The Quiet Light Podcast

The four pillars that add value to an internet business are:

1. Risk
2. Transfer-ability
3. Growth Opportunities
4. Documentation / Financials.

Documentation is completely under an entrepreneur's control, and is arguably the most important of the four pillars for web based business owners. Having good documentation and clean financials will bring more value to an online business, instill more confidence in website buyers and help you get a better deal structure if and when you decide to sell.

Simply put, Excel is not accounting software and we've experienced buyer blow-back from multi-million dollar website listings that only use Excel for their accounting. If you want to have a good transaction for maximum value, with as few headaches as possible you have to have good financial records and documentation.

Getting there can be a challenge though, if accounting is not your forte. Expert bookkeeper Matt Remuzzi from CapForge is an eCommerce expert and manages the books for hundreds of online businesses.

In this podcast, Matt shares some tips to make your web based business bookkeeping easy, have your write-offs maximized without flagging an IRS audit, and have your 1099s from Amazon and other 3rd party platforms match your tax returns. He even shares tips on when to start collecting sales taxes and the right accounting method to bring maximum value if you ever decide to sell your online business.

Episode Highlights:

• Matt's background. An MBA and entrepreneur himself, he now runs a bookkeeping firm focused on helping online business owners keep clean financials.
• Clients are FBA sellers, Multichannel sellers, and SaaS business owners. They look at each project and customize it and then put it into Quickbooks.
• You can hire a professional online bookkeeper for $100-$400 a month.
• Clean financials help you set the right source for your business.
• Tracking and measuring results help you adjust and pivot when required.
• Accounting software makes your website business value higher and you more flexible when required.
• Lenders such as the SBA require tax returns to tie out to P&Ls exported from Quickbooks. With improper accounting files good deals fall apart.
• Capforge can do 100% of the bookkeeping without the entrepreneur getting involved. They can take the admin task off of their plate. Plus it is done by professionals.
• New website business clients are brought on and records go back to the day the day the business launched. They want to work from the source material or statements to reconcile everything.
• Matt's team makes sure there is a trail of expenses you claim in the event you are ever audited.
• The process starts with a simple client instruction sheets.
• The entrepreneur still owns the QB files / account and has 100% access to the files.
• Learn the correct way to log the Amazon income in Quickbooks so the tax returns matches your Amazon 1099 the IRS receives.
• Your Quickbooks financial statements should match what Amazon sends the IRS on the 1099s.
• Know the difference between cash and accrual accounting, and why it matters so much to total value when selling or buying an online business.
• Joe did a valuation on a cash based business and adjusted it to accrual and found $250,000 in value.
• Learn why accrual based accounting is the right way to manage the books and how it can bring more value when selling an online business.
• Capforge will do all of the bookkeeping for a web based business owner and allow them to focus on running the business. The cost is MUCH LOWER than hiring a bookkeeper in house.
• Regarding sales taxes, consider collecting in your home state until you are big enough to have it "makes sense" financially. And go with what you are comfortable with.
• Make sure the cost of sales tax compliance makes financial sense for your small business. If it is 10x what you are collecting/paying in sales tax, then it may not make sense to collect.
• Learn what you can write off and what write offs are red flags to the IRS.
• Meals and entertainment are not a big piece of an online business. Writing off multiple vehicles is a hard to swallow number. Matt's team will go through every client and try to find deductions.
• A home office deduction is completely legitimate.
• CapForge takes on startups to large online businesses. They love to help people start out on the right foot.
• Fees can range from $100 to $400 a month. And all clients have 100% access to their account.

Resources:

• CapForge
• CapForge for Amazon Sellers
• Matt Remuzzi LinkedIn
• Matt Remuzzi on Twitter
• Matt Remuzzi on Facebook
• Quickbooks

Today's interview is with Bjork Ostrom, the founder of Food Blogger Pro. Bjork and his wife Lindsay started Pinch of Yum. When they started out, they really didn't know a lot about blogging, and people kept telling them that food blogs were hard to monetize. They went for it anyway and learned as they went along.

But by applying a few common sense principles, such as continuous small improvements, Bjork and Lindsay have gone from unknowns in the food blogger world to building a virtual empire. In this interview Bjork shares how he went from not really knowing anything about blogging to becoming a multifaceted online entrepreneur.

Episode Highlights:

• Lindsay started posting recipes on social media in 2010. Bjork was also interested in online business.
• After reading and listening to Gary Vaynerchuk, he was interested in publishing online and creating a business around it. Bjork worked behind the scenes to create income from a recipe blog.
• They started on Tumblr and kept working and building and after seven years they were successful food bloggers.
• It's been their goal to enjoy what they are doing and the process of working on their site and creating great content.
• Their workshop has been a big goal. The first thing they did was break it down into micro goals.
• User control analytics and putting gut and feel before actual numbers.
• Finding things other than numbers to focus on such as enjoyment for success.
• Using analytics and metrics to figure how to prove things.
• The idea of acquiring a business and continually making small improvements.
• The importance of making a list of things you are excited about and that are high impact.
• If you are not good at some important things find someone to do those for you.
• The nuance of grit and doing things you don't want to do, but not falling in love with grit and being miserable.
• Getting a little better everyday over the long run.

Resources:

• Pinch of Yum
• Food Blogger Pro
• @BjorkOstrum on Twitter
• Bjork Ostrom Facebook
• Crush It!
• You Should Test That

• Listen to this episode on iTunes
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• Listen to this episode on Google Play

We were honored to work with Dave Bryant on a past deal. Recently, he sold his business, packed up his family, and moved to China for a year. While in China, Dave is exploring the ins and outs of sourcing products from China for ecommerce businesses.

One of the things that makes a sustainable Amazon business is owning the brand and controlling the manufacturing process. In this interview, Dave talks specifically about sourcing and importing from China. Before selling his business, Dave was importing boat anchors from China. He is also the co-host of the Ecomcrew Podcast. He is an experienced entrepreneur and also part of eCommerce Fuel and active in that forum.

Episode Highlights:

• On the call, Dave is literally in a hotel lobby in Beijing, China.
• How Dave sold his business for south of a million dollars but still has his blog to keep him busy.
• We pushed the value of Dave's business higher, so that he could capture seasonal revenue.
• Dave and Joe planned Dave's exit well in advance, implementing tips that generated at least $150,000 more in value.
• How Dave was importing and selling large, heavy boat anchors.
• Dave built his relationships over years, but he started with Alibaba.
• Going to trade shows and meeting suppliers is probably a better method.
• When emailing a vendor list mention the trade show and ask for more information on a product.
• Go through your products and get discounts for products that are losing money.
• Sometimes all you need to do is renegotiate your contracts.
• Consolidating shipments can save on shipping costs.
• Have one supplier ship to the other and then the other one can ship to you in one container.
• Ship directly from China to Amazon and eliminate the middleman.
• How Dave's business buyer is getting a good return on his money.
• The importance of differentiating your products.
• How shipping is one of the biggest costs.
• Focus on building positive relationships with your suppliers. They may want to partner with you as opposed to compete with you.
• There will always be competition.
• There is still a ton of opportunity in ecommerce.

Resources:

• Ecomcrew
• Ecomcrew Podcast
• eCommerceFuel
• How to Create a $1million Amazon Brand Course
• Build Your Million Dollar Business Importing from China
• Alibaba

Scott Scharf is the founder of Catching Clouds an online accounting platform for ecommerce businesses. There was a time when online selling was the wild west, but the government and taxes have caught up to the industry and are targeting individual sellers.

Scott shares information, tips, and insights into legally navigating the world of tax and online finance when buying, selling, and running an online business.

Episode Highlights:

• How online businesses need to reach out to state tax entities after the sale until their tax liability is voided.
• Bad things that can happen are audit triggers and owed taxes on zero revenue businesses.
• Scott has been a long time online geek. He and his wife decided to focus on online accounting to help online business owners.
• Catching Clouds provides outsourced cloud accounting for ecommerce sellers.
• They have just launched their online Catching Clouds training.
• What people should be doing after selling their business.
• Engage a CPA or expert before closing down the business.
• You want to understand the tax impact and any rules you need to apply.
• How it's easier to keep your EIN when switching businesses. You can close sales tax licenses that you don't need for that business.
• Sales tax licenses for ecommerce businesses. When selling an FBA business you need to actively close down the past sales tax licenses and file your last returns and follow-up so that they have closed the license.
• The biggest gotcha for selling an FBA business. You don't want to be audited after the sale.
• The importance of collecting all of your business documents, payroll, EIN, vendor invoices, and where you spent your money, and all of your receipts. This will help with a sale and protect you in an audit. Save your receipts in real time.
• Using Hubdoc to collect financial statements for clients. You need all of your data saved and organized in one place.
• If you aren't keeping track of everything you need to go back through those PDFs.
• Start now with your document collection.
• Building a complete asset list of everything that you have.
• Just because something is on a credit card statement, you still need to prove what you have.
• Back up all of your data. You can be liable for up to 10 years. Back everything up in the cloud and a physical copy or a dvd.
• Record all of your websites and logins on a password tool like LastPass. Handing over the account makes it super easy hand over a business.
• Document your standard operating procedures. Create a list of support tools, team members, and general organization chart.
• Download your last batch of orders before a sale for sales tax purposes.
• Don't wait until the end of the month. Call the tax entity and get your final sales tax forms filed.
• When calling the IRS and if you were given bad advice they won't hold you accountable. With other departments call back and make sure you get the correct information.
• Always follow through and be diligent with tax authorities.
• Know your new business address and specifically change it.

Resources:

• Catching Clouds
• [email protected]
• Scott Scharf LinkedIn
• @ScottScharf2 Twitter
• Hubdoc
• LastPass
• TaxJar

Access the Ultimate Buyer's Checklist

Click here to access the checklist we use in this episode.

Often times, when someone buys a business they start spinning in many different directions, when the best thing they could do is tap into the knowledge and advice of the previous owner. The previous owner has lived that business day in and day out. It's important to follow their growth plan if they have one. Ideally, every new owner wants to implement new growth plans, but the best paths to growth are often those that are already open.

Today, Joe is talking with Kent Renner who is a client that bought an Amazon FBA business and website through us. This is a customer success story. He'd never say it, but Kent is actually that "the smartest guy" in the room, regardless of the room. And he says the smartest thing he has done to help the business grow is to implement the growth plans that the previous owner suggested.

He added new SKUs and variations and followed the existing paths to growth outlined in the Business Summary. Because of this and Kent's capital infusion to expand the total SKU count, the business is on track to grow 300% in 2017. And he only bought the business in March of 2017!

Episode Highlights:

• Kent is an impressive guy who made it to the top levels in his role at a publicly traded company, working 50 to 70 hours a week.
• Now he works at home with his Amazon business and his life has completely changed.
• He still works hard and smart, but now he is building a sellable asset that is 100% his own.
• Kent started as a CPA and auditor at PricewaterhouseCoopers and eventually ended up as Chief Accounting Officer at XPO Logistics before taking the self-employment leap.
• Kent wanted a business capable of growing that he would enjoy working on. The more he looked at this particular business the more he liked it.
• The business Kent bought was well branded with excellent reviews and it had many clear paths to growth.
• As part of the transition process, they developed a SKU rollout plan.
• The way the seller and Joe presented the business made it clear for buyers to see the paths to growth.
• The importance of the clear paths to growth was essential to his purchasing decision.
• There were no access issues between the seller, Kent, and Quiet Light during the selling process, which instilled confidence.
• Kent and the Seller developed a transition plan with key objectives and priorities, and then Kent flew to Hong Kong and executed the transition processes and met with suppliers.
• Kent had fully documented processes by the time he left Hong Kong and he would recommend that for any buyer and seller.
• These things can be done in advance, but they also need to be done during the transition process to make sure that they are accurate.
• The important advice of not changing a lot of things too quickly and not breaking the site was critical and helped toward the path of 300% growth.
• Staying in compliance with Amazon rules is always top of mind.
• Kent is working a lot while learning the business. There are maintenance hours at about 24 hours a week, but Kent works longer to get new SKUs introduced and meet his own goals and objectives.
• He has expanded into the rest of Europe and sells in the UK and US.
• He is also looking into other selling opportunities outside of Amazon.
• It's Kent's goal to have a multi-channel business on other platforms and his own website, knowing this brings more value.
• Driving traffic is more expensive, but you get a higher return when you own the customers.
• Kent expanded from 17 to 30 SKUs in the US and his revenue has tripled. It is his goal to get to 5X in 3 years.
• The growth is based on the process the seller setup plus Kent's expansion process.
• Kent has some contractors and uses great online communities as a resource, but he is running the whole show without a staff.
• Getting comfortable with patents, trademarks, and traveling to meet the seller, were all part of his buying process.
• Attorneys are important, but keep in mind that they work for you. Trust your instinct and your relationship with the seller.
• Kent is pleased with the business and the way the transition went. The seller wanted him to succeed and Kent was impressed with his level of detail.

• Listen on Stitcher
• Listen on iTunes

On today's show, Mark shares a conversation that he had with Chad Rubin. Chad is a very large Amazon seller and the founder of Skubana which automates inventory for ecommerce stores. Inventory management is critical when selling a business. We talk about finding the parts of your business that are a grind and then figuring ways to make those things easier.

We also talk about how to grow an Amazon business the right way. Chad sees a lot of big stores and sellers, so Mark wanted to delve into the habits Chad has seen from these higher end sellers. Where are they putting their time, and how are they automating and delegating? We also talk about private label products, how much time should be put into product creation, and how much work do you have to do after purchasing an Amazon ecommerce business.

Episode Highlights:

• Chad started selling online in 2007, and now he has created software to manage and automate his business.
• Chad used to have 30 employees and now he only has 2 employees thanks to Skubana.
• Chad has 950 skews. Other brands will copy and replicate your process. You have to continue creating useful products.
• When buying an Amazon business look at the cost of the sale, trends, a revenue analysis, and market conditions.
• When Chad started he was a reseller. He wondered what value he was adding, so he built his own brand.
• There is a difference in competency between being a private label brand and being a reseller.
• To understand demand is go to Amazon and search for what people are searching.
• Skubana is a good fit for larger scale more complex Amazon businesses.
• If you have a large business, your time is better spent having a good system and working on strategic moves and finding skews.
• Bundle like items to increase your average order value.
• There is also a ton of marketshare off of Amazon. People need to stop and see other channels.
• Think about the big picture and off Amazon growth and diversification.
• Your own website can be your second biggest channel. Some people start search on Amazon and Google and now facebook.
• It's important to pick the right channel and social channel for the market you are targeting.

Resources:

• Ecommerce Renegade
• Prosper Show
• Chad Rubin LinkedIn
• Crucial Vacuum
• Chad on Twitter @EcommRenegade
• Cheaper Easier Direct: How to Disrupt the Marketplace and Create Your Own E-Commerce Empire
• Skubana

Today's guest is Chris Yates. Chris is an entrepreneur who acquires and manages portfolios of websites. He is the founder of Rhodium Weekend an event for investing in online businesses, and he runs several online businesses including Centurica, Buying and Selling Websites, and Vision Group Management.

Chris started his online entrepreneurial journey in 2009, while running a digital marketing agency. He felt client work wasn't scalable, and he had an urge to build his own assets. He also got a call from a former partner/mentor who wanted to partner with Chris buying online businesses. They bought 10 or 12 websites that year, and Chris thought it was so much fun that he sold his marketing agency and started acquiring web businesses full time.

We talk about Chris's online journey and the benefits of being able to build an income online. We also talk about how isolating it can be and how Chris and his partner decided to start Rhodium Weekend and how passionate Chris is about getting like-minded people together to talk about what matters most for their businesses. We talk about all of this and more on today's show.

Episode Highlights:

• Chris shares how Rhodium Weekend is his passion.
• A couple years ago, Chris bought Centurica and has been building out the company. It's been fun helping people find the right businesses to buy.
• How there can be ups and downs with online business. Especially, the penguin algorithm update.
• How when you buy a business, you buy what the person did to the business previous. How money making hacks are not sustainable.
• Changing a model from organic traffic to paid search.
• How Centurica can do SEO analysis for a website and risk analysis.
• How opportunities can be flipped around. Heavily relying on Google organic traffic. This could be a potential risk.
• They try to be an objective third party, so that the buyer can know what they are buying.
• People who work with Centurica are people wanting a risk and valuation. They analyze data from broker listings for a starting point. Risk assessment and analysis.
• They also verify that seller claims are accurate. The importance of trust but verify.
• Start with the profit and loss statement when looking at a potential business to buy. Understand the trends and seasonality and what the capital requirements are.
• Google analytics is great because revenue is usually driven by traffic.
• Ahrefs backlink tool is one of the simplest tools to find backlinks. Look for quality links and bad links that look artificially generated or look like spam.
• SEMrush can help find rankings and traffic numbers.
• FBA businesses and third party sellers. Every business model has specific due diligence.
• Diversity of skews is better than relying on one product. It's important to look at seller metrics. Are they selling directly or third party fulfillment. Look at refund rate to judge product quality.
• Look at both the positive and negative product reviews in relationship to other competitors.
• Take a deep dive into the notifications look for complaints or policy violations.

Resources:

• Chris Yates
• Rhodium Weekend
• Centurica
• Centurica Website Buyers Report
• Buying and Selling Websites
• Vision Group Management
• Chris Yates LinkedIn
• @ChrisYates30 on Twitter
• The Four Hour Work Week
• Ahrefs
• SEMrush

Whether you are buying or building an Amazon business, you want it to be sustainable. There can be a lot of mystery around buying or building an Amazon business and what worked in the past may not work today. To explain the difference between a sustainable Amazon business and an Amazon business that is not sustainable, we brought in an expert.

In this episode, Mark interviews James Thomson. James spent five plus years at Amazon. He was business head of Amazon Services and the first FBA account manager. He is the President and co-founder of the PROSPER Show a seller education organization that shares best practices for online businesses. He is also a partner at Buy Box Experts a marketing agency for Amazon sellers.

James is an extremely smart and trustworthy guy. We do business with a lot of intelligent people, but he really stands out. Mark asked James what he would look for in a business if he were going to buy it, and how to build an Amazon business that would be sustainable. We talk about the importance of continual product creation, and how it's much tougher to be really good at selling on Amazon than it used to be. We talk about the importance of having a brand beyond Amazon, the importance of having more than one SKU, and so much more.

Episode Highlights:

• James introduces himself and talks about what he learned at Amazon and how he is on the other side helping sellers now.
• The number one problem FBA sellers have now is not paying proper sales tax on the orders.
• Many states are getting aggressive about auditing sellers. The state of Massachusetts is suing Amazon to get a list of the FBA sellers.
• The sales tax amnesty program allows sellers to come forward and to start collecting sales tax and back taxes are forgiven.
• To be successful on Amazon every seller should understand what their profit and loss is on every skew.
• Look at the data and see what your return rate is along with right off cost and acquisition cost.
• Understand your overhead cost things like heating, shipping, warehouse, employees, etc.
• Ask yourself where your competitive advantage is coming from. With Amazon there is no limit to the amount of competition you can have on one skew.
• A lot of sellers source exclusively for one particular brand.
• Private label brands are another common method. You can make a lot of money, but you have to be extremely disciplined.
• Sellers must excel in operational discipline. You must have a daily, weekly, and monthly process. Inventory, data, and making adjustments and course correcting.
• You need to know how to create amazing Amazon listings and to bid on great advertising rates. Know how to play the Amazon game.
• The importance of building outside traffic such as Facebook traffic.
• Put a value on your social media following because that is the secret sauce to drive traffic to your listing.

Resources:

• Prosper Show
• Buy Box Experts
• James Thomson on LinkedIn
• Sales Tax Amnesty Program

Quiet Light Brokerage client Derek Teschner and his father purchased Herb Affair, an herbal supplement ecommerce website, in 2012. Derek and his brother run the day-to-day operations. Derek’s father has operated his own construction business for over 30 years. Today Derek talks about how growing up in an entrepreneurial family has influenced the business and he addresses some of the issues they faced in the early stages after they took over Herb Affair. Derek said the website and customer base were two of the main things that attracted them to Herb Affair. He said when Herb Affair came across his desk a lightbulb went off and it seemed like the right fit for him.

Derek’s company has more than 90 herbs and spices and 150 to 200 SKUs and has seen steady growth since Derek and his brother took over. He says that initially the herbal supplement world was a new thing to them and a lot of time was spent learning about the products and ecommerce. He talks about some of the things that have helped Herb Affair grow and some of the challenges that came up along the way, including:

What selling through Amazon has done to grow the business

How he handles a large inventory

The biggest challenges faced in the first 60 to 90 days

The biggest business mistake made so far

His best business decision to date

Tools that help track Herb Affairs growth

Derek’s advice to others starting out on a similar path would be to stay calm. He believes internet businesses take time. Derek says learn as much as you can, take it day by day and have confidence in yourself.

For potential website buyers many things factor into their decision on finding the right fit for them. Quiet Light Brokerage client Simon spends some time today discussing his process in looking for the right website. Simon has a digital media background and creates digital strategies for large companies. He knows he is looking to buy a website that has very specific characteristics in the healthcare space.

We begin by discussing the buying versus building of websites. Simon favors buying an existing site because he knows what he is looking for and his needs are very specific. He’d rather find an existing online business website that addresses everything he is looking for and that he can scale. Simon is not in a rush to buy and is instead looking for the right fit.

He explains his checklist in considering existing sites:

A strategically sound business

Something in the healthcare space where he is knowledgeable

A niche market as opposed to mass market

Large customer database in existence

Solid Google organic search rankings

High customer satisfaction

A business where most of the execution has been outsourced or can be outsourced

Diversified distribution channels

No legal problems

A good value

Simon credits Quiet Light with taking care of the detailed documentation process which can slow down the overall progress of moving forward. He explains that he knows that Quiet Light will be offering high quality sites. An attempt to buy a website in his niche didn’t work out for him, but he was able to turn it into an opportunity to fund a new purchase when the right one comes along.

His advice for those also looking to purchase websites is to line up your capital sooner than you might expect and decide on how comfortable you are putting your personal finances at risk if you are self-funding the purchase.

Simon explains that he is in no rush to find the right business and he feels it’s better to wait and have a great business than to buy something that’s going to suck the life out of you and have no return. For those who wish to be more proactive in the process, Simon suggests going out and finding the people who meet your criteria in a site and asking if they're willing to sell.