1558 – Unlocking Online Profits with Jaryd Krause

0:28Hey there, thoughtful listener. million in revenue. Just head to upmyinfluence.com and watch my free class on how to create endless high-ticket sales appointments. You can even chat with me live and I'll see and reply to your messages. Also, don't forget, the thoughtful entrepreneur is always looking for guests. Go to upmyinfluence.com and click on podcast. We'd love to have you.

0:58with us right now my good friend jared kraus jared you are the founder and ceo of buying online businesses you're found on the web at buying online businesses.com jared thank you so much for joining us gosh thanks for having back on appreciate it absolutely um i'm gonna have to go back and see how long ago it was that that we had you on but two or three years ago it It was a while ago now. Yeah, yeah. So, and boy, a lot has happened in the meantime. Hasn't it? Pandemic, you know, because we've put on probably about 1 ,200 episodes since then. But Jared, give us an overview of your work and kind of what you do.

1:36Again, your website, buyingonlinebusinesses.com. Yeah, we help people buy online businesses and scale them, grow them. That's basically the essence of it. Typically, it was starting out helping people that wanted to get out of their current role in their job so they could have more time doing what they love with the people they love. So we help people kind of, we were helping people replace their income. And now we help a lot of people that want to buy online assets to add to their portfolio or their investment portfolio. So we work with a lot of people that are in commercial real estate that want to roll over some equity into buying a deal, get some online cashflow, build that up, and then they can roll that back into another commercial deal or resi deal.

2:20So I call it the infinite loop of wealth between digital property and physical property. And yeah, I work with a lot of people doing that as well. It's quite fun. Yeah. All right. So here's the million dollar question. I'm sure you hear every day. Why do I want to buy someone else's business? I'm just going to start my own from scratch and then I can have it exactly like I want. It's kind of like buying a new house versus is a used house? Am I buying somebody else's problems? What's the advantages or disadvantages to stepping into something that's already been built? That's a really good analogy that you use of the house is if your goal is to live in a beautiful home, would you go away and learn how to build it yourself and then build it yourself?

3:04Or would you have somebody else build it for you exactly how you want it. It's 90 % of startups fail. That's a massive amount of people that try to start businesses. And that's just people that are passing that failure rate. To be successful and scale and grow it is even harder. So a lot of people come to us and they've started their online business that hasn't worked out for them. They've started multiple. I've done many ventures and they're like, they can actually go and buy an asset that they know is going to produce income because they can see how much the business is worth. They can see how much it's actually making.

3:44They can see what work is required. They can see what team is involved with it if there is a team. And they can purchase it and just be the owner of it. And then they can choose to have it maintained or they can choose to grow it. So it's a far smarter investment option in your time and I think dollars than trying to start something from scratch. It's just back to the analogy of like, if your goal is to actually own a home, a beautiful home, would you try and build it yourself? Like learn how to actually do the whole thing by yourself. It's crazy. Yeah. So, you know, when buying a business, you may or may not pay more than the original owner founder put into it?

4:24Maybe, maybe not. But what you're getting is the fact that they made it into the 10%. And, you know, that the cost of failure emotionally, spiritually from a time perspective, hey, look, I mean, if you got the time, you got the patience, and you have the skill set to start something from nothing okay but if you'd like to remove those variables uh you know step into something that's already established i guess is the idea here um but but my question jared is why are people willing to sell their businesses does that mean that there's something wrong with the business good question uh the answer is no typically if you're buying a business above the couple hundred thousand dollar range what people want to do is they want to take some money off the table and they want to reinvest into something else or start another project a lot of the time that people the people in the startup realm that are good at it they might have an 80 percent failure rate not 90 for people that never bought them right so they know that they've got a high turnover of work and failures that they need to overcome to get to a successful business after maybe a five-year period.

5:45But then because they're so wired into and so energetic into new things, they get bored of that niche or that business model. And they want to move on to something else. They want to start another business and then sell it. So there's people that start businesses and sell them. There's people that have built businesses that are super passionate about it that have just been burnt out and like, look, I need to exit. Or sometimes they need to pay for a surgery sometimes they need to buy a bigger family home most of the time people want to sell a business because they need to reinvest that money somewhere else or want to uh so i also said that's in the caveat of course you need to do your due diligence you need to make sure you're buying the right asset for you and it's sound um but there's this the reasons that people sell businesses are very legitimate and fair it's the same to somebody who wants to sell a house well we just want to relocate we don't live in it we want a bit of in a variety bit of change bigger home small home whatever it is yeah um you know also too um so for example like i'm thinking of you know eventually i probably there will probably be some sort of an exit for me from for my current company and the reason why is because i have a moral obligation to serve more and more and more clients because what we do is exceptionally valuable.

7:08That said, I love the stage we're in right now. My desire to impact the world in a huge way, you know, that's one variable, but then there's also my personality. I'm a really good CEO of a company, you know, probably under 30 employees on our, even maybe 40 employees and under, you know, we start getting to the size of company where it's like 80, 100, 120, that's a different type of company. And now you're having to deal with a lot more, you know, HR, a lot of administration, a lot of rigmarole. I'm not really, that's not my jam. I don't, but yet I don't want to shortchange my potential audience or my team or the impact of my influence as an entity by intentionally curtailing growth.

8:04I don't want to do that. So, so to someone who's listening to our coverage, come hit me up in about three, five years. We'll see. Who knows? But then, you know, my hope would be then to maybe shift my role. Like I would love, I'm more of an evangelist, you know, an operational CEO. yeah not so much i'll do it but my my passion is really going out there so i and i would imagine that there's people like me too that kind of fit that profile yeah hugely so i think the biggest bottleneck in my business is me i'm at the top and the same with most business owners as well and sometimes people are on that wave of or trying to catch a wave to get to the next level and they've been doing that for a couple of years and they haven't been able to take it to the next level.

9:00They've tried a bunch of different things to take the business to the next level. They haven't been able to. So then they go, all right, cool. That's where I'm at. I'm done with this business. I'm going to move on. I can't take it to the next level. And they're actually doing the business and the users and the clients a disservice by staying involved when they can actually add more value by handing it over to somebody that can take it to the next level. and it's a huge win-win for every single person involved right the seller the buyer and the and the people that are you know working with the business clients uh users yeah um where would be some of the biggest risks when you are taking the reins of an existing business you mean when do you mean when buying and looking to buy business yeah yeah so so let's say for example um like one thing you know i've already been you know i've already had plenty conversations about this right it's like let's say that um the founder uh was very very tied like their brand personal brand was very very tied to the brand of the company and if you remove that founder what is that going to do to the viability of the business yeah that's a that's a huge risk uh you can like every i'd say most people are replaceable uh if you're selling a business that's already a personal brand name like if you're selling like tony robbins.com like you can't you can't replace that right and it's the same with other food bloggers and things like that that i have seen that have tried to sell their brand name as their domain and their book and everything like that it's just not an easy thing to do.

10:48But there are businesses like say for my business, buyingonlinebusinesses.com, I can be replaced quite easily because yeah, I'm the face of it now. But we've also hired people that are creating content for us on YouTube and podcasts and stuff like that as well. So it's not going to be so dependently relied on me. If I was to sell this a couple of years ago, you could still replace me as well. Because you just have to have a strategy and you have to understand like what's the people joining this or the users buying this product because it's Tony Robbins or they're buying because they're going to get the result a big portion of buying it because it's Tony Robbins right so there's that to understand but then when you I think what you were asking before previously is like when somebody does become the new owner of the business what are the risks the biggest risk is coming in and changing things too rapidly and not understand how the business works and not listening to the business.

11:46What I like to do, I help people scale their businesses, you know, the seven, eight-figure range. And what a lot of people do is that entrepreneurs, like they get all excited, they want to make all of these changes. And they hear a podcast or a YouTube video or they know somebody that can grow a business with, you know, YouTube or socials or whatever it is, a different organic strategy. And they try and implement it. And then throw the baby out of the bathwater. They forget about what's actually working. and they don't know how to tune in and listen to the business. Because our businesses, just like in our life, is giving us hints and telling us what we need to do and do more of this because it's right, feels good, and it's getting your results and do less of what's not working.

12:26It's a natural thing. We need to tune into our business and do that rather than reinvent the wheel and try and go for other markets and all that sort of stuff. Why not make your product or service far better and increase your customer lifetime value? Those sorts of things versus the shiny object syndrome. And that's the biggest risk when people become the owner of a new business is they have these grand plan ideas instead of leaning into more of what the business actually is and making it better for where it's at. Is there, talk about maybe some of the models. Is it, are you typically like, I'm sure that there are some different, like what it looks like.

13:10you know, when you're talking about this is the former owner, I'm coming in as the new owner, what sorts of maybe conditions or, you know, as a buyer, you might ask for rather than let me just cut you a check and see you. Like, is there, are there, are there some different things that you could do? Maybe like a transition period that you might request? Yeah, definitely. Definitely. So So different ways you can structure the deal. Sometimes you can buy all cash. Sometimes you can buy finance. Sometimes you can have a seller note, which will be where you'll put the deposit down. And after a certain KPI has been met within a certain period of time, you will release the rest of the funds.

13:54That can be done in a one lump sum. It can be done in certain milestones and chunks and different payments. typically you will negotiate a training period with the previous owner of the business or you could keep the whole team on board and still have a training period with the previous owner there's very there's it depends on the business the type of business how much work is involved how much team's involved and how much training is needed but to decrease risk you can definitely do things like seller financing. So buy part of the business and then you can do, you can finance the rest through the seller with a small percentage, or you can just do an earn out, which is what I would prefer is buy a portion of it and then earn the rest out.

14:40It's basically seller financing without having to pay interest. Then you've got the seller notes and then you've got the different milestones as well. Yeah. Seller notes. Yeah. Yeah. And then let's say that somebody does not have enough cash on hand and the seller is not willing to finance. How does the lending world look at buying a business? And also go ahead and throw in how the lending world might look at buying an established business versus getting a loan on a great idea. Most people won't get a loan on a great idea. That's what the startup realm is all about, right? Silicon Valley is that's why you have people inject cash into it because you can't really get finance for the startup ideas.

15:36It's hard. Yeah. Why would you when 90 % of startups fail as a lender? You wouldn't do it. It's ludicrous. And that's why those people in the Silicon Valley startup will hedge their investments. They might invest, they might have 50 mil and they might put a million dollars into 50 different projects, right? One pays off. That comes back and just backs up what we're saying about that 90 % of startups fail. So the lending when it comes to buying an established business, it's a lot easier and you can actually do it compared to a startup, but it's not as easy as investing in say a physical property right like residential or commercial uh the options aren't infinite and there's yeah it's it is there are some nuances you do need to for the bigger deals you're going to need to prove that you have some entrepreneurial experience and you need the business needs to be approved by the lender as well just like if you're going to purchase a physical property.

16:36And there's basically two options now. You've got bupos.com and then you've also got SBA, right? Really cool thing in America that Australia doesn't have, most of the world doesn't have, small business administration loans that you can use to buy an online business. Yeah. Jared, how do you work with people? good question uh people typically come to me they check out my podcast uh and watch our youtube videos and they that builds a bit of trust before they dive in and then people will join our membership where they go through a course on how to buy business do you do they submit their businesses that they're looking at to us and we review them prior to them making an offer so we point out risks and opportunities and you know next steps and all that sort of stuff before they even make an offer uh so that's like a a done with you sort of thing uh and then we have i do one-on-one coaching for people that want to buy a business and then transition into growing as well a lot of people that i'm working with now one-on-one they already own a business that bought me and they've stayed on and they want to they want to we're scaling and growing them yeah yeah so what would happen if i said and and again your businesses that you're going to help them fine are going to be, well, they're all going to be online, right?

17:55Yes. Yes. The reason being is because our philosophy is we like to teach people to earn an income where they can be anywhere. And so they have the actual, can achieve the goal of spending more time doing what they love with the people they love. Yeah. Generally, when you buy an online business, does this mean that that is also going to become a full-time job for you? Or based on what you were talking about, it sounds like, no, the idea is that you want to look at this as an asset and hopefully this will not become a full-time or a full-time and a half job for you. Yeah. We have that saying of like, you don't want to buy a job.

18:36You want to buy a business and be the owner of the business and not the full-time operator. You can hire an operator. If you're willing to want to work still, you can buy a business that may take you 10 to 30 hours a week to run if you like uh but why it's up to you it's some people love to work right um but most of the people that we work with they're like hey i've got kids and i want to spend more time with my kids and i'll take them traveling and that's what we're all about is is ensuring people yeah get to do what they love with people they love. So yeah, don't buy a job unless you are excited to buy a job.

19:17You, on your website, buyingonlinebusinesses.com, I just want to, you know, for someone that's been listening to us, Jared, what's kind of the next step in that relationship? Or maybe they've done some searching, they came across this episode, they've been listening to our conversation, they're like, okay, I need to, I need help. I'd love to find a business. I'd love Jared to help me? Like, like how, how does that, are they joining a coaching program? Do you, do you have just, just courses in education or like, how can you step in and be that mentor? Yeah, it's, it is that membership where there's a course involved in membership.

19:55I do, we have within the membership, there's a lot that's encompassed in it. We have accountability calls. So we have leaders, Bob leaders, buying online business leaders that are leading accountability and networking calls that you can jump on. I do a Facebook Live every month in there. You guys can ask me any and all questions by email or via the group. I'm very heavily in there. I go above and beyond. And if you guys are interested, people are interested in that, they can just check out the website or email me at jared at buyingonlinebusiness.com and ask questions. And yeah, obviously you want to do your due diligence on me and make sure I'm the guy that can help you get to your goal.

20:38And if it's the right fit and you want to ask questions, reach out and we can help you. If not, then maybe we can point you in the right direction to somebody who can. If I have an online business, can I work with you? And I'm looking to sell. Yes. If you want help to set up the business to sell it, it would be a one-to-one approach, right? because it's every single business is to get it set up for sale will be very different. But if you want to do one-on-one coaching to get the business set up, maybe over a three to four month period, I can help you get your business set up for sale and get a higher exit price by getting a few things put in place.

21:19All right. Again, all of this is at buyingonlinebusinesses.com. Jared Krause, we've been friends for a long time. I just looked it up. oh man I just lost it it was episode 100 and in the beginning 113 here wow that's early days close up to like 1600 yeah wow yeah well Jared this has been great thanks for coming back and again appreciate all of your insights of wisdom your website buyingonlinebusinesses.com thanks Jared thanks so much having me on again Josh appreciate it

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