In this episode Michael talks to Jaryd Krause of BuyingOnlineBusinesses.com about Jaryd’s journey from being a plumber to buying businesses online and traveling the world. They discuss how Jaryd is now helping other people achieve their dream lifestyles buying and selling online businesses.
Jaryd Krause has gained knowledge, experiences and great success through purchasing online businesses and teaching people how they can do the same. Jaryd’s mission is to teach 1,000 people how to replace their current income, quit their job and live a lifestyle they absolutely love.
To show people an alternate lifestyle is more than possible.
SKIP TO THE GOOD PARTS:
- 0:34 – 2:24 Jaryd talks about how he explains what he does to others. He also talks about his journey from plumbing to buying and selling websites and traveling the world
- 2:43 – 3:43 Michael describes how he explains what he does to people.
- 5:06 – 5:53 Jaryd talks about how he bought his first business
- 7:57 – 8:46 The story of how Jaryd got into teaching people how to buy businesses
- 9:16 – 10:45 Jaryd explains how customers find him and how he structures his services
- 10:56 – 11:20 Jaryd talks about the average amount his customers will spend on a business and how it’s gone from from $30K to $50K-$250K
- 11:20 – 12:11 Michael explains a service offered by Domain Magnate where the help the client purchase a business and then manage it for them
- 12:11 – 12:59 Jaryd talks about the increase leverage larger businesses have in comparison to smaller ones
- 13:42 – 15:23 Jaryd talks about two important things he teaches is clients; two goals they should have
- 16:57 – 18:06 Jaryd talks about how he finds business on FE International and Empire Flippers and how helpful these companies are for first time buyers
- 18:50 – 21:07 Michael explains where Domain Magnet’s deals come from and how he is looking for a different sort of deal so FE and EF are not idea for DM’s purposes
- 23:11 – 24:29 Jaryd talks about how he makes money. He describes the membership and community that he is running and how much it costs
- 26:19 – 27:28 How Jaryd teaches due diligence to his clients and how important it is to become an “Attractive Buyer”
- 31:03 – 32:05 Jaryd talks about some things to keep in mind when buying your first business
- 32:37 – 35:48 Jaryd and Michael discuss group buying and where they feel the online investing industry is headed. Jaryd also talks about how he is preparing his team for group buying and larger investments.
- 37:47 – 40:43 Michael and Jaryd discuss how, right now, brand new, high-risk businesses are being sold for the same amount as some decade-old, low-risk businesses
- 42:41 – 43:42 Jaryd talks about finding virtual assistants to help first time buyers run their new company
- 43:42 – 45:01 Michael talks about how VAs and contractors can be utilized to run a business
- 45:47 – 46:31 Jaryd cautions people not to get overwhelmed with the amount of information out there on starting a business. He recommends finding a mentor and people that will help you learn the right things and know what to listen to and what to ignore
- 46:56 – 51:46 Michael and Jaryd talk about some of the places they’ve traveled including Bocas del Toro, India, Egypt, Montenegro, and many others
- 51:51 – 54:54 Jaryd tells a story of his first time in India when he experienced extreme culture shock at a local tradition surrounding cremating the dead
- 54:54 – 56:25 Michael tells a story about Thailand where he left money in a cab and was surprised when his driver actually chased him down to return it
Michael Bereslavsky 0:14 Hello there listeners. Today we have Jaryd Krause. Hi, Jaryd, how are you doing?
Jaryd Krause 0:21 Good Michael. Thank you for having me on. How are you?
Michael Bereslavsky 0:25 I’m good. So Jaryd what do you tell people when they ask you what you do for a living? How do you explain it?
Jaryd Krause 0:34 It’s always an interesting question. I used to play around with this a little bit because I got sick of telling people the whole story. I used to tell people that I was a plumber and I tried to make money online and I failed and I sucked at it for so long, and then I bought a business and then bought another one and learned this craft of buying sites and I then started to teach people. Now I just tell people that I teach people how to buy website businesses.
Michael Bereslavsky 1:08 That’s a good one. So that’s a short kind of one line. I teach people how to buy businesses.
Jaryd Krause 1:13 Yeah, and then it sort of gives people the opportunity to ask deeper if they want, and then there’s some people that it’s just a common…it’s like a generic question. It’s like an older response of like, Hey, how are you? What do you do for work? So a lot of people actually don’t really care what when they really asked, but there’s some that do dig deeper, spoke to a guy. It’s funny this morning, I woke up, I went out and put the bins out for the rubbish man and down the end of my street, there’s a job site. It’s quite a massive two story, a two building high rise, and I used to work on high rises as a plumber. And as I took the bins out One of my old work colleagues walked past my front house. And he’s like, My last name is Krause, and they will call me Krausey, he’s like, Krause? I was like, oh, Simon, Hey, man, how you doing? And he’s like, Oh, you know, what are you doing? Like, are you still a plumber? And I told him no, and then I told him what I did, and he ate it up. He really got into it. So there’s some people that are interested in it, some people that aren’t.
Michael Bereslavsky 2:24 Yeah, that’s interesting, because I have to deal with that question all the time as well. Mostly it’s entrepreneurs or people that are somehow involved with entrepreneurship. So I found that I generally give my answer based on who’s asking.
Jaryd Krause 2:42 What’s your regular?
Michael Bereslavsky 2:43 regular? Well, I would usually tell people that I run a private equity firm and we buy businesses, we buy online businesses. But it raises a lot of questions. What kind of businesses do you buy? How big it is? Because people think maybe it’s a billion dollar firm, maybe this guy’s a billionaire? Or maybe he’s just a fake, if they can just, you know, build a website just last Monday. Sometimes I just don’t want all those questions. So I will say something like, I do my affiliate sites, you know, something common or like SEO. But the simple way is just I would say that they buy businesses. And pretty much always it invites some more questions. So I still haven’t figured out how to explain that, like in one or two lines, without everyone just asking tough questions after that.
Jaryd Krause 3:43 Yeah. It is challenged because we’re in a space that’s so new, where I feel that most people want to make money online, right. Everybody wants to live the dream of making money online and traveling the world and everyone’s so curious about it, so it’s hard for them to not ask questions I feel.
Michael Bereslavsky 4:04 Yeah. Yesterday I met someone who asked me what I do and I told him, I buy businesses and he said, Oh, I did affiliate marketing 10 years ago and I made about 1000 euros, and we’ve been discussing that a little bit, so he kind of asked like how that works. But it is something that you should probably have prepared, what to say to people in different situations. The difficult one is then you have like a mother of your friend asking and then how do you explain it? Or to your grandmother.
Jaryd Krause 4:50 Yeah, I agree. You gotta have that arsenal in your bag.
Michael Bereslavsky 4:54 So I know you shared your story before and you were a plumber, but just to give us some brief overview for our listeners, how did you buy your first business? How did you get into it?
Jaryd Krause 5:06 Yeah, sure, so I started…I was basically running away from…I didn’t like my life basically. I started drinking heavily and I decided enough like, I hate my job, I hate what I’m doing with my life, and I pretty much ran away. I just started traveling the world and I realized I wanted to…I needed to do something different. And I just had some stupid goals like, I want to travel the world and make money online and just like live this dream life. I decided that I’m actually going to commit to this. So I started a travel blog…and I started travel blogging and everyone said it be really hard to make a lot of money or any money at all a nd they were right. And I tried to challenge them. I was like “No, I can do this”. I made a little bit of money, but it definitely wasn’t going to sustain my goal, my dream life. So I started another website business as a drop shipping business and I just thought I’d build it and sales would come through the door. It didn’t happen life sucks, right? To be honest, I learned a lot through that process and I realized that…why am I starting these websites when I know that 90% of all businesses fail? 90% of all startups fail, sorry. So I thought, I’m going to skip that startup failure rate and just buy one that’s past that 90% so I taught myself, much like you did is, I taught myself how to buy websites on Flippa. I bought one and I made some money, and then I bought another one. By the time I had two websites, I was making more from my website then from my plumbing job. So I decided to quit. I went travelling, and then I bought another site.
Michael Bereslavsky 6:53 How long ago was that?
Jaryd Krause 6:56 I bought my first website in 2014.
Michael Bereslavsky 6:58 Okay. So from the time that you bought your first website, how long did it take you to get to a point where you felt secure enough that you could quit your job.
Jaryd Krause 7:09 I don’t feel that I ever felt super secure. But I did it quite quick. within eight months, I bought my second business. And within 12 months I had quit my job and I had my two websites and I was traveling.
Michael Bereslavsky 7:28 Okay, these are all cash purchases? ? You didn’t have any loans or mortgages?
Jaryd Krause 7:33 Yes, so cash. I started saving money, my money from quite a young age and I started to put it in the share market. It wasn’t really working in the share market and so I needed to put it somewhere else.
Michael Bereslavsky 7:47 Yeah. Okay, nice. And so then you had these two businesses and you had people asking you, wanting you to help them?
Jaryd Krause 7:57 Yeah. So I quit work and I got invited to, pretty much where you are in Thailand. But in Bangkok, I got invited to like a retreat and a lot of people there were asking me questions, and really trying to learn a lot from me, all the attendees, and they were like, “dude, you should jump up on stage and start teaching here” and I was like, that’s not for me. That’s not my, this isn’t…yeah, I don’t know about that. Then a lot of people sort of pushed me into start teaching them because they really wanted to know and that’s how that sort of spawned like I bought another business in that year and then yeah, a lot of people just started reaching out and wanting to learn how it was all done. So they could do it as well.
Michael Bereslavsky 8:47 Yeah, nice. That’s, usually how, you know, good businesses are built, just out of necessity. You know, having people coming to you and asking. How does it work now? So for those, for listeners who want to work with you, what budget should they have to buy a business? How do they engage with you? How do you structure your services?
Jaryd Krause 9:16 Yeah. So normally somebody will find me for my podcast or my YouTube channel, some crazy content that I put out and then they will make a decision based off that whether they trust me or not, and then they will come to me and want to join my community. In my community, I have a course and we have a pretty rich community of people that are doing five, six and seven figures, buying sites, selling sites, scaling sites in that community. I teach them how to do their due diligence process, to buy the business and then also how to grow the business as well. Normally people that want to work with me. I urge them to be spending more than the $10,000 price range for a website. And the reason I say this is because anything under that price range, your kind of buying a startup, and you’re still in that bracket of a 90% failure rate and you need to put a lot more time, effort and energy and money into it for it to hopefully past that 90% failure rate for it to hopefully give you some sort of return on your investment. So I urge people to, you know, spend a little bit more money, roughly more than $10,000 on their first business if they can, and then as you as you buy bigger, you know, it gets a lot easier, the risk sort of diminishes as you as you go higher, depending on the business as well.
Michael Bereslavsky 10:45 What is like the average of the trivial amount that people come to you with that they want to spend to buy a business…to buy their first business?
Jaryd Krause 10:56 Yeah, so it used to be roughly between the $30K range. Now it’s around in between the fifty to two-fifty, I mean we’re looking at deals up to the $800K range now as well with different clients. So it’s quite…the bracket is spread quite a lot.
Michael Bereslavsky 11:20 Yeah, that makes sense. So we recently launched a service, a buying management service. We by a business for a client and manage it for them. Our minimum is pretty similar so it’s around fifty, sixty-thousand as a minimum, because really, when you go below of that, you know, the cost of management that goes the resources, it just doesn’t make as much sense financially. Yeah, and certainly, like the $10,000 or $15,000. We do sometimes buy the smaller ones, but its completely different thing out there like it’s, it’s still like completely wild west, when you go into this ranges. versus buying, like at least $50,000. I feel that gets you more or less, a reasonably stable business. That is more automated.
Jaryd Krause 12:11 Yeah, I mean, you’ve got…the bigger the business is, the more levers you can pull with regards to the business and how you want to grow it and with a $10K, or $20K business, you don’t just have the, you know, you need to put a lot more cash into it, to get it to a level where you can pull the levers a lot easier and work out what’s working, what’s not working, and where should I spend my time. Yeah, you don’t have much resources when you have a $10K or $20K business. But as you grow, as you get a bit bigger, you can deploy those resources in different areas. So I could definitely see that as you guys have launched that service – which is awesome by the way – it’s just not worthwhile to any of the parties to partake in anything less than $50,000.
Michael Bereslavsky 12:59 Yeah, absolutely. For our fund as well we mostly target businesses like around $100,000 and bigger and when we buy smaller businesses it’s like it’s a different kind of thing so we would just be looking at a completely different strategy maybe like quickly versus kind of looking at it more long term. But so we only focus on content businesses and sometimes by SaaS businesses that have a strong content component. I mentioned that you and your clients are generally more you know, more…less kind of focused. What what kind of businesses do you usually buy for clients?
Jaryd Krause 13:42 Yeah, so I have a thing that I teach my clients is to have two goals. First, you need your lifestyle goals, and then you need financial goals. So like there’s no point in like having a whole – in my opinion – there’s no point in having a whole lot of finances if you don’t have a really good life. Yeah? So I think the financial, I mean, the lifestyle goals are really important to work out how much time you want to spend on the business, what you want to…how do you want that business to improve your life as well and then you can work out the financial goals. So if somebody wants to be making, you know, $1,000 a month, they kind of need to spend $36K on a business. Then, you know, how much hours do they want to work on it so we work out what is the best business model suited to their lifestyle goals and their financial goals. So, roughly like we’re looking at, I’ve got clients that have bought drop ship sites, content sites as well. Looking at SaaS businesses, to FBA businesses. We’ve got people in the community own FBA businesses and looking to buy more of them. So it’s quite diverse. It’s not just content. I do like content because it’s a…it’s a good business model for people that are beginners, because they don’t need a such a heavy, heavy reliance on marketing as a…which is a skill that they may not have when they first come to the space. I mean, buying a drop shipping site when you don’t know anything about marketing. It can be a tough business to grow and scale.
Michael Bereslavsky 15:23 Yeah, absolutely. So how many deals would you say you’ve done since you started doing this for clients?
Jaryd Krause 15:33 That’s a good question. I think we’ve done…I’ve done, I’ve recorded like, five case, no six case studies. I think we’ve done seven deals and we’re coming up to I’ve got like, another person is buying one this week, put an offer down and then we’ve got another person is putting offers in between two businesses as well. So since often that service we just started offering in March. Yeah, that’s the amount that we’ve done.
Michael Bereslavsky 16:12 That’s like one…more than one deal per month on average so…
Jaryd Krause 16:17 It’s tracking nicely, yeah, and…it’s good..the biggest thing is not how much deals can be make happen, but how much of an impact can we make for those people in their lives because I’m not about…I don’t want to make people super duper wealthy and only have wealth. But I want to make sure that I have a big impact and actually change their life. That’s the real metric that we should be following in my mind anyway.
Michael Bereslavsky 16:45 Yeah, I agree. Where do you usually find those deals? Do you go to the brokers, to marketplaces, or do you use some personal connections? Do some outreach?
Jaryd Krause 16:57 Yeah, so obviously, I do have a lot of personal connections now being aside for quite a while, people that want me to sell their sites and then also people that want me to buy their sites. So we do post some of those. Now we also mainly are going to the brokers, so like Empire Flippers and FE International. We’ve looked at some of the other brokers as well. But…so for the businesses that are being bought over the 20-30K range, we’re using brokers for the ones that are, you know, 15-40K, are usually a cross between brokers and marketplaces. So we bought from exchange marketplace and things like that and then we’ve also bought from FE and…so FE International and EF – I always get them mixed up because there’s always an F and an E there. Yeah, So between those guys, and they help us out a lot and they’re good brokers, they’re good to deal with.
Michael Bereslavsky 18:06 Yeah, they are. Yeah, I think it’s…they really make it convenient especially for first time buyers to just, like handle everything for them. Empire Flippers do the transfers and some due diligence.
Jaryd Krause 18:20 Because they noticed a lot of my clients are first time buyers but they’ve also got that education so they know what questions to ask they know the process. So they actually like dealing with our guys because they know how we work. We know how they work so we can educate each other on how our different processes work. But I want to ask you, what about you, like do you have a particular type of brokers you go to, or suggest people go to, as first timers?
Michael Bereslavsky 18:44 Yeah, we have. We do not really work with brokers.
Jaryd Krause 18:50 Okay.
Michael Bereslavsky 18:50 All our deals come privately. So all our deals come from people that come to us that want to sell quickly and we have a deal flow department and what we do is just look for deals, do calls, do due diligence. We also do some outreach. I would say that most of the deals that we’ve done in the past have been private from people coming to us. We haven’t bought anything from Empire Flippers or FE International yet. But we have looked. So we’ve certainly look but because our criteria is very strict in terms of what we are looking for in terms of the deal, in terms of numbers and opportunities, and prove…so our goal is usually to try to get a 100% return in a year, in less than a year. So we found that that’s really difficult to do if you buy a deal from…like, you can find good deals with brokers, but it’s really difficult because you have so many buyers and a limited number of deals. So what we’ve found is we’ve developed some advantages in the marketplace and we have those connections and we are able to go and tell people “hey, you know, if you go to Empire Flippers, it would take, what, like five months to sell a business. But if you go to us, we can do that in a few days, we can do that in a week, and we can, you know, you have the cash so you can go and buy the business quickly. That could be like a six figure deal as well. So that really helps us go and get better deals. For us, it’s really important, because like half of what we do is just really finding better deals, so we look at hundreds of different deals and try to find the very best ones. But that said, I think that for for most people, for most buyers, they are looking for something a bit different. So that strategy probably wouldn’t work for them because they are looking for the long term, they are looking for something that’s stable and safe, a lifestyle. For us, we are just looking for profits, so…
Jaryd Krause 21:07 Different type of buyer.
Michael Bereslavsky 21:08 Yeah, the strategy would be certainly different.
Jaryd Krause 21:11 Yeah, yeah, I totally agree. When you buy them with your own deal flow you can pay a low multiple, because you don’t have brokerage fees and all that sort of stuff and then you can also really see, you know, if it’s, you can determine if it’s going to be a strategic fit for the portfolio that you already have. Most of the buyers, or people that want to work with me, it’s their very first time and they’re like, “I just want to sort of dip my toe in the water and buy something, that’s stable”. They can learn a lot from that business and then that can be like a foundational investment in their education and then they can choose which way they want to grow, whether they want to go bigger with bigger sites or stay at the same level and buy things that they could really deploy a lot of their time and energy in to get a higher growth. So it’s really dependent on the…on what their goals are as well. A lot of my guys, they don’t want to be spending a lot of time in building their businesses, like I’m talking they don’t want to spend 20-30 or more hours per week, whereas you have a team you’ve got different people working for you that can do that sort of stuff so…
Michael Bereslavsky 22:33 Yeah, it’s..yeah, you certainly shouldn’t go and buy high risk websites with a lot of BPMs and backlinks, like unless you have a solid SEO team already and some SEO experts on your team that can just look into it and decide a strategy for you that…so that’s absolutely true. Okay, so you explained how this works and what kind of people you usually work with and what budgets they should have. How does your service work in terms of cost? Do people pay you hourly or is it a one time fee? Or is it like a success fee like a broker?
Jaryd Krause 23:11 Yeah. So how they come along is I have a membership. Okay, so it’s like a community and they pay per month. So it’s 100 bucks a month. Join for however long you want, cancel whenever you want and then we’ve got annual it’s $800 for 12 months. Yeah, in the group, I teach you how to buy the business, so a specific course, which is like 20 lessons diving real deep into how to do it precisely and correctly without…you know, I think last time we talked about emotional intelligence and buying based on emotions, not to do that and then how to do it very strategically, right? How to be quite analytical and by it by a business that’s safe, and a good investment for you personally, and then also we do strategies once they’ve bought the business on how to grow it as well. So I sit down with them and say, “alright this is what you’d want to do in order” and “this is why” and “this is how long it will take” or “you need a team for this” or…it depends on the business. So yeah, it’s focused on basically buying your first business and building it and then also the connection, the network is is a big pace because your network is your net worth right? So we’ve got people in there that can help one another with their businesses too so…
Michael Bereslavsky 24:29 Yeah, that’s pretty good. So they pay a monthly fee and they get access to all the materials and they can ask you questions and network with other people who are also that group and maybe they can also communicate and like buy deals together or figure something out, some cooporation.
Jaryd Krause 24:50 Yeah, exactly. So there’s that leverage of a community that you can buy together or you could sell one your business to somebody in the community. That could be a beneficial thing for them like we got people with the same…just the other week, we had somebody that came on who loves sports fishing, saltwater fishing, and then, another guy who enjoyed a lot earlier. He’s in the same sort of niche. So the possibilities are really cool. I think the power that they…the most valuable thing that they get or they join for, is the level of support like where people do – I teach them how to do their due diligence – but I also review it for them. So I share with them like what red flags there may be and the goal is to really educate them to do it themselves. Like I don’t want to give a man a fish I want to teach him to fish so he can buy and build a portfolio themselves. So for the entry price to become a part of the community is so low but for what they can get in the long term, if they stick to it is…the value just…it just goes up. So it’s up to them. You know, it’s good for some people, and it’s not right for some people, and that’s totally cool.
Michael Bereslavsky 26:05 In terms of due diligence, how do you teach people to start doing due diligence on their own? Or, you know, what are some things that they should focus on? Should they just have a long checklist? Or how does it work?
Jaryd Krause 26:19 It’s a big process as you know. But when they first come, we talk about how to check out the owner, do verifying checks on the owner, check out the domain name, page ranking, domain rank, all that sort of stuff and then we slot into different areas. So we have like, check out the traffic, verify the traffic, the financials, check out the SEO, and then you have specific seller questions you need to ask as well. We talk about negotiations and submitting an offer. We also talked about how to be an attractive buyer, because like you said before you have a lot of people that want to buy these businesses, especially around the 20-50K range. So we teach you how to be an attractive buyer to ensure that you…when you know there’s five people looking at the deal that you can be the person with the cash that they actually want to sell the business to. That’s an important thing because a lot of sellers don’t want to sell a business they’ve worked really hard on to somebody who’s incompetent, they don’t want to see that their baby be given up to somebody who’s…where it’s not going to be put into good hands. So that’s a really important thing.
Michael Bereslavsky 27:28 Yeah, one thing that we’ve noticed is that in that range is particularly…like from 10-50,000 because there are so many buyers like everyone, everyone has that kind of budget to go with. A lot of people just like start contact, start discussing, start negotiating and then just disapear, or even make a deal, and then disappear. That really makes buyers feel more concerned about it. So they realize that “Okay even if they make a deal that’s not, that’s not sure”. That’s where we also have an advantage which we are able to just tell people, okay, if you make a deal, like you make this deal with Domain Magnate and we will always follow through. Sometimes it also helps us secure a deal even if we a little bit lower, you know, even if there are many other buyers. So I’m curious, how do you…you know, how can first time buyers project that sense of, you know, sense of authority that, like showing the seller that if they make a deal they’re going to go through, they have the cash, it will be a smooth deal. How can they do that?
Jaryd Krause 28:45 Yeah, so that’s all in the education, is teaching people how to know their due diligence, and do it really, really well and do it multiple times to become confident of the process because the first time like it’s…we’ve talked about this before, the first time you’re on the phone with a seller, it’s…it can be overwhelming or daunting. So I teach them to speak to the brokers and talk about business, and the best way to learn about the business is to be in business. So the discussions that happen within the community are all about learning and teaching each other how to do due diligence and be confident in it, and be confident in the businesses that were buying and the more businesses that they look at, and they break down, they do due diligence on, the more confident they get, right? The cool thing, the byproduct that I love is that when you look at multiple businesses, you learn so much from them that all those things…you can take notes and strategies on the things that they do to those different businesses you’ve looked at, the things that they’ve done to grow them, and you can keep that in a big swipe file and that can really help you build your confidence for ways and things you can implement, strategies you can bring into the business you end up buying as well. So I teach people to take note of a lot of things that they’re doing through the due diligence and how the businesses are growing. So they personally can build their confidence to ensure that they’re competent to run the business. Which is then, you know, once they build that relationship with the seller, then that seller…well that person is radiating their confidence that it allows that seller to be confident in them. So it’s more about teaching people how to do it themselves, like I said before and be confident in it, then they can become an attractive buyer enough so that the seller is happy to work with them. They’ve also got not just me on their side, but the whole community backing them too. So it really helps.
Michael Bereslavsky 30:50 Right. So that is by the time they are going to make the deal they will already have quite a bit of experience in due diligence and they would be sure that this is the deal they are doing and they can project that confidence.
Jaryd Krause 31:03 Yeah, I have some people that come through and they just, they want to buy a business within the first two months of working with me and you can tell that they’re like, they’re like, “hey, I’ve checked all the boxes, and I’ve got all the information, can you just make sure it’s a good business because I want to buy it”. And I sort of, I push back on them a little bit and I asked them questions like, “how do you feel…” like “do you think this would be a safe thing to do if you were going to invest in this business would you know how to handle this and this and that?”, and they’re like, “oh, wow, this actually may not be the business for me”. So it’s not…I don’t just, like I’m not just trying to go push people into buying a business. Right? Because I could. If they went and bought a business cool, awesome, I could get a case study and that would make me look really good. But the thing that’s bad about that is that they may buy a business not right for them and that’s even more destructive, to buy that business and for it to collapse and do bad, then what it would be to not buy business in the first place.
Michael Bereslavsky 32:05 Yeah, you have to…you have to be ready like a lot of people, what I found, a lot of first time buyers would come to us as well they feel that this is like a real estate investment. You know, you don’t need to know a lot if you’re buying real estate or a rental property, you just buy it, and then you get someone to rent out or rent it out yourself and you figure out everything else after. But it’s really not like that. It’s a business. It’s like buying an offline business rather than, you know, investing in real estate.
Jaryd Krause 32:35 Yeah, that’s right. So true.
Michael Bereslavsky 32:37 What are your thoughts about buying kind of as a group buy? Because you have this whole community now. So you might be able to go after bigger deals and have like, like 10 people or 20 people pull their money together. Have you tried that? Have you considered that?
Jaryd Krause 32:54 Yeah, it’s definitely something that’s happening…going to be happening in the future. I have a lot of people reaching out to me, with the people that are starting in that 20K to 30K or 50K range. People with the six to seven figures that are like, “Hey, I wanna I want to buy a business and not run it”. I’m in the process of building a team, to be able to do these group buys to ensure that those people in that market can can get what they want as well. So yeah, it’s definitely on the cards in the future. It’s quite exciting. It’s going to be fun, but I want to make sure I do it the right way and people get the value they want out of it. I think you can…and you can see, I don’t just want to scrap it together and see how it goes. Yeah.
Michael Bereslavsky 33:44 Yeah, you have to be ready. You have to know that you’ll be able to manage it successfully. Especially if you have, like, if you have 1- or 20 people, you have to have some some decision making process as well.
Jaryd Krause 33:57 Yeah, so we definitely need you know, we’re building out the team and the SOPs and the target property or the target sort of investments we’ll be making. Yeah, it’ll grow from there. I mean, the more this space becomes known to people, like as you know, there’s not many people that know what buying websites is, but as this space starts to grow, which it is, and I think you’re seeing this happen as well, that there’s more outside money coming in from bigger real estate money or biggest stock market money or angel investors that are coming into this and as you grow the same time as I grow, like we grow together, and so does the industry and more money will come into it, that it’s inevitable that these group deals and these funds and stuff are going to develop. I feel the best way to go about it is to put one step in front of the other and do it the right way. Rather than try and rush to the top and it all come crashing down, which is definitely not what I want.
Michael Bereslavsky 35:05
Yeah, I think this is happening these days. There are many, many industry of people who are starting funds who are doing some group buys and that’s expanding. So last month, I was speaking at a conference in LA, it was a conference for investors. So it’s mostly people that are investing in stocks, investing in real estate and all kinds of different things and we had quite a bit of interest, people coming up after and people asking questions, like, “this is really good, you can go and buy a business and get a 30% return versus like a five or ten percent return”.
Jaryd Krause 35:48 That’s great. Good on ya. That’s awesome.
Michael Bereslavsky 35:50 Yeah, and then they look at us and they say, “Wow, so you’ve had low and 100% annual return. We want to invest if you” and we’ve definitely seen a lot of people kind of getting interested in that asset class, and they understand the risks, but they also understand that it’s maturing and becoming bigger and more serious.
Jaryd Krause 36:12 Is that something…you’re gonna do it?
Michael Bereslavsky 36:14 Yeah, we are. We are doing it already. So we have one fund that we set up this year and it already doubled in value in less than a year and we just had actually last month’s we exited one of the businesses from that fund and we’ve made a 3x return on that purchase. So it’s been very successful.
Jaryd Krause 36:40 Congrats. that’s awesome.
Michael Bereslavsky 36:41 Yeah, and that fund is closed. But we are in the process of setting up our second fund as well. So the first fund is a bit over a million dollars in capital and assets now and we are setting up the second one, probably early next year. I think that’s definitely where we are going as well, and targeting more and bigger businesses to buy as we expand our deal flow and I think that’s going to be with general trend as well. I think if the industry grows, I expect that we’ll see more of that happening and even now, we see a lot of that already. But also what we are seeing, what’s new is, I think, the bigger funds like the traditional big private equity firms or even VC funds are getting into this and getting interested in this industry and they generally operate in much higher budgets…much higher brackets, much higher interest.
Jaryd Krause 37:44 Yeah, like 20 to 30, 50 million.
Michael Bereslavsky 37:47 Yeah, like 10s of millions, but they’ve started to get interested and they’re starting to, you know, to look into this and I think in those higher ranges, there is going to be a lot more competition and I expect what’s going to happen is that the multiples will go up, like the multiple for those higher ranges will go up. While the multiples for lower ranges might stay about the same because they already, like they’re already a bit high to be honest.
Jaryd Krause 38:18 Yeah, I agree. I mean, the more established businesses, you can see that they have less risk from outside forces, right. They’re more diversified in different ways and you’ve got so many levers you can pull and deploy different, you know, funds in different…into different areas, and I agree like, for me, I’m not going to get into something to the 20 to 30 mil range like straight away. I’ve already got a cap on what we’re going to do for our first group buy-slash-fund, and we’ve probably pretty much already got the funds there. We’re not ready to deploy it yet but those… I feel that those 20 to 30, 50, I think it’s even hundred mil that, it’s crazy the money that those things…those will have a higher multiple and I feel so they should because the less risk right and then also the lower ones in their life the six figure down to the five figure who knows like what’s going to happen with that because it’s interesting that you and are I both seeing that those…those multiples are quite high now, right. I think Empire Flippers had a 32 or 47 multiple on one of their sites they sold.
Michael Bereslavsky 39:40 I think…I think their average is, their average is around 30 or below 30.
Jaryd Krause 39:45 Yeah.
Michael Bereslavsky 39:46 But that’s mostly content sites.
Jaryd Krause 39:49 Yeah.
Michael Bereslavsky 39:51 I think actually one of the biggest opportunities right now, especially from first time buyers. Is coming from understanding those multiples because a lot of time what happens is, if you see a website that’s relatively new and like less than a year old and has some really high risks, it might be selling for a similar multiple, like 30x the amount of revenue, compared to a website that’s been around for literally a decade and is very stable and very low risk and that side might be selling for a little bit higher. But wouldn’t it be a big difference and honestly I just find it crazy. Like that site that’s a lot more stable, that should be like much, much higher price and I think that really presents a big opportunity in the space that particularity in the market.
Jaryd Krause 40:43 Yeah, I agree with you. It should have a high multiple, those bigger, more established businesses. I think what’s affecting the smaller sites, you know, the 50K type sites, is that the pool of people that can invest in those types of sites is so much bigger than the pool of people that have 20-100 mil. So the competition is a lot fiercer, which can then drive up the price or the multiple, which is why it’s a seller’s market in those spaces, in that area, or that price bracket.
Michael Bereslavsky 41:18 Yeah, and that’s the thing is, I think most of the buyers on the market are not yet well educated. So they look at numbers, they might not be able to see the difference between like a high risk deal and the low risk deal. Like they would understand the age and things like that, but they wouldn’t be able to go and check the backlink profile of a content site most of the time. So that really presents an opportunity for buyers who are better versed in that.
Jaryd Krause 41:52 Yeah, yeah and that’s a huge thing of why I…like I started buying smaller sites, as did you, and it’s so important for us to, to understand that process and educate ourselves. Hence why I’m doing what I’m doing is most people don’t know how to, like you said like pull up a backlink profile like that later or we don’t even know what a backlink is. Which is crazy to us but yeah, it’s scary for somebody that wants to buy a site and they don’t even know what a good backlink or a bad backlink is or whitehat vs. blackHat type stuff so…
Michael Bereslavsky 42:28 Yeah, absolutely. So how do you deal with operating those businesses. Do you teach people to operate them themselves? Or would you sometimes help them find someone to help with that?
Jaryd Krause 42:41 Yeah, so it depends on the business. I prefer people to learn how to operate the business themselves. So at least they can have some skills and then start hiring. I’m certainly happy to help them, and do help them find VAs. Sometimes there’s people that want to buy sites that have VAs that may not come with business, one or two, then there’s ways that we can purchase the site and hire a VA at the same time and have them go through the same training as the seller. But when they hire that VA they want to ensure that that VA has a foundational skill set in the tasks that they need to run as well. So it’s really dependent on the business. Personally, I have different people helping with different parts of my business as well. So it’s certainly something that I help people with just through having to do it myself.
Michael Bereslavsky 43:42 Yeah, I think being able to hire a VA and get some simple tasks done that…that’s just a really important skill that anyone should have on a business. What we found also is that often you have…you kind of have a choice, you might either go with some external contractors and have some people help you with somethings or advice on something or just like go and do it yourself or hire some people to do it for you. So we’ve mostly been trying to hire people in house to do like the important things, the SEO, the link building, the content, the strategy of that because these are things that I feel, if you outsource them…like finding someone who can do simple things is easy. But, finding really high level SEO experts is actually quite difficult like someone who is going to be able to go and do the analysis like on TDIDF and then look at the backlinks and analyze your anchors, and kind of all these kind of things like the high level stuff is more difficult and the consultants generally add a really, really high premium on their service.
Jaryd Krause 45:01 …and so they should. Because they’re good, right. Like, that’s the thing, when people buy the smaller businesses in the, you know, under the 50K range, it’s like you don’t really have the funds to put into an assay SEO consultant that’s gonna, you know, maybe charge you two, three grand a month just on consulting.
Michael Bereslavsky 45:27 Absolutely. Yeah, so it just it just doesn’t make sense and that’s why it’s so…and that’s why it’s definitely preferred for buyers in that range to go and get those skills by themselves…and these days, you can, you can find everything, you can read it online, you can learn it all on your own.
Jaryd Krause 45:47 Yeah, yeah, I do have caution for people that do learn things online as well…Because I went and learned a lot of my skills online. But it wasn’t until I hired a mentor that things changed, whether that be yourself or somebody else. I feel that you can get stuck in that paralysis by analysis of all the content online. Because there is so much and it can send you off different directions that may not actually get you to the destination you want. So it’s…theres really, you can learn so much, like you can learn almost anything you need to know but you got to be careful of learning some things that may not be serving you as well.
Michael Bereslavsky 46:29 Yeah, yeah.
Jaryd Krause 46:30 That happened to me personally.
Michael Bereslavsky 46:31 Yeah, I think if you if you are learning, you have to make sure that you are constantly applying those things and also testing yourself, testing the assumptions or having someone of course to do it by someone knowledgeable.
Jaryd Krause 46:44 Yeah, you know, what they say? I think it’s to know and not do, is to not know. So you can learn all the theory, but if you don’t take it put into action, you don’t really know it, right.
Michael Bereslavsky 46:56 Yeah, and you…you mentioned travel. What’s been your favorite destination? Do you travel travel often these days?
Jaryd Krause 47:07 These days not as often as I used to, I spent about eight years traveling. So I’ve been to a lot of contr…a fair few countries. The only continent I haven’t been to is Antarctica. It is on the list. But I spend my time, like I lived in America, I lived in Canada, I lived in Egypt, I spent a bit of time in Japan. I think one of my favorite parts of the world is Central America. Mainly because I love surfing. Yeah.
Michael Bereslavsky 47:42 I liked Panama and Costa Rica.
Jaryd Krause 47:47 Yeah, I actually lived in Panama for three months and I was a surf coach over there.
Michael Bereslavsky 47:52 Where did you live?
Jaryd Krause 47:53 I lived in a little place called Bocas del Toro. It’s on the east coast and it’s a collection of islands and I lived there for about three months and ended up running the surf school there. I was surfing six hours a day and then I had my two little businesses running as well. It was good fun. But yeah, I think that side of the world is probably my favorite. What about you? You travel a lot as well don’t you?
Michael Bereslavsky 48:16 Yeah it’s pretty cool. I actually lived in Panama for a few months as well. I stayed in a place close to Boca, it’s colled Boquete.
Jaryd Krause 48:25 Yeah, yeah, I’ve heard of it. Yeah.
Michael Bereslavsky 48:28 Yeah, it’s like so quiet nice. Like nature and I would go hiking every day and do some work. It was great. I stayed in Panama City for a bit as well.
Jaryd Krause 48:40 Yep.
Michael Bereslavsky 48:41 Yeah, I like I like that area. But my…I certainly need to work a bit more on my Spanish like it’s like good enough to get around but not enough to have an actual conversation.
Jaryd Krause 48:54 Yeah, I’m the same. I’m borderline can conversation..can well can…like speak the non technical things that are like for like just the most basic conversation. It’d be a boring conversation for us to have anyway.
Michael Bereslavsky 49:08 Yeah, but now I’m mostly living in Chiang Mai, Thailand, and I don’t speak any Thai. So I kind of get around with just english as well.
Jaryd Krause 49:17 How long have you been there?
Michael Bereslavsky 49:19 I’ve been here for like two or three years, but I’ve also been traveling. Now it’s mostly just business travel, but it used to be more like just exploring the world, you know, travel. I’ve traveled a lot europe, I’ve also been to all the continents, I think, except from Antartica. It’s not a my list currently.
Jaryd Krause 49:41 I was going to say, if it was we’d have to go together.
Michael Bereslavsky 49:45 Someday, but I don’t know. It just feels like it certainly could be on the list but I don’t know how interesting it is and it’s really quite cold.
Jaryd Krause 49:56 Oh, yes. Very, very cold. I do like photography. So I’d love to go and spend a bit of time doing photography there. It’s it’s not the cheapest place to go.
Michael Bereslavsky 50:07 Yeah is expensive. Yeah. I love Europe, there are some really beautiful places in Europe. Have you been to Montenegro?
Jaryd Krause 50:18 No, I haven’t been to Montenegro. I actually just got back from Europe a week and a half ago. I was over there for a month in Italy in Germany and I do want to go to Montenegro though. I’ve heard it was nice.
Michael Bereslavsky 50:31 Some magnificent views. In the summer. It’s amazing and just for all things, like swimming and kayaking and paddleboarding, all the water related activities it’s been great.
Jaryd Krause 50:48 Hmm. Awesome.
Michael Bereslavsky 50:50 What’s what’s your next destination? What’s your next travel plan?
Jaryd Krause 50:55 I did get an email this morning. I might go so close to home I can’t say where because it’s for a box party in this might get released early so I don’t want the groom to find out and I actually don’t have any big travel planes coming up into 2020 unless it’s business related interstate in Australia so yeah, how about you?
Michael Bereslavsky 51:24 Same. Just some…probably some business conferences. I did want to go to India because I’m…I’ve been to India once but just for a couple days so I’m curious to explore it a bit more. You know, after you’ve traveled for a while it’s…you find it’s difficult to find that culture shock again.
Jaryd Krause 51:45 Yeah.
Michael Bereslavsky 51:46 Then you kind of see everything a little bit and everything is just a similar.
Jaryd Krause 51:51 Yeah, I actually lived in Egypt for six months in a little town called Dahab and I was teaching, I became a dive master there and then everybody’s telling me “you should go to India” and I thought, all right, cool. I’ve been in Egypt, it’s, you know, undeveloped country I’ve been here for quite a while. I’m prepared…and then I went to Nepal. I was like, I’m prepared to go to India. So I end up catching the train down from Nepal to India to a place called Varanasi and it was like, the bus ran off without my bag and then I had to end up run…like the person ripped me off on the bus ticket as well. So I nearly lost…I lost a fair bit of money on nearly lost all my bags on this bus until I ran it down the road jumped on and then I got into the train platform and that was six hours late and then I ended up catching the train I met a Korean guy and we both didn’t know where to go in Varanasi. So we’re running around with our bags and it was like a 20 hour transit and it was just disgusting and we were tired, frustrated, and hungry and we were walking through the city of Varanasi with our bags, and somebody pushed me up against the wall and I’m like “Woah” and then about 20 people ran past me and then another, like, big group of people ran past yelling this thing it was like “numnuh hana set da hayah, numnuh hana set da hayah” and I think…they were chanting something and they had, on a stretcher, this woman that had just…like her body and she had just died and I just, it just went past me in plain sight. I was just, I was just so shocked because I was just so tired, hungry, frustrated, and I just saw a dead person float right by my face.
Michael Bereslavsky 53:37 Wow.
Jaryd Krause 53:38 …and that was a massive culture shock to me and later on, I found out what happened is they were taking that body to the the lake the, holy lake in Varanasi, the Ganges. They dip the body in the water, and then they bring it back out and then they cremate the body and they cremate the body and on this fire, that’s been burning for about two-thousand years so you can go and see it. The next part of the culture shock is that in India there’s like seven different types of people that they’re not allowed to cremate in that holy city. It’s women that are pregnant, people that have been bitten by Cobra, I think people with leprosy, and a couple of other ones, and since they can’t cremate them on that fire, what happens is they end up…they really want to put them in the river, in the holy…the Ganges, right. So what they end up doing is they wrap the bodies up in this cloth with rocks and they sink the bodies. What’s bad about that is that the bodies have gas, and after a while the gas, you know, it sort of comes out and the bodies blow up a little bit and then they float to the surface. So it’s a massive culture shock to say the least.
Michael Bereslavsky 54:54 Yeah, that’s that’s quite a story. Yeah, that’s why I like Thailand because, I feel it’s a perfect mix of, you know, like having enough, enough of that…enough developed, enough development and culture and still experiencing that different kind of cultural excitement. Yesterday I was in a taxi and I was going to doctor and I was in a taxi so I left the taxi, I came to the doctor, and then about 5 or 10 minutes later, I saw my taxi driver come after me looking for me and you know, like waving a one 1000 baht note, which is like like 50 bucks and I was surprised, I was thinking did I, I paid the fair I was thinking, I know that they paid. So what’s going on? It turns out that I dropped the…I dropped the note, like I dropped the money, it just fell out of my pocket.
Jaryd Krause 55:49 Wow.
Michael Bereslavsky 55:50 I had no idea like I would have never noticed but he realized it later and he actually came back just to return it and I was thinking like that’s not gonna happen in most places in the world I don’t know about India. I haven’t been to India enough. But like…
Jaryd Krause 56:08 That’s amazing. That’s, that’s very, that’s very generous isn’t it? I mean, that’s a lot of money to them.
Michael Bereslavsky 56:15 Yeah, and it’s quite a normal thing here like that, that’s something that you would expect to happen always. So that’s, that’s kind of why I like it here.
Jaryd Krause 56:23 Yeah, it’s a great place to live.
Michael Bereslavsky 56:25 Yeah. Alright, so on that note, let us wrap it up. What would be your best tip for first time buyers, the people that are looking into this industry and thinking of buying some business, what would be the one piece of advice to give them?
Jaryd Krause 56:44 The biggest tip would be to learn how to do due diligence and do it well. If you’re wanting to buy a site and just to…if you want to buy a site and grow it then certainly learn to…learn some skills that you need in this space, right like in SEO, marketing, hiring VAs, like learn some of those trades, or those skills sorry, to ensure that you can have success in this field. That would be my biggest tip.
Michael Bereslavsky 57:19 Right, so learn the skills.
Jaryd Krause 57:21 Yeah.
Michael Bereslavsky 57:22 How can people contact you or find out more about you?
Jaryd Krause 57:26 Sure. So just buyingonlinebusinesses.com. So buying online businesses plural dot com, and they can just find out all of my stuff or they can type that into Google and then on my social media, it’s just my name, Jaryd Krause.
Michael Bereslavsky 57:42 Alright, thank you Jaryd. Pleasure to talk to you.
Jaryd Krause 57:44 Thanks so much for having me. Always a pleasure. Thanks, Michael.
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