In this episode of the eCommerce Lifestyle podcast, Anton shares his thoughts on the current market and how to think through what is sure to be a life changing decision.
Hello everybody, Anton Kraly here, and welcome to another episode of the Ecommerce Lifestyle Podcast, from ecommercelifestyle.com.
So first off, just want to say, welcome to everybody that just subscribed today. I realized that I've been doing this podcast for like eight or nine months now, and I haven't really told anybody from our community about it, just made a post, and I saw we're getting a bunch of more traction, which is great. So hopefully, if you're new here, you take some time to go through the backlog of episodes, look for any titles that stand out to you, listen in, because again, the whole purpose of this is just to share real world examples of things that are happening right now inside my businesses, or inside the world of eCommerce. Hopefully, they all have at least one thing that you could take away, and either apply to your business right now or at some point in the future. So again, welcome, and yeah, have fun going through the backlog and catching up.
So today, speaking of, speaking on things that are happening in my businesses or in my life or in the world of eCommerce, the topic that I want to hit on, just real quick is, if now is the right time to sell your business. I know with podcasts these things live on forever. So I'm going to talk about now in, let me look at my phone to see when it actually is. When is right now, in case you're finding this in the future. It is February 25th of 2019. So right now, February 25th of 2019, the economy is doing great. People are investing money into the markets. Markets that are an all-time high. People are spending money online, because they have discretionary income, and people are buying websites.
So buying websites, as in buying businesses. And businesses, these websites, are going up in value. So if you were to sell a normal eCommerce store, using maybe my Drop Ship Lifestyle model, which by the way, if you're not a member of Drop Ship Lifestyle, go to dropshiplifestyle.com/webinar, watch that presentation and see if you can get enrolled.
But if you are, you built your business, then you might be thinking, you know what? The economy is super high right now. Again, money is kind of moving around. Maybe I should sell. This is the exact conversation that I had with a member of Drop Ship Lifestyle this morning. I'm not going to say her name or anything, because we didn't talk about me talking about this, but she is a awesome person, been part of the Drop Ship Lifestyle community for like four or five years now, has a successful store, and she wanted just to hop on a quick call today, to ask me some questions about selling it. So that's what she's thinking of. I kind of gave her some feedback, walked her through my thought process of selling stores right now. She found it useful, so I wanted to, again, share maybe the top takeaways from that call that I had with her this morning, that hopefully will either affect you now or in the future. Okay, my thought process, right? Should you sell your store right now? Well, the way that I think of this starts with one main question, and that question is, do you have savings? Do you have a bankroll? Okay. Do you have enough money in the bank that you are comfortable? Okay. And the reason I think that's important is because if you do not, then it's probably a better idea to start thinking about selling it.
Now the reason I say that is because the reason there is buyers, right? On the other side of this, the reason people are buying these businesses that we build at Drop Ship Lifestyle, is because they're super valuable, and because they have great cash flows for not much work. So they are valuable to people that have money. I mean, that's one way of thinking about it, right?
In fact, a lot of the websites that we sell and that our students sell, are sold to different investment firms or to different, just basically pools of investors, that put money in, that are looking for cashflow positive assets, like again, the ones we build that Drop Ship Lifestyle. So if right now you're listening to this, and you don't have a big bankroll, you don't have enough money to keep you financially stable for I would say at least five years, then maybe start looking more so of like, "Okay, should I sell this thing?"
Again, if you do have that money, then I would recommend ... We'll get into some of the reasons later, but if you do have that money already saved, then holding on to the business I think is a good move, because again, cashflow is hard to come by. If you build yourself a great asset, it's good to have it keep kicking off cash every month.
On top of that, if you have your business set up, you can put different expenses through it. So things like education, things like travel, if you're doing it for business, things like meals, if you're doing them for business, things like lease payments, if you're doing them for business. So you do have a lot of benefits for tax savings and to make money. Now if you do not have the bankroll, if you do not have a lot of savings, if you are not kind of like in a safe zone, where you have money to, I guess, keep you living your lifestyle for, again, years, then it's time to start thinking, at least from my perspective, "Okay, do I want to actually sell this thing?" Now, if the answer is, "You know what, I think I really want to get rid of this. I want to cash out. I want that ...," whatever it is, $300,000 $500,000, $700,000 payday, then the next question I would ask you is, "Okay, you want to sell? That's great. What are you going to do next? Okay, what's your business idea? Are you making any progress towards that?" This is what I spoke with, with this woman about this morning. Again, I'm not going to say her name, but this is kind of what we went into. If you're going to sell, and you decide you want to, you need, not just financially, but emotionally, you need to know what's happening next, and ideally, you're making progress towards that thing. Now it's not just about financials. It's not just about, "Okay, I'm going to sell this and I want to have my cashflow covered." Again, then you'll have your bankroll after you sell. You'll be able to live off that.
People don't realize, you forget when you've been in business for a while, that learning a whole new skillset, picking up traction in a different area, developing your website, your marketing, your authority, your audience, it's a process. I know the emotional toll that this takes on a lot of people that sell their sites. Honestly, it happened to me when I sold my first network of stores, back in 2012. When you're just having to start totally over and you're literally starting over with no traction, it's scary and it takes a big emotional toll on you. So again, if you decide you want to sell, my advice is even starting now, start devoting an hour a day, or two hours a day, or whatever it is, into what you think your next project may be.
Again, even if you're not making a dime from it at the time that you sell your current business, you do want to at least have your brain working in the direction of building something new, because it's a great feeling the day you get a big payday, but it's also a very scary feeling the day that money stops getting deposited into your account, because your business is gone. to sit there at that point, and then to have to figure out what works and how to learn a new business system, or start a new store, or do whatever it is, it's just a lot better if you already have traction and you already ... This is really important, too, you already know this new thing you're doing is something you're going to enjoy more than the thing that you're selling.
Again, whether that's another eCommerce store in a different niche, whether that's an affiliate site, or whatever, you need to be comfortable with the fact that you're going to be doing that, most likely, for the next four or five years. So keep that in mind.
Now, if you do not have any business idea at all and you just want to sell, to sell, again, my advice would be really think about it. Unless you have an amazing offer in front of you, start already looking into new businesses, starting in the next one, figuring out what comes next. If you sell your business, even at 30 X monthly net profit, so 30 times monthly net profit, you're going to get a lump sum payment. You're going to pay tax on it. You're going to live off it. If you're living the same lifestyle you're living now, off of your Drop Ship Lifestyle store, then that money is going to go really quick. THe worst thing I think would happen is that you just really regret it, and you don't replace that income soon enough. So keep that in mind.
Okay, so we talked about the emotional toll. We talked a little bit about the tax benefits of holding onto it. We talked about, if you definitely decide to sell, making sure you're learning a new skill and kind of practicing what it is you want to get into next before you actually make that sale. One more thing I think that is worth talking about, is the actual economy right now, and is it a good time to sell, again, when the economy's great or what happens if you wait?
So, kind of what I discussed with her today is the reason right now I believe that websites are selling faster and selling at higher multiples, is because over the past, let's call it the past probably a decade, here in the States at least, there have been a lot of people, probably half the country, that has money, that was keeping it pretty much in cash. So these are the conservatives, the people that really didn't like Obama, the people that thought they needed to prep for the end, and the people that thought we were going to become a Socialist country. They couldn't put their money anywhere, because the economy was going to collapse, a lot of those people, again for the past decade have been holding cash.
Right now, and for the past couple of years since Trump came in, they have been putting that cash back to work, which is one of the reasons why you see the economy really picking up. It's this money that's been kind of out of play is now back in the markets. It's now being spent at online businesses. It's back in circulation, if you want to think of it that way. So because of that, there's now a larger buying pool when we list sites for sale.
In terms of that, I think that if you're looking at it from purely a multiple of what you're going to get for your business, we're pretty much, I don't want to say we're maxed out, but we have the money's there right now. Right? the other reason besides more money moving around right now in investments, that website values is going up, is because websites now, they've been being sold for a longer amount of time. Whereas, five years ago, when I sold my first network of stores, the whole ... Was it five years? Yeah, about five years ago, maybe more. Wow. But the whole idea of buying a digital business was still kind of foreign. Whereas now, again, it's not. It's something that people are comfortable with. There are people that have, again, like I mentioned, funds that only do this.
That's another reason valuations are going up. So if you're thinking, "Okay, we know those two things. What happens if the economy does crash?" So, let's just say the economy, whatever, it tanks, and a couple things are going to happen. Some money is going to come back out of play. So there'll be less people investing in any type of assets, and most likely in online businesses, not, but I think the market definitely won't fall out, but maybe will go back to how it was two or three years ago, with the amount of people purchasing online properties, which by the way, was still great. We're not by any means losing out. We're not going to have our business value cut in half from that side, even if there's half as much of a buying pool.
But on the other hands, you have the obstacle of, if you're selling high ticket products, and if they are luxury goods, and if the economy does crash, then are people still buying these things at the speed they're buying them now? I can tell you, I started my first eCommerce stores back in 2007, when the market was already in a recession, and then basically saw things get better over time. So I don't know what the difference is going to be in terms of sales. Are you going to lose 10% of sales, 20%, 30%? I can't answer that, because I haven't been through it in the past, but I could see a time where, let's just say the economy crashes, people spend whatever, let's just say 20% less money online. Your sales drop by 20%. That happens for a year. That means your business is now worth 20% less, because it sells at a multiple of how much it makes.
So with that being said, if you really do believe the economy's going to crash, I'm not saying it's going to be. I like to be optimistic on this, but if you do believe that, then you might think, "Okay, let me sell now while there's more money in play, while my store is growing year-over-year, and while I can get the highest multiple."
Again, there's a lot of other factors to consider, like I mentioned a little bit earlier in this episode, so definitely keep that in mind. What I told the woman on the call this morning about the way I think of this is, right now, because I've been doing this for a long time, I do have that safety net of cash, basically cash reserves. Because of that, even if I thought the economy was going to crash, let's just say in a year, I still would not sell right now, because again, I like this for cashflow ,and I'm in for the cashflow. I know that even if the economy does go down, it will go back up. I know if it goes down, I can kind of cut some of my expenses, maybe spend less money on ads, maybe get a lot less sales, but still be making money off it.
Then when the economy goes up again, which it will, like it always does, I'll still have these assets. Again, then I could spend more, make more money from them. I might think different about this if, again, I didn't have money in the bank already or the cash reserves, whatever you want call it.
So definitely a lot of factors that you have to consider. I know for sure, everybody's situation is different. Everybody sees different things inside their business. Everybody has different beliefs of what their business is, what it can become, what the economy is, where it's going. This is something that's a huge financial decision. So it's something you do have to ask yourself. Hopefully, some of those thoughts I just shared helped you with the way that I approach this and the way I think about it now.
Yeah, that's pretty much the main things. There were some more personal things that I discussed on the call, that I'm obviously not going to discuss now. But hope that helped you, if you are thinking of selling your business.
If you're thinking of buying one, I've done other episodes on that I can link to. If you're running your store, you're still looking to grow it, I believe no matter what level you're at in terms of revenue, there always are ways to get creative. There always are ways to think outside of the box. There always are ways to actually grow.
Honestly, I do believe even in a down economy you can have a big impact, because like I said, I started in 2007 when the economy was bad, and I was able to do some things at that time that my competition wasn't doing. We were new, but we were growing like crazy. I think there's always opportunity, especially if you stay on top of the game and on top of what's happening now, which by the way, things always are changing. So you should always be a student.
If you're listening to this right now and you're a member of Drop Ship Lifestyles, speaking of being students, you definitely want to come out to Prague in September. We're going to have an amazing lineup of speakers. I'm actually going to be announcing them next week. I'm personally putting together some really good presentations. I already actually have one all mapped out, because it's about what's working right now for us on Facebook, where I'm going to get into detail with it, show exactly how to structure your accounts.
So yeah, if you want to come out to Prague for our sixth annual Drop Ship Lifestyle retreat, we would love to have you. Just send me an email. It's Anton, A-N-T-O-N @dropshiplifestyle.com . Just put Prague in the subject line, and I'll respond with how you can get a ticket and join us out there. I think we have like 50 tickets left. I'll get back to you, but email me sooner rather than later.
Yeah, that's it guys. Hope you enjoyed this. If you're not part of Drop Ship Lifestyle, build your store before coming to Prague. Just go to dropshiplifestyle.com/webinar, and you'll learn how we build these things. Then you can come to Prague and see how to scale them. So hope you enjoy this one, guys. As always, if you did, I'd appreciate any feedback over at ecommercelifestyle.com. I'm going to get back to work, and I will talk to you all in the next episode of the Ecommerce Lifestyle Podcast. Thanks everybody.
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