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How I sold one of my eCommerce businesses for 6 figures…and got depressed

Hey guys,

Not many people know this (I hinted at it in my previous post) but I’ve sold 1 of my eCommerce businesses about 4 months ago.
I can’t go into specifics on what business and what the deal was but it was a healthy 6 figure number. I can tell you that it was an Amazon & Shopify business.

Today I wanted to give you an idea of how you can build and sell a business and what specifics a deal like that entails.

Before I go into details I wanted to give you a brief update of what I’ve been up to in the last few months. I took a bit of a time out and travelled a lot.

I am currently in Bali with a good friend (Bastian from Officeflucht – check him out if you speak German).

 

Bali so far has been amazing and we were lucky to be here around a couple of traditional ceremony days. Melasti was one of them. Villagers walk in traditional clothing and cartable temples from their village to the beach.

 

Bali has amazing sunstets, check it out

 

Other places are equally stunning.

 

 

Before that I was travelling to Germany in January for a conference (Amazon Sales Kongress).

Always present in style 🙂

Stopped by my hometown Salzburg in Austria for a few days

Salzburg at night.

Went back to Bangkok and had a friend visiting and we took a motorbike ride up the North of Thailand.

Village near Pai, Thailand.

Mae Hong Son near the border to Burma.

 

Farming near Mae Hong Son.

 

We went on to Cambodia to see Angkor Wat (the biggest temple complex in the world). Simply stunning, see for yourself.

 

 

 

 

Dirt Quads around Siem Reap

And then I had enough and work was calling 🙂

So now I am in Bali working again full time on my businesses. Thats what I love about eCommerce and this business model. You can take some time out, travel, bring your laptop and work from anywhere in the world. Obviously I had to put in a lot of work in the beginning, its not all as peachy as I make it sound like 🙂 But after 1-2 years anyone can do this.

So now onto my actual posts. How I sold 1 of my businesses last year.

When I sold the business in November I really didn’t know what to do for a few weeks. I was really depressed for a few weeks.
You might think why would you be depressed if you just netted a six figure amount? Well I worked on this business for more than 3 years and it was kind of one of my babies that I took care of every day.

 

All of a sudden it was gone and while I still had my other businesses going on I felt empty with one big part of my daily life gone. Haters gonna say, take the money and be happy. But thats not what I m about.

 

Every since starting on this eCommerce journey I realized I like building different businesses. Now, 4 months later I have come to terms with the fact that I just need to move on and build something else in its stead.

Through all these years I’ve met so many amazing people, students and eCommerce entrepreneurs that made me grow my skills, experience and much more. So eventually I just moved on and found motiviation again.

 

Another thing why I was so depressed and couldn’t find any motivation was the fact that I felt secure. I never had this amount of money in my bank account and I realized why I didn’t hustle anymore. I felt safe and lost my “hunger”.

I am talking about the “hunger” that I had for 3 years working somewhere between 8-12 hours a day for months on end.

 

I know many entrepreneurs who have flipped many businesses for lots of money and they don’t retire. They just move on and build other businesses.

 

For me this was a first timer. I thought I can take a couple of weeks of, take it easy and chill. These weeks turned into 2,3 & 4 months doing barely anything. I really felt miserable.

My other businesses still generate 5 figures every month but they could be doing 6 figures a month. Slowly that is decreasing as well and I am starting to eat into my savings (I spent way too much money in the last 4 months)

 

I really neglected things. But meeting a few entrepreneurs over the last weeks here in Bali really gave me motivation again and I’ve started to pick up things again. That’s another great thing with this industry. You meet a lot of like minded people that can help you along the way. Be in brainstorming or doing projects together.

 

So after selling that business I basically travelled around Asia, went to Germany for a conference, and took life really easy. I always thought once you make a big chunk of money you can relax and everything is awesome.

But let me tell you its not. I guess thats how many people feel when they retire with 65. All of a sudden you have nothing more to do. While I still had things to do I felt that way. The good thing about my business set up was that I diversified and had more than 1 income stream.

 

If you recall in my older blog posts (How to scale an Amazon business / Existenzangst) I always stress out the importance of that. If I wouldn’t have those other income streams I’d be eating up my savings for the last 4 months.

Not that I could retire anyway but I felt like semi retirement for a few months. Trust me, it is REALLY boring doing nothing for a few months (apart from travelling).

 

You may understand me if you get to that point and I hope that many of you will 🙂

But onto this blog posts topic. How I actually sold that business and what that entails.

It started early last year after I released my last courses on ImportDojo (ImportDojo certifications & Brand Evolution) that a friend approached me and told me he sold his business on Empireflippers.

I wasn’t even thinking of selling the business. But after hearing how much my friend made on the sale it sounded good.
I went onto Empireflippers Calculation tool to evaluate the business’ worth. I got an email with an estimation and I was surprised.

Within the same day someone from Empireflippers contacted me and asked me for a phone call to see if my business is suitable for their marketplace. I think that was around late May.

In that call we discussed how the business is set up, if I have social media following, email lists, age of the business and other details that may influence a sales price. He gave me another estimatation at the end of the call which was even higher.

 

In a follow up email after the call I now had to prepare a lot of documents and answer over 30 questions regarding my business. For the next two weeks I was collecting income proof, screenshots and answer the questions related to my business. I had to fill in a very detailed profit and loss sheet that they provided and that took me at least 10 days to complete. I sent in all the necessary documents and then I waited.

 

After about 2 more weeks I got an email that my listing is approved and a final sales price has been calculated. Forget the typical 24X you can get in a normal business. eCommerce businesses can be sold much higher.

 

The older the business and the more consistent in growth the better. A lot of things go into the final sales price. Like how old the business is, how many email subscribers, how many Facebook fans, Instagram followers and so on.

So I agreed to the sales price and the listing went live. Within the first week I got 12 depositors on my business. The way this works with Empireflippers is that the business itself is not revealed. However a description and actual figures are revealed.

So interested buyers can deposit a minimum fee and then see the actual business. This is actually good because otherwise everyone would see your business. This could be bad, people could copy your business or even hurt your business if they knew who you were.

 

Within the second week we had an interview with a potential buyer. Empireflippers is on the call with you and prepares you before hand.

 

They manage the entire call while the buyer is asking questions. You just honestly answer the questions and at the end of the call Empireflippers will gently ask the potential buyer is he is interested. He said he’ll evaluate and think about it. Two days later I got an email that the buyer wants to close the deal.

 

However at a lower amount than I was asking for. The buyer had concerns about seasonality and the industry which was normal so I agreed to the price. He couldn’t wait to make the transfer. The deal was done. At this stage Empireflippers will collect the money and hold it in escrow until I hand over the business completely to the buyer.

 

This is called migration. Once the buyer confirms that he is now in control of the business the money is released to me.

 

This “migration” part took about 3 weeks. Empireflippers will be there with their team to help transfer domains, email and other things. I had about 4 or 5 calls with the buyer to explain everything about the business. Another 4 calls and 2 months support via email was agreed upon. Then finally the buyer confirmed that he is in control of the business.

 

3 days later I had the money in my account. I looked every day and just on the 3rd day there it was. I couldn’t believe it. The business I built for more than 3 years has just netted me a nice chunk of money. And just 2 days later I fell into the “hole”…see above.

To wrap up, all in all it took about 3 months from contacting Empireflippers to closing the deal and getting the money. If you are cosindering selling your eCommercebusiness I can highly recommend them.

 

So thats that. What I also probably learned of this is to not get too attached to your business. Of course if it’s your life’s dream to build a business and run it until the end and you throughly enjoy doing it then don’t sell it.

 

But if you want to build different things then go for it. Also the money you get for your business can be used to invest into other businesses.

I choose to put it into my other Amazon business to grow it and real estate as it is the most secure way to put your money in. Even it a property would decrease in value – you still have a roof over your head.

 

The moral of the story today I guess is, build a business, sell it if you can and keep building other businesses. Take some time off but don’t loose track of why you went into entrepreneurship in the first place.

 

To live freely, travel the world and build something meaningful. I don’t regret selling this business and to anyone who is hesitating if Amazon FBA is right for you – don’t hesitate. It has enabled me a lifestyle I never thought possible.

 

I do hope this gave you a bit of an idea what its like to sell a business and how I felt doing it. Don’t make the same mistake I made. Taking off too much time and loosing yourself. Get some well deserved rest and then tackle the next thing 🙂

 

You may ask yourself whats next for me? Well I m really putting in a lot of time into my remaining Amazon business (Mandarin-Gear), my sourcing business (ImportDojo Sourcing– message me if you need help), working on a new (FREE) course for ImportDojo, as well as building an Amazon affiliate site which I want to document publicly.

But the big news will come towards the end of the year. I am working on an interface that lets you see if a supplier or his test reports are verified by a third party testing company. I contemplated a lot over the last few months what I can do that will actually help people and change the industry. Because two of the most common questions I get asked are:

  • How do I know if a supplier is legit and not a scammer?
  • How can I verify a test report from a supplier?

Obviously with research, due diligence you can answer these questions for yourself. But what if you could see in an interface that this is true and verified by third party companies? This is a big project and will take 2-3 years to develop but I am confident we can bring it to the market. Let me know if this is something you would be interested.

Stay tuned 🙂

All the best,
Manuel

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When and how to work with a sourcing company in China

Hey folks,

Today’s post is all about how sourcing companies work and when it makes sense to use a sourcing company instead of doing the entire job yourself.
Back in the days when I worked for a Buying Office/Sourcing Company in Hong Kong I was travelling 10 days of the month scouting new products for customers in factories in China.
As a Sourcing Company we provided every service the customer needed to import so he didn’t need to handle everything himself. We earned a small commission (non-profit wholly owned buying office) on our orders and made life for our buyers a lot easier.
That was back in 2013. Today things are a little different and sourcing companies have adapted.

Here’s how most sourcing companies work and how they charge:

1) Up-Front Flat Fee:

ImportDojo (https://importdojo.com/sourcing/) was one of the first sourcing companies to adapt this model. Basically you pay a fixed up-front fee that is agreed on at the start of the project. The company starts sourcing and you’ll get a report after a couple of days. Usually complete with 1-3 supplier recommendations and which one would work best for you; an Excel file containing supplier contact details, product weight, measurements, description etc. At this point you could possibly hire the sourcing company for further steps (what that entails explained below) such as a full sourcing package or take it from here. No further costs are involved.

2) Up-Front Fee & Commission:

Some companies charge you an up front fee (usually fixed) and if you decide to order that product from the choosen supplier the sourcing company also gets a commission. This is a rather unpopular model as the sourcing company even gets money even if they don’t do anything further anymore.

3) Commission only (with contracts, usually big sourcing offices with monetary commitment every year)

This might be a bit of the older model but not many sourcing companies offer that to a new customers. The sourcing company does all the work in finding a suitable supplier and once the buyer is ready to place an order a commission is agreed upon and paid to the sourcing company once the goods are shipped. Since the sourcing company doesn’t have any guarantee that the buyer places an order this is usually only available for existing clients or buyers who have their own sourcing office in Asia. A good example for this would be the company I worked for many years in Hong Kong (Eurogroup.com.hk).
Eurogroup acted as the sole buying office for 3 big companies (Rewe Germany, bauMax Austria and Coop Switzerland). Every order had a fixed commission (agreed upon every year during a yearly meeting between buyers and sourcing company) and paid out at the end of the year to the sourcing company. Usually these percentages range somewhere in between 4-8%. This might be the best solution for you if you have the need of a contact person any day of the year and have a lot of orders every month (possibly more than 5 containers per month).

4) Making money on the backend

This is a practice used by MANY chinese sourcing agents or companies without Western management. It was very common in the 90’s and 2000’s but more and more oversears buyers have gotten wind about this (rather unfair) practice.
What basically happens is that the buyer pays an agreed commission or fixed up-front fee to the sourcing company and the sourcing company collected extra commission from the factory itself without the knowledge of the buyer.
Many Chinese sourcing agents have this agreement with factories. If they introduce a buyer to the factory the factory pays a commission to the sourcing agent after the order.
Obviously the sourcing agent doesn’t tell the factory what kind of money they already got from the buyer. It is difficult to figure out if there is money involved in the backend. Usually it is when a sourcing agent offers to work for a very low fee or does not allow you to contact with the factory itself. Beware of these types of sourcing companies.

When to use a sourcing company?

I find that there are different types of buyers and depending on what type of buyer you are you may want to use a sourcing company or not.
1) Experienced buyers who want to focus on other parts of the business
These type of buyers usually have imported from China for at least 1-2 years and have experience in dealing with Chinese factories and companies. If you are one of these buyers you are very likely stable on your profits and you may want to outsource this task to sourcing companies. Mostly because sourcing in China is a tedious process and can be very time consuming. Especially if you are in a growth phase and you need to focus on non-China activities in your business such as marketing, developing new products or difersifying your business.
2) Tight budget buyers who want to try themselves at the process first
You are very likely at the beginning of your eCommerce or general commercer business and have limited amount to spend on sourcing companies. If you are in this phase I actually do recommend that you do not use sourcing companies as you might want to learn the process first and experience working with Chinese factories first hand. There are a lot of tutorials available on the internet to learn about importing from China (including my blog posts and Import Bible). Sign up here if you haven’t yet and get my Import Bible (The beginners guide to importing from China) for free: https://importdojo.com/pricing/ (choose the free membership plan). Also make sure to read trough my blog posts: https://importdojo.com/blog/

So what do sourcing companies do?

Keep in mind sourcing companies do the entire job for you. Just to give you a brief overview of what this entitles and how long this process usually takes:
  1. Establishing your needs (1-2 days of communication)
  2. Sourcing compliant suppliers/factories in China based on your requirements (7-10 days for off the rack items)
  3. Preparing quotation and findings in a summary for you (1 day)
  4. Order samples and evaluate them for you (5-10 days)
  5. Negotiate final conditions/pricing (1-2 days)
  6. Issuing contracts and agreements (1-2 days)
  7. Placing the order in your name, making sure all terms are met and everything is fixed (2-3 days)
  8. Arranging production, packaging, labelling, shipment (7-10 days)
  9. Monitor production period (30-45 days  – obviously it doesn’t take 45 days to produce but when you place an order with a factory you need to wait a certain amount of time for all materials to arrive, arrangement of production etc.)
  10. Arranging inspection (1 day)
  11. Release production and arrange shipment (1 day)
So we are looking at 87-90 days (roughly always 3 months) from beginning of the project until shipment.
So if you do not have to monitor the entire process but rather want to focus on developing and growing your business it makes a lot of sense to hire a sourcing company.

When does it not make sense to hire a sourcing company?

I always recommend first timers to go trough the process at least once. That way you learn a lot about the trade and obstacles a sourcing company has to go trough. Also it will make you simply understand the process better – and appreciate the work a sourcing company is doing for you 🙂

What do sourcing companies not do?

Some sourcing companies may offer these services, some may not:
Inspections – make sure you use a third party inspection company. There are sourcing companies who offer this as an integrated service but I recommend hiring a company (such as Asiainspection/TUV, SGS etc.) who have many years of experience.
Logistics – some sourcing companies offer this – also here make sure you use a third party inspection company.
Reason why I say use a third party for inspections and logistics is that your sourcing partner is probably not the strongest in that field. Meaning their prices are higher and they are less experienced. You might argue that you want an all-in solution with one company and don’t mind but I’ve seen my fair share of problems with these all-in one companies.
Just think of it this way: if you want to have a great pizza you aren’t going to the Greek around the corner because they also serve Pizza. You’ll want to go to the best Italian in town (if they are affordable). And if the Italian serves a Greek dish it’s probably not the best Greek dish you can get…. I think you get my point 🙂

What can you expect from a sourcing company?

China is not a department store. What I mean by that is that you simply don’t walk into a store (even with experience) and everything goes smooth. There are a lot of obstacles that can come along the way. Governmental Inspections (https://importdojo.com/what-is-going-on-in-china-right-now/), Chinese New Year holidays, unexpected delays on raw materials, unclear communication from the buyers side delaying things and so much more.
Obviously most sourcing companies work in YOUR interest, not in the factories interest. However if the buyer is in-experienced with doing business in China some situations can become difficult in the buyers eye. Therefore it is important to understand all facets of doing business with Chinese companies. Again, I recommend to have gone trough the process at least once and ready up on my blog posts 🙂

Conclusion:

I think it generally makes sense in any business to outsource those tasks that you aren’t good with (or have no time for). Just as I outsource certain tasks in my business. Do your research on sourcing companies and determine based on the following factors of the sourcing company:
  1. Experience
  2. Reputation
  3. Pricing
Pricing is usually my last priority in all tasks I outsource because I rather pay a little more but have less headache afterwards.
I hope this gave you a bit of an overview of what sourcing companies do and how they can help you.
Let me know in the comment section if you have any questions 🙂
All the best and happy sourcing,
Manuel
Ps.: Here’s a shameless self plug ☺
I’ve been running my own sourcing company together with my partner over at www.asiainwest.com/sourcing-service for a little over 3 years now and we have great packages available.
Check us out here:https://importdojo.com/sourcing/ or email me (mail@importdojo.com) if you have any questions.