How a Niche SEO Site Prints 95% Margins

11:49Walker Deibel:Where's Heather when we need her? Jeez. Not the substandard lodging, Heather, for when you listen to this.

11:56Josh Schuchart:So, I mean, I think your question is a good one. How much of this is fixed cost versus marginal cost for these guys? And it looks like there's a lot of fixed costs where you're staying in these lodges that they have built and all that kind of stuff. So it's important to have high occupancy of those. They do look like they have marginal cost where they are, I'm sharing the wrong tab. They do have marginal costs where they are having to pay somebody to take you out as a guide and need more horses and all that kind of stuff. So it looks like it's mostly lodging type expenditure, right? If you imagine 300 bucks a night towards hotel, 200 bucks a day towards amenities and the riding the horses and all that kind of stuff.

12:34Josh Schuchart:So that's kind of where my mind is on this stuff. So these are, you know, if it's$1 ,000 per person for a two-night thing, you know, a family of four years spending four to five grand on a trip. Plus travel.

12:44Walker Deibel:I mean, if I'm leaving South Carolina to go to Montana, I'm going to do it more than two days. I'm probably going to shoot for five to seven. Yeah. So, yeah, I think this is one of those things where, you know, I could Google around and maybe try and find one, but it looks like on duderanch.com on the website that Peter has, is there some kind of, it looks like there's a review. kind of component to this, right? Where you're getting kind of the accumulating advantage of all the past instances of customers, instead of me just like trying to go on TripAdvisor or something that's not as niche and getting less of an experience.

13:28Walker Deibel:Don't you think there's a kind of element of this where the niche like builds and builds and builds on itself?

13:33Josh Schuchart:Yeah, the reviews are powerful. You know, you also have a situation where the link juice has got to be huge, right? He owns duderanch.com, which is kind of worth us taking a pause to talk about Peter's model. His whole model is, I find a reasonably priced domain name, and that gives me the idea of the business to build. Like, you're like, how does this guy do Dude Ranches and Vidalia Onions? Well, it turns out, guess what two domain names he owns? Dude Ranch and Girdly.com. No, I'm just kidding. He owns duderanch and vidaliaonions.com. So that's why he sells Vidalia Onions. Yeah. Yeah, all of his tweets are that way.

14:12Josh Schuchart:And then I think the important thing about this is this basically has ski trip economics. And ski trip economics are the thing that the entirety of like Vail Resorts, all these ski trip businesses are built on, which is if people only have two weeks a year to go skiing, they'll pay up to go to the absolute best place and they pay$300 a day to go ski Vail. And if you're going to go do this, you're going to go on something magical. You're not going to just go to gyms, backpacking, slash dead horse, you know, sleep in a tent type thing. You're going to spend up for this because it's a once in a lifetime thing.

14:45Walker Deibel:Yeah. And the cost of it going wrong is like worse than the cost of paying for insurance in essence. A billion percent. The first thing I thought that when I saw this tweet was this whole conundrum of like there's good reasons and bad reasons to sell a business. So Peter has a bunch of different things going on and yeah. Why are you, this person, you haven't pulled up. Why are you selling to focus on onions? Yeah.

15:09Josh Schuchart:To focus on onions. I think that's the first time in the history of the English language that sentence has been created.

15:17Walker Deibel:Yeah.

15:18Josh Schuchart:Why are you selling? To focus on onions? Question mark. All right. Peter said, to sort of pull some money off the table, but also to inject some new blood in the project. I still love it and I'm strongly associated with the industry, but I haven't done a good job utilizing social media and haven't done much outbound sales for new signups, et cetera. That sort of thing.

15:33Walker Deibel:To me, like, I don't know. I haven't had a conversation with Peter, but this could be a great example of a good reason to sell. The fact that he calls it a project, I think is like the crux of it. There's plenty of people who really enjoy taking something from nothing to something, which is presumably, I think, what Peter did here. He found the domain, built the site around it. And now he's going, hey, look, this doesn't excite me as much. I'm doing it a disservice. I want to keep doing my zero to something. you know, my zero to one. I don't want to go from one to 10 on this. I did see in some of the comments and stuff he had made in the thread that he's being pretty discerning about who he's talking to as buyers and what the right fit is.

16:19Walker Deibel:And so I almost love the fact that this is like, the competitive advantage is pretty durable and he can put it all out in the open. This is contrary to your typical broker conversation where it's like, I can't even tell you, you know, have anything about it until you sign an NDA and give me your social security number. And it's like, how fragile is that business compared to this? He's putting it all out there. He's telling you the pricing. Yeah. A million percent. It's almost like, come compete with me. I like there you can't, you know, I have dude ranch.com.

16:49Josh Schuchart:Oh man. Well, this is my, I was looking at the website and I was like, okay, well, could you get this to a hundred or $150 ,000 a year in revenue? And I was like, um, first thing I would do is like figure out how to get closer into the value chain and provide more value to customers and consult with them on how to find the perfect dude ranch. They're doing it, but no offense to Peter, this is way under-monetized. They've partnered with these dude ranch vets, Bob and Karen Foster, who are kind of what you imagine of what people look like who love talking about dude ranches. They are charging not$10, not$20, not$30, but$40 to sit down and talk with you and share all of their expertise having visited all these dude ranch in the world.

17:39Walker Deibel:They're not making commission.

17:41Josh Schuchart:They're not a travel agent. Like Bob is just doing it for$40 for thousands of dollars on a vacation. Are you ready to take a leap into business ownership but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. founded by Harvard MBA and acquisition expert, Walker Deibel. The lab is your fast track to success in the search diligence and acquisition process with hands-on support, world-class resources, and a community of like-minded entrepreneurs. Acquisition lab gives you the tools and confidence to navigate every step of the journey.

18:15Josh Schuchart:And we're proud to call Walker and Chelsea, the labs director, longtime friends of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream a reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you.

18:35Walker Deibel:I think that's so cool, though, because it's almost like... Not if you want to make money, though, bro. Well, right. All he's doing probably, and Peter, correct us if we're wrong, I hope you listen to this, is that you're trying to focus on the core thing, which is how do I get more dude ranches to give me my base cost, the$575 per year? And so then you have a person like Bob and Karen Foster and you say, look, you guys love this. You want to pay it forward. They may not dude ranch.com may not even take a big on this. They may not even skim it. Yeah, it's paid directly to Bob and Karen and it reinforces the entire community aspect of this.

19:17Walker Deibel:and I agree you could as a pure capitalist extract more value out of this but I think it probably

19:24Josh Schuchart:just reinforces the core business yeah okay so then you're arguing the way to grow this is kind of what Peter said um so somebody asked what are the growing opportunities for a new buyer this is so good every seller should do this yeah just put all your cards on the table it's just a live Q &A. And if you ever do sell a business, my number one recommendation to you is from day one, create a FAQ every time you get asked that question. If you get asked a question, write out your answer, copy and paste it, put it in your data room. I do that every single time. That way by the 14th person look at your SEM, there are no more questions you're being asked.

20:05Okay.

20:05Josh Schuchart:But anyway, so what are the growth opportunities for the new buyer? Peter says, I haven't raised rates in 10 years. My base is$575 per year. Okay, can we agree that's low enough? Or does your socialist, communist worldview, kumbaya, decide that? Can my capitalist friend come back, Mills?

20:22Walker Deibel:I am a capitalist, yeah. Have you seen that clip from the guy who sells something to farmers on Shark Tank? And they're like, why aren't you charging more? And he's like, because I'm selling to farmers. And they're like, but you could charge more. And he's like, but I'm selling to farmers. It's like this thing that helps water trees or something. I keep seeing the clip online. mind. That's what I have in the back of my mind, because I think there is something about this that is like incredibly, uh, like operator minded for the base of these operators. And I just wonder, yeah, could you extract more value in the short term?

20:54Walker Deibel:Yes. Does it dilute the core essence of this? Maybe, but go ahead. I agree. He could, if he hasn't, if you don't raise prices in 10 years, you probably need to raise prices. It doesn't matter what you're doing.

21:05Josh Schuchart:Well, I think somewhere in here he talks about how he has no churn whatsoever. Yeah. It's like, yeah, it's because your product's too cheap. But look, he's charging$575 a year. Let's say on average he's sending 50 leads to your typical dude ranch per year. That means they're doing, let's say, 50 % conversion on those, or let's say even 25 % conversion at a$7 ,000 per. Yeah. He's sending for$575, he's sending these guys$150 ,000 worth of business. Like that's too low. It should be at$1 ,500, right? Okay. Then he says, I have a list of around 50 ranches that advertise with my friendly competitors that I have yet to pitch our services to Vidalia and Wrenchwork because they hide his time.

21:47Josh Schuchart:So he doesn't sell anything. He doesn't have a salesperson. An opportunity to offer new ads on an email newsletter and also expand on my signature ranch awards that I haven't run in a few years, but that's just a few. Signature ranch awards. You know what this reminds me of? wine ratings.

22:05Walker Deibel:Yes. One of our favorite

22:08Josh Schuchart:favorite hustles ever. So if you're new here, if you haven't been here for the past 500 episodes. Episode like 12, I think maybe. It was very early and we're just like, this is such a good business. So they were doing $3 million a year. The way this wine business worked is the wineries would pay this service to rate the wine and give awards. Most everybody won an award. And the wineries would send them free wine. And then they would hire independent contractors to do it, to taste the wine and write up reviews of the wine and then give an award. And so everybody won. And these people just collected several thousand dollars a year from each winery who wanted an award.

22:48Josh Schuchart:So this seems like a great opportunity to be Ranch of the Year and stuff like that. Have a ranch gala.

22:53Walker Deibel:Yeah, or it could be like, you know, best food, you know, best cabins, best, you know, glamping experience. There could be a category for everything under the sun, in essence.

23:04Josh Schuchart:So I think your worry is, and Peter says it here, this project isn't a high-flying, a million-dollar opportunity. This is just a killer, high-margin project where you could travel your tail off and visit some of the most amazing spots in North America as business expense and grow revenue a little. Could it get to$150 ,000 a year or more? Yeah, I think it could, which to me reads it could get to$150 ,000 easily for a sole proprietor.

23:26Walker Deibel:I think that these kind of circumstances are really interesting to me because whether it's this or real estate, the allure of value add is so tempting because people go, oh, how hard could it be? I just need to do X, Y, and Z. But I think you've got to go all in on the value add, whether you're doing value add on a piece of real estate or on a project like this, which is what Peter calls it. You really would have to completely immerse yourself. You'd have to go to the industry association meetings. You'd have to go rub shoulder to shoulder with these folks, which if you're like me, you're a father of four and you own a business, I can't do that.

24:11Walker Deibel:The value add element is like epic as it seems. It doesn't suit me in this phase of life. But for the right person, I mean, you could have an amazing quality of life and you probably could find ways to grow this. The real dilemma for me is, are you having to pay up for the value add? So many times in a value add situation, a seller wants you to pay for the value that you're going to add, you know, and kind of what could be. And I'm not saying Peter is doing that, but it just makes you wonder. A lot of people want you to pay for the growth of what's possible, not what is historical and actually been done.

24:48Walker Deibel:But wait, there's more.

24:50Josh Schuchart:Well, here, so trailing 12 months, it says, I guess that's revenue, but mostly it seems like it's profit. He barely works on it. He's asking four and a half times free cash flow. Okay.

25:00Walker Deibel:So I think it's right in that sweet spot where, you know, it's not so low that you don't even have to do due diligence. and you can just, the price is your due diligence and you can ride away with it. It's on Twitter. So it's pretty, probably honestly, a pretty efficient market, you know, the Twitter comments. I don't know. I think if four and a half times, depending on your capital structure, you probably do have to grow it a little bit in order to have enough, you know, marginal free cashflow.

25:28Josh Schuchart:Yeah. I mean, I think the most important thing to recognize about this is there are some businesses you run into like this one where the person has a million percent, 100%, a trillion percent optimized for how do I have the absolute best life possible with the minimum amount of work and doing nothing I don't want to do. And that's where this business is. And all the growth opportunities that he talks about just are going to require some hustle, right? So that's there. But let's say, Mills, you get this, it's a 50 ,000. You double through a combination of new customers raising the rates, let's say we go from 575 to 775 to 975 over a couple years, you could see yourself getting 125 or 150.

26:12Josh Schuchart:That would put it at basically one and a half times free cash flow. It's pretty darn good.

26:20Walker Deibel:I would need to figure out, are we talking about, he said it's 50 ,000 ballpark, 50 ,000 trailing 12-month net, right? uh correct okay yeah that makes sense because if you got 200 member dude ranches paying you 575 you're at 115 000 in revenue per year so it's basically two times revenue is what's being asked a little bit over two maybe two and a quarter times oh no oh no i think no i think he's quoting

26:50Josh Schuchart:i think his expenses are so low basically rev it runs at 98 profit margin oh okay it's a wordpress site with some credit card processing and a domain renewal. So you don't think it's 115 ,000 in revenue and 50 ,000 net? I think he's doing, I think he has 100 customers right now and he's doing 50 ,000 in revenue.

27:10Walker Deibel:Okay. Alright. Gotcha. But yeah, 98%, you know, or 95 % margin or something like that. What's the highest and best use? If you just, okay, Michael, put on your capitalist hat and, you know, twist your mustache. What's like the absolute most like just pure, you know, capitalist approach to this if you were going to squeeze every last drop out of it?

27:33Josh Schuchart:Okay. This may sound half-baked, but it's because it's totally off the top of my head. Number one, you got to raise the prices and you got to figure out how you're going to do that without alienating people. Totally fine. Number two, I think you start to look at how do you actually go and run a sales process? Because they're not doing that. They're just totally like, well, if somebody shows up, they show up. This is something that you need to have handheld, selling, I would hire a seller and put them on like 80 % commission. I would do it in a low cost jurisdiction. Call hireoneer.com. Number three, I would look at how do I add value add services on top of this?

28:10Josh Schuchart:Like how do I start to make money from that concierge stuff, travel agency, all that kind of stuff. I would take and try to monetize these eyeballs on top of it some more. And those value ad services could be more concierge type stuff, the agent type stuff, then you could actually white label some trips and stuff like that and start to get into that business as well. How do you get where you're making 20 or 30 % margin on some of this stuff rather than just getting referral fees and that sort of thing. So those are the three levers. Raise prices, sell some stuff, figure out what else to sell to the same people.

28:45Walker Deibel:I think that's a good playbook. My only concern would be does it does it cannibalize and erode, you know, your, it's a marketplace. So does it erode kind of your marketplace? And I don't know, but I mean, that's, I think you have to extract more value, you know, and if you have to extract more value than that, those, I agree, those are the ways you do. Yeah.

29:06Josh Schuchart:And look, the way to, the way to not erode a marketplace like that is basically figure out when you charge more, how do you provide more value? Exactly. And I'm not, you know, I'm not trying to screw anybody over with all this stuff. I'm just trying to... Let's create more value for these customers on both ends of the marketplace. The clients and the rancher. We're going to charge more because we're delivering more. Yeah. I mean, you could charge the ranches to do a review, right? On-site visit, reports, all that kind of stuff. So besides just charging more for the base service, you could figure out how to add more services and create more of a premium offering.

29:43Josh Schuchart:Would you like to be one of our reviewed ranches? Well, okay, here's what it costs you a free trip and it costs$2 ,000 a year. And we write up, we send somebody out who's an expert goes on your trip. Yeah. Yeah. All that totally works.

29:56Walker Deibel:Peter, I'm fascinated by this and I hope you keep live tweeting the entire process. If you want somebody to, um, grill your potential buyer with questions, we're happy to, to do that and live record. Hey, you know what? We'll give you the Bob and Karen Foster special and it'll be 40 bucks.

30:17Josh Schuchart:Oh, we should talk about the obvious thing worth worrying about. AI is coming for search. Do we think this is going to get disrupted by AI search?

30:28Walker Deibel:I don't know. Those kind of questions are above my pay grade.

30:31Josh Schuchart:I mean. Okay. Imagine this is a roof and there's a hailstorm coming in. If AI was the hailstorm, would you be worried?

30:39Walker Deibel:I'm so confused. Yeah. I mean, I think if something is, you know, if it's tethered into the digital world in such a major way like this, then yes, it could be coming. It could be coming for your inefficiency.

30:54Josh Schuchart:My thesis right now is that for AIs, basically, there will be a transition of SEO as a technology that stops speaking so much to how our eyeballs act and how the AI's eyeballs act. and you're seeing more of that. I forgot what the exact name of it is, but they've stopped calling it SEO. They're calling it, I don't know, agentic optimization or something where there's some weird name for it where people are like, okay, we're optimizing for how does ChatGPT see our site? How does Gemini see our site and so on? So I'm less worried about it. In the end, it's just the AIs are just a middle person coming in between you and the data and then the data just has to get reformatted for a new middle person who's not Google.

31:39Josh Schuchart:Yeah, yeah, absolutely. Cool. All right. Well, I think you put out the call to Peter. Kudos to him for putting this out there. I'm going to give him a click like button. Good job, Peter. Yeah. Sorry, I pooped on aspects of your deal, but I think you're a great guy. We should have him on.

31:55Walker Deibel:That would be a fun conversation.

31:57Josh Schuchart:He seems like a great guy. I got to admire people that optimize for the life they want to live. Goodly.com. Goodly.com is also for sale. I should put it on here. All right, everybody. Thanks for being here this week. We'll catch you next time. And if you enjoyed this episode, please talk about it on social media. We would appreciate it. Tag Peter on it. He's at Searchbound is the name of it. And we'd love to hear from you. So, all right, catch you next time.