Norm: Well, first they have to spell the name right. There’s two R’s in it so it's PR Reach. Joe: PR Reach. Norm: Okay, so again I get people telling me that they’ve tried to reach me at Preach but PR Reach and you could reach me at Norm@PRReach and we’ll be; like the whole sales team, we've got an excellent sales team, great customer service. They'll reach out. They'll have an appointment. You get a free 30-minute call with them and they just go over everything just so you feel comfortable. Joe: That’s great. All right. Norm: And to make sure you're doing the right thing. Do you want brand, do you want launch? It just depends. And you don't have to be an Amazon seller, you could be that chiropractor that's looking for help. Joe: Yeah, I think it's one arm of the marketing arms that somebody should be using instead of just one or two. It sounds like a great approach. I appreciate your time, Norm. I’m looking forward to having you back on the podcast again soon. Norm: Hey, no problem. It's my pleasure. Resources: PR Reach Norm@PrReach.com Quiet Light Podcast@quietlightbrokerage.com

May 19, 2020 • 48min

How Joe Cochran Sold His Car to Buy Inventory…Then Sold His Business For Seven Figures

Joe Cochran had a rough start in life, but eventually came out on top. Through perseverance and a hard struggle, he finally has a success story. Tune in to hear our chat with Joe and learn about his process, his early struggles, and why he finally decided to sell his company. Topics: The emotional rollercoaster of being an entrepreneur. His early struggles. Launching his business with $5000 in credit. Sacrifices Joe had to make to keep his business afloat. Siphoning vs. reinvesting. How he ran his initial campaign. Which accounting resources he used on a tight budget. His competitive nature and how it drives him. Making the decision to sell. Transcription: Mark: Joe, we’ve had the opportunity to work with some pretty amazing entrepreneurs over the years and I never get tired of hearing about these success stories, especially for people that have gone through some of the dark periods of life that come out through the end. And often we get to be a part of the process when that reclamation, that coming back from some difficult times in their life comes to a head and comes to that real big victory point of an incredible exit. Joe Cochran is one of these stories. Joe: Yeah, he had his first child two days after his 17th birthday. I think that changes somebody’s life forever. He didn’t quit. He stayed in high school and he says his girlfriend at the time does his homework, helped him cheat to graduate. Mark: His girlfriend helped him cheat? Joe: Doing his homework, yeah, she did his homework. He helped in graduate high school. Mark: True love, I love it. Joe: Yeah, he worked full time. He just got out and hustled and went through some dark times after that in terms of business with his father, major debts, substance abuse, and came out the other end of just fighting and launched an Amazon business in 2016 when he had about $40,000 in debt. He thought through it and came out the other side in January of 2020 with a seven-figure exit. And as he said at the beginning the podcast interview, he said he felt like an incredible burden was lifted off his shoulders. So it’s a great story; great success story. A lot of golden nuggets in there throughout the whole interview that I did with him and just one of these inspiring people that you just got to listen to the whole thing. Joe V.: Hey, folks. Joe Valley, here from Quiet Light Brokerage, and today we’ve got another episode of Incredible Exits. This one is with Joe Cochran. Joe and I’ve been working together for I think I want to say, a couple of years Joe, in the process of planning your eventual exit or as I like to call it, training. You came to me as a referral from our good friend Mike Jackness in EcomCrew and I think you were living in one state when we first chatted and eventually moved to another. And then I think we closed the transaction in January of 2020 is that right? Joe C.: That’s correct. Joe V.: All right. Well, welcome to the Quiet Light Podcast. The first question I have for you; normally, by the way, I ask people to introduce themselves and give a little background but I want to actually just know how you felt when you finally closed this transaction. I shouldn’t say finally because you weren’t under LOI by the time we listed it to the time we sold it was 45, 60 days something like that. How did it feel? I don’t want to know about the money and that kind of zeroes and this is a seven-figure exit but how did it feel when you finally had the money hit your account and you knew that this was real and the transaction was closing and assets were transferred? Joe C.: Yeah. So, I mean, that was kind of a roller coaster, to be honest. I think since I started the business all through the business to selling the business and even shortly after selling the business, emotional roller coaster. I just think as an entrepreneur, it’s probably one of the hardest things to do is manage your own feelings and emotions around your business and what’s going on. I would say the second that I signed the paperwork, it felt like the weight of the world kind of lifted off my shoulders because a big part of my why was always to be able to provide for my family and kind of have a security if you will. That was something that is always very important to my wife and I as far as something that we strive for. It’s just having financial security and things like that so it was definitely that life-changing feeling. But shortly after, other fears and worries crept in. It was short-lived, but it did feel great. Joe V.: Yeah, life of an entrepreneur, it’s not necessarily just because you sold the business and you’ve got some money in the bank that you don’t stressing about other things. It is what it is. So your big why was to be able to provide for your family; we didn’t talk about this. You haven’t given me permission and cut if we have to but your story is interesting. You ended up becoming a dad while in high school if I recall correctly. Is that right? Joe C.: Yeah, I got my high school sweetheart pregnant when I was 16 and had my son a couple of days after my 17th birthday. Joe V.: Wow. And you finished high school, kept working, provided for your newborn family at the age of 17. You were working and going high school at the same time, right? Joe C.: Yeah. I basically cheated my way through high school at that point because I was working 30 to 40 hours a week going to school as little as possible. My girlfriend at the time was doing my homework for me, helping me through. And it was important to my family that I finished school and it wasn’t as important to me that I do, but just felt like I needed to finish that. That was my junior year when my son was born. Joe V.: How many years ago was that, Joe? Joe C.: Well, I was 17 when he was born. I’m 41 now. Joe V.: Okay. Joe C.: I don’t try to do math in public. Joe V.: When I do I usually get around but I would say 23, 24 years-ish. Joe C.: Yeah. Joe V.: So you went from… Joe C.: It’s a bit easier this way, how old is my son? He’s 24. Joe V.: I was hoping you were going to just go there. Yeah. We’re doing math instead. So you’ve gone from a situation that is the worst fear of parents that you’re becoming a dad a couple of days after your 17th birthday to 23, 24 years later, you’re having a seven-figure exit of your own business. The weight of the world lifted off your shoulders. You’re able to provide for your family, which is very, very important; a great success story. Let’s talk about your path to it. I’m going to shorten it a little bit because we just talked about that and I know that you went to work into sales and eventually with your dad in the hot tub parts business, pool parts business, and eventually exited that. But then you started this brand that you built primarily as an Amazon business. Talk about how you came up with the idea of selling on Amazon and building your brand and what that path was like a little bit. Joe C.: So when I was working for my dad, we started to get into the Amazon business model in his business probably around 2009, 2010. Somewhere in there we dabbled, didn’t really jump into it seriously until closer to the end of that business cycle. But we had kind of been playing with ideas. We started our own brand at one point in the fireplace and arts niche. And so I had some experience there, but I just wasn’t ever passionate about any of the products my dad and I were selling. I was passionate about business. I was just a student of business. I studied all the time at marketing, sales, e-commerce in general and so when I realized that he was going to sell the business and I was essentially going to be out of work and need to define and figure out an income, I started really focusing on what kind of business would be right for me? If I was going to start my own thing what would be the best model? How can I get into it inexpensive, because I didn’t have much money, matter of fact I have a pile of debt. And it just ticked all the boxes for being I want to work from home, start small and scale and potentially exit in a large exit. So I wanted kind of all those things; I needed all of those things and it just ticked all the boxes for me. Joe V.: And you’re 41 now, how old were you when you started the business? I’m going to make you do math again. Joe C.: So I started a business in 2016 so it’s been like four years ago. Joe V.: Four years ago. Okay, and how much money did you have when you launched the business in terms of cash? I know that you had a pile of debt at the time, but how much money did you pull together to make your first order? Joe C.: So I had about $5,000 on credit card that was available. Joe V.: You did it with $5,000, you had a pile of debt and you took $5,000 on a credit card to launch this business and four years later, you got a seven-figure exit. Am I doing this right? Joe C.: Yeah. Joe V.: Wow, incredible. Joe C.: I’ve had about $40,000 in debt personally. We have just started making progress with paying off credit cards and stuff because we started doing Air B&B and kind of renting out bedrooms in a house that we were renting. And so by doing that, we had started to make some progress in paying off our debt and like any good entrepreneur person as soon as I saw the light at the end of the tunnel I decided I’d took on more debt and started our business. Joe V.: Was it a success out of the gate; did you immediately start selling and say oh boy now I’ve got an inventory problem, I’ve got to buy more and keep up? Joe C.: Yeah, so I have the; I don’t know what to call it, good luck also good sense that I did develop a product that really spoke to my target market. That was kind of easy for me at the time because I was my target market. And so I simply created the solution that I thought was amazing. When I showed it to my friends and family, they all kind of agreed that it was amazing. And so it was kind of like I knew the product was great and I knew how to create the offer because, again, I was the target market. So I literally was able to craft a story that really hit home with my ideal customer. And so when I launched, it was hockey stick growth. I mean, in the first six months we broke a million dollars in revenue. Joe V.: In the first six months, incredible. For those listening on audio, we decided not to mention the brand or the buyer and things of this nature just for confidentiality purposes. But if you want a hint, go to YouTube and watch the video or go to I think it’s Quiet Light Academy on YouTube or go to the Quiet Light website ant take a look at our podcast. There’s a hint in the background; a big giant silver one way back there somewhere in the video at Joe’s home office there. Let’s talk about the how; okay, you had hockey puck growth, you said in the first six months you did a million dollars in revenue by creating a product that solves your own problem in a niche that you knew very, very well. How did you get to know and learn about Amazon; what resources did you utilize to become that person that knew how to create the right photos or videos or ads and things of that nature? Joe C.: I basically do what I’ve always done, which is tried to cheat. And at first, I bought several courses, which kind of worked. Yeah, so the first course I really bought was the Amazing Selling Machine. And then for a short time, I decided I was going to create an information product and I started thinking about doing uninvolved course on e-commerce because of course, that’s what I had experience in for the previous 12 years. I came across guys like Andrew Youderian from eComFuel. I came across as Ezra Firestone from Smart Marketer, and somewhere in there, I think in eComFuel I was put in a Mastermind with Mike Jackness and a couple of other guys. And so that was sort of my network and I bought all their products and I just dug in and followed and studied everything I could. Joe V.: So for those listening a lot of times from the thousands of entrepreneurs I’ve talked to that sell physical products in e-commerce, they’re part of a Mastermind group. And I think it’s critically important that you connect with peers either on the free Facebook groups to start off with and understand that free means free and the quality of information that’s shared there is not going to be as deep as a Mastermind group like eCommerceFuel or Ecom Crew or Smart Marketer or Ezra’s Blue Ribbon Mastermind group but there’s a lot of podcasts that you can listen to as well. Mike, at the time, did he have Ecom Crew podcast, or is that something new since you met him in 2016 and connected with him in ECF, which is eComFuel? Joe C.: Yeah, so that was new for him. He was starting to work on the project but didn’t have the podcast yet and it was just kind of an idea in the background that they’re working on. Mike was still very involved in his e-commerce business or businesses at the time. Joe V.: Okay, cash flow; what I see is when you’ve got a hockey puck growth, there’s always a cash flow problem. How did you manage to keep up with the inventory needs, which is a cash flow drain on the business? Joe C.: Yeah. So my first order I think was $1,500. I placed that order. Well, when I received that order and launched the product, I did a really dumb thing and went on vacation to my parent’s house here in Florida, which I now own and in right now. But so I came here and within the first couple of days of launch, I could see that I was going to run out of inventory very quickly. So I placed my second order for $1,500 now the vacation was five days and that happened on day one when I got here. So like I literally launched the product day two or day three after launch I came here. I stayed here for five days and by the end of that week I had to place a second; a third order. So like I was here on day one when I realized I was going to have to place another order and by day five I realized that wasn’t going to cover it and I’m going to have to place another order and I didn’t have any money. The first call to my wife for that first follow up order was like hey dear I know we just opened this new credit card for this business and we just spent 1,500 bucks but I think it’s going to work. We need to place another order, send me another 1,500 bucks. And she was like yeah do whatever you think. Joe V.: Awesome. Joe C.: And I’m behind you, so cool. So then by Friday when it was time to come home and I realized this isn’t going to be enough, I had to make that call again. And I said, hey, you know… Joe V.: Wait a minute; hold on, for all those people listening in the audience I want to just ask a question that they’re asking. You’re on vacation in Florida without your wife. Joe C.: Yeah. Joe V.: Why? Joe C.: Well, it was just to see my family. My mom and dad were here and we were both working and we’ve had this kind of Air B&B business at the house. We have two dogs and it’s just difficult for us to both leave at the same time. She couldn’t get the time off work. I wasn’t working at the time. Essentially I have my own business so it was just yeah say hi to Mom and Dad, hangout for a few days, go fishing the whole time. Joe V.: Fair enough. Joe C.: She wasn’t that into it anyway. Joe V.: All right so that third order, what did you do? Joe C.: That third order I was like, hey, the last order is not going to be enough. We’ve got to place another order and we’re going to have to like triple down. We’re going to need to spend like five grand on this next order and we don’t have it. So can you call the credit card company and see if you can get our limit raised? And she did. And she got it raised to like 10,000 and so I was able to place that third order; so really having no money coming back in yet. I mean, we’re starting to make sales. I don’t think I ever got my first payout at this point, though because it’s bi-weekly from Amazon. So I went from 1,500 to 7,000, $8,000 in and now I’m thinking, well, I don’t know how I’m going to place the next order. And so by this point, I had been communicating a lot with my manufacturer. I placed three orders now and they could see that my orders were growing and so I just called them and I said, look I need to place bigger orders but I’m going to need some sort of terms. I can’t operate without terms. You told me that I had to place a few orders before we could talk about that and I will say I planted that seed from day one. So I planned on the product being successful. I didn’t just hold and not do anything. So from the very first interaction with the supplier, I asked for terms and they said no. And I said, okay, that’s fair but what do I have to do to get terms? And they said, well, you need to place a few more orders, we need to be comfortable with each other and I said, perfect, fine, no problem. So it was a natural process at that point. I placed three orders. Yeah, it was a short period but I placed three orders. I showed that I was serious and so I said, look, I’m going to need new terms or I’m going to have to find another supplier and it really was kind of that. I don’t want to be threatening but it was kind of like hey if you’re not going to give me terms, I’m going to go somewhere else. And so they came back and gave me 30-day terms. Joe V.: So you were able to actually… Joe C.: Yeah, so it was kind of ridiculous, actually. What they are giving me was 30-day terms and I was able to renegotiate and say, yes, 30 days from the day I received the product. Joe V.: That solves a big cash flow problem right there. Joe C.: Huge. Because most places will give you 30-day terms, but it’s from when they shipped the product. Joe V.: Right. Joe C.: So I wanted it from when I received it. And I wanted it from when I received the product in full. And I say that because I was doing air shipping so I would receive shipments in bunches. So I might place one big order and I might receive 10 shipments over two weeks before I get the complete order. So I kind of knew that I was working the system a little bit, but they were happy. I was paying on time and so we were able to kind of grow using that structure. But it was only about a month later before we got into another big cash crunch because the size of the orders were growing, the volume was growing, all the money was going back and inventory as you know and it was to a point where 30 days wasn’t enough. I needed to buy more than 30 days’ supply to cover everything and it was like round two of the next challenge as the business grew… Joe V.: How did you solve that? Was it just living off your wife’s paycheck, doing Air B&B, and scraping dollars together and living a conservative financial life at home? How did you do it? Joe C.: Yeah so I have reached out to friends and family. I asked for money. Everybody told me no. I start reaching out to other investors, people that I knew that would maybe do hard money loans. All of them that agreed, which was I think, one or two said they’d do it but they wanted 50% of the business which I wasn’t willing to give up any percentage of the business. And so I just kind of scrambled. I think at one point I sold my car and we just continued to scrounge and scrape. Joe V.: I love that. I love that you sold your car; that you got to do whatever you got to do to feed the business and feed that cash flow problem. That is brilliant. How long was it, Joe, before you were able to take any money out of the business for yourself or did you in that three or four year period? Joe C.: I did and probably looking back, it was one of the biggest mistakes I made. It was siphoning money from this company versus reinvesting. I think we could have been talking about a much larger exit had I reinvested versus taking the money but the bottom line is I needed the money. And my goal still was the hardest thing. So hindsight in 2020 that’s fine but at the time my goal was financial security and not to get too far into the story but when my dad sold his business and when we had to basically move on from there, we sort of lost everything. We built our dream home. We had all the toys. Of course like good Americans we had overextended ourselves as well and gone into a bunch of debt to have all of that stuff. But when he said he was selling his business, there were no job opportunities in that area that we lived. We lived at a small northern Michigan town, there were no jobs, and I knew we were going to have to move. So we sold the house. We sold everything we had essentially. We packed up what was left into a moving van and we moved to Raleigh, North Carolina, without having any clue what was in Raleigh other than my wife had lined up a job with one of those suppliers that we had bought from the last business. So we were sort of starting over, but we had sort of lost everything and to be completely honest it wasn’t the first time I lost everything. It was the second time that I completely lost everything and went into pretty significant debt so it was a big driver for me; it was to get financially free. And to me at that point, I was also following a guy named Dave Ramsey, I was following his debt snowball and so my number one focus was get out of debt. And so I was pulling money out of the business to pay off cars. I didn’t buy myself another car until I could pay cash for one. I didn’t buy a house until I could a big down payment down because we were renting at the time. When we bought a house, we bought a five-bedroom house for me and my wife and we rented out three bedrooms. And so we just kind of continued that path of doing whatever we have to do and it was super uncomfortable living with people really sucks and it’s really tough on a marriage. And running a business is tough but you just keep working and finding your way through it. Joe V.: Now I understand why the feeling; and this is why I ask about how it felt when you sold the business when it’s finally done and you said the weight of the world was lifted off your shoulder because you’ve gone into debt, the wrong way two times and you’ve got Air B&B to strangers coming to your house and taking up three bedrooms while trying to run a business and survive a marriage as well. So congratulations on fighting through it all and doing whatever it takes to succeed because that’s the bottom line. You know I’m mentoring a couple of entrepreneurs from a local college now and they’re 21 and 22 years old. And one of the conversations I had recently was that they need to file for a business and incorporate and one said it’s $300 and they don’t actually have the money for that and I’m like suck it up. Look around your run and sell something. You can scrape together $300. You’re not going to ever become an entrepreneur if you can’t do what you did, which is anything you have to do to survive and sell your car and credit card loans and whatever it takes to do it. And you did smart; you had a business that was already taking off so that’s good. I want to talk about two things. I want to talk about the first few days of how you put together a launch and how you learned to do that and launched the business but I also want to talk about your goal. So let’s talk about the launch first. What marketing techniques did you use or put together and what would you recommend to others in order to put that initial campaign together? Did you spend money on advertising, did you just do organic traffic, did you do outside traffic; what did you do? Joe C.: Yeah. So it wasn’t what I would consider very sophisticated. I was, again, kind of fortunate that the market that I went into was not highly competitive. The listings that I was competing against were very poorly created in Amazon so my listing from day one just crushed everybody. And it was just before this particular market got a lot of competition. As a matter of fact, my product is what launched the competition in this category and now there are thousands of competitors that are highly optimized and it’s very challenging to get in to. But when I first started it was very easy to beat all of the competitors in that space. And so all I really did was run ads. I ran some Facebook ads, but mostly it was just Amazon ads. Joe V.: Facebook ads to the Amazon store or to a specific keyword or something like that? Joe C.: Yeah, mostly Facebook ads went to my own website. I did have a Shopify store and I had some Google ads that were going directly to my Amazon page and I had the Amazon ad platform and Amazon ad platform was the big driver. The Google ads did a little bit. Number one, what they really did, though, is they helped the page get a ranking for the keywords that I was targeting. Joe V.: Get ranked on Amazon or in Google? Joe C.: In Google. So after we launched that product, it was maybe two months until our Amazon listing was the number one listing for our target keyword. Joe V.: I got you. Joe C.: So there were strategies like that that I learned so that was conscious. I didn’t do anything super sophisticated with the launch, though. I didn’t have an audience. I didn’t build an audience beforehand. All things that I think are necessities now with the competition being so much higher than it was then. Joe V.: Yeah. Joe C.: But yeah, at the time it was not a super sophisticated launch. Essentially what drove the revenue was the Amazon ads in their network just going direct to my page. Joe V.: And in a not necessarily highly competitive space at the time; it is now because you created the niche or the better niche as you will. All right, let’s talk about your goal. You and I, I want to say we first chatted in 2018 and you were living not in Raleigh at that time, but you were living on the coast of North Carolina. How important is it in your opinion for an entrepreneur to learn about again, get trained on what it takes to sell your business; that exit path, and to set goals? How important was it for you and how important is it on the priority list of things to do for entrepreneurs, in your opinion? Joe C.: Yeah, so I think the best time to think about when you’re going to sell your business is the day you start planning to launch a business. And the second-best time to do that is right now if you haven’t done that. So the earlier you can start the better. And a lot of people, in the beginning, it’s difficult because you have so many other fears; fears that the business isn’t going to be successful, I’m going to launch it, and I’m going to get traffic and so many other things in your mind that’s taking up space. It’s hard to think about how I am going to sell this business down the road but you don’t have to put a lot of time in the beginning, you just have to know that eventually, that’s where you want to go. And so when you know that and if you know how to structure that business for sale then you’re just going to be starting off on a much better place. So I got the privilege of watching my dad go through a sale and I did get to listen to him complain about all the things that were going on with the sale like oh we had to clean up the books. And that took three months to get the books cleaned before they can even move forward with the due diligence properly. And there were so many aspects that were kind of snags for him to actually get that exit. So I kind of have the benefit of watching what he went through and realized day one, I need a CPA. I need somebody who’s going to watch this money because I know I’m not organized enough to do it. So literally, I launched the business within the first couple of weeks when I saw I was going to be a successful product I hired a CPA. Could I afford to? Not really but I knew I had to do and I know I really couldn’t afford much. Joe V.: What did the CPA do for you? Because I always say the bookkeeper manages your books on a monthly basis, the CPA files your taxes. In this situation what did the CPA do for you? Joe C.: Yes, so the CPA did a combination. My wife ended up eventually taking over the books when she was able to leave her job. Joe V.: Did you use QuickBooks or Xero? Joe C.: QuickBooks. Joe V.: Okay. Joe C.: Yeah, and we kept pretty simple. So it was the CPA was more important of just setting up QuickBooks for me so when they charged the fee it was ridiculously cheap, really. They charged a fee to just set up QuickBooks and then once it was set up, my wife could do the bookkeeping. So they weren’t expensive in the beginning. I still couldn’t afford them but it wasn’t expensive. And so I remember like literally at that time I was like whoa they’re going to charge me 50 bucks a month or something. I don’t know if this is a good idea we can’t afford that. We have to go elsewhere when I say we can’t afford it. That was my mindset, my frame of mind. But I was happy I did it. It helped us get started on the right foot. The QuickBooks was really pretty clean from day one. The business was not complex anyways so it was I think a good move. But the more complex you are the more important that is. And just those small things like planning to be successful is hard when you’re not successful yet. But it certainly, I think in my case, paid off to start that way. So a CPA or a bookkeeper or somebody that can help you if you’re not good with it was important. If you’re great with it, you can do it all yourself. That’s fine. But you’re going to be doing many other things you got to figure out where it makes sense to spend your time. Joe V.: Yeah, I think it’s really important to do that bookkeeping part because like you say it snags at the end. If you wake up one day and decide, okay I’m ready I want to sell my business but you haven’t done your bookkeeping, guess what? You’re not ready to sell your business. You’ve got to do that bookkeeping and get it done right in order to exit the business. Joe C.: You might be ready to sell but your business isn’t. Joe V.: Right. Yeah, so if you’ve got a seven-figure business, even if it’s six figures, if it’s only $100,000, there’s someone out there in the world that has worked very hard to save $100,000 and they are going to buy your business. They’re not simply going to look at your merchant processing account or your seller account and say okay, yeah, here’s the money. You really need to have your financials together; vendor invoices, cost of goods sold, all of this stuff, cost of goods sold on an accrual basis people, really, really important stuff that has to be done in order to exit without those snags. You can always sell, but you’re going to be able to sell for more if you do what you did which is 18, 24 months in advance we started having conversations. And each time the value kept going up that we had conversations. Let’s talk about that for a minute because I always say let’s reverse engineer your path to success. Set a financial goal and a happiness goal; happiness goals and setting financial goals. Thank you, David Wood, for the happiness goal. I think it’s really important. Yours, Joe, was a huge burden off your back that made you happy and you go fishing now and enjoy it without thinking about the debt that you had because you don’t have any. So happiness goal, financial goal, and then reverse engineer a path to that. Sometimes it’s 12 months, sometimes it’s 24. You can’t do that successfully without knowing the value of your business today. You can’t do that without having good financials. So it all is interwoven together. But your financial goal, if I recall, moved. You set that goal and then you moved that goalpost a little higher or further down the road. Can you talk about that path? Because you had I think you said $40,000 in debt when you started this business and then you took more debt out eventually. Did you pay off your debt while the business is growing and that’s the money maybe you shouldn’t have taken out because you followed Dave Ramsey’s program, which I think is brilliant too, by the way, and then what was your mental process for setting that exit financial goal and once the value of the business was there did we list it or did you move that goalpost further down the road? I honestly don’t recall the details. Joe C.: Yeah. So starting the business, the goal was man this would be cool if I could pay a car payment or something like that and we got to that part pretty quickly. And then, of course, again, you move the goalposts constantly, right? So, man, it’d be cool if we could make a house payment. And then it became, man, it’d be cool if we could pay these cars off and pay off our credit cards and boy it’d be really cool if we could pay off our mortgage and over that first two-year span, we accomplished that. And so when I started talking to you, I don’t think we can quite pay off our mortgage yet but we were debt-free otherwise. We were just working on our mortgage and that is the money that I was pulling out of the business. And so when I started talking to you and started talking about exit, it was actually during the time that we had had a big hiccup in the business, a big stumbling point and I was frustrated and I just wanted to be done and I didn’t know how I was going to do it. But after speaking with Mike first, he recommended I speak with you. And so that was kind of our first introduction and you stomped on my heart. You said you’re not ready. Your business is in a very bad position right now. Joe V.: It must have been trending down at the time. Joe C.: It was trending way down. This was essentially right when the mass competition came on board. I went from having no competitors to one or two to hundreds. And I’ve come to find out a big part of the reason for that is that Amazing Selling Machine used my product as an example in their course. Joe V.: Oh wow. Joe C.: And I reached out to them and said, hey, what the hell, guys? You know I’m one of your students, right? And they were like, oh, we didn’t have any idea you were a student of ours, sorry, we won’t do that in future releases but what’s done is done, you know. And so they’re like the biggest Amazon selling training course out there. Joe V.: Yeah. Joe C.: Literally overnight we just had hundreds of people copy our product and hit Amazon. And the business started to tank as far as our revenues it really started to go down. I was burned out at this point. I was frustrated. And I was hopeful for whatever reason, I was going to be able to still sell for some big number. And you were like no, it’s not going to happen. If you sell right now, you’re going to give it to somebody. Joe V.: Yeah. Joe C.: What you told me was you’d be better running it into the ground then you’re just not going to get what you want for yourself. Joe V.: That’s right. Take as much money out as you can and let it inaudible[00:38:34.4] Yeah, those are hard conversations when I’m telling you that, being relentlessly honest as we say at Quiet Light and not tell you what you want to hear. Joe C.: But you know what if someone was my, I guess, drive that was what I needed to hear because I realized again if I wanted to hit my goals of having that financial security, I couldn’t just give up. And so that turned me around. That turned me from being down and being depressed to being pissed off and realizing you know what, you’ve gotten this far, you can beat these guys that are just starting and you’ve got two years off. Figure it out, quit worrying about what everybody else is doing, and figure out how you can win. And so, I mean, it was literally I think we hung up the phone and that shift in my mindset happened and I just went right to work on how am I going to fix this, how am I going to beat these guys? I’m very competitive. I played hockey my whole life growing up. I’m just super competitive. So when that shift happened from kind of loser to, hey figure it out; yeah, we were able to turn it around. And so it took about six months to get back to that number one position and back to where the revenue was decent. That took about another six months before we were where I felt we should be in terms of the revenue. And to your credit, you reached out every quarter or so to check in on me and that was always super helpful because it just reminded me of the goal. And so sometimes it’s just so easy to get caught up in everything that’s going on in your business that it was great to feel like I had some people in my core. Mike was another one that I could reach out to at any time and he would jump on a call and talk me off a ledge or give me some input. So having those resources to be able to reach out to when things aren’t going well is just; I don’t know how else to put it, it’s just super valuable. Yeah, so it took about a full year to really; it took six months to basically turn things around, it took another six months to gain back what we had lost in sales and get back to where it felt like we could potentially exit. Then we had another call and you said okay, good, now you need to run it for another year. Because I was like oh great, we’re back, now we can sell it and you’re like hey man, you need a trailing 12 months at this level if you really want to sell it. So you crushed my heart again. Joe V.: I am sorry about that. Joe C.: But the reality was; no, it’s fine because things were good. And so I was up and I was just like oh yeah okay, fine. I can run it for another year. Maybe I can even grow it a little bit. So that’s what we really focused on and pushed through. And so you started that question really with what kind of got you there and what made the decision to actually sell? And that was literally hitting like the 10 month part period where for 10 months nothing went well. That’s literally what made me realize we need to list this in because you told me, hey, you need a trailing 12 months of solid numbers and then you’re good. At 10 months I was like, holy crap we’re two months away from that. There’s nothing in the forefront that makes me believe that we won’t hit that. Let’s call Joe. So I reached out to you and boy, what an interesting time to make that decision, right? Because look what happened just a few months later. Joe V.: Yeah, we closed; we’re recording today on April 13th, 2020 folks and we ended up listing the business in mid-November, headed under LOI within two or three weeks, chose to close in January for tax purposes. Good for you, Joe, because you had moved to Florida, partial tax year down there, no taxes on state level and then, a grace period of another 15 months before you had to pay your taxes for the sale. Yeah, and then COVID hit. So I think in your niche sales probably went up though but still, the world is incredibly unstable and maybe better of peace of mind that you sold versus holding on. There are a lot of folks that waited and now have to wait even longer to see relatives come back. It’s a tough situation all around. Joe C.: And you know it doesn’t matter that your business does well in these times because if you can’t get inventory or you can’t get inventory on Amazon, you’re still not making sales so there are so many challenges. And the other challenge is that I lived with; lived and breathed every day, day and night I mean, so that decision to sell was based on a lot of things. But yeah, it was definitely the right time and it worked out well for me and it gave me the freedom to now look back and say okay, what did I do, what made that successful, how can I repeat that in my next business, and how can I do it even better maybe? For me better means a better lifestyle. I don’t want to do it again and work the way that I worked and worry the way that I worried before. And surprisingly when you have some money in the bank, a lot of those worries do go away. A lot of things do get easier and so now the big thing is make sure you don’t make a big, stupid mistake because you’ve got money to spend and go about it like a clean start up again and remember what it takes to do that and then start from that. Joe V.: Great advice all around, I love your story, Joe. What is your next adventure, any clues or hints that you can give us? Because if anybody out there is in the audience that might have an interest in it or can contribute to it in any way maybe they’ll reach out. Joe C.: Yeah. So what I kind of took away from my last business is that being passionate about the products for me is important. Some people are just passionate about business and so they don’t have to really be passionate about the product so much. In my last business, I was passionate about the business, but I was also passionate about the product. And even more importantly, and this is just through self-reflection that I kind of realized recently I was passionate about my customer and I was passionate about that customer getting success. And so for me, it was realizing that it’s not just the business, it’s not just the product, and it’s not just the customer. It was kind of a combination of those three things that I think helped push me through the hard times. Because there were so many more ups and downs that we didn’t even get into that if you’re not passionate about something within that, you’re going to struggle. And for me, if I wasn’t passionate about all three of those things, I might have faltered. So as you said I’m a fisherman and I’m looking in that market and seeing where I can contribute my value. And so I just registered a new trademark last week and we’re starting on working on those offers and seeing where we can beat the competition. Joe V.: Excellent. Well, I look forward to having you back on the podcast and telling that story of your next exit although you’ve just started; you’ve just begun. Thanks for sharing your story, Joe. It’s amazing going from being a dad at the age of 17, 17 in two days, if you will, to a seven-figure exit 24 years later, supporting your family and getting a big burden off your back and living debt-free. Congratulations. It’s been a privilege working with you and an honor to know you. I look forward to getting out of Florida and maybe go fishing with you someday personally. Joe C.: Absolutely. Well, I appreciate all your help as well and I look forward to being back. Joe V.: All right man, talk to you soon. Resources:Quiet Light Podcast@quietlightbrokerage.com

May 12, 2020 • 42min

Negotiating Terms With Suppliers to Save Cash Flow with Dan Ashburn

On today’s episode of Quiet Light, Dan Ashburn joins us to discuss negotiating terms with your suppliers. Dan is the co-founder of Titan Network, the Mastermind for Amazon sellers, the China Magic, the immersive Mastermind discussed in another episode. Tune in to pick up some awesome tips about how to save cash and boost the overall value of your business. Topics: How he came up with this concept. Why face-to-face interaction is important. Forecasting sales, inventory requirements, and pay-out per unit. Using market data to help with forecasting. The formula/numbers Dan uses. Making sure your offer is win-win. Timing your requests. Having perseverance when it comes to your requests. Traveling to China. Transcription: Mark: Shortly after you buy a business, you’re obviously looking for any opportunities to increase your return on investment. Sometimes that’s through growth, sometimes that’s through different ways of cutting expenses. But oftentimes looking at your suppliers and the terms that you have with your suppliers can be an easy way to free up free cash flow or get better terms or be able to even get different rates. But how do you go about actually negotiating those terms? How do you approach the suppliers, especially when the relationship is new? If you’re on the sell side, the same sort of questions applies; how do you approach suppliers in a way where you can increase your return on investment by negotiating better terms? Joe, I know you talked to someone about this and have some good tips here. Joe: Yeah, Dan Ashburn from Titan Network. You know what? Just in the podcast, I’ll just tell you right now, Dan goes through a step by step process to basically walk people through what to do, how to do it and get better terms with your supplier. And the ultimate result, whether you’ve got a straight-up e-commerce business, a Shopify store, or an Amazon business, or whatever it might be, even retailers that are out there importing from overseas. I hear it over and over again that when you make the right connection in the right way with your supplier, you can get better terms. The end result is more cash flow. More cash flow means you’ve got the ability to buy more inventory as you try to keep up with growth, which is often a good problem to have. But Dan talks about it quite a bit in there. And the piece that is forgotten and not all that talked about is people are always trying to drive top-line revenue. But if you can negotiate better terms with your supplier and then get a better reduction in the cost of goods sold, it’s going to boost your overall value as well. Joe: Hey, folks, Joe Valley here from Quiet Light Brokerage, and today, I’ve got Dan Ashburn on the line with me. Dan is the co-founder of Titan Network and I think China Magic as well amongst another a number of other pretty fancy titles and credits to your LinkedIn profile here that I’m looking at, Dan, but that’s as far as I get with fancy introductions so why don’t you tell the folks that are listening about yourself and about your background and what you do? Dan: Yeah, sure. Thanks for having me, Joe. So, yeah, I’m the co-founder of Titan Network Mastermind for Amazon Sellers, co-founder, and co-organizer of China Magic, which is a trip where we take 100 people twice a year to source products over in China. We’ve taken over 500 people now and the co-creator more recently of Amazing Selling Machine. And then my team and I are responsible for delivering eight figures in sales on Amazon per year through my brand management agency. Joe: That’s an awful lot. How do you do all that and not lose all your hair? You got a nice head of hair there. So this is a prod for people to go to the YouTube channel as well. Dan: Yeah, for sure. So I have a good team around me. I’ve got a good management team. I’ve got an executive assistant who makes me look really good. And then, yeah, I just got good people around me so it’s pretty cool. Joe: Okay. There are not a whole lot of Amazon sellers that we have on the podcast and that I deal with on a regular basis; I’ve been doing this for eight years that have a beautiful British accent. So tell me about that aspect of it. You’ve got; I don’t know how many you said in terms of Amazon sellers, 1,600 that you work with or something like that. How many are typically US-based versus Europe based? Dan: Yeah, it’s a great question. I’d still say the majority of the market is in the US. I’d probably say it’s a 70/30 split right now. However, Europe is growing and it’s growing fast as markets like Germany, etcetera pick up. And if you combine the combined sales volume of Europe to the US, then it’s a good opportunity. And Europe is definitely picking up. A lot of the Europeans are obviously using US as their main channel as the US seller are then coming out over into the European market to diversify. Joe: Okay. So a quick side note before we get into the meat of this discussion is that Amazon has just made it a whole lot easier to transfer a European seller account. So that’s real positive news. It doesn’t necessarily have to be a stock sale anymore. It can be an asset sale and it’s easy to transfer so positive stuff there. But today we’re talking about a little bit of your China Magic experience and your China experience in general and negotiating terms with your suppliers to improve cash flow and to improve your bottom line and boost valuations, which is a breath of fresh air because you can’t; you wrote that line when we talked about it because most people don’t think about valuations when they’re working with suppliers and things of that nature but you do. Dan: Yes. So you’ve had Scott Dietz on a number of times now. Scott was very much a mentor of mine over the last few years and something Scott really instilled in me is what’s good for selling your business is good for building and running your business. So installing that, combined with the challenges that I come across so many sellers have; there’s one thing in this business that stops growth and that’s cash flow, its cash on hand. We all know there are only three ways really to grow the business, sell more of the same products, sell additional products, or sell the same products in new marketplaces are really only the three ways. All three of those ways take cash and they take cash flow. So we very quickly; my team and I launched this, my team and I really set our minds over the last couple of years to how do we solve this problem for the accounts that we’re involved in, the brands that we have stakes in, and the people that we’re working with across Titan Network, China Magic, etcetera to really solve this problem. And that’s where this working with a supplier to fund that growth, that whole concept really came from. And I’m really proud to say that the last year or so, the last 18 months, we’ve been getting some pretty impressive results where suppliers are letting us go north percent down, 10% on shipment, 90% two or three months thereafter so it’s really positive. Joe: One of the things I hear often is, yeah, I just got back from a trip from China. I was able to do this. I’m getting better terms here. I reduced my cost of goods sold here. I ate way too much and drank way too much and I feel like I’m a member of their family now. Is that what everybody has to do? Do they have to get on a plane and go to China to meet the manufacturer and supplier or is it just something that helps but there are other ways to do it? Dan: Look, there are other ways; there are always other ways to do it. You can get this done over a Skype call or a Zoom chat like we’re having now but if you’re serious about growing the business and you want to go in and get the times that you want, then every time in every case, physically being there in China in the room, staring the person in the face, building a real relationship with that person gets the better result every time. And where we’ve had a good result virtually, it’s always been as a result of following up physically with someone. So we’ve already been earlier in the year or we may be met them at the last Canton Fair but there’s always been that physical interaction. And I think what people underestimate about China is the business culture out there is relationship-driven. It’s all about building that relationship. It’s all about going and having that male drink and some of the alcohol stuff that they put in front of you to really build up that relationship. And there’s so many benefits to that relationship much further beyond payment terms and cost of goods sold even down to stuff like it’s coming up to Chinese New Year that productions run is full. And because you have that relationship, they bump you to the front of the production line, which keeps you in stock. Joe: So let’s get to specifics for the audience then. For people that are; and talk to them as if maybe they’re your clients, they may be somebody that just bought an Amazon business from Quiet Light Brokerage or they’re somebody that listens and is getting expert advice from folks like you. What are the first few steps that somebody should take? And I know this is general information for general people, specific would be if you were talking to one. What do you advise somebody to do? Dan: Okay, cool. So first off, we need to understand what terms do we need to achieve and what are we aiming for? What’s our goal? So the first steps or so of executing this process before you got to China or before you attempt to do this virtually is we need to put together a sales forecast. We need to understand what am I expecting to sell over the next 12 months and include uplift for Q4 based on historical dates or if you’re selling seasonal products, make sure you’re including all of that uptick and then break down what you plan to order. So once you forecasted those sales, understand what inventory requirements you have and what your current order rate would look like with your supplier over the course of that year. Then figure out with that information what is the payout per unit on your sales? So you need to calculate the Amazon payout per unit after all fees and marketing costs. So within our brands, we work to operating 10% advertising contribution or true A-costs whatever you want to call it. And we factor all of that in and we figure out after storage fees and etcetera, what is our P&L per unit? Joe: Did you say 10% advertising; is that what that was? Dan: Yeah. So as a PPC contribution, margin, or a true A-cost; whatever you want to call it. Once we’re out of the launch phase and we’re in some maintenance we factor in a 10% margin for advertising. Joe: It’s great, we do key financial metrics anytime we list a business for sale and typically see the ad cost somewhere in that 8 to 12, 8 to 15% range so 10% is a good number. Before you go on too far, so you’ve talked about doing a sales forecast and of course, that leads into inventory need forecast. The question often comes up, what’s the best software if there is such software for inventory management and sales forecasts? Do you use some or do you create it with Excel spreadsheets? Dan: So we keep it simple. We do all of this in Google Sheets. We have adopted a new inventory management system and I’m pretty impressed with it if you wanted to talk about that. But we do all of this in a basic Google Sheet template. And if you want, Joe, I can have that template sent out to your subscribers. But yeah, we just use a Google template, we use a Google sheet and we just manually plotting in numbers, manually forecasting out. It’s nothing fancy. If we want to work with someone at more advanced than we’ll offset pull in an accountant or a bookkeeper; someone that’s more savvy with the numbers. But we’re just using historical data to forecast the future 12 months. Joe: And you’re pulling that data from Amazon or from QuickBooks; where are you pulling it from? Dan: Yeah. Typically, depending on the account that we’re working with or depending on whether it’s an in-house brand or a joint venture type relationship, we will take the initial data from Amazon. So we’ll take your initial sales data. And then if we can sanitize that data with actual validated bookkeeping records, then obviously we will do that. But for the sake of this exercise, it doesn’t need to be 100% accurate. This is a forecast and everyone knows; I think what everyone gets is they get that analysis paralysis on forecasts. Because I think what if I don’t meet the forecast or how do I know what it’s going to sell? You’ve got to take the best guess and if you haven’t got 12 months of trailing data, go use tools like Keeper to look at your number one like for like competitors trailing 12 months of data. Just use data in the market to be able to inform your own self forecast. Joe: So doing a cash flow forecast or I’m sorry sales forecast leads into what your inventory needs are. You’re doing that in Google Sheets and what’s next from there? Dan: So before we can move onto the next stage, we then have to figure out what our payout per unit is, because these three pieces of data, the sales forecast, and the inventory need forecast as you call it, and then the payout per unit factoring in a rough 10% advertising contribution. That gives us all the information that we need to be able to produce an accurate cash flow forecast. So what sellers I find out doing most that aren’t taking on external cash or external funding, they’re kind of running on this system of hope. They kind of think or hope they’ll have the cash in the bank for the next inventory order, but they’re not really forecasting enough ahead to say, will I have enough cash on hand to be able to fund my next inventory order to meet demand of growth and not run out our stock at the same time? But without those three data points, without knowing how many you’re going to sell, what inventory you need to meet that demand, and what your cash payout per unit is, you can’t put together a cash flow forecast. So once you’ve got those three data points, we then put together our cash flow forecast. So to give you sort of a demonstration of this, we base it on our current term. So let’s say typical terms, 30% deposit, and 70% before shipping. That’s pretty much most the market. Joe: Pretty standard. Dan: Yeah. So we will forecast our cash flow based on those terms for the products that we want to negotiate. So you might have one product with a supplier or you might have 10 but you just do it for the group of products that you’re talking about with the supplier. So we’ll have the sales forecast at the top of that cash flow forecast. Then we’ll have a payout forecast which is based on sales. It’s just that payout per unit multiplied by the number of units we expect to sell in that month. That gives us our total cash pile for that given month. We then factor in some fixed costs. So things like employees, software, training, salaries, costs that we know we’re always going to have. And then we might factor in some ad-hoc costs like travel conferences, going to China Magic twice a year. God, I’m plugging that. So we factor in those hard costs and then that gives us a forecast month by month, January through December. If we go for the annual calendar year of what our cash on hand looks like. Then we just have to plugin based on what we know we have to order what cash output; what cash outlay do we need to factor in based on 30/70 payment terms. That then gives us an accurate view of where we’re going to have a deficit on cash, where we’re going to be up on cash, and what that looks like for the next twelve months. Does that make sense? Joe: It does. You sound like a grown-up here, running a business with real numbers and doing some analysis. Dan: I’m trying to. Joe: Congratulations. And that’s what you teach the folks at Titan Network as well. You’re going through this with them Dan: Yeah. Joe: And do you produce video walkthroughs on how to do this with examples? Dan: Yeah. So we’ve got like the whole step by step. Within Titan, we have something called masterclasses and we’ve got an entire master class on supply payment negotiation with all the templates, negotiation, soft scripts, ways of approaching; I’ll give you some secret sauce in a minute but even like a presentation that we use to present this information to the supplier, all of that is all inside of Titan. And our Titan members; I mean, the results that we’re getting, someone got a 50 grand credit line off the back of this. Joe: Wow. Dan: I can’t count how many now; it’s got to be 20, 30 members in the last few months alone that are getting terms, even just improved terms like 20% down because the raw material costs are quite high, but then they’re not paying 40% until 30 days after shipping and the remaining 40% until 60 days after shipping, which means they’ve been selling the product likely for 30 days before that balance is due, which just opens up so much opportunity because you can afford to sell more product cause you can order more inventory. You can afford to expand into new markets because you can afford more inventories. Or you can afford to launch new products. And for anyone that’s doing some serious money in this business, they know launching products is the fastest way to grow it. So, yeah, I mean, the results are quite stellar and we’re doing some good things in time for sure. Joe: It’s all good stuff. Everybody listening certainly needs to do it if they’re not doing it now. So once you’ve got all this information, the forecast and estimates and things of that nature what do you do with it? Dan: So once we’ve created that cash flow forecast based on our current terms, so 30/70 we then produce a second forecast and we play around with those terms. So the example of I’m looking as a reference in front of me here is 20% deposit, 35% 60 days after shipping, 45% 90 days after shipping. And this is actually a live case study on one of the ASINs that we run. So we will adjust the cash flow to the new terms to then demonstrate what that does for our cash flow. And at this point, this is all internal. This is all internal reporting, preparation to support and enable the negotiation. So I know here, just look, I’ll read us some numbers because obviously, I can’t cast the screen. On our 30/70 our cash on hand column across the bottom January was in this example 5,000, February is 3,000, March goes into a 2,000 deficit, April goes into a 4,000 deficit because we’ve paid out that 30% deposit on this inventory order. Joe: Can you just with those numbers do you have a ballpark total revenue figure as well? I’m just curious. Dan: Yeah, we do. So down here we’ve got a total payout figure in this example because we haven’t got the retail cost in here. We just track basically what cash flow we receive from Amazon so it’s on the end of the column. But if it scales up; this was an example of a new product launch achieving 300 in the first month to a thousand units in the 12 months; very, very conservative forecast. Joe: Okay, so what happens when you flip this to the new terms that you’re trying to achieve? Dan: So interestingly, the cash outcome; so at this point, we’re not forecasting what additional inventory we can get so the cash outcome at the end is the same. So December, for instance, in the 30/70 on this example, the cash outcome for December, cash on hand sorry is 79,000. It started at 4,000. In the after states 20/35/45 again it’s 79,000 at the end of the year in terms of cash on hand. But the difference is I don’t have a single deficit in my 12-month run because I’ve been able to achieve better payment terms. So that’s sort of step one of this process, cash flow forecasting existing terms and saying where your deficits are and then making sure that you can negotiate payment terms that mean you never run out of cash. You never need to go into any credit line, credit cards, any sort of equity or debt financing, because you’re always going to have positive cash on hand to fund the growth of your business. Joe: So what do you have to say to those people that are listening saying, okay, I got this, I’m just going to ask for these better terms and they don’t do this work and they don’t do a presentation the way that you want, what it is their supply going to say? Dan: It’s funny, actually, because one of the things we normally go to; this is a typical role play and if I ever talk about this on a stage and you lied and or anything like that, this is how it typically goes. You send an email that goes, hey, I need some better terms. Can I pay you the balance after shipping? The supplier email backs no. You sit there drinking FML like, what am I going to do? Yeah, most people just go give me better terms, a supplier goes no. And if you think about it, these factories; these suppliers, how many brands are asking them daily? How many of their customers because they’re supplying hundreds if not thousands of customers. Joe: Yeah. Dan: I’m just saying give me better terms. I hope you sat there as a factory owner going well what’s in it for me? Joe: Right. Dan: You have to answer that question of what’s in it for me. It’s got to be a win-win relationship. Joe: Let’s get to it then. The next stage is I mean, obviously, you’re seeing so no deficits, which is great. The entrepreneur is sleeping better at night. They’ve got a little more cash for themselves, but also cash to probably buy more inventories which is what’s in it for the vendor, right? Dan: Absolutely. So with everything we do, we have to approach these relationships as a win-win deal. Having been to China more than a dozen times now, I’ve taken over 500 people. I have been involved in a number of these negotiations at lower levels and much higher levels. It is all about the relationship. It’s all about the win-win. And you have to present what’s in it for them. Why should they risk that workflow, their cash flow? Because I sense you’re asking them to fund your business. Why should they risk that inaudible[00:20:16.2]. So the outcome for everyone has to be a benefit. So the way we do that is there’s a five-step process to presenting a win-win. And this is what we break down into a presentation and we’ve got templates for etcetera. So Step 1 is the opportunity and the conversation that you’re trying to get across is there’s a big opportunity to make more sales. That’s kind of the message you’re trying to get across. And the reason it’s better to do this in person as well is you can take; if you’ve got like a logistics manager or sourcing agent on the ground. All of our Titan members benefit from Titan sourcing, so we provide this to them on the fly. But yeah, if you’ve got that on the ground, you can then have that person translate but also be like an internal ambassador for this process. So step 1, the opportunity. There’s a big opportunity to make more sales. Step 2, the challenge. The challenge is I can’t order enough inventories to fund and meet the demand of my growth because of cash flow. And that’s the challenge that you need to communicate. You can’t fund your growth because of cash flow, and that’s limiting your ability to grow because your sale is outgrowing your cash impact. I lose sales and as a result, the supplier, the factory that you’re dealing with is going to get smaller orders. The solution is better terms so we can order more inventories. The whole objective here is better payment terms, more cash on hand, and allowing you to order more inventory just to grow faster; to compound that growth faster, the benefit, larger orders for the supplier, more sales for us. So that’s kind of the five-step story that your supplier, your factory really needs to understand from this process. I’ll read… Joe: Read them off. Yeah, you were just going to do it. Yeah, read them off real quick one more time. Dan: Opportunity, challenge, impact, solution, benefits. So they really need to understand each one of those points and then we’re going to break down exactly how we do that. Joe: Okay. So look, I haven’t been to China before and I want to ask you about that a little bit, but I know that there are benefits for the manufacturer because you’re going to be placing more orders. What’s their recourse if you don’t pay on those notes or is the risk so low because you’ve been there, you’ve met with them, didn’t rush on building a relationship. Dan: So you’re not going to get this sort of payment terms on your first order. We have, however, had a number of success stories on their first order, even just slight movements like 20/80 on the payment terms or a slight reduction in COGS because we’re guaranteeing more orders. We are getting some traction on first orders. This is more for sellers who are probably more your audience, Joe, who are sort of gearing towards exit. I’ve got an established relationship inaudible[00:22:54.8] the second to third order is kind of the sweet spot that you can start bringing this up. And if you bring it on early in the relationship, every time you place a bigger order, you can revisit these terms, you can revisit the relationship. So for the factory, yes, of course, there is risk involved, but they’re weighing up the relationship with you and there are other insurances and stuff that you can bring up without getting too technical. You kept their eyes on ways of ensuring the order and stuff which can give a lot more confidence to the supplier but we don’t do that most of the time. It’s just purely based on the relationship and your order history. Joe: Okay, so any more steps after the 5 that you talked about there? Dan: Yeah there is. So that’s the story we’ve got to present but when it comes to actually presenting that you’ve got to back that story with data. So they have to believe you and they need to see the numbers for themselves to tick that logical box. You’ve ticked the emotional box, you’ve got the relationship. They believed your story. Now you’ve got to present the data to back your story. So the six-step process to presenting the win-win, one is the growth potential, two is a product by product sales forecast. So that forecast to we produced in the beginning, we’re just going to take the sales aspects of it and present that in a nice presentation. We’re going to then present the order values to meet that demand and we’re going to show them the before and after. We don’t get into showing them the internal cash flow or the profit or anything like that. We just show them on the current payment terms this is what we can afford to order, on the new payment terms this is what we can afford to order. And what they’re going to say is an order of say, 5,000, 10,000 units but with the new payment terms, I might be able to order 20,000, 25,000 units. So they’re going to see a drastic change in the volume of units that you’re able to order if they just work with you on the payment terms. Now, once we’ve done that, there’s two other points. We always present what out of stock means. So most factories and suppliers don’t really understand what it means when you’re out stuck financially from a sales perspective. Sure they’re being hammered; you’re sort of getting on email, you’re getting on Skype, you’re doing you thing saying well I need this order, can you push it? Can you put it to the front of your production line and you’re sort of pressuring them. But because you’re pressuring them so much they’re not really thinking about the impact on sales. So you can show the cost of being out of stock from a point of re-launching, lost sales velocity, lost growth. So maybe you’ve lost a couple of places in rank which has actually brought your growth percentage down, the momentum of growth. And for them, they’re not going to be getting as frequent orders because that volume is down, meaning you’re not placing as bigger orders. So you can still present the loss to them as well, which is a nice sort of stick to underpin the whole thing. And then finally you go right to solve this problem; this challenge, to order more from you and to recover was it, defend against that potential loss of being out of stock. These are the payment terms I need. And you just present the data to back the story. And it’s quite easy, there’s a whole template towards it in terms of how we do that. You can use screenshots out of your Amazon seller central accounts to back the data; you can use Keeper screenshots within the presentation as well as just sort of showing screenshots of that spreadsheet you really want to be showing the analytical graphs to back that data because it really gives that visual representation. Joe: I’m sorry so let’s just put in the; so for every 10 people that go through this process and try to renegotiate terms to go through the full process, they do it right. They do the projections. They do everything that you’ve talked about so far, which I think is eleven steps after they’re doing the sales forecast, do 9 out of 10 of them get better terms or 10 out of 10 or 2 out of 10; what are the odds? Just put it into a realistic perspective for the audience. Dan: So if you are already working with the supplier, you’re already in communication. You’re not just… Joe: Yeah, let’s assume that somebody has been placing two, three, four, five orders. A lot of people if they hadn’t done this, they’d been placing the order for two or three years. Dan: Yeah, so that person I would be as confident to say that eight in 10 people. I am yet to come across a relationship of that stature that’s established with good communication where you won’t end up better off. Now, you might not get the terms that you want straight out the gate, but I guarantee if they value your business, which they should do by that point you’ve got a relationship, you will end up off in a better place. So 90 to 100% of people will end up better off. 80% of people will execute to a point where it impacts customer for sure. Joe: And this includes a trip to China because you’re presenting it in person? Dan: Yeah, this is like optimum. You’ve gone to China. Think about how many requests these factories and suppliers get from brands in the west as they say it asking. And then think about the percentage of people that actually get on a flight, fly to China, sit in the office, drink sake and do all that good stuff. That is going to be like 98 and 2%. So who are they going to prioritize? They’re going to prioritize those showing real commitment. Business is about commitment. Business is about doing what you said you would do. And I think that’s all this is. It’s as simple as that. Joe: Yeah, the 80% of people that have established brands can certainly get better terms with these vendors. Are you seeing; obviously they’re ordering more and with higher volume orders comes lower cost of goods sold. How do you negotiate a lower cost of goods sold? Is it strictly volume based or do you make that part of this overall presentation that you’re looking for terms and lower COGS at certain levels? Dan: Yes. So what we do is we hold that conversation. So in any negotiation, you need the person you’re negotiating with to say yes a few times. You need to get them to agree and we need to chip away at the yeses. So what we do is we hold that COGS conversation right until the end. So once we’ve gone through showing the growth potential, the product by product sales forecasts, showing the order values to meet the demand before and after if they give us these terms, the impacts of being out of stock, and then say this is the payment terms we want and always start higher, by the way. Always start higher than you actually need because there will always be a piece of negotiation. They will turn around and say, yes, hopefully. That’s the goal. That’s our amount in agreement. It might not be what you want, but they might say, well, on this one, we’ll give you this and if you meet the demand, then on the next one we’ll give you this. We might be a bit of an up curve. We then turn around and just say so now I’m placing a bigger order, I get a better price, right? And you’ll find about half the time they’ll smile and laugh at you and say, yes, the other half the time they’ll say, let’s talk about that in the next order. But yeah, you have to put a bit tongue-in-cheek in whether you have to build the relationship, play on the relationship. Joe: Is this done over dinner or is it done over a desk; how do you see it most often done? Dan: Typically, it would be done; in most cases, it’s going to be over some sort of food environment, some suppliers and factories would like to get the business done and then go for dinner. Most likes to get the relationship piece in first. They want to sort of learn about you, your family. They want to give you some food, take you to lunch. And then during that process, we’ll then bring it down to the conversation. Now, it’s important to say it won’t always happen there and then in the room. A lot of the time you’ll present this, you’ll throw in that thing at the end that says, so now I’m placing a bigger order do I get a better price and be a bit cheeky with it. And a lot of the time they’re going to turn around and say well, look, we need to run our raw material costs. We need to look our production workflow. We need to speak to our internal production manager. We’ll get back to you within a few days. So depending on how long you’re in China, it could be back when you were in America or back in Europe. You’ll jump on Skype and they’ll go, okay, cool we’ve run the numbers. It makes sense. Yes, we can do that. So it kind of happens like a bit of a fluid conversation during the social aspects. Sometimes you’ll sit in an office and just get it done. But most of the time it would be over some sort of lunch or something like that. Joe: I got you. Okay, any other steps that you want to review? Dan: No, we’re good. So really just remember, it’s a win-win. Do your internal prep; what they say is the success is in the preparation, success in the planning. Do your planning, and then make sure you’re presenting it in a way that presents it as a win to them. And yes, you can achieve this virtually over the internet, but you’re going to have 100% better results. And if it’s okay, Joe, I’ve got some examples here, actually. Joe: Yeah. Dan: So Case Study 1, 30% deposit, 70% before shipping, after 0% deposit, 100% percent 60 days after shipping. Joe: That’s a beautiful outcome. I can’t imagine anybody would be upset about that. Dan: No, it’s cool. That was actually inaudible[00:31:13.0] and my business partner and Sarah, who’s head of Titan Sourcing that negotiated that one. The next one was 30% deposit, 70% before shipping after we got a 30% deposit because the raw material costs were quite high on this product, which you have to still work with them on, and then it was 20% percent before shipping. So we pay sort of 50% and then we got 50% percent 30 days after arrival at Amazon FBA, which meant we had 30 days of sales before having to pay the remaining 50%. Case Study 30% deposit, 70% on the approved inspection report. That was a bit of a quality assurance thing there. After we got a 20% deposit, 35% 60 days after shipping, 45% 90 days after shipping so that was a nice one. And then finally, the fourth one and I’ve got some bonus tips at the end if you want them, Joe, 20% deposit, 80% before shipping. That was the terms we had so it was a bit nicer on the frontend. After we got a 10% deposit, 40% on landing in the USA, and 50% 60 days after landing. Joe: Wow. Dan: And these are typical; I can stand there and say now these are just four cases that we’ve done we’ve got a whole Titan network full of members that are doing the same. Joe: Yeah. No, I want to hear about the bonus tips. Also want to hear briefly about China Magic and maybe we can have Athena on to talk about it. Just let me ask; go ahead into the bonus tips and then then I want to talk briefly about China Magic. Dan: Yeah, sure. Because there’s loads of benefits above and beyond obviously COGS and terms. Joe: Yeah. Dan: Okay, so tips to success face to face always will produce a better result. They often pay for the trip and that’s what you got. Think if you’re looking at a cost offset, you’ll often get to pay for the trip in the renegotiation. Always ask for more than you need; really important. You probably won’t shake hands there and then as I said. Make sure if you come to see the boss, you don’t want to be waiting on a middle person or a middle man so they then you have to go and sort of do the translation. You want to be in front doing the deal with the boss. Before you go into that environment, before you even head out to China, if you’ve got a representative from that factory or you’ve got a sourcing agent that handles that relationship for you, then get them onside. So run through the presentation with them first so that when they’re in the room, they’ve already done the thinking, they’re already standing there, and they can get the buy-in of the boss in the room. Consider consolidating your orders to one supplier. It gives you more buying power. And one thing we’re a big fan of in Titan and in China Magic is leveraging an outside adviser. Because then you can play the whole good cop bad cop. If you want to maintain a good relationship you can bring in someone that’s like an external advisor to crack the weight a little bit and you can call them your finance person. You can call them whatever you want to. That allows you to do that. And remember, every relationship and supplier cash flow is different so you have to really; don’t just tell them what you want, understand what they need, and bring the two together. And this is counter-intuitive but it’s often being willing to pay more to achieve the terms especially in the beginning. So one thing you can do is if they’re not budging, you can afford to give them a dollar bum pull over here now on a product to get them to nudge on the payment terms which is still going to give you more cash on hand and then come back to renegotiating the COGS once you’re up at the higher volume because you’ve been off to some of the growth. Joe: I like it. Dan: And also take gifts as well; take presents. It works. It depends; there are controversial views on this. So Kian Golzari for instance who is a sort of an expert on China Magic everything; he’s doing sourcing and product development. Kian loves; he’s from Scotland, he’s from Edinburgh, he loves taking some Scotch whiskey with him. Other people take chocolate. There’s the whole red envelope with some cash in it for the children but that one’s a bit more controversial. But yeah, just my advice would be take something that’s important; not important but personal to you, and then that creates a talking point and it creates more of a relationship and a bond. Joe: Okay, that sounds great. I think one of the most important things I see people that are running great businesses and eventually sell them, they’re great businesses, do great for buyers. They really have been to China and they always wind up with either better terms or better COGS. It sounds like a scary place to me, though. I’ve never been so is China a scary place? Dan: It really isn’t. So when I first got involved in the early days with China Magic I went out there as a guest speaker and then ended up becoming a co-organizer with Athena. I thought the same but when you land; if you think like Guangzhou where the Canton Fair is. That’s where we go. It’s the biggest product sourcing Fair in the world. I think they start setting up 5 million products on display during the Canton Fair. They’re used to receiving hundreds of thousands, if not millions of westerners through that fair over the course of 12 months. The airlines are efficient. The flights are cheap. I mean from the US, the flights are $500 on a good day it’s $400. Joe: Wow. Dan: Yes. I mean, it’s really cheap. That’s for obviously economy. I got a first-class ticket; I mean first-class pod for two grand. Joe: Wow. Dan: So yeah I mean it’s cheap. We head out there and we’re picked up by a nice comfortable bus and we stay in the Four Seasons Hotel which was rated Forbes Best Business Hotel in the world 2019; the one where we go. So they look after us. We’ve got five staff service and food, good internet. We then head over to the fair. This isn’t a market; there are other markets like Ebru and stuff which are a bit more like rack markets, Canton Fair is a professional establishment. All of the suppliers there are paying serious money to have a booth at this fair. So if they don’t speak English themselves, they’ll employ English speaking representatives. So you can have a really good conversation there. Sometimes you have to work with a bit of culture and there are definitely cultural barriers that you have to learn, like receiving a business card with two hands and showing that respect. It goes much further and Ken covers all this in China Magic. We go into depth like we spend some of that four hours just going into how to have a conversation with a supplier so that they know you are educated. But yeah I mean, to cut a long story short, it really isn’t. Like I walk around in my shorts and my t-shirt, I go down and they’ve got little smoothie bars now I’m on the streets by the hotel. It’s quite a pleasant place. Joe: Fantastic. How do people learn more about Titan Network and then China Magic and again I think we ought to probably have somebody on for China Magic and what that event is all about because it’s; I don’t know, it’s the next step. I don’t know if I would want to go on my own and I assume that you would not recommend that. You go with a group that does this on a regular basis. So tell us about how more people learn about Titan Network and in particular this cash flow management renegotiation, all of the different steps that you’ve talked about. Dan: Yeah, sure. So if you want to know more about Titan Network, we’re an invite-only membership organization for Amazon sellers. We’re going from strength to strength. And the thing about Titan Network is it’s created by sellers for sellers. So it’s not about any one person’s success. It’s not like a guru led thing. You can learn it at TitanNetwork.com. That’s where you go and learn about Titan Network. And if you feel like you want to find your tribe and your family, then take a look there and you can apply for Titan Network. If you want to learn more about China Magic go to ChinaMagicTrip.com. It’s got the full trip details on it. I’m going to give you access to a little special link. If you go to ChinaMagicTrip.com/masterclass we go into a bit more depth on these payment terms upon negotiation stuff. And it’s got off-screen shares. You can actually see some of the slides. And that’s all out there free of charge so you can go and take a look at that. Yeah, I’d love to do a follow up about China Magic. I’ll bring Kian on, I’ll bring Athena on and go into the depths of like not just payment terms and cash flow, but how do you build these relationships and how do you find these factories that you’re not going to find in Ali Baba, how do you improve the quality, how do you differentiate products in 2020; yeah, we could talk about a lot. Joe: Well, I think it’s a great service to the people that are Amazon sellers or even just not Amazon sellers, other people that sell-off of Amazon need better terms as well. Dan: Yeah. We’re seeing Shopify sellers. We’re seeing a lot of these influencers on Instagram that are realizing they’ve got an audience. If they apply a physical product to that audience, they’re going to make money. We’re seeing all these guys come along now because it doesn’t matter whether you’re selling on Amazon or Shopify, physical products are physical products. And to your point about going alone, there are seasoned travelers out there that will have no issue in visiting China themselves. But for me, it’s about return on my time, a return on investment on my time so if I can go with 75 like-minded sellers at a similar point the journey led by multiple seven and eight-figure sellers, get shown 30 years’ worth of sourcing experience across Marcy, Kian, myself and the team in a couple of days; so condense that learning period, get the COGS on payment terms on it and every single evening mastermind for four hours a night on every single area of the business, that to me is a bigger return on my time than just going over to China myself. So that’s kind of my view on it. Joe: Yeah, if I was in the e-commerce world myself, I’d be in. I’d want to bring my son though so he enjoys the world travel. Maybe in another life, I’m out of the e-commerce business myself. I’m an entrepreneur at Quiet Light Brokerage only. So listen Dan, I appreciate all the time you spent here. I think its great advice and I know from experience that people that exit their business for the maximum value end up doing a lot of the things you’ve talked about so thank you. I appreciate it. Dan: Yeah, no there’s just a final closing point now. We should tie this back to valuation. So you’d go how does this make my business worth more? Well, I think I’ll just spin-off three raises in my head to maybe cut this in. One is it’s going to make you more attractive as you’ve got solid foundation relationships with your supply chain and you’re not relying on Alibaba or some sourcing agent. Buyers want to know you’ve got the full foundation. Two if you’ve got more margin, you’ve got more profit, more profit, bigger valuation. And three, if you’ve got better cash flow and more cash flow on hand, you can compound that freight faster which means you achieve your valuation faster. So that’s how they tie it back to valuation. Joe: And again, I say it and I’ll stop saying because Mark keeps correcting me there’s no fifth pillar. All of the things that you’re talking about make you a better business person; somebody that others will trust because you’re instilling confidence in them that will bring you better value as well. People if they trust you they’re willing to pay more for your business. So Dan, great stuff, thanks so much for coming on the podcast. Dan: I appreciate it, Joe. Thanks for the time. Resources: Titan Network China Magic Masterclass China Magic Trip Quiet Light Podcast@quietlightbrokerage.com

May 5, 2020 • 30min

Finding Opportunities in Hard Economic Times With Jason Yelowitz

Quiet Light as founded before the Great Recession, so founder Mark Daoust has seen first-hand how economic downturns can affect the value of online businesses. Today he is joined on the podcast by Jason Yelowitz, Quiet Light’s most tenured advisor – who has been with us for ten years. Congrats, Jason! They discuss the possible implications of the economic downturn, and some of the things buyers and sellers need to consider when thinking about a transaction. Episode Highlights: How buyers have a big appetite for deals, but they might not find as big of an opportunity for steep discounts Will our shopping habits permanently change after COVID-19, and what impact will that behavior have on the value of businesses? Are online businesses a stable investment? Will blips in the supply chain have an adverse effect on valuations? How profitable businesses will always have some value to a buyer How much impact might there be on multiples?

Apr 30, 2020 • 36min

Selling Your Online Business at the Right Time With Serial Entrepreneur David Wolf

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