How to Buy Profitable Online Businesses and Build Different Streams of Passive Income

Where Should I Start Looking To Build My Own Online Business Portfolio?

When you’re first starting, if you’ve got a bunch of friends and you’re already in business, it’s definitely good to get some private deal flow and go to your private network. Most people starting this, they probably just heard like, well I can buy a business. What you don’t want to do is you don’t want to go to a marketplace, where people can self list their own businesses for sale.

You run into problems there where you look at a bunch that look good, but you do due diligence, and you just waste your time because a lot of those listings are DOA listings. I like to call them lemons, people will be buying lemons.

And I only suggest going there if you’ve got experience, you’ve bought a business before you know how to do due diligence. If not, and you’re just new to this, go to Google and type in website brokers and there’s so many, right there’s so many like people listening to your show. You’ve probably heard of FeInternational they sell a lot of SaaS sites. You’ve got EmpireFlippers. you’ve got MotionInvest, you´ve got QuietLight, Investors.club. Check out those guys. Also, don’t forget Andrew Gazdecki from Micro Acquire if you guys haven’t checked him out.

What Skills Do You Need In Order To Operate Profitable Online Businesses? 

It really depends on their goals. It depends on what they want to do within the business, not how they want to grow the business, but what they want, combined with what they want to do in the business as well. Normally, people will buy business in the community, and I will send them to the mastermind, where I teach them how to scale and grow it.

There I like to sit down with them and go, what’s working in the business, what’s not working in the business? Let’s scrap everything that’s not working, let’s focus on what is working. Then let’s build processes and systems around it. What of those tasks do you want to do? Do you want to be doing marketing or SEO? Do you want to be doing customer service if it is there? If there isn’t any, do you want to be producing the content? What part do you want to do, if you don’t want to do any of it, that’s okay as well.

So the part that you do want to do is up skill in that level and go all in on it, right? The rest that you don’t want to do, if you don’t and you don’t have to do any as well. Let’s build a process and a system and hire a team around that. What I do is I basically teach people how to hire and and build and be the owner of the business, not the operator, unless they want to be the operator for smaller businesses. I suggest people do become an operator and learn that part of the business that they do love and outsource the other parts.

Once they’ve learned that, what they can do, is you can do this if you have a team or you can do this if you’re an operator yourself is, you’ve built something that is more powerful than business, you’ve built the engine of the business, and that’s highly leverageable. So once you’ve learned that skill or built that system, you can go out and look at profitable online businesses that require that, that are inferior to the business you have, that you can buy, and then you can push this engine into that business: and that’s just a beautiful thing.

Let me let me highlight each of those three categories of what they should focus on if they’re going to purchase one of those profitable online businesses. Focus on being an excellent marketer. Really, really good at digital marketing and then pick one channel. If you get to pick Facebook, stick to that one and get great at it, YouTube, stick to that and get a great… Instagram, whatever it is. 

Then focus on marketing content is our focus on SEO, right being really, really good at SEO. With SaaS, what I would do personally since I’m not a developer, I would have a developer team or or virtual assistants to do the developing part and then I would focus on marketing as well. Mainly content marketing, but you’re doing it is awesome.

Which Model Would You Focus On When Acquiring Your First Online Business? 

The lowest barrier to entry would be content businesses, in my opinion. Because you can buy an e-commerce, I mean, SaaS is good as well, we could probably put them in the same boat. I wouldn’t suggest getting into e-commerce, because you want to ensure that you’re great at doing marketing and you want to ensure you can produce the same results, if not better.

If you can’t, you need to hire an agency. To find a good agency, it’s just really, really hard. You’re going go through a few and you can spend a lot of money to find the right one. So I’d say, don’t go into e-commerce. You can hire writers quite cheap, you can have people produce articles for you that do content management services, and build backlinks, all that sort of stuff. I’d say the barrier to entry is pretty low on that, because you can outsource tasks pretty easily, and start to learn SEO on the fly.

The business doesn’t need your immediate attention to continue to produce any results. You could leave that business for a matter of months, and it could still produce revenue. We see say people will leave their business for a year or more and sell them and they’re still producing decent returns. 

When it come to SaaS, it depends on what business you bought in the SaaS. If the due-diligence checks out and the software is up to date, and the marketing systems working quite well, you’ve got time to learn how to do some marketing and learn how to do CRO.

So I would put SaaS investments in in the same boat as content as well, because you’re buying a customer base. There are some other things that you probably want to learn prior to buying a SaaS business like how to decrease churn, and increase retention. That is a pretty valuable skill. You can bet if the business has been growing along for quite a while, then the barrier to entry can be quite small for SaaS as well.

Why Should We Consider Buying an Established Business VS Building Their Own Online Business From Scratch?

Great question. My partner and I went for a walk yesterday afternoon, and she asked me a similar question. We were talking about how easy it is to teach people to start an online business. The barrier to entry is very cheap, very easy, you can get a lot more people to come and work with you and you can sell your products and services a lot easier because people are taught that you don’t need a lot of money to start an online business.

But when you buy one, you need to have that upfront cost. Why would I suggest still buying online business? And why do I believe it’s less risky? Even though you’re spending all that money up front? The answer is that when you start an online business, you still got that 90% failure rate.

What does that consist of? Well, one thing that you need to find is this thing called product market fit. That can be hard and this is one of the hardest things: finding product market fit. You can go through a lot of products, and you can spend a lot of money trying to sell this product that nobody wants to buy and you can build this website, and there’s a lot of cost that goes into that as well.

Then, even when you do find product market fit, you start selling it, then you really need to evolve that marketing machine, that sales machine, it’s a system. To build that out to scale and grow the business into something that’s quite decent.

When you buy in on the business, somebody’s got that product market fit for you, that built that marketing machine, that sales machine. They’ve got not just product market fit, but they’ve got proof of concept that the business as a system, as a whole, works. You can buy a business with a team, I bought a business with the team before.

Why I believe it’s less risky is because you realize your profits a lot quicker. When you start online businesses, you can go through a year to three years, sometimes more, without even getting a return on your investment. If you don’t know how to project the growth of a business, then you can run out of money and you can be left hand drawn.

This happens to a lot of people, when you buy an online business you’re within a ballpark range. If you buy a $100,000 business, you know that you’re roughly going to be making around $30,000 a year and you’re going to get those payments in monthly payments. So that’s why I believe buying an online business is less risky, because the whole thing is proven and you’re buying a whole system.