This episode features guest Greg Elfrink, from Empire Flippers, the world’s leading marketplace for buying and selling established and profitable online businesses.
Discover the top factors buyers evaluate for when determining the value of a digit business.
Greg also goes into detail of why diversifying your marketing channels as well as your product offering are essential factors in determining the valuation of your business.
Within this episode, Greg details the formula for evaluating valuation of digital businesses (hint, it has to do with profits not revenue).
Finally, Greg details how Empire Flippers works to help digital business to sell their business or buyers find legitimate businesses and why 2022 is such a 'hot' sellers' market.
Episode Action Items:
To find more information about Greg or to signup for a free business evaluation visit https://empireflippers.com.
ABOUT THE HOST:
Andy Splichal is the World's Foremost Expert on Ecommerce Growth Strategies. He is the acclaimed author of the Make Each Click Count Book Series, the Founder & Managing Partner of True Online Presence and the Founder of Make Each Click Count University. Andy was named to The Best of Los Angeles Award's Most Fascinating 100 List in both 2020 and 2021.
New episodes of the Make Each Click Count Podcast, are released each Friday and can be found on Apple Podcast, iHeart Radio, iTunes, Spotify, Stitcher, Amazon Music, Google Podcasts and www.makeeachclickcount.com.
Andy Splichal 0:02
Welcome to the Make Each Click Count Podcast this is your host, Andy Splichal. We're happy to welcome this week's guest to discuss today's topic which is Placing A Valuation On Your Business. Today's guest is the Head of Marketing at Empire Flippers, the world's leading marketplace for buying and selling established and profitable online businesses. A big welcome to Greg Elfrink. Hi, Greg.
Greg Elfrink 1:12
Hey, thanks for the warm welcome. Hopefully, I'll be able to add some value here for your audience.
Andy Splichal 1:16
You know, I think so we're definitely looking forward to having you on our show today. Now, let's get started with a dream of many entrepreneurs is to start a company with the intention of one day selling it and retiring to a tropical beach somewhere. So let's start right there. What are the top things potential purchasers care about when buying a business?
Greg Elfrink 1:39
Sure, and just as a footnote, if you are, you know, Ecommerce entrepreneur, you can actually be working from a tropical beach, too. I have a lot of friends who do that the old digital nomad lifestyle, but yeah, the main things people look at when they're buying a business is one, is it a solid business, right? Like, this depends on the phase of the business, obviously, older businesses tend to be better. So older businesses tend to want that are multiples.
Andy Splichal 2:07
Greg Elfrink 2:09
Yeah, longevity, right. So obviously, you can't predict the future like the past is never a predictor of the future. But the longer your business has been around, that it is probably survived a lot of storms, like, you know this, and I am sure your audience must know that as if they've been in the game for any length of time, you know, internet marketing changes incredibly rapidly, right? So if your business has been around for a few years, that's actually a pretty long time for a digital business. And you have seen some crazy twists and turns and probably complete pivots that you've had to do in your business and you've survived. So that's a really good sign of a solid business as staying power right.
Andy Splichal 2:50
Now, is that number is that number, like five years is better than one, but does it go exponentially? 20 years is better than five? Or, or is it like once you get over five years, your your, you know value more valuable because of longevity?
Greg Elfrink 3:06
Yeah, good question. So I wouldn't say it's an exponential increase your valuation, I think it probably works more in a linear fashion than exponential. But I will say like most business buyers, or depends on the size. But for most like decent sized businesses, say you have a $500,000 valuation Ecommerce store or a couple million dollar Ecommerce store, you got to be around for at least probably two to four years before you can really sell that two years, it would be on the very low end.
Andy Splichal 3:36
Just to make sure it's not like a fad or something?
Greg Elfrink 3:39
Right, exactly. And I've had friends who reached out to me who just like, you know, have this amazing growth and their business is probably worth like one and a half billion, you know, but the business has only been around for five months. So no one's gonna buy that that's too high. Now, if the business is worth, say, 50k Someone might buy that, right. Because, you know, the risk on that is less, but buying a seven figure five month old business is pretty risky proposition, right.
Andy Splichal 4:07
Right. Okay. So longevity, what's next?
Greg Elfrink 4:10
So the next thing is your traffic diversity, which I think you understand quite well with the name of the podcast, Each Click Count, right? So this is a double edged sword for a lot of entrepreneurs, because most entrepreneurs, they have a single channel traffic that is like, by far their main source of traffic, like whether it's SEO, Facebook, you know, whatever, right? But if you can diversify that traffic, that again, the risks the profile of the business, right, so if you're getting, say 50% of your traffic from SEO 40% from say, Facebook ads and another 20% from Google ads, or YouTube ads, or you know, whatever, that's a pretty healthy mix, and most businesses we sell don't have that mix, by the way. Most businesses we sell are still a single traffic channel, but So I'd say that because, you know, most entrepreneurs are like, Oh crap, what I have to learn this old, complete new way of marketing before I could sell, it's not true. You definitely sell a single channel business, but you want to sell the highest valuation diversifying traffic is super important.
Andy Splichal 5:12
Well, even if you're not looking to sell your business, I mean, you never want to put all your eggs in one basket. I mean, you don't know it. I'm sure that's why the evaluations there because you don't know if that marketing channel for some reason you wake up tomorrow and Facebook suspends you, right? Or Google out, the SEO algorithm changes. And all of a sudden, he gets slapped with a Google penalty.
Greg Elfrink 5:33
All the people start writing SEO is dead again.
Andy Splichal 5:36
Exactly, exactly. So whether you're looking to sell or not, I mean, you you definitely want to diversify when it comes to your marketing channel. Okay, so we have longevity, different marketing channels are bringing in traffic, what's three?
Greg Elfrink 5:50
Three is very similar to traffic diversity, and its revenue diversity. So this can be as simple as having more than one product to sell, you know, if you're an Ecommerce Store owner, and you are selling one product only, then you are at a higher risk in that size. Like when if this product falls out of fashion, when if someone comes and does it better than you or you know, markets move on. So as a brand, you want to have multiple different ways you can make money ideally. Now, when I say this, I don't mean go and launch 500 products, that's the exact opposite, or what I mean, some, some people hear that, like, oh, I need to have all these new products to increase my valuation. But really, the sweet spot where you're looking at is between like five to eight products tends to be the sweet spot. Now if you are a one product only business, the reason why one product is a bad thing for most business buyers not all is because again, let's go back to a million dollar Ecommerce store. Example here, it's only one product, a buyer looking to buy that business, he's banking 100% of their investment thesis on that single product, rather than a brand selling a suite of products, all at good margins with good, you know, shares of that revenue, right? Now, there are buyers who would buy a one product only business and those tend to be more in the private equity family office kind of thing where a million dollars on one one product business isn't actually a huge risk for them because of their capital. But for most buyers as a huge risk, so I always recommend the sweet spot being between three and eight products. And obviously, like as your business gets bigger, you can feel free to add even more, as long as as reasonable. Like you don't want to have $100,000 ecommerce store with like 100 different products. That's a bit much, right. And ideally, each of these products should be built into each other, where you're making money for the cross selling upselling, all that kind of stuff, order bumps on all that good stuff.
Andy Splichal 7:40
Now, does it matter where you're selling? Like on your own website? Or if you're just selling on Amazon?
Good question. So that that goes kind of in a mix between traffic and revenue diversity. So most of my friends on Amazon, the vast majority is all Amazon all the time. Some people have successfully diversified with a little bit of stuffing to Shopify, as far as it affects your valuation, it won't affect your valuation unless it's a reasonable sum. So most Amazon businesses, for example, I see are like 99% Amazon where their revenue is coming from a 1% Shopify, that's not going to help your valuation like, you add 70% amazon 30% Shopify that could help your valuation because you're effectively doing multi channel selling, which combines traffic diversity and revenue diversity.
So is there anything else besides those three?
Greg Elfrink 8:34
In terms of what what like what goes into a valuation?
Andy Splichal 8:37
A valuation. Yeah.
Greg Elfrink 8:39
Yeah, yeah. Branding is that's an important one, which is always a bit of a nebulous thing. I think that is probably the hardest thing to quantify. From a business buyer persona and a seller's perspective, to be honest. Even me as I was working at an m&a firm at Def or six years, it's hard for me to always say what is a good brand or not, but there are some like hallmarks your if you're on Amazon FBA, it's quite simple because you're you can look at your reviews, right? It's very public what people think of your brand, right? If you're looking at a Shopify store, for example, or DDC ecommerce brand, there are things you can do look at, you know, Reddit for I love using Reddit subreddits see what people are saying about your product on social media? Are people talking highly of you? Are people interacting with your brand even like, if it's not your sales copy, for example, do you share you know just a piece of pure content and people are loving it? This is all good signs of a good brand. And brand power becomes extremely important as you get higher up in your valuations like Amazon FBA you can skirt by it a little bit without that, because again, the reviews being so transparently Amazon, but the DDC brand, the bigger your valuation is the more brand power you really want.
Andy Splichal 9:50
So how can you determined how much your company is worth if you wanted to sell?
Greg Elfrink 9:58
Well, there's a very simple I always use our valuation tool, which is an extremely promotional thing. But that uses real sales data, you can give a give it a look there. I always recommend if you want to find like what you are worth is and you don't like say you don't want to use us. So you don't want to use the valuation tool or anything like that. There's two things you can do. One, you use a different broker, ideally a broker that is sold businesses like what you are, and ideally at a similar kind of net monthly net profit. And most of the brokers will show the net profit on the public page of the of the businesses that they're selling. So you can see that it's comparable to yours. The other thing you can do is look into your network of people who have sold like kind businesses, so similar businesses to you and get their feedback as well. I think it's very important to do at least one of those two things before you go to sell, sell your business because some people they'll look at you know, oh my you know, my friend, he sold a carwash but you helped me figure out what my valuations but these are radically two different businesses, right? And right, very different kinds of valuations and different things that go into.
Andy Splichal 11:04
Now, is there a simple rule of thumb? I mean, I don't know this, but you know, years worth a profit times three or, or something that just is really ballpark?
Greg Elfrink 11:17
Sure. So yeah, we're a little bit weird, because we use monthly multiples, which is exactly the same as what you just said, it's the same as annual EBITA. It's just a monthly level. But in general, if you're running an Ecommerce business, that is healthy, you know, giving out respectable net profit every month, we look at profit, not revenue, people love talking about revenue, but profit is what matters for buyers. You can probably be looking at between a 38 or 45x. And that's again, monthly.
Andy Splichal 11:52
Greg Elfrink 11:54
Yeah, per month.
Andy Splichal 11:54
Wow, wow, I had no idea it was something, so if you're making 10 grand a month, but let me let me I can't you know, I'm not smart enough to do that in my head. But so 10 grand a month times 38 You're looking it? Does that 380,000?
Greg Elfrink 12:12
Yeah, 380,000, 380,000, $450,000. That would be about right for a quality business. Now, that could go lower, depending on what's happening. There's certain Ecommerce models that would get a hit on the multiple, like drop shipping, for example, it gets a hit on the multiple because they're much easier businesses to copy, they have a much more shallow moat, in that sense, so they're not as defensible. But yeah, if you have a high quality business, like, like Amazon FBA, for example, it's very common for us to sell those at 45x of monthly EBITA.
Andy Splichal 12:45
Now, the bigger you are, does that multiple go down? I mean, I assume if you're making 100,000 a month, you're you're not going to get or maybe you are, are you still gonna get the 38 45 time multiplier?
Greg Elfrink 12:58
Good question. So a lot of the bigger multiples like when you get to the that stage is in the seven figure valuation. So once you cross seven figures, especially Ecommerce, you become a very interesting target to ultra high net worth individuals, other entrepreneurs are bootstrapping their own wealth, as well as aggregators, family offices and private equity. So you have all these confluence of competitors, seeking to buy what you have, which is one of the big reasons why I suggest using a broker like us, because we can navigate those waters for you, obviously, you can do it yourself, it's just more difficult to get all the parties in the same room, so to speak. But once you get above a seven figure valuation, that's when you see a real significant jump to your multiple, so say, a $200,000, Amazon FBA, they might be operating closer on our 35x EBITA multiple monthly EBITA versus a million dollar business. Like we saw, I think the highest multiple we sold was 76 77x monthly EBITA. And that was for like a four or $5 million FBA business.
Andy Splichal 14:03
Four or $5 million a month business or a year?
Greg Elfrink 14:06
Sorry that that was the valuation price. So five oh $5 million dollars. Yes, Sorry.
Andy Splichal 14:11
So tell tell me about Empire Flippers. So you go on there, and I see a ton of listings. Now you go on, and you can just, I mean, you list your business, you have to fill out a form to list your business. How does that walk into the process?
Greg Elfrink 14:28
Sure. So if you're ready to sell, there's two there's two ways you can interact with us on that front as a business seller. And let's first get using our valuation tool. As I mentioned earlier, that's where a lot of people start just to play with the with the calculator, because I bet it uses real sales, PAC data, right? So you get a very rough ballpark of what buyer might buy your business for. The second way is submitting your business. It's there's no commitment or anything like that. And what you find is you go through our vetting process and so we're a bit different than In other brokers in that we have an entire department dedicated to just vetting a business to making sure it's legitimate, that it is doing what the seller says is doing. Because, as you might imagine, there's a lot of smoke and mirrors in Internet Marketing Land, right. So we, we try to make sure everything is real legitimate that we put up on the website. But from an Ecommerce thing, one thing that's super helpful and sometimes depressing for the Ecommerce seller is, we will build your profit and loss statement for you build it from scratch, because we find this is the thing that most Ecommerce entrepreneurs are not terribly great at. And I'm in their camp, you know, I'm a creative person on marker myself. So I'm not the P&I guy either. But our vetting people very much are the P&l people, right. So the reason why it might be depressing is because a lot of Ecommerce entrepreneurs, especially Amazon FBA, they might be thinking they're making a lot of money, but then they look at the P&I, and they're not making as much as they initially thought, because maybe they were doing their books wrong, they missed up on a SKU or something like that. So that's one of our big things, get your books in order. We look at everything else that we just talked about, we form a valuation. Now, everything up to this point is completely no commitment whatsoever to us, you can walk away anytime you want. And we give you the final valuation what you think what we think the business sell for, and we usually give you two valuations. So we give you what is called a typical valuation, which is our typical process, and what we think would be the smoothest transaction for you with the best possible valuation. And then we give you what is called an absolute valuation. An absolute is usually further is either above or below the typical range, usually we're talking about or above, because sellers usually want more money for the business. And we will sometimes do that and allow it if we think it's a quality business. But we also tell you, you know, just expect you're probably gonna have a lot much longer sales cycle, because we're going above what our data suggests, right? But it's always possible if you have a high quality business. So at this point, that's when you we asked you, you know, are is this good? Like, is this what you want? And if they say yes, we will list you on our marketplace. The following Monday, we released the new listings at 10am, eastern standard time every week. And that's when the sales process really begins where our sales team comes in and helps negotiate with the buyers and all that good stuff. At once your business is actually sold, we have another unique thing that is unique to us, at least in the industry, which is we have a team dedicated to migrating that business over to that buyer and making sure everything happens smoothly. That's something that doesn't really happen with other brokerages, which I understand why because they're afraid of the liability. As you might imagine, there could be a lot of liability potential with that. But we do it to help our buyers and sellers have, you know, just a better experience because like, if that thing if migration doesn't go well, like everything was for naught, because it's like really tedious and annoying, but it's also the most important part actually handing over the assets so you can get paid.
Andy Splichal 17:56
So you list your business for sale. Is it I mean, I'm kind of is it like an open house? Were it a hot market where you might get six people interested and have competing Office offers? Or does it just depend on the business?
It depends on the business. So for example, Amazon FBA extremely hot market right now. There's like five of our buyers that become unicorns in the last year and a half or so who are Amazon FBA aggregators and all the aggregators basically, shop with us because we have the highest deal flow for FBA. So in that market, yes, like you, especially if you're above seven figures, there's tons of people competing for business.
You might be getting you might be getting bids even higher than what you've listed. Oh,
Greg Elfrink 18:42
Oh, yeah, we lately if it's a high quality FBA business, and it's over seven figures, we tend to sell above our list price, which is something that usually never happens, because we are usually pretty spot on with the valuation, but they're so hyper competitive, that this is like why I say you should find a way to make people compete, because you will walk away with way more money. We had, we had a deal that was $1.4 million. It was a, it was a private offer. The guy got a private offer, he came to us and say, Hey, what do you guys think? We told him, we can get you way more money. And so you listed with us, and we sold that same exact business for 2.1 million with 1.8 upfront, so just the upfront amount you received was bigger than our private offer. And that's the power of competition. And especially when you use a you know, a machine like us that hasn't already been set up. But that's not true for all business models. So I don't want to you know, finish answer that question. You will think that everything's a hot market like that, like, if you if you run, say a marketing agency, and we've sold those before, those are incredibly difficult businesses.
Andy Splichal 19:44
So let's say hypothetically, let's, let's say hypothetically, I do run a marketing agency. So why why is that difficult to sell?
Sure. So there's a lot of issues with most marketing agencies. Now if you're a marketing agency at massive scale, and by massive, I mean, you're looking at a valuation between 8 million and $14 million, somewhere around there, you're easier to sell at that at that scale. But most agencies, like the owner, like the agency is very personality based or personality driven, where the owner is doing a lot of the tasks were either doing, the fulfillment they're doing the sales are doing the customer service, the operations, everything, right, they might have a few people that are key employees to help. But that also leads into the next issue, which is agencies tend to be very asset poor. In that, if you're if that key employee leaves to go start their own agency, it's quite common, then the new owner is kind of screwed. Because they have to do everything because the key employee left. So this is why agencies usually are very difficult to sell. The other thing is the custom work. So a lot of agencies do scope out custom work. And that makes it incredibly difficult, especially for like, if a buyer like say you ran an SEO agency and the right buyer comes in to buy your SEO agency, they might not even have a background in SEO, they're just business private equity or whatever. And your key employees now what do they do? Like what assets do they really buy here? Because most agencies, ironically, not very good at building their own brands and marketing themselves. So we're usually quite good at marketing their clients right but not for themselves.
Yeah, that makes sense.
Greg Elfrink 21:24
Andy Splichal 21:25
Back to back to Ecommerce. So I read somewhere that during COVID, it's been a great time to purchase businesses. Is Is that true? Do you think and what does that mean for sellers?
Greg Elfrink 21:37
Yes. So it is a this is the best time to purchase businesses I've ever seen in my six years at EF. But not because businesses are cheap. In fact, businesses are actually more expensive now than ever, we're in a seller's market, very hot seller's market, like you're running a really great business you there's the there's not a better time to sell them right now than I've ever seen in six years. Now, the reason why it's so good for buyers is because more people than ever are selling their businesses, which means while a buyer might not get a fire sale, or a credibly deep discounted deal, there are more high quality businesses than ever before for them to choose from of getting a really good one. And most buyers, I know that really go up and like scale, what they buy, they don't usually buy a fire sell type of business where like, you know, the valuation is way off from what it should be. Usually they're buying premium businesses that they then leverage up with either capital team talent, skill, whatever their unique advantages, right? And they blow it out of the water from there. So this is one of the best times I've seen it by and one of the best times I've seen, so
Andy Splichal 22:46
How much bargaining occurs on your platform? Let's say, you know, I'm looking at your listings right here. But let's say somebody list the price to make it easy, like a million million dollars.
Greg Elfrink 22:56
Andy Splichal 22:57
Do people come in and say, hey, I'll give you 600,000 for that? I mean, do they lowball like that? Or do they come in closer to the mark to the asking price?
Greg Elfrink 23:09
So yes, people do that. Not so much on our platform, though. So one of the things that we have is we have two sales teams, we have a sell-side and buy-side. So the sell-side is usually doing that, supplanting with entrepreneur, stuff like that, selling them on our process, as well as educating them how it works. And once they're on the actual marketplace, that's when they will start interacting with our buy-side team and our buy-side team. They have all the relationships with our buyer network. And we have a buyer network right now with over $5 billion in verify liquidity waiting to like deploy into a profitable house. So like yeah,
Andy Splichal 23:44
Yeah, that's great.
Greg Elfrink 23:45
Yeah we only started tracking it last year, I was shocked myself how much we have, so we there's two things we do to help people not get a lowball offer and waste the sellers time and waste our time to write because like no seven in the right mind is going to sell you the business for 40% less, unless like the business, there's something wrong with the business that maybe right, which is okay, like you can sell things are wrong with a business, you can sell a business, there's something wrong with it, buyers buy those two, because there's opportunities if you can fix them, right. But what we do is if a buyer comes to our marketplace and registers before they can see any business, so in this example, that million dollar deal, they'd have to prove that they have enough liquidity in their bank account or investments to actually buy that business. Otherwise, we won't allow them see any of the intimate details. So that's the first thing we do to qualify a buyer. The second thing away is very rare to get a lowball offer unless there's again, something wrong with the business or you're something just a hard business to sell like an agency for example, is our buy side will tell the buyer look, this is not a good enough deal. This is not a good enough offer. You're not going to get it.
Andy Splichal 24:53
So you don't even give it to, you don't even give it to the client then?
Greg Elfrink 24:56
Well that depends, that depends. Well, we'll still probably give it to the the seller, but we'll also give them three other offers, right? That are probably way more competitive. So they'll never move ahead with that higher.
Andy Splichal 25:06
So, so if you do most of the time, so you get multiple offers?
Greg Elfrink 25:13
And I'd say that's pretty common. Yeah. I'd say most businesses get between three to four offers. If you're Amazon FBA, obviously that's going to go up because so many people are looking to buy FBA. But in general, yes. So we tell by like, like our the way we look at it, like our fiduciary responsibilities to the seller, but buyers are our actual repeat customers. So buyers buy from us over and over again, a seller might sell with us once every two years, because it takes time to build up a new business, right, sellable. So are like we are coaches for both the buyers and the sellers. And our goal is to get it so the buyer wins by getting a good deal. And the seller wins because they sold at a good price. And that's what we want, right? So we'll tell the buyer will coach them like, hey, look, this offer is very low, you need to raise it because there's these other offers are definitely going to be this offer. You're like if you really want this business, you need to make a better offer. Right? So we'll coach you on what the seller is really wanting to get out of the deal, right? And sellers, like, obviously, the seller wants the most amount of money, but that's not always going to be the winner. So you can make a lower offer and actually still win the deal. It depends on what the seller wants.
Andy Splichal 26:24
Are there any restrictions on what kind of businesses you'll sell?
Greg Elfrink 26:29
Yes. So we only sell online businesses. So the vast majority of the business has to be done online. So we wouldn't sell like a beauty salon or a carwash, right? None of those as we are,
Andy Splichal 26:45
Are there any restrictions on what they're selling online?
Greg Elfrink 26:50
Yes. So we don't do any porn or gambling or political stuff. So we,
Andy Splichal 26:55
Greg Elfrink 26:57
CBD? So we will do that with affiliate sites but not with Ecommerce.
Andy Splichal 27:02
So I'm sorry, to interrupt. So no porn, no gambling? No, what are the other restrictions?
Greg Elfrink 27:09
Political things, CBD with Ecommerce. We don't know have
Andy Splichal 27:12
What what's, what's a political thing?
Greg Elfrink 27:15
Oh, so we have this one. That was a bit weird. And this one had a this one was definitely a fad. But it was just like a business. I was trying to make money off of both political sides and USA and like their thing was, like printing the faces of these political candidates on toilet paper. And that was like early Congress was like, there's like, multiple reasons why we couldn't sell that business. But that's like an example of a funny one.
Andy Splichal 27:42
Whatever like political T-shirts? Is that that would be a, no?
Greg Elfrink 27:46
Usually that's okay. No, that's usually okay. It's usually stuff that is like more built on the, the the rage machine. Stuff like we tried to stay away from that. But like, you know, normal, normal G-rated political would like we saw political news websites, for example. And that's fine.
Andy Splichal 28:06
Interesting. Now, do you have a favorite success story of a business acquisition, you'd be willing to share?
Greg Elfrink 28:13
I have so many. So what's interesting with my position, like I become friends with a lot of our customers, like a lot of their first contact with EF is through my marketing. And we'll talk over, you know, LinkedIn or Facebook or something like that. So I've become friends with a lot of them. But a couple of really cool stories. One that has always stood out to me over the years was, there was a couple. They were high, high up media executives, I forget what exactly they were doing, but it's a media company. And they had a child who unfortunately had like mental challenges and had to go to this special school. The problem with the school was it was an hour in the opposite direction of their commute. So they're basically commuting like two to three hours a day each way. And by the time they get home with their kid, like they have like, no time to spare, they're just like, wasted and tired. Right? So they buy this business Ross I think it was a foreigner 50k, $450,000 Ecommerce business. And then I followed up with him about a year later, I think was about a year later and they had quit their job. They sold their house and they now live five minutes from my school walking distance. So way more time with their kid and this was just like, one story like there's so many stories like that I could talk about like I one of my really good buddies in SEO world. He just sold a content site with us. And it was a seven figure content site and I told him like hey, you know, just expect a longer sales cycle is a bigger business. So he gets listed on our marketplace on Monday. He sends me a message evening in my evening, and he's like, Dude, you just changed my life like. What do you mean? Like, just got a full cash offer like live for less than 24 hours. So that this is all a million dollars all cash up front. And that changed his life drastically. Right? So that's one of the things I love about this business is the ability to change someone to transform someone, or we could transform you in a negative way if things go bust, right. Like, that's always a possibility. But it's just awesome to see so many of those stories.
Andy Splichal 30:17
Now, are there any challenges that you struggle with and getting results for businesses that want to sell?
Greg Elfrink 30:24
Yeah. So if you're a first time seller, the biggest hurdle that I have seen is actually it's actually pretty easy to overcome, if you recognize it in yourself, and that's what I call emotional equity. So most entrepreneurs who are first time sellers, their business has a very high place in their heart, because yeah,
Andy Splichal 30:44
I'd say it's their baby, their baby.
Greg Elfrink 30:44
Yeah. Like most of their net worth is tied up in it. And it probably allowed them to do some amazing things like with their job, the stay at home with their family, all sorts of stuff, right? So entrepreneurs, they have a tendency to weigh over value, what their business is worth. For example, we had a Amazon FBA guy, he's worth 6 million. He's like, No, I'm only going to sell it for 12 million, like, Okay, well, you're never going to sell it. You know, that's like these Wait, you're asking for too much what the business is. And it's because of the emotional equity, we value our businesses with a much warmer arithmetic than an investor is going to value. So that's something we coach on, we coach entrepreneurs on a lot, before they really get deep into the vetting process. So they understand that, you know, a buyer is looking at the code, our numbers, not at the awesome stuff the business did for your life.
Andy Splichal 31:33
Now, one thing I always like to ask my guests is, are there any business books out there that you can attribute to your journey as an entrepreneur?
Greg Elfrink 31:42
Yeah, so like, there, this isn't so much a business book is more of a personal finance book, but it's called The Richest Man in Babylon. Have you heard of it?
Andy Splichal 31:52
I've heard of it. I haven't read that.
Greg Elfrink 31:54
So it's a great, it's a great read, you can read it almost in a single sitting like it's not very long. It's just a parable of this guy in ancient Babylon, trying to make money. And he meets his mentor who helps him teach them about how to make money. And there's a really funny story inside of it, where the guys are saving 10% of his income over a period of like a year or two. And now he has enough money to start investing. And the first thing he invests is with a friend to go like overseas to buy these gems from these Venetians. And he tells his mentor, he did this and mentors like, Oh, do you know what, Venetians? And he's like, no, like, Oh, do you know a lot about gems? Like, I don't know anything about gems? What about your friend like, no, like, Okay, well come back to me when you say about money, again, if you'd like all business like, was completely false, because the Venetians just sold them like pretty glass, but it wasn't igems at all. And then later on, he saves up money again. And he invested in this chariot makers business, who make who like that's his business, you need a loan, basically, to scale his business. And he's just started becoming really wealthy, because he started realizing the difference between good and bad investments, like understand the like the parable, the stories, like understand the lay of the land before you commit, right? I think that's a always a very valuable advice in business.
Andy Splichal 33:09
So what problems does Empire Flippers solve for their clients? And how do you guys stand out from the competition?
Greg Elfrink 33:17
Sure. So I think, from the seller side perspective, the big big problem we solve is, most sellers have never sold a business. It's a highlight event, right? They're not doing it every day. If they're prolific, they might be doing it every two years. Once right, you know. So there's a lot of moving parts in selling a business, especially a bigger Ecommerce business, like we have a $30 million Ecommerce business listed right now there's tons of moving parts, that person built that business from scratch. So we help you navigate those M&A waters with everything I've been talking about before. Now on the buy perspective, one of the things we help you with is knowing you're buying a legitimate business, which is should be pretty easy to note, like that should be a standard thing in the industry. But like I said, there can be a lot of smoke and mirrors. So we help you make sure that is a legitimate business. And we cut down your due diligence time drastically because of that, right? And we help both sides negotiate, right. So we're basically there as a coach and a mentor for both sides of the deal to help you now one of the things that makes us really stand out is most brokers, they are very much like a commissioned salesperson kind of job where they do everything themselves. That's not what we are. So at a traditional broker, you're looking at a guy who's doing all the vetting, he's building the p&l, he's doing the marketing, the sales, the migrations, if they do it, which most of them don't, and he's doing all himself. So if you go sell your business with that brokerage to you, two years later, you're gonna sell it again, you might get a different guy and the process is completely different because the person does everything differently. And you run into these issues where people think like, oh, no, this is better because it gives me a white glove treatment, but it's actually the worse you on an assembly line. And that's what EF is we're an assembly line, we've taken what that one broker did. And we split it off into sections where we have an entire department dedicated to vetting, dedicated to sell, sell, sell, or sell as buyers, dedicated migration as a whole marketing team dedicated, right. Which leads to way better results in my in my views, that's how we stand out.
Andy Splichal 35:23
So how does the fee structure work then with you guys?
Greg Elfrink 35:27
Sure. So we used to have a tiered system. But now we have a rolling scale. So anything less than a million dollars still run usually right around 15%. As you go up closer to that million dollars that 15% will slide down. But if you want to play around with our commission calculator, you can just type in empireflippers.com/commission or /calc. Either one of those will work and you can type in your numbers and you can get a good feel what kind of commission you're going to be paying as you go up higher, the Commission goes lower.
Andy Splichal 35:58
Great, well, how can an interested listener learn more about working with you at Empire Flippers?
Greg Elfrink 36:03
Sure. You can check out empireflippers.com We buy team is blogging all the time, we have a Podcast called The Opportunity where my content manager is interviewing buyers and sellers as well as domain experts all the time. So that's a good place to learn. If you want to connect with me, you can always email me, email@example.com. or you can add me on LinkedIn. I'm usually pretty active there.
Andy Splichal 36:25
Well, this has been great. Is there anything else you would like to add before we wrap it up today?
Greg Elfrink 36:28
Oh, no, I think you did a good job if your audience does have any questions. Like I said, I'm usually pretty easy to get a hold of and always happy to help whether user or not.
Andy Splichal 36:37
Well, great. Well, thank you for joining us, Greg.
Greg Elfrink 36:41
Yeah, my pleasure.
Andy Splichal 36:42
Well for listeners remember if you liked this episode, please go to Apple podcasts and leave us an honest review. And if you're looking for more information regarding Empire Flippers or connecting with Greg you will find the links in the show notes below. In addition, if you're looking for more information on growing your business, check out our all new Podcasts Resource Center available at www.makeeachclickcount.com. We have compiled all the different past guests by show topic and included each of their contact information case you would like more information on any service I've discussed during previous episodes. Well that's it for today. Remember to stay safe, keep healthy and happy marketing and I will talk to you in the next episode.