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!
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…
53 k$ Initial Investment
Final Sales Price
334 k$ Final Sale Price + Net Earnings
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 😉
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...
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...
Podcast Interviews on This Business Model
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.
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!
Below is an overview from the time when I decided to start building this business to the point when the deal closed.
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
The potential sales price is $270k but what did I actually sell it for and what were the terms of that sale?
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…
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).
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
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.
During the sales process we started to get our first hijackers on our listings which…
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…
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)
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
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:
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
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.
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.
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.
I am a 31 year old husband, father of 2, engineer and a huge fan of developing systems to build useful and profitable websites. The reason I build online businesses is to provide financial independence for my family and yours. I am not a GURU but just a regular guy who is grinding out 12+hr days to build a life for my family on terms.Jon Haver, Online Entrepreneur