Category: Ideas

FBA

Amazon Affiliate Site to FBA Business

Today’s post I get into the weeds of how to analyze an affiliate site you either own or are considering buying to convert to an Amazon FBA model.

Basic Strategy – What the heck am I talking about?

This strategy is the basic strategy I followed to build and sell an Amazon Affiliate Site and Amazon (Fulfilled By Amazon / Private Label Product) business in 8 months with a 530% return and made $334k including sales price and net earnings.  See the full case study here – how to sell Amazon FBA business.

  • Step 1 – Build or buy an affiliate site that is generating sales of a product you believe you can source and private label yourself
  • Step 2 – Start an Amazon FBA business leveraging your affiliate website to drive traffic to your sales page.

What if you own  an affiliate site and are considering using it to build an FBA Business? Although a lot of the details in this post talk about considering the FBA model when buying a website, the information below is the same approach you would use if you own an affiliate website already and are looking to convert it into an FBA business.

phase1

What I Will Share in This Post:

  1. How to analyze the potential of an affiliate site for an FBA business
    • A – 10 Point Checklist Weighted Average Matrix to evaluate if the site could work
    • B – How to get and analyze the data to estimate potential sales driven by affiliate site
    • C – Assumptions to use based on my experience to gauge the impact Amazon organic sales will have
  2. Run the numbers (what is the expected net profit for the FBA business?)
  3. Spreadsheet I use to do this analysis – Free Download (Completed for One fake Site)
  4. A clever/slight twist on the Affiliate to FBA conversion model

ONE – How to analyze the potential of an affiliate site for an FBA business

A – 10 Point Checklist and Weighted Average Matrix To Evaluate Multiple Opportunities

Whether you own the affiliate site or are looking to buy one here are 10 key questions including their weighting in order of importance(from my perspective) to help evaluate the potential opportunity.

  1. Product can be easily sourced
  2. Not a restricted product (weapon, ecig, liquor, uranium)
  3. Similar Private Label Product Selling on Amazon
  4. Website Focused on a specific product
  5. Price point of product $20min to $40+ ideal
  6. Target $3k/month minimum amazon associate income
  7. Product is small/light (not oversized & cheaper shipping)
  8. Traffic Growing
  9. Industry Growing (easy to check with Google Trends)
  10. Backlink Profile & Risk

question

B – How to get and analyze the data to estimate sales

In order to determine the size of an opportunity, there is some critical data that is needed.

The key question we are trying to answer with this step in the process is…

“How many sales of a similar product to the one we could source does this website drive per month?”

This is a key piece of the equation when working on the next step.

So here are the detailed step by step instructions.

  1. Get the data – Login to Amazon associates account, go to reports, click on download reports, select max relevant date range and all associate tags attached to one website, download report
  2. Slice the data up using some excel tricks – Open the spreadsheet in Excel, sort all the orders by the date, create a pivot table with (filter on for relevant categories, row label = names, values = sum of items shipped). This pivot table will now show you how much of every product the site has sold. The next step is to copy that pivot table into a new tab and paste it as text then filter on the quantity so you can see the number of each unit that has been shipped starting with the most.
  3. Group the data based on the type of product you could replace – Based on looking at this table make some assumptions on the number of a similar product

Simplified Example – Download the template at the bottom of this post

category

The result for this step is that we can say in our fake example that our website sells around 500 3D Printing Pens in the given time period (for the purposes of this example assume 1 month)

C – Assumptions to use based on my experience

Back when I first launched my affiliate site to FBA case study I shared several assumptions I made well before I knew if they would be true. Some held and some didn’t, however based on a very small sample size here are the assumptions I am using to evaluate a sites potential…

item

salessplit

TWO – Run the Numbers – What is The Potential Profit?

For this section we just punch the numbers we have collected into the summary tab on the spreadsheet and it provides a very rough approximation of what kind of volume and net profit the business is going to do.

YES – I know this is simplistic and there are many ways to get into more detail (which I do in the template) but when evaluating any potential opportunity this is great way to start!

product

So after this analysis a Printing Pen (no I didn’t check if any of these numbers were reasonable) would be able to generate an additional $4k/month net profit if the little affiliate site added an FBA arm to it.

THREE – Spreadsheet I use to do this analysis – Free Download (Completed for One Site)

To get the same template I used to do my analysis on this “fake” site for the post or many other potential acquisitions simply click on the link below…

[thrive_link color=’blue’ link=’https://www.dropbox.com/s/6oy780twlcl0gzu/FBA%20Business%20Model%20Analysis%20-%20PUBLIC.xlsx?dl=0‘ target=’_blank’ size=’medium’ align=’aligncenter’]Download Template[/thrive_link]

FOUR – What About Buying Both an FBA Business and Complimentary Affiliate Website

Slight Twist – Eric from DigitalStrats made the interesting suggestion that flipping the model would deal with a few of the downsides of my suggested model… meaning buy an FBA business and then add on acquiring Amazon Affiliate sites in the space. This would result in a much faster return on the investment since you would see the increase in earnings immediately. There are 3 main downsides to this model I currently see…

Upside:

  1. The time until you realize your return is higher… as soon as you point a related affiliate site at your FBA business you will see the benefit.
  2. If you can acquire both your probability of success for the overall investment goes up vs acquiring just one. This is mainly due to there being fewer unknowns that could derail the business.

Downside:

  1. Total investment required would be more substantial
  2. The ability to find complimentary affiliate sites and FBA sites all willing to sell is tricky
  3. The return on your investment is lower than if you completely added the FBA side potentially

Wrap Up

I hope me sharing this method and spreadsheet for quickly evaluating the potential is helpful to some of you. Although one of my recent migrations is not going as planned I still strongly believe in this model and am looking forward to continuing to test it out.

Here are some additional resources:

If you are doing anything cool in this space please let me know I always like connecting and learning.

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Jon Jon July 25, 2016 8 Comments
Team Management

3 Key Positions Required For a Successful Team and Online Business

This post is to try and share what I have learned building multiple teams online and a recent review of my business teams revealed some of my failings (which I share below).

Here is an updated post for 2020 on how to manage a remote team including all of our procedures.

There is a common question I get about how do I manage to get so much done…. The fact is “I” don’t.

In reality within my business I don’t do many of the day to day tasks. The majority of my day is reviewing reports, weekly one on one meetings with my managers, writing these posts, talking with clients, strategy for clients and coming up with new business ideas is the majority of my non-email work week.

For every new project I look to setup a team, sometimes this isn’t possible and I do most of the activities myself (IE my initial FBA business). But for the most part the benefit I have seen from using a team has been huge and one of my key questions when evaluating new projects is who am I going to work with on that project.

This post is going to focus on how I go about building and setting up a team for a new project whether it is existing team members or new people I am partnering with. (more…)

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Jon Jon July 20, 2016 9 Comments
IdeasMindset

How I Quit My Job to Pursue Online Entrepreneurship Full Time so I can Ski, Bike and Hike With My Family

This post took ~8 years to write!

It is with great satisfaction I announce that the goal I set for my family has now been achieved and I have left my 9-5 7am-6pm day job to pursue online entrepreneurship full time!

First let me say thank you to everyone who has been following me on this journey you the readers of authoritywebsiteincome, customers of LightningRank, friends, family and my wife.

This is the start…big stuff to come!

This post covers…

Table of Contents
Why Did I Want to Quit my Day Job?
How Did I Get Here – My Online Business Building Timeline
Top 3 Inflection Points in My Journey
Why Didn’t I Quit Sooner?
So… How did it feel to Quit?
5 Most Important Lessons
3 New Concerns I Now Need to Manage
What Will I Do Now?
If You Could Learn Only One Thing
Thank You!
Finally Good Luck!

Why Did I Want to Quit my Day Job?

For everyone their reasons are a little different. Some people want to become digital nomads mine came down to wanting to…

  • See What I Can Do on My Own – Online entrepreneurship has a lot of opportunities I am excited to explore. I may or may not regret this decision but I am 100% certain if I never took a shot at building something on my own I would always regret it!
  • Ski/Bike/Hike With My Kids (my wife can come to 😉 ) – My youngest child will be 36years old when I retire at 65 (4 years older than I am now) and the number of hours I work per day between now and then were not going to go down based on the path I was on. But the main reason is I simply want to ski, bike and hike with my family in my hometown!

This Table Scared Me!

Green = Years Worked at Day Job

Yellow = Years Left to Work!

My Age at Retirement = 65 & My Oldest Kids Age = 36

One of My Main Reasons Explained with Pictures...

(my reason why explained with pictures!)

How Did I Get Here – My Online Business Building Timeline

  • Pre University – Side Hustles
    • Lawn Cutting 
    • Selling Skis on Ebay
  • 2004 Went to University (Mechanical Engineering with a Business Minor)
  • 2005 – Bought International Edition Textbooks from India at 90% Off and Sold for 75% off to friends
  • 2005 Started listening to AudioBooks and a few had significant impacts on how I thought about business/life options.
    • E-Myth Revisited 
    • Rich Dad Poor Dad 
    • The 4 Hr Work Week
  • 2006 – Started a Bike Parts Company – Never Manufactured a Part
  • 2007 – Started a TextBook Selling Website – Sold One
  • 2008 – Got Engaged
  • 2008 – Worked for a technology startup company and was responsible for getting their site built (cheaply)
    • Learned about ODesk (now upwork) (blew my mind)
  • 2008 – Started a Small Membership Site That Organized Old Time Radio Shows – Cost $2,000 Made $150
  • 2008 – Built a Sales Page to Sell Excel Templates – Started making a few sales – $100/month
    • Learned about article marketing
  • 2009 – Built some “Feeder” WordPress Sites to Drive Traffic to Sales Page – $200/month
    • Learned about SEO 
    • Learned about wordpress
  • 2009 – Graduated with a Mechanical Engineering and Business Degree
  • 2009 – Started Working in Project Management for an Oil and Gas Company
  • 2009 – Started replicating the “feeder” sites and made them into money sites – $750/month
    • Outsourced everything article marketing, web creation etc. 
    • The dream of a self growing fully outsourced system was strong!
  • 2009 – Got Married
  • 2010 – Attempted to build a Facebook Team Gift app after coming up with the idea at my Bachelor party with friends– FAILED – $1,000 gone
  • 2010 – Built a team on ODesk to promote each website using Yahoo Answers and Blog Commenting – $1,250/month
    • Built the team up to 15ppl
  • 2011 – Stopped Being Profitable & Cut Back On Team To Become Profitable – $500/month
  • 2011 – Started Building Private Blog Network and Testing Other Strategies to Improve Ranking and Drive Traffic
    • Feb 2011 – Panda hit – No Impact on My Business
  • 2011-2012 – Started focusing on lower quality exact match domains that required less work and my team was building 2/week – $1,500/month income
    • Never used “automated” link building methods! 
    • Never used spun content on my sites (but yes I was one of them that used it on article sites)
  • Apr 2012 – Penguin hit – Small Impact
    • Doing some research and trying to think about SEO like Wayne Gretzky played hockey “go where the puck is going to be not where it is” translated into “give the search engines what they want not game the current loopholes”
  • Summer 2012 – Decided to shift focus to build up my larger more useful sites – $3k/month
    • Sites like ACLSurgeryRecovery.net grew to 800 visitors/day
  • Aug 2012 – Decided to create a public case study through AuthorityWebsiteIncome.com showing how I was going to build (My Case Study Website URL is Now Hidden)
  • Sep 2012 – EMD Update Hit – 15%-25% of my sites got killed(all smaller sites) – 5% of my earnings affected – $3k/month
    • EMD update reconfirms I believe I am on the right path with larger more authoritative sites.
  • 2013 Feb – (My Case Study Website URL is Now Hidden) averages over $1000/month for month 6, 7 and now can make up to $8k/month income (sold website for six figures)
  • 2013 Aug – Began using PBNs to rank my websites and grew my passive income portfolio – $6k/month income
  • 2013 Nov – Based on my on my monster post Ultimate Expired Domain Guide I launched my PBN creation service – $10k/month income
  • 2014 – Continued to build my passive income portfolio and my services business – $11k/month average
  • 2015 – Focused on systematically growing my passive income portfolio which grew to $14k/month for its best month (reliably now making over $10k/month)
  • 2015 Sep – Added FBA Business model to my strategy for Q4 2015 – $24k/month average
  • 2016 Jan – Listed FBA business for sale
  • 2016 Feb – Launched BrandBuilders.io as a partnership
  • 2016 Feb – Let my day job know I will be leaving!
  • 2016 Mar – Started with Private Equity group to rinse/repeat affiliate site to FBA business conversion
  • 2016 May – Launched ListingEagle.com as the first/best Amazon Listing Hijack Monitoring service
  • 2016 June 10th – Last Day of Work!

Top 3 Inflection Points in My Journey

  1. Finding Out I Will Become a Father – Narrowing in on my “why” in 2013 gave me the drive to stop messing around with simple low value add crap and really do the hard work, add value and consistently grind. When we became crystal clear on our goal of $15k reliable income and moving to our hometown to spend time with family the business started to move in the right direction quickly!
  2. Creating an EPIC Guide (Adding Obscene Amounts of Information/Value for Free) and then listening to the audience and providing services around that topic was another large inflection point for the business.
  3. Unit Shutdowns at Work & 80+hr Weeks – This was actually a deflection point but was equally insightful. There were multiple times over the last few years where I worked 80+ hr weeks for a couple months back to back and it became clear the business suffered after that time when I wasn’t able to work more than an hr a night. Based on this it was clear that my time, despite all the systems I had put in place, still significantly influenced the direction of the business. Despite the promise of systems replacing me completely it was clear that for my business more time = more success.

Highlighted Yellow Represents 80+hr Weeks at Day Job

Why Didn’t I Quit Sooner?

  • I had very specific metrics to hit for both income and runway before pulling the trigger…
    • Income – I had a very public goal of hitting $15k/month in reliable income by the age of 35. This had been achieved for several months but it took awhile until the second criteria of runway/mortgage was achieved. 
    • Runway/Mortgage – In addition to the public income goal I also had a runway/mortgage goal to ensure I wouldn’t need to play defensively in my online business.
  • I was learning a lot – My belief was that this game is a LONG game (just look at the graph to 65 above)! I don’t see me ever not doing something associated with building a business and as a result I believed that the most important thing right now is to improve my abilities and one of the most profitable/systematized corporations in the world certainly had many great learning/development opportunities. My online business is better for the experience I had at my day job and vice versa, I was a better employee because of what I was learning in my online business. The learning curve had started to slow over the last year and that contributed to the decision around timing.
  • Enjoyed a lot of my day job – My day job as a plant shutdown manager / maintenance team leader had a lot of great aspects. I worked with very capable people and we were thrown at some very challenging problems with a lot of pressure (such as being on point and responsible for 100+ contractors fixing equipment that was loosing the company $1M/day being down).
  • I wasn’t sure if online business would be fulfilling – Online business can be played at different levels and where I was originally playing it was not fully satisfying. Systematically building authority websites is kinda fun from a systems standpoint but it wasn’t really challenging me on multiple levels. However, lately with the addition of some new businesses and partnerships it has become clear that I can be as challenged as I choose to be with my online business and that is exciting!
  • Increasing my chances of successfully exiting and not returning was more important than getting out early – My wife and I had many discussions on the right timing to pull the trigger. In the end we both believed that the prize on the table (moving back to our hometown) and staying there was substantial enough that ensuring when we did pull the trigger the chance of success was as high as possible!
  • Diversifiable Income – No single point of failure could exist in my business that would ruin it. I wanted to be certain that I had multiple channels of income that would support my family. My business needed to be a multi-legged stool with each leg of income being somewhat separate from the other. If any one leg got chopped out the stool won’t fall!
  • Golden Handcuffs – The pile of money between pension, career trajectory and vesting bonuses that has been burned by me leaving is not inconsequential. Although I left on very good terms with the door being open for me to return the amount of money being "burned" certainly had the desired effect of being slow to make the move.

So… How did it feel to Quit?

I enjoyed working with most of the people I worked with and my direct reports and manager were all exceptional so I did feel a little guilty about leaving them. In addition I had made some great friendships over the last 7 years and as part of this change I will be leaving my current city.

However in the end it felt awesome! This was a goal which became an obsession for the last few years and achieving it was incredibly satisfying for everyone involved!

My manager was incredibly understanding and treated me much better than I had expected.

One interesting note was that all the coworkers that I considered as really strong performers were positive/encouraging while many of the “B team” employees were scared for me and couldn’t understand giving up the security!

5 Most Important Lessons I Learned

  1. Do the Hard Work - For the first few years online I was in search of the easiest way to make money online. WRONG! When I buckled down and did the “hard” work usually the type that made me uncomfortable results followed! Many nights I wanted to lie down and watch TV exhausted from 12hrs of work, playing with kids for 1-2hrs but if I had I wouldn’t be writing this post.
  2. Have a CLEAR Driving Goal & Reason Why – It wasn’t until I was crystal clear on my reason why that the business moved in the right direction quickly.
  3. Add Value and Don’t Look for Shortcuts – Shortcuts online don’t exist, stop looking for them! The only way to make money online is to add value. The more value you add the more success you have. No, this rule doesn’t hold 100% of the time but believing it 100% of the time is a recipe for success.
  4. Take Massive CONSISTENT Action – Every night/day that you do work, if you are adding value, you are pushing on the flywheel of your business. When you take time off from the work the wheel starts to slow…consistent massive action on an activity that adds value to people is bound to result in success.
  5. Don’t Do It Alone! – From my first popular guest posts on other peoples sites (like Spencer Haws) to my most recent partnerships with industry leaders (like Scott Voelker) and previously little-known experts (like Andrew from BrandBuilders.io) it has been clear that building an online business is more fun and successful when working with others. In addition to these relationships my team has been a huge factor in the businesses growth. Some of my team members have been with me since the start including some whose income has gone from $1/hr to $7/hr and another who named me as a god parent…

3 New Concerns I Now Need to Manage

With changes come new challenges, to be honest these I am afraid of and I won’t know if I overcome them or not for a couple years. I hope AuthorityWebsiteIncome and my monthly reports will help me have the discipline to ensure these fears don’t become a reality.

  1. Getting Mentally Soft – For the last few years my schedule has been a little bit insane. Approx schedule… wake 6am, leave for work 6:30am, work 7am-5:30/6:00, Home at 6:00/6:30, family time until 7:30/8:00, work from 8pm-11pm(sometimes much later). Following this schedule was TOUGH and it, like training for anything, resulted in me being able to be disciplined about working. Will I now go soft since I won’t be working the same number of hours?
  2. No Single Inspiring/Driving Goal – Achieving my goal of leaving the day job had become an obsession and now my current goals are less tangible… will my business not have a stimulating goal and as a result be directionless?
  3. Playing Not to Lose – For those that play/watch sports we all have experienced/seen a team take the lead and then play not loose vs playing to win. Will I now play not to loose vs take bigger swings?

What Will I Do Now?

  1. Improve My Website Portfolio Management and scale select websites
  2. Be More Active With AuthorityWebsiteIncome.com
  3. Expand Services to Include More “Higher Touch” offerings
  4. Grow ListingEagle.com
  5. Go to conferences and engage with the community more
  6. Now that I have my "cash flow" businesses moving I will look to take bigger swings with disruptor businesses (such as ListingEagle.com) 
  7. Spend more time on other neglected areas of my life…
    • Family (although not sacrificed much for my online business I now have more time to spend with them)
    • Health/Fitness/Outdoors – Definitely neglected over the last few years and looking forward to doing a lot more!
    • Ongoing Education – I have been on a very light information diet and am excited to tackle learning and applying new skills. There are many great courses I know I can learn a lot from!

The majority of my goals for the year will stay the same

If You Could Learn Only One Thing

From working with people I have found there are plenty of things people are a lot better at than I am but if there was one thing that I continually seem to be able to bring to a business it is this repeatable system…

My Process for Getting A Lot of Work Done Systematically:

1. Identify need/problem (me, project manager or one of my team leads)

2. Create a quick procedure for it (me, project manager or one of my team leads)

3. Assign it to a team member or hire 3-5 people on UpWork.com (project manager or team lead)

  • Give the 3-5 people a similar test assignment with no interview and minimal training (project manager or team lead)
  • Review quality of work done and communication and then fire all but the best (or fire all and repeat hiring a few more)

4. Assign the (potentially new) team member to execute the created procedure and work together to improve it (project manager or team lead)

5. Manage the change to the new procedure (project manager or team lead)

  • Input the new procedure into the procedure database (list in a google doc)
  • Communicate the new procedure and the basics of the change to the affected team members

6. Begin executing the procedure (new team member)

7. Improve & Track Desired Results of the New Procedure

  • a. New team member to send out weekly update with basic update to entire team including myself focusing on the metrics of both what has been done and how it has impacted the key end result the new procedure was put in place to improve (new team member)
  • Key metric(quantitative or qualitative) for the new procedure added to the team lead or project managers weekly business scorecard which gets reviewed at the weekly 1 on 1 meeting I have (most important 1hr I do all week)! (project manager and myself)

Executing this boring series of steps repeatedly over the last 8 years has built up a team with team leaders responsible for results and managing their team as they see fit (hiring/firing), weekly reports and a pool of great A players who I can leverage for any new project. Plus most of the processes in my business following a decent procedure.

If you are struggling to get your business setup with a team and systems I highly recommend you give the above 7 steps a try!

Thank You!

To everyone who has visited this website, emailed me, supported the business (even when you thought I was crazy – wife) been a customer of one of my services or responded to a question thank you!!!

If there is ever anything I can do to help you (visitor) achieve your goals with your online business please do let me know!

Finally Good Luck!

For those of you looking to make this same jump happen I hope that this post provides some insight into my mindset as I journeyed through my online business up to this point. If you can take anything away from this that increase the chances of you achieving what you are after or shortens the 8 year journey I took I would be very happy.

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Jon Jon June 15, 2016 50 Comments
FBA

How I Sold My FBA Business for Six Figures and Generated a 530% ROI in 8 Months!

Today’s post is an exciting one! The success of my authority site conversion to an Amazon FBA brand has been a huge success and today I can announce that a successful sale has been completed!

In this post I will share everything (except the URL) of the business I launched and the sales process from my FBA business.

Sell Your FBA Business FAST!

If you are looking to sell your highly profitable FBA business with a lot of history and have time then this post will show you all the options available to you. 

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However for those of you who were like me and don't meet all those requirements your options are limited. If you want to explore all your options for selling your FBA business click on the link below and I can see if the team I have built to buy FBA businesses is the right setup for you...

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Your Options Are Limited If You Meet Any Of These Criteria...

  • Not making over $2k/month
  • Can't wait 1-3 months for money to hit your account! (regardless of size)
  • Your business hasn't been running for at least 12 months

However, even if your businesses situation is the same as any of the items above click on the button below and fill in the form and you will be able to receive an offer on your business today!

Sell Your FBA Business TODAY!

​How Much is My FBA Business Worth?

​If you are interested in seeing the state of the industry when it comes to Amazon FBA business sales then I highly recommend checking out this free report!

​

If you are like me you want to see the results…the money…the numbers… I won’t make you scroll if you don’t want to…

Initial Investment

53 k$ Initial Investment

Final Sales Price

​

334 k$ Final Sale Price + Net Earnings
530 % Return on Investment in 8 Months!
  • My Original Plan = Invest $100k and build a business to sell for $297k (197% return)
  • The Actual Results = Invested $53k and sold the business for a sticker price of $281k in 8 months (530% return)

If you like numbers and graphs enjoy this beast of a post showing you all the gritty details about the business.

If you enjoy reading this post as much as I enjoyed writing it… you probably have issues 😉

Table of Contents
PART 1 - My Authority Affiliate Site to FBA “Can’t Fail” Business Plan
3 Benefits of This Model:
PART 2 - Previous Posts Regarding This Case Study
PART 3 - Original “Can’t Fail” Amazon FBA Business Plan
PART 4 - Business Timeline (Approximate)
PART 5 - Original Plan vs Actual Results Compared
PART 6 - Unique Amazon FBA Business Sale Multiple and Deal Terms
Where I Sold My Website and FBA Business
Creative Win-Win Deal
Valuation Bridge
Key Deal Terms:
Earn out Basis:
Detailed Transition Plan:
6 Learning’s from the Sales Process:
Hijackers Almost Killed the Deal BUT… an Idea was Born:
PART 7 - How to Sell an Amazon FBA Business
7 Tips to Setup Your FBA Business Now to Sell Later
How Much Is My FBA Business Worth?
5 Places to Sell or Buy FBA Businesses
Should You Use a Broker or Sell Your FBA Business Privately?
PART 9 - Conclusion
PART 10 - Opportunity For You – Work With Us To Take This Brand To The Next Level!

PART 1 - My Authority Affiliate Site to FBA “Can’t Fail” Business Plan

​

The plan with my move into Amazon FBA was first shared here. After hearing about Amazon FBA for over a year I swore I was not going to jump into a new business without an advantage.

This advantage took the form of a website that I had purchased from my eventual partner of BrandBuilders.io (affiliate site creation package is equivalent to what I bought) which was making $100/month that I had grown to make $1,000/month on Amazon Affiliates.

Seeing that many of the products this site was selling could seemingly be easily imported from China and private labelled I decided on a weekend my wife had left me alone to jump in an start a new business!

The basic concept of the model was to turn the 8% affiliate commissions into 48% private labelled product profit margin!

The simple model is to use the traffic from my website to promote the private label brand I import.

The simple 3 step plan was as follows...

3 Benefits of This Model:

  1. Product Selection Is Easy – You are now selecting a product you know you can sell because you are already selling a similar product. Product selection can be a large stumbling block and this strategy helps remove that problem.
  2. Huge Initial Promotion Not Required – The common strategy is to run at a loss while you continue to promote until you have “bought” sales rankings…this is not required (but can still be effective) with this model since you are already driving sales to your listings. Plus as Amazon turns down the weight they put on sales generated by huge promotions this strategy will become even better!
  3. Minimal Risk of Capital to Buy Inventory – Since you can be reasonably confident your site will drive sales your capital is not at substantial risk. Buying the first order everyone has the fear "what if none sell" but since you have a website to drive the sales you can again be more confident you won't be stuck with product that won't move.

PART 2 - Previous Posts Regarding This Case Study

If you are new to my website or haven’t seen the previous posts here is a summary of all the locations I have talked about

Posts On AuthorityWebsiteIncome.com About FBA Business...

No results have been returned for your Query. Please edit the query for content to display.

Podcast Interviews on This Business Model

    • ListingEagle (Real Time Hijacker Monitoring and Alerts For Your Listings)
  • NichePursuits – Not Yet Published

PART 3 - Original “Can’t Fail” Amazon FBA Business Plan

So going into this business I made several assumptions about how the business was going to perform and shared them publicly on this site when I first started back in September.

Basically I created a model trying to answer the question of if I invested $100k and spent $50k to purchase affiliate site(s) and used the other $50k for working capital what would the return profile look like?

  • NOTE – In my case I spent substantially less because I grew the site from a $100/month to $1,000-$1,500 per month site. For the purposes of this post/analysis I will treat the site as if I purchased it for $30k.

Here are the assumptions I had back when I started…

Keep reading and I will show how each of these assumptions actually turned out in reality!

PART 4 - Business Timeline (Approximate)

Below is an overview from the time when I decided to start building this business to the point when the deal closed.

PART 5 - Original Plan vs Actual Results Compared

This business had a lot of assumptions when I built the plan back in September. Many of these numbers were flat out guesses and I truly didn’t have a clue at how they would turn out.

Original Plan Summary – Invest $100k and generate a return of 191% within the year

So What Were The Actual Results Compared to the Plan?

Above shows a lot of the data for the business including the affiliate site engine driving this business and the substantial traffic increase it is experiencing right now!

There was a substantial failure in the business and that was one affiliate site I purchased died shortly after purchasing it. I have included none of the revenue it generated in this analysis but did include the $12k cost in the upfront capital. 

The potential sales price is $270k but what did I actually sell it for and what were the terms of that sale?

See below…

PART 6 - Unique Amazon FBA Business Sale Multiple and Deal Terms

Where I Sold My Website and FBA Business

I considered a few options to sell my FBA business including EmpireFlippers.com but in the end my decision was to first attempt to sell to my audience directly by announcing the business was for sale here.

In the end there were a few groups that were interested and the conversations progressed over several months including…

  1. Private Equity Group
  2. Marketing Company
  3. Private Investor

The synergy with the private equity group was low while the marketing company had some solid upside opportunities but in the end the most benefit that could be realized by the buyer was for the private investor.

I can say that the entire process took longer than expected (although in hindsight I shouldn’t have been surprised).

Creative Win-Win Deal

The buyer is a highly talented/hard working Sr VP of a fortune 100 company who is looking to apply his considerable focus and skills into a new venture. As part of the terms of the sale I will remain heavily involved/invested in getting him trained up to ensure he succeeds online! He was looking to purchase online businesses and for a very small premium he is getting a business that comes with extensive 1:1 training and me very incentivized to see him succeed all while investing only a portion of the final value of the site up front.

Valuation Bridge

How did we come up with a fair price? We used the baseline for FBA businesses selling in the marketplace and then made adjustments (some negative & some positive) to come to what was believed to be a fair number for all.

The $284 sticker price (tweaked to get to $281k) is only part of the deal terms with many additional terms added in to help protect the buyer and make this deal more of a win-win.

Key Deal Terms:

  • Closing Date – May 10, 2016
  • Down Payment = $100k (due once transition is complete)
  • Earnout = $87.4k (Due Jan 15, 2016 based on the table below)
  • Detailed Transition Plan to be Executed (See transition plan below)
  • Ownership & Earnings 
    • Jon – 1/3rd partner
    • Partner – 2/3rd general partner

Earn out Basis:

Detailed Transition Plan:

6 Learning’s from the Sales Process:

  1. Lawyers can cost a lot of money – Although not going through a broker I thought I was saving the 15% by making this deal a little complicated the legal fees added up on both the buyer and sellers side. The vast majority of the terms were solved before they even got to the lawyer but it still cost a lot of money to work through the deal.
  2. Sales Process Is Complicated – This was my second sale of an asset with a sticker price over six figures and both times it took a lot of time for both the buyer and the seller to be comfortable with one another. Trust is huge and we certainly have it now but it takes time to naturally build it.
  3. Find a Win-Win or Don’t Sell – I hate inefficiencies in life and business and unless I was selling in order to make the pie bigger or to create a better win-win I would not sell again. Since much of the effort of selling a website is simply wasted energy working with people who ultimately don't buy, no fault of them it is the process but it is a lot of hard work that doesn't generate real results. Talking with potential buyers to see if they would be a good fit is part of the process and I am thrilled with the people I met as part of the process but it was not pushing the business forward.
  4. Data Transparency is Key – For all my spreadsheets calculating every number I had it built into a spreadsheet that goes right back to the raw data dump for every line item for both my affiliate site and FBA account. This level of detail helped to provide confidence with the data.
  5. Finding a Good Deal & Working With a “A” Players Is Fun and Pushes Me to Be Better!
  6. Accountants Can Help – The way a sale is structured can have significant tax implications. Reviewing the deal with my lawyer helped save a minimum of $14k in taxes by correctly structuring it.

Hijackers Almost Killed the Deal BUT… an Idea was Born:

During the sales process we started to get our first hijackers on our listings which…

  1. Increased the perceived risk of the business and could lower the sales price
  2. Stole sales again decreasing the sales price of the business
  3. Could damage the brand hurting the sales price of the business

The result of these hijackers was my wife checking our listings at every hour of the day to help fight them off since rapid aggressive responses are key!

Due to this problem I parterned with some awesome people to put together a tool that helps people monitor their listings and help their sleep deprived wife get some sleep J

See the solution to monitor your listings and the full story here…

Try ListingEagle & Defend Your Listings!

PART 7 - How to Sell an Amazon FBA Business

7 Tips to Setup Your FBA Business Now to Sell Later

  1. Make Sure All Data is Transparent - Don’t mix up multiple businesses or tracking codes. Data that is easy to check results in a better sales price.
  2. Setup a Business You Are Going to Sell On Its Own – For businesses you are thinking you are going to sell for a reasonable price tag it is best for it to be its own entity. For me I made the mistake of not doing this and as a result will forgo any small business capital gains tax breaks (Canadian specific tax credit).
  3. Build a Brand – Having a branded website for your private label brand will help increase your multiple by presenting yourself as a more established business.
  4. Get Diversified Traffic – I achieved this through my affiliate sites but however you do this it is important to not have any single point of failure in order to earn a premium multiple.
  5. Run Lean but Don’t Stop Running – If you are preparing to sell your business make sure to keep costs down but don’t stop pushing your business forward. The sales process can take a long time and it is vitally important that you continue to push your business forward during that time.
  6. Diversify Suppliers - Similar to above it is never a good idea to have a business that can fail with any single point of failure. If a business doesn't have a backup for its main supplier(s) it can hurt the sales price.
  7. Position Product in a Growth Niche – Positioning your product offering in a growth niche can provide a lot of interesting upside for a buyer. If you are looking to sell for a premium a dying market is not going to demand a premium.

How Much Is My FBA Business Worth?

FEInternational.com has a great post talking about selling an FBA business and from the image below shows that generally expect an FBA business to sell for 2.0X – 3.0X annual earnings (24X-36X monthly)

Source - http://feinternational.com/blog/how-to-sell-an-amazon-fba-business/

DigitalExits.com did a great summary analysing 15 deals in 2015 and found the multiple to be closer to 1.83X or 22X monthly earnings.

Source - http://www.digitalexits.com/amazon-fba-business-worth-want-sell/

EmpireFlippers have multiple FBA businesses for sale in their marketplace and have them priced from 22X-25X compared to 25X-30X for the websites for sale on their marketplace.

4 Places to Sell or Buy FBA Businesses

  1. EmpireFlippers.com
  2. DigitalExits
  3. FEInternational
  4. WebsiteClosers

I haven’t had much experience with these but certainly don’t recommend Flippa and can say that if I was going to list with a broker I would have listed with EmpireFlippers.com

Should You Use a Broker or Sell Your FBA Business Privately?

Reason to Use a Broker – The biggest benefit of a broker is the access to buyers who would be out of reach otherwise. The other large benefit of using a broker is their help in guiding you through the process with structured deal terms and some security to ensure you don’t get ripped off.

Hidden Cost of Using a Broker - Inflexibility to come up with a unique deal structure – If me and the eventual buyer had connected through a broker we would have struggled and been discouraged from coming up with this creative deal structure.

Reason to Sell Privately – Ability to structure a unique win-win deal was the main reason I liked the private sale model. In addition I was able to save the ~15% brokerage fees.

Hidden Cost of Selling Privately – Lawyers! Although they were necessary and did add value they certainly aren’t cheap!

Final Thoughts on Using or Not Using a Broker:

  • If you have a straightforward deal and don’t have access to potential buyers than definitely list with a brokerage.
  • If you have access to potential buyers and are looking to structure a unique deal than listing privately definitely makes sense.

Using a Broker Update (May 21) - Differing Opinion From Justin/Joe...

1. Yes, you avoid the broker fees selling yourself, but I think it's a bad idea for MOST people. (You're fine, Spencer's fine, etc. I'm talking about your average site owner) They don't know the ways they could be screwed over and aren't likely to get a great deal. In many cases, they sell for less. Avoiding the brokerage fee is only worthwhile if you're getting the same value, of course! (Jon Comment - I don't disagree here, getting experts to help is definitely worth it)

2. You mentioned not being able to get a "unique deal structure" is a hidden cost to brokers, but that's just not true. That's exactly what brokers DO! 🙂 We do earn-outs and deal structuring all day long as part of our value add. You COULD argue that a broker is more likely to offer complicated deal structures as their goal is to ultimately get the deal DONE, not to necessarily get the best price. (I think that's a better point, heh) (Jon Comment - I can't imagine how we would have gotten to this unique deal going through a broker...however I have not had enough experience with buying/selling sites to truly understand the unique deals brokers are able to structure so I believe it is possible to get some to truly unique deal structures with the HELP of a broker). 

Learn more about unique deal structures with this podcast episode​

PART 9 - Conclusion

Obviously this is a great success! I am thrilled with the growth of the business, the sale of the business and the next steps for me in this space!

Effort + New Problems = Opportunities

For the past 9 months in addition to building my other projects I have been putting a lot of effort into the FBA business and where effort flows opportunities follow.

The combination of effort and new problems has presented new opportunities which I am progressing with and excited about…

New FBA Projects:

BrandBuilders.io – Was born by partnering with the person who I purchased the original affiliate site from when it was only making $100/month and focusing on creating a web development service specifically focusing on FBA sellers looking to establish a “big brand” presence online. Or for people looking to repeat the model above a done for you affiliate site.

FBA Brand Websites & Done For You Affiliate Sites

ListingEagle.com – This SAAS was created due to the massive pain we had monitoring our listings for hijackers. Partnering with a great team including a programmer, business development lead and a couple advisers has helped this idea take shape within the span of a couple months.

Get Notified Immediately If Your Listing Gets Hijacked!

Partnership with Investor Syndicate – One of the groups I was first in talks with included a very accomplished group of investors who are looking for additional acquisition plays and working with them we are looking to rinse and repeat this model and then do so on scale once the model is validated again.

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Buy it Now!

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Jon Jon May 18, 2016 19 Comments
Team Management

So What Do You Do Online? Plus How To Keep Control Of Multiple Projects

One of the questions I have gotten a lot lately is so what exactly is an “internet business”  or “what exactly do you do”?

Similarly a lot of my online friends ask me so how many projects do you have on the go and how do you manage them all?

With this post I hope to be able to answer both.

I will show exactly what I do with my online business and also all the different projects I am currently involved in…

(more…)

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Jon Jon May 1, 2016 19 Comments