112: Build an Online Presence and Connect with Your Ideal Customer with Ajay Prasad

Ajay Prasad from GMR Web Team and creator of RepuGen software tells us how business owners need to focus on their repeat customers AND how to differentiate to reach their ideal customer. He works with urgent care providers, dentists, local business and more to increase (and in some cases, save) their business with Yelp ratings, SEO, PPC, website updates, reputation, followup, and more.

[showhide type="transcript" more_text="Display Transcript" less_text="Hide Transcript"]Robert Plank: Ajay Prasad is formerly a marketer for a few Fortune 10 companies and he now owns GMR Web Team, GMR Transcription, and his brand new business, RepuGen. Ajay has focused his career on helping SMB's maximize revenue and reach through the internet. Ajay, I'm Robert. Nice to meet you.

Ajay Prasad: Very nice to meet you, Robert. I'm happy to be here.

Robert Plank: Awesome. I'm happy, too. What I want to know is, what is it that you do and how are you different from everyone else out there?

Ajay Prasad: What we do is essentially we help small- and medium-size businesses maximize their sales from the internet. A lot of the business is now coming from the internet, so that's what we do. We are different from your typical digital marketing agency is, number one, we are a full service agency. We have all the pieces in one place. We are not a one-trick pony. We are very strategy-focused. We judge yourself based on what kind of return we are bringing for our clients.

For our client, it doesn't take them to ... We don't do all these mumbo jumbo about ranking and where you are. We just look at it, say, "What kind of money you are making from the internet or how many views you are getting?" Then, we see if we can improve it. We come up with a plan, we tell them what the budget will be, and if they are struck with us, that means they are happy, they are getting a positive return on investment. We don't lose too many clients, which tells me we must be doing something right.

Robert Plank: That tells you you are providing good service, right?

Ajay Prasad: Yes.

Robert Plank: That's cool, and I like that because I don't work with a ton of small businesses. I work with a few, and what I always hear a lot is that, for example, I see that you guys work with dentists and urgent care doctors and things like that. What I hear from some of these doctors, the dentists especially and the chiropractors especially, is that they get these robocalls all day long from these kind of, like you said, the other one-trick pony kind of agencies. All they do is say, "Do you want to have a better Yelp review?" I'm thinking, okay, a Yelp review is nice but what about the rest of it? What about a website, social media, stuff like that?

Ajay Prasad: Yes. That is where we always tell them that one thing is not going to do anything for you. These days, now, to get business from the internet, of course you have to be found. You need to be found. Then, you need to have a really stellar reputation online, where the Yelp review comes in definitely, and the other things, and once you have these, then of course you have to be able to convert. That's what it takes for someone to contact you. After that, your service comes in. Really, most of the small businesses ... I always say that if the majority of business is coming from new customers, then you need to look inside and see what you are doing wrong, because the majority of customers should be getting really from referrals, especially for small businesses.

As you do a good job ... Everything needs to be a peace offering. You cannot just say, "I'll get you this. I'll get you that." Unless you look at all the pieces of business together, it will not work. Because my experience is with larger companies, where we always knew that the operations is as important as marketing, and finance is as important as operations and marketing. We become more of a consultant to our client, not just bring them customers.

In face, today I'm meeting with one of my clients where it looks like we are not getting the positive return on our investment in four months. That's the discussion we are going to have, is go over the numbers, really look at the metrics to see if it is making sense. One of the things that are not making sense for me is the value of sales.

Until we understand, until the company understands, what's the value of sales, how do you know if your marketing is effective or not? We get to that level. You cannot just take one piece and do it. You cannot say, don't do paid advertising. Everything has a place, and the reason people say, "You don't do it," is because they don't know generally speaking.

What we do is we say, "Given your business, what should be the right strategy for marketing?" We tell them. Of course, there are businesses where we say, "You know what? Social media is not very critical for you." Which is very rare nowadays, obviously. There are businesses we say, "Don't even worry about SEO, because it's so comparative, all the element keywords. It will take forever, so let's figure out how to do better advertising and get a positive return on investment for you."

Again, marketing has to be customized. Every business is very unique. That's what we always say. Our campaign needs to be consistent with the business.

Robert Plank: I like that. It seems like from what you just said is there's a couple of levels to it. You could say the worst, most basic level, would be, like you said, the one-trick ponies. All they want to do is just show, "Well, look, you can rank high for this keyword." The next step up is some kind of an agency that they do everything. It seems like the next level about that is that they do everything, but they look at what's already there, and they look at what's worth doing, and they look at the competition, and they say, "Even though we could do these ten or twenty things, maybe we'll just do five."

It sounds like the next level even above that, it sounds like where you're at, is you do all that, but also once the ball is rolling, then you'll course correct. You don't set up the website and then say, "Have fun," and walk away. You actually, like you said, "The leads aren't coming in," or, "There's not enough repeat customers," so now you go and fix things over time.

Ajay Prasad: Correct, correct. I've always said that web is no different from brick and mortar. It's not like you set up a store, and you put a sign in it and everything, and you are done. You have to keep on improving. You have to tweak the product that you are selling. You need to be trying different kinds of marketing campaigns to maximize it. This is no different. For example, we are a Google Premier Partner. All it means is, we have jumped through many hoops and Google recognizes us as experts in Google AdWords.

For all of our clients ... We manage over a million dollars right now for our clients' budget, and we are checking it three or four times a day to see, what's the trend, what's working. These are not the kind of thing that you set it up and you are done. You have to keep on looking. You have to keep on improving. That's all marketing.

When I was in corporate America, for big companies, it's not like we had a campaign, say TV advertising, and it was successful, so we said, okay, it's done. No, we just had to keep on doing the same advertising, right?

Robert Plank: Right. If it worked, why not repeat it or even try to make it better, right?

Ajay Prasad: Exactly. At some point, any advertising, you'll see that there is a life cycle. After some point, it starts to become less and less effective. Then you have to go and change it. Even the large corporations, like Coca-Cola and all, you will see that their team keeps on changing, right? That's what marketing is all about. If you see the business is declining, you have to make some changes to keep that momentum going.

Robert Plank: Yeah. Imagine if every year for the Superbowl you'd see the exact same commercials. That's no fun.

Ajay Prasad: That's exactly my point.

Robert Plank: Cool. Could you give me a good example of some business that you came across where they maybe had a lot of missed opportunities and then you went in and you worked your magic, and you made their business super awesome?

Ajay Prasad: Yes. Since you talked about Urgent Care ... By the way, we have many, many clients. A few very large companies are our client. When I am saying large, I am saying a couple of hundred million dollars. The largest one would probably be a couple of billion dollars. We have a lot of these small businesses that are struggling. Urgent care is a very good example. This urgent care center came to us for marketing. This was about a year and a half back.

Basically, they were very honest, and they said, "Listen. Our sales have been dropping, and now we earning a loss, and if in six months we can not turn it around, we have to close it." Their lease was running out so they said, "We are not going to renew the lease if we can't become profitable." We did analysis, and we could see that there were a lot of searches, that people are searching. That is true. Urgent care is one thing that you can even afford not to do digital marketing.

That's the first thing people do is go on the internet when they have a cut or an injury. They're looking for urgent care. We saw that there were a lot of searches for them. Of course, their website was outdated. They were not getting found there. Other thing that popped up was that their Yelp rating was 1.2. There were seven reviews. Just seven. The last one was one year old, but if you just went on their Yelp and you saw 1.2 rating.

My first question was, "Is this the correct number? If this is correct, I don't think I can do anything. I can get people to come to your website with my activity, but after that they will not come to you because who wants to go to a place where everyone is saying it's horrible?"

Robert Plank: Right.

Ajay Prasad: Of course, the owner got really upset with me. She was like, "What do you mean? We have been there for twenty-five years. We have all these loyal customers." I said, "Yeah. Someone who does not know you, how would they know?" What we did is, of course we redid the website. That was a simple thing. Because this is local marketing, it becomes really easy.

We started with some ... We did both a CO and some paid advertising, so quickly start getting people on their website. Then we instituted a program, ongoing program to improve their reputation. What happens, people do not medically write reviews just because they had a great experience. The people who had bad experience are more likely to write a review because they are pissed off.

We created a manual process, which later on I automated, which became RepuGen. We created a process for them where we printed a card and the front desk was to ask everyone when they are leaving, "How was your experience?" If they said, "Very good," or in their judgement, they were happy, then give them a card. Request them to write a review. Literally, fast forward three months, their review was 3.0.

They were already in black, the whole operation. Now one year down the road, their number of patient count has doubled. Half of the patient is now coming from internet, which was not even there before. They have a hundred plus reviews. Their average is over 4.0, because our process is such that if you are unhappy, then we just ask you, "What happened?" Then we say, "We will contact you," and someone contacts that if you are unhappy. If you are happy, then we ask you to write a review. As simple as that.

Now, one year later, they are super profitable. Obviously, they went and they renewed their lease for another ten years and it's a huge success story. This was a chain, so they had two other urgent care centers. They had similar problem. Not as bad as this one, so of course now we are doing all three of them and it's a very profitable operation. This gives you a very good example how literally in three months, a business which was contemplating closing turned around and became a very successful operation. Right now, that is probably one of the most profitable urgent care center in the city.

Robert Plank: Awesome. That's cool that in just a few months, it seems like before, they were probably working really hard and missing out on a lot of things, and now, just because you were able to plug in just a handful of strategies, now it turned the whole thing around.

Ajay Prasad: The interesting thing is, for example, putting this reputation development process, they also started to get feedback from the customer who were not happy, right? If the customer is not happy, they tell you what happened. When we automated the system, the RepuGen, that's what it does. Now that when people are not happy, you find out, so you also improve your operation. They learn a lot of thing from our system that they also made changed in their operation that made them even stronger.

Robert Plank: I like that. It's not just a matter of following up with the happy customers to balance out the bad reviews with some good ones, but it's also if you keep getting all the reviews saying that, like, "The place isn't clean enough," or "The secretary's mean," or something, or "They don't follow up enough," they can correct that.

Ajay Prasad: In fact, the funny thing is that there was that problem. They had to fire one of the front desk person because she was mean. In fact, everyone complained about, so they just simply went and changed that. That made a big difference in their happiness.

Robert Plank: That's cool, because that's one of those things that, just a few years ago, before all of this stuff, they might not have even known. It might've been for the past twenty years this was their problem. Right?

Ajay Prasad: Correct, correct, correct. The people were thrilled with their doctors. The front desk was the problem

Robert Plank: Such an easy thing to fix, right?

Ajay Prasad: Yeah. Exactly.

Robert Plank: Cool. I really like stuff like that. For example, I really like that, like when there's a house for sale near me, they almost all have a website, now, on the actual sign. It's usually 123MainStreet.com. It's what's printed right on the sign. Super easy to get to. It seems like the dentists seem to be the most savvy, I guess, with this kind of thing.

I really like ... When I was a kid what was cool about the dentist was they would have you write yourself a postcard for six months from now. You totally forget that you sent that, but six months later, a thing comes in the postcard, and you recognize your own handwriting, and I'm sure that was just part of the process to get customers back.

I like that now that there's all this technology, the dentist I go to now, what I do is I have my appointment. Again, from six months ago, I forget that there's an appointment coming up and then I think that a system sends me a text message, and that emails me, and even the email itself says either I can click a link to reschedule, I can click a link to say I agree with the appointment time, do not contact me again, or I can say I agree but also email me again the day before. I love that. I wish more businesses would do that.

Ajay Prasad: Yeah. Exactly right. Either, for attention you want to do that, and then of course, for every dentist, you have to have a stellar review online. Otherwise, again, if I see 1.2 rating not just on Yelp, but on other review sites, or you have Vitals, and all those medical-related site, and if I go there, and someone is saying, "And I went there and I came out with a bloody mouth," guess what? You are not going. It is so important to have a stellar review now to get new customers. Your typical process now is when people find you, they go and find about you before they contact you.

Robert Plank: Oh, yeah, and that's so true about any kind of dentist or doctor kind of thing. The reviews are so huge because if there's a Wal-Mart, or a Target, or a Taco Bell nearby that has two stars, fine, I'll still go there, but if there's a doctor who's three stars, I don't trust that.

Ajay Prasad: Every local business. That's what I said. The chains is a different story, just like you said. Every local business needs to have a very stellar online reputation. There's no way around it. For medical professionals, it's even critical. I know some hospitals which has horrible ratings, so I don't even know how people go there.

Robert Plank: They have no choice. It's what's nearby, I guess, right?

Ajay Prasad: Yeah.

Robert Plank: I really like what that kind of leads us to, because always the fear, right? Everyone's fear is that if they have a mom and pop business or something with only ten employees, and then the big retail chain comes to town ... Maybe they own a deli or an Italian restaurant, and then Olive Garden come to town, or a Subway comes to town, everyone's always worried that the big franchise is going to push me out. It sounds like, with this online stuff, with the social media, with the reviews, the big chains don't really do that. This is how everyone can get ahead.

Ajay Prasad: Exactly. You are a hundred percent there. That's why I always say that regional marketing is so critical for small businesses. You can really have your customer loyalty and keep on making improvement, and not losing your existing customer, and then keep on adding new customers. It is totally irrelevant if you have competition.

I always tell my clients that, "Listen. The competition, worry about it but first thing you have to worry about is internity. If you are doing everything right, you can go against any company. I don't care how big they are." Again, it's the local and even individuals ... I work for a restaurant chain. One of my jobs was, I was VP of strategy for a big restaurant chain. It's a billion dollar corporation. I know that the customers have an affinity for local ... If they had their own preference, they would go to that local mom and pop restaurant instead of this chain. That's the first inclination. You can build your customer relationship.

When you go to a new place, then obviously review is how they will go. If I don't have a way to check review of a restaurant, then I will end up going to a chain because I know what to expect.

Robert Plank: Right. The chain is the default decision. If you can't decide, you just go to the chain.

I don't want to keep you too long and as we're winding this down, could you tell us as far as all the business that you helped and worked on, what's the number one mistake you see them all making?

Ajay Prasad: I think that the number one mistake that they all make is that they are way too focused on outside instead of looking inside. Every business needs to understand why they are in business, why they are different from their competition. Small businesses, generally speaking, don't do that, which is the biggest mistake. I have always said that if you are a small business, you need to know why.

If someone has been in business for twenty-five years, like this urgent care, it's easy, right? You can talk about how we have been serving the locality for twenty-five years. If you are an accountant, whatever you are, why? One of the things that will happen is, if you look internally, then you will start to focus on who your ideal customer is. Small business have a tendency to take any customer. I made that mistake, frankly, when I started my own business, is to go and, "I'll take any customer," then later on I was spending way too much time on the wrong customers.

Every small business has to figure out who their ideal customer is. Once you have that figured out, who your ideal customer is, then you start to focus on getting those customers, because that is the only way you will grow, you will keep customers. You need me to know who that is and very few businesses I run into have that.

The two biggest mistake that they tend to focus too much on, "Oh, so-and-so is doing this. So-and-so is doing that. Oh, they have this happen." I always say that what you do has going to be the biggest impact on your business rather than what happens outside.

Robert Plank: The other thing about that is it seems like that anyone who's in the business, if someone owns a restaurant or owns an urgent care, a lot of times it seems like they're too close to it and they need someone like you to look at their business from the outside, from a regular person's perspective, to figure out their weaknesses and figure out their strengths that they should be doing more of.

Ajay Prasad: Yeah. It's even just asking questions. I can tell you that many business owners, when I start asking them questions, it just makes them think, and like, "Wow, okay." That's the thing. The small businesses really are so busy surviving that they are always working on the business. They are in the business, not on the business. You need to take some time off so that you can work on the business so that you can see what you are doing right, what you are doing wrong, and make adjustments.

It is very hard, but getting an outside company like us, it's very automatic for us, right? We start asking, "Okay, how do you differentiate yourself? What is the problem?" Just like we did with urgent care. It never occurred to them that no one will, even if someone referred ... I told them that, "Listen. When people even refer and they say go to that urgent care, they are going to check you up on the internet. They see your review and they are not going to come.

It never even occurred to them that not having a plan to get ongoing reviews is hurting their business. That's the only thing. You have to be looking at what is working, what's not working. Like I said, if you had this internal focus, number one, to see where you can make improvement ... I always say, you will seldom make home-runs. All you have to do is hit regular singles and doubles and you will see that you are winning. Then, of course, every business should know who is their ideal customer. That will really help them focus their marketing.

Robert Plank: Two really good pieces of advice. Focus inside and then differentiate and get your ideal customer. I really like everything you had to say, and I want to send people your way. Can you let everyone know, Ajay, where can people find out more about you, and what it is you do, and maybe even hire you?

Ajay Prasad: Sure. There are two websites that they should check. My digital agency marketing website is GMRWebTeam.com. It's just like it sounds. GMR is Gloria Mary Rachel, and it's web as in website, and team is in football team that you have, dot com. That will give you an idea of our approach even to digital marketing. The other one that we have created, like a software service for generating ongoing reviews, which also helps you see what your customer, if there are any flaws, is called RepuGen.

This is a software that essentially automates the whole manual process that I had created for our businesses to generate more reviews and get the feedback. The reason I created software, frankly, was the execution level was so spotty. Some of my clients did an excellent job of manually doing it, some of them not so excellent, not very good. This software just takes the fright out of asking people how happy you are or getting any feedback. The system does everything, and now you can just contact customers who are unhappy to address their issue. These two sites, I will say that they should go and check me out.

Robert Plank: Awesome. The GMR Web Team looks like a great website, a great service, and the RepuGen looks like a great software as a service. I'm really glad that you came on the show, Ajay, and I'm really happy that you shared the things you did. I was really impressed. Learned a lot so thanks for coming on.[/showhide]

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111: Make the Right Business Decisions for Maximum Success with Donald Mazzella

Donald Mazzella, author of the upcoming book, "Recalculating: 97 Experts on Driving Small Business Growth" tells us how to make great decisions in business, whether it has to do with leadership, marketing, operations, human capital, or finance.

[showhide type="transcript" more_text="Display Transcript" less_text="Hide Transcript"]Robert Plank: Our guest today is Donald P. Mazella. Donald P. Mazella is a political and lifestyle expert who's been seen on MSNBC, Bloomberg, and in the Wall Street Journal. He is the COO of Information Strategies Inc, a company that helps business managers improve profits. He currently oversees a prints and internet publication network centered around Small Business Digest, with more than 3.2 million opt-in small business readers and healthcare industry stakeholders.

Cool. Donald, I'm Robert. Nice to meet you.

Donald Mazzella: Good to be here. Thanks for having me.

Robert Plank: No problem. Tell me about yourself. Tell me about what you do?

Donald Mazzella: Basically, right now we've just put together a book, 97 Experts on How to Grow a Small Business, which will appear in September. We're expanding. Small Business Digest has been around since 2000. It's had it's ups and downs. Right now it's in expansion mode. We've been helping small business managers, as you say, add profits. Ultimately, how you do that covers 3 main areas: You grow your business, you grow your profit line, or you sell your business. It ironic, in today's world a majority of small business owners above the age of 50 wil tell you all they want to do is get out. Exit strategies are now becoming very important.

Robert Plank: That's what you do, compared to everyone else? You're all about the exit strategy?

Donald Mazzella: We tell our audience in our stories. I should also say, most of our stories come from other entrepreneurs, or from stakeholders in the area. We've had Marcus Lemonis on the program, JD Powers, John Scully. We generally look for the people who've been successful and ask them how they've been successful, how they exited. We try to get them to provide 1 or 2 nuggets of information that our audience can use, whether it's on our radio program, whether it's in our newsletters, or in our e-zine, or now in the book. We just try to get them to talk to our audience because who knows better how to do things than people who have done it. Interestingly enough, sometimes we get someone who failed because sometimes you learn more from failure than you do from success.

Robert Plank: Oh, yeah. When things don't go the right way, and they have to readjust and change direction. Could you talk about an example from your book? One of these big failures that jumps out at you?

Donald Mazzella: Can I talk a success strategy because it happens to come to mind because everybody has a business card, but as one of our experts said, "You're business card should be one of your most effective marketing tools." She goes into detail. She actually has a test that's included in the book on what your business card can do, and how to do it. For instance, your name of your company. It should be immediately recognizable, or distinctive. If it can be both, it's great. That's one. Now to give you one about failure. 53% of all the people we've talked to over the years, we've kept a running tally, have told us the biggest single factore in failure is financing, not having enough financing. That's number 1. Ironically, number 2, and which is reason we labeled the book recalculation, is the fact that the industry was changing, they didn't realize it. I thought that was fairly interesting. Then the 3rd reason they said for failure was the fact they picked the wrong people. Those are the 3 major reasons for failure.

It's consistent throughout the book, and through the years we've been on the air. If you asked them, "What's the success?" They'll tell you, Number 1, they picked the right people. Number 2, they happened to have the right service or product at the right time. Number 3, which I found interesting, a lot of them said luck. They happened to do it right.

Robert Plank: Luck in terms of they put out enough things, they had enough projects going, that one thing ended up taking off, right?

Donald Mazzella: Yeah, correct. I always use the story ... Are you familiar that the man who created Xerox was going to Rochester in a snowstorm, and he got a taxi-driver. Since they were making slow progress he told him what he was doing. The taxi-driver said, "Well, my sister and I want to invest." They invested a then unheard of sum of $25,000.00. They became multi-millionaires, if not billionaires, because of that. What is that? Luck? Listening to the right person? I always use that story because I consider it luck when you hear something and act on it, or when you hit a situation and act on it.

Robert Plank: Decisiveness.

Donald Mazzella: Absolutely.

Robert Plank: Cool. I like books like that. I like stuff like the Chicken Soup kind of books, where you can just get different perspectives, or different ideas. I really like stuff, for example, they can grow rich or they've just taken all the sum total of every one of success and failures, and drew some conclusions that are the common threads, from all these people from different eras in time, different ages, different industries, all that good stuff.

Donald Mazzella: I hate to disagree with the host, but I disagree in one way. All of these books, that's one of the reasons why we wrote this book, they distill it down to simple procedures. I believe in small business, or any business, are made up of a series of decisions, no one of which alone can topple you. If you look at Kodak, on the big side, or for that matter, Yahoo. Yahoo had the world, and what happened? It sold the world for $4 billion. I think life and small business is a series of decisions, one leading into the other, one leading in to it. That's why if you read the Chicken Soup for the Soul books on happiness etc ... I happen to have read them all because I was involved in a court case involving Chicken Soup. It's a formula to it. At the end it's like a formula you had for tomato soup. It fills you for a while, but leaves you strangely unsatisfied.

Robert Plank: Okay. What you're saying is that these Chicken Soup kind of books, there's not really much behind it, but what you have in this recalculating book is everyone has their own story and you can draw your own conclusions, but there's some real lessons behind it, then?

Donald Mazzella: I wish I could have said it as succinctly as you did. I'm not denigrating these. These books, I wish I had a Chicken Soup franchise. You and I could retire easily on it. That's what I believe. I believe that small business leaders, or managers, face decisions every day, some large, some small. The worst part about it is they usually don't have anybody to talk to to help them make that decision. That's the difference. You can have an overall philosophy. If you're a gambler, sometimes gamblers all have a system. At some point you have to make a decision that's outside of these peramiters. That, to me, is what separates many successful small businesses. It's one of the questions I ask our people when I assign a story. I ask the reporter, have you asked what they consider the decision that made or break them? If they haven't asked them I have them go back. It's amazing, people say, "You know, I never thougth of it that way. Let me go and look at it." Then they say that, and say, "But, if I hadn't of made that decision I would have had to do that." We're meeting a little bit, but that's how I feel about it.

Robert Plank: You're saying it's like the butterfly effect in a lot of ways then, right? Like, some small decision that you had to make, and it's a good reason that you did make it so long ago, led to this whole path of all these other things.

Donald Mazzella: Absolutely. In the case of Kodak, what decisions they made? They were not going after the digital camera marketplace. I mean, that was a big decision. Kodak holds all of the patents on digital photography, or did, and then sold them off. Company up the street ... Just had an article cross my desk today: Where do you put your second store? Oftentime people think about the first store. They don't think as much about the second store. They say, "Gee, that's a good location, a lot of traffic, etc." Yes, but the demographics of the surrounding neighborhood are not. Those are the kind of decisions that once you're committed to that area, then you have to do a lot of other decisions in order to make it work. Maybe sometimes you can make it work. There are other times when no matter what you do you're ending up with a poor location. Am I making myself clear on that point?

Robert Plank: Yeah. Could you impact that a little bit? Could you tell me about in your book, someone's decision, one where no decision was the right decision, I guess you're saying?

Donald Mazzella: Oh, yeah. That's a really good question. The answer, in our book, we talk about how you make a decision, and not make a decision. I'm going to look at the list of contributors, got a hundred of them, see which one probably ... Oh. The one that comes to mind, they're talking about a lot of companies, over 50% of companies still do not use social media. As one of our contributors points out, "The decision not to do social media has ramifications far beyond." One example, if you're not using social media, if you're not signing up people for your newsletter, if you're not doing the thousand things that are required, the perception of your customer is going to change. The problem all of these big box stores, Talbots, everybody else is having ... Ironically, as you know, Walmart is now thinking of buying Jet.com because it recognized that not having a social presence that is respected, and used by the consumers, is hurting it's brick and mortor business. Walmart is doing what many big companies do. They're going out and buying the expertise. That's the case. As Bob Haymon points out, the one single non-decision that he has seen, that's really hurt, has been the smaller companies not embracing social media.

Robert Plank: With all this decisions, and especially things like that, like some old-school company or some huge company they might hear, "We should do this," or "We should do that." How do you sort that out from all the noise? How do you know if this thing that comes across you, and you think, okay, I need to have social media, how do you know if that's a real thing that you need to be going after? How do you know if that's something that you should just ignore, and focus on something more important?

Donald Mazzella: That's a good question. I wish I had a simplified answer. We divide the book into 5 parts: Leadership, Marketing, Operations, Technology, Human Capital, and Finance. In doing so, we did it because we found that the average small business owner uses a combination of them every day. Depending on the company, and depending on the individual, they go in various orders. There are some people who are technically trained that operations and technology is, they make the decisions based on that 1st, and then 2nd, 3rd, and 4th. Someone else, a marketer, does it in a reverse, marketing first and then the others. In order to make any decision you have to make the one column, a right column and left column, and decide after that ... Most people do it mentally, I don't know about you, but I do it. When they finally put it all together, they then look at it, and say, "Ah, this is my decision. This is why I'm going forward." In the end, it's usually based on the bias of the individual, which we talk about in the book.

Robert Plank: You have the book broken down into these 5 sections. Is what you're saying that someone could look at your book, and they could narrow down if they want to focus just on to marketing, or just on finance? They could narrow down which section. They could read one of these stories from one of these experts, and then if they decide that, "Okay, that's my weak spot. My weak spot is I need better marketing," then they could make a list of pros and cons, and decide if that is something that they should do or not.

Donald Mazzella: You said it better than me again. You're good at it. The answer is yes. Within that sales and marketing section there are how-to articles on how to do it. If you decide you want social media, for instance, there's 3 or 4 stories of contributions on social media from some of the top names. Operations, the intersting thing about operations is, as I'm sure you're aware, it's a lot easier to start a company today than it was 5 years ago. Most of the heavy lifting, you don't have to create a financial package, it's available. You don't have to create an inventory management system. You can all tie it into your e-commerce site, so that you have an instant inventory, instant distribution, etc. the world has changed radically. As someone said, I wish I'd said it, is, "All you have to do is come up with the idea and the product. The rest is available via technology." I really think that's the case.

Robert Plank: I think so too. It's a lot more civilized. Like you said, even 5, 10, years ago, if someone were to start a business, even just to have a cash register, a point of sale machine, would have been thousands of dollars. They would have had to get a merchant account, or get some custom coding. Now, there's the little paypal little doohickey. Now there's a stripe little thing that just plugs into any iPad. It seems a lot more civilized, and a lot more streamlined. A really exciting time. I really like your idea for this book just because you hear all these stories, even something that might not directly relate to someone's business. There's like Kodak, or Xerox. I can read some story. It's almost like I'm just reading it for entertainment, but then I might see some similarities, or some differences with like my business or their business. Just because my marketing, studying, student brain is turned off, and I'm just reading some other business story just for fun, I can pick up little nuggets just because, I don't know, I was in a better mode, if that makes sense?

Donald Mazzella: Absolutely. I agree.

Robert Plank: Cool. I don't want to keep you too long. As we're winding down this call, could you share with us what you see out of all these stories, out of all these business' successes and failures and decisions? Out of all this stuff, what would you say is the number 1 mistake you see everyone making these days?

Donald Mazzella: Poor choice in personnel.

Robert Plank: Cool. Poor choice in personnel. They're not sure, at all, where to begin. They're not sure, at all, where the problem is, where to correct that. You're saying that's the common weak spot for everybody?

Donald Mazzella: That, and obviously make sure you have enough financing. If you think you need 50,000, you probably need 100,000. If you need 5,000, you need 10,000. That is the thing. Be prepared to work hard. Many people think that owning a small business is easy. It's a 24 by 7 requirement. It's interesting, as you know, the sons and daughters of small business owners do not want to go into the business because they grew up knowing that their parents, and usually the 2, devoted more time to the business than to them. Though very interesting, there are more businesses available for sale today than at any time in the last 10 years. The main reason, people will tell you, "We have no one to give it to."

Robert Plank: Aw, man, it's sad, but also a big opportunity for the right people who want to pick up those businesses.

Donald Mazzella: Yes, but there's also opportunity. It's interesting, what we complain about immigrants, but immigrants are the ones that seem to want to take the chance more and more. Most Dunkin Donuts are Pakistani owned. A lot of dry cleaning stores are Greek owned here in New Jersey. It's really a funny thing how they ... Foreign born are wanting to take the chance that our own children don't seem to want to take.

Robert Plank: It's interesting how it's evolved that way, but if they're willing to fill that slot, then more power to them.

Donald Mazzella: Absolutely.

Robert Plank: Great. I really like the idea of your book. I really like the things that you have to say. Could you tell us where people can find that book, and maybe even anything else you have to offer?

Donald Mazzella: It will be available September 15th, on Barnes and Noble, and Amazon. Our publisher is BrickTowerPress.com. It will be available there. There's also a e-reader available. All of that will be available September 15th.

Robert Plank: The book is called Recalculating? Is that right?

Donald Mazzella: Recaculating, 97 Experts Driving Small Business Success.

Robert Plank: Awesome. September 15th, Recaculating, Donald Mazzella. I can't wait to read a copy for myself.

Donald Mazzella: I'm glad. I hope I peaked the audiences interest.

Robert Plank: Yep. I like everything you have to say, great insights. I can't wait. Recalculating, and I'll check it out as soon as it's out.

Donald Mazzella: Have a good day.[/showhide]

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110: Take Your Money Back By Removing the Fear and Greed with Joshua Belanger

Joshua Belanger from OptionSizzle tells us how to remove the fear and greed, overcome common financial obstacles and take control of your own money.

[showhide type="transcript" more_text="Display Transcript" less_text="Hide Transcript"]Robert Plank: Today's guest is Joshua Belanger. He was a once struggling professional wrestler delivering pizzas and is now recognized as one of the leading experts with trading options and alternative investment opportunities to generate passive income. That's a mouthful but I'm super glad to have you on the show Joshua.

Joshua Belanger: Yeah. You need to shorten that, but thanks. Thank you for allowing me the opportunity to rock the mic for the next 20 minutes.

Robert Plank: Awesome. What is it that you do?

Joshua Belanger: Listening to that, and listening to it a few different times I think the way that I've shortened it down is that I help investors get over the 2 biggest obstacles I've seen over the last 12 years. What are those obstacles or hurdles? Fear and greed, so that's what I look to help them with.

Robert Plank: Isn't that the stereotypes, like the Gordon Gekko you're supposed to be? You're supposed to play to your strengths and stuff like that?

Joshua Belanger: Yeah. Right. No one's successful at being fearful or also greedy, so it's about keeping yourself in check. When it comes to the marketplace you can get both of those sides of it pretty good. That's not a real good way to explain it but, fear and greed is really what controls the marketplaces, but you can't provide proper expectations on being fearful and greedy. That's what I look to sum up for people to be able to help them become successful.

Robert Plank: You're saying that can take over if you don't manage it well?

Joshua Belanger: Yeah, that happens for most people. Why do most people lose money? It's because they are either too fearful and also are too greedy, meaning that they don't, if all the greedy side they're not getting out of positions because they think, "Man, if I would've just had Amazon and I bought that IPO in 1995 I would've been up 2000%." No. It doesn't work that way, and the same thing on the fearful side of it when the financial crisis is going on, and the S&P 500 is at 666 and you're like, "Oh well, the world's going to hell in a handbasket." You could think that way but at that point you've got to say, "Maybe I should buy some stuff here."

Robert Plank: That's like the weirdest thing because I haven't done stock trading in a couple years but when I did do it I was surprised at just how a number would take over, and then even I went through a stage where I would do some paper trading and be like, on certain days, say the price is this, and I played around with that, and the same psychological stuff like you're mentioning, like the fear and agreed, it still messed me up even though it wasn't real money, it was just numbers on even a piece of paper, but it's crazy how much, you have no idea how much all that dark stuff comes in until you're playing with your stock trading stuff.

Joshua Belanger: All that dark stuff is all the stuff in your head. You're looking at stuff and you're making your own interpretation but there's millions of dollars traded every day, back and forth, and not back-and-forth meaning one side to another, but there's a buy and sell. The wonderful thing about the marketplace is that there's no other opportunity out there like the financial markets, meaning that you don't like Apple, so you could take the other side of the trade by selling it. You could sell short, say "Hey, Apple's overvalued here." You can't do that in anything. You can't go to a piece of real estate and, "Hey dude. You just sold your house for how much money," and like a new buyer, "I'm going to short that house."

You can't go to Vegas with an edge and say, "Hey I want to take the other side of the trade." They'll take the other side of the trade, but with their edge, but you can't be Vegas. The only opportunity is in the financial markets with that, and that's the most, it's transparent, and it's at your fingertips, and it's a wonderful thing.

Robert Plank: But also kind of scary. I want to know about your story and this whole, because you can't just say, well, you used to be a wrestler and delivering pizzas, and now you're doing this. That's too good to pass up, right? I'm curious, how did you get from there to here?

Joshua Belanger: Oh man, that was a while ago. I started wrestling when I was 14, 15 years old and I stopped when I was just about 19 years old. In that time I didn't really know what I wanted to do, and I was working at a pizza place, and I went to school. I went to a junior college for a week and at that time I worked at this pizza place for a while. I had an opportunity to become a manager and the guy that I looked up to, and I worked for, Rod, he taught me a lot about business, and sitting in business 101 class I'm like, I already know this stuff and this is not my route.

Before then he had told me, and just in conversation he's like, "Man, if I wasn't doing this it'd be cool to be a stockbroker." That was my a-ha moment. My a-ha moment is because wow, man, stockbrokers. They probably make a ton of money.

Robert Plank: That sounds like a cool profession.

Joshua Belanger: It sounds like a cool profession so I watched movies like Boiler Room at that time, and I'm like, "Whoa. This is pretty awesome. Let me jump on this horse," and a couple doors down from where I worked at the pizza place there was an Edward Jones office and a guy named Russ. He ordered pizza pretty often. I went in there one day and I said, "Hey. 19 years old. I'd like to become a stockbroker," and he said, "Okay. Do you have a book of business?" "No." "Do you have a series 7?" "No." He knew I didn't have the stuff but he was like, hey, you know, and then he explained to me-

Robert Plank: Then he asked did you watch Boiler Room and that was like you're hired, right?

Joshua Belanger: He told me, he said to me, "These are the things you have to get to." I live in Chicago now but I grew up outside Chicago. I grew up on the Wisconsin Illinois state line so that's about a 45 minute car drive, and an hour and 20 minute train ride, so he said to me, "I used to work on the floor of the Chicago Mercantile exchange." There's a couple different exchanges in Chicago. That's one of them. That's a futures exchange, and that would be your best opportunity. You would be able to get your foot in the door and see where you want to go, and he was right, but he said to me, "I haven't worked there in a while. I don't know anybody, but that's my advice."

I'm like, "Okay, cool." That's all I needed so I went, like I said this was 13, 14 years ago, so I went online, we had the interwebs then. They were still starting out but I went on. I went to CME's website and I even, I didn't know much about it because I didn't realize until I was down there that there's a Chicago Board of Options Exchange, and the Chicago Board of Trade, so I'm only looking at the CME because that's what he told me, but I called every firm in there. I went through the directory 2 times, got an opportunity to interview, didn't get the job the first time. They called me back a few months later and they gave me a job as a runner, which only means I had my foot in the door, but I was making little money.

I joke that the janitor was actually more valuable than me because you're kind of like a grunt. As a runner you're a grunt, and a runner, only my job, in those days that is what's known as the open outcry system. You see all movies, like the Eddie Murphy movie where they're in the pit and their yelling, it looks like they're yelling but they're actually really trading. There's a art to it.

Robert Plank: With the yellow coats and stuff?

Joshua Belanger: Yeah. I forget the movie. I think it's trading money or something.

Robert Plank: Trading Places.

Joshua Belanger: Trading Places. Yeah. That movie, that's when things were really buzzing. When I got there it was buzzing but not as much is that, and also that's a movie, but that's a different story. A runner actually would go and have to fight through those crowds to get the tickets from the traders who are in the pit there, and usually some of them, if they're bigger, they had a clerk which was essentially an assistant. I would have to to fight through there, get in, get all these tickets from who I need to get tickets from, and the tickets are these trading cards because that's how they traded, and I recorded it, take those and within 15 minutes, because it all had happened, get them time stamped at the clearing firm. That's why I had to fight it.

They don't just let you in. They don't say, "Hey, Josh. Oh my God. You're the runner? You got to get the Bill over there? Come on through." No. They push you out of the way. They elbow you and they know that your new. They don't make it easy. You get in their way. They yell at you. It was a pretty fun experience. It was pretty fun.

Robert Plank: You had to earn your stuff, sounds like.

Joshua Belanger: Yeah. You have to break in. I loved the opportunity. I miss it. It was a unique experience. I would never trade it for anything.

Robert Plank: Cool. That's how you got your foot in the door. Obviously you don't do that now, so what is it that you do now?

Joshua Belanger: That's how I got my foot in the door and then from there I can summarize my whole background. It could take a while but I took different opportunities. I leveraged that and eventually I became a stockbroker, realized that's not what I wanted to do, and I was fortunate enough to have that experience of being on the floor to realize, "Man. I got my series 7 now. I thought I knew everything and here I've become a stockbroker. I'm making 600 calls a day. Man, and all I'm doing is just pitching product. Man, this is like a sales job."

When I would ask about, "Hey, this client asked me, or this person asked me about the market, what I thought about it." My senior broker would say to me, "Your opinion doesn't matter. Just go open accounts," and I'm like, "Wow." I would ask questions like, "Hey. What do you think of Martin?" He was like, "Kid. Just go open accounts. It doesn't matter." I'm like, "Wow. This is not as fun as I thought it was going to be."

I had different opportunities. I have a lot of experience in different aspects of the financial industry, but in 2008 I was working at a trade desk, and I really wanted to do something on my own. I was starting to manage money on the side and I also wanted to start the website because how I got gravitated towards, specifically options is what I teach, or what I primary focus in on, but to be honest with everyone and to help them understand, options are only a product. Stocks are a product. Options are a product. Features are a product. It's just understanding how to use them all at once, or how to use them to be successful.

Having just one product and saying all I want is just to, okay, for instance. All I want to do is eat chicken. Well, okay. What about steak, and what about this? You can enjoy all those things but why do you just have to have chicken?

Robert Plank: It gets old fast.

Joshua Belanger: It gets old fast. It's not the best example. If the first thing I could come up with. Anyways, they're all products and they all work together. In all actuality stocks are easier and that's why most people gravitate towards it. I work in different aspects of the financial industry and there's a lot of restrictions, and there's a lot of things I didn't like. I didn't like a lot of the regulations, the restrictions, and all I was supposed to do was to sell products and gather assets. I thought I could do more for people. I thought I could do more and provide more because that's all I asked. Every time I asked to do something more I was always shut down. No. You can't do that. No. You shouldn't do that. No.

Robert Plank: Right. Don't be creative. You're a machine. Keep making phone calls.

Joshua Belanger: Yeah. Don't be a machine. There is a stock called Rick's Cabaret. The ticker symbol, stock symbol's R-I-C-K. It's a strip club. I thought it'd be cool if I could pitch those in open clients. I'm like, "Hey man. This stock is relatively new. It's a strip club. You could own a strip club." That was just a unique story. Compliance department shut that down pretty quickly.

Robert Plank: Oh man, but now that you're on your own, now you're free to do all that, right?

Joshua Belanger: Yeah. I don't focus on stocks. Stocks are just a byproduct of the everyday, the typical investor like you and I, which are known as retail, I'm not a professional. I'm not on the professional side anymore. Retail investors, the most opportunity for them is using leveraged instruments like options, like futures, and to really use a lot less of their capital to make a lot more. The traditional approach to investing is to have 80 to 90% in stocks, and the rest of it in cash. Well, that doesn't work. Maybe 30 years ago whatever person said that and that was the outcome, yeah. People still rehash that information because the financial industry is all about taking your money and collecting fees. That's it.

There's zero edge with the access to technology, with the access to information, all those things that may have made others so-called market wizards successful is out the door. They're past. They're gone. The market's so much more efficient, so much more effective. The edge is gone for anybody. The playing field, what I mean by that, is as level as possible, and somebody like Robert, and me, and anybody can actually do better than professionals because we don't have those restrictions. It's just about learning your craft, or actually wanting to do it as well.

Robert Plank: It reminds me of, we keep mentioning all these 80s and 90s movies and stuff, and it reminds me of how when people used to go on an airplane and they would call a travel agent. Now you just use the computer. It sounds like that's a similar thing now, right? You used to call your stockbroker but now it makes more sense to learn a little bit, and then go online and do it yourself instead.

Joshua Belanger: Yeah. In those days you didn't have direct access to the marketplace so you had to go through a broker. There was a part of it too, you're like, "Oh, I've got a broker." You call him on your phone on the golf club, and yes, you feel important, and at that time there was different opportunities. Maybe a hedge fund manager did have access to certain information that the street didn't have, but that doesn't exist anymore.

The only way that these hedge fund managers, because they underperform, they underperform. Mutual funds underperform. 90% of them underperform every year. There collecting fees to give alpha but they underperform. The reason why is because the markets so efficient and there's no edge for them. You're in the hole right when they take their fees, and there are so many other types of hidden fees and everything else. It's a money machine.

There's a book called, it's an old book, it's from like the 1930s, but something about the yachts. I can't think of it, but anyways, brokers. Why do these hedge fund managers have the most money? They're not the smartest people. They don't even produce that much alpha, alpha meaning return, but they collect their fees. Fees paid out is a third of our GDP, the financial industry. It's just such a money generating system that's protected by these firms because that's their interest, is keeping your money in a 401(k) plan, keeping your money and an IRA, keeping your money away from you as far as you can so they can collect their little fees.

It might not sound like a lot but over a time frame for you, and also for them with millions of people, it becomes trillions of trillions of dollars every year that they look to do that, and they don't have to do anything.

Robert Plank: Sounds like a little corrupt system in a way. Along those-

Joshua Belanger: Yeah.

Robert Plank: Oh, go ahead.

Joshua Belanger: I don't want to say it's corrupt. It's naiveness. It's people who don't want to take control of their money. There's a little bit, it's tough. It's tough because they're not doing anything. They're doing what they're saying, and then there's some people that actually want to do good. It's just you have restrictions when it comes to the financial markets. You have restrictions with firms who don't want you to do this because the risk department. It's just easier to put people into products. It becomes accountability of you and your money, and you knowing what to do with it. That's a long discussion on its own, but it's not as plain cut of pointing the finger at them. The easiest way to stop it is to take your money back.

Robert Plank: That makes sense. If people want to invest in a strip club or whatever, the equivalent is that in the research they want to buy some options and whatever, they can make their own decision. They can have their own control.

Joshua Belanger: You can have your own control with your money and how you invested into the marketplace. The first step is like, okay Josh. I don't want to stop, the fees that you pay over 10, 20, or 10, 15, 20, 25 years, that 2% fee, that compounds. I could show you a graph to what we have. We're talking about thousands of dollars. On a $50,000 account we're talking about thousands of dollars, many of thousands of dollars, that you lose that could go into your pocket over that time frame. The first step is just taking your money back.

Now you don't have to go into options. You're wanting to get your blue belt in investing. This is like a little dojo. Investing's like a dojo. If you want your white belt and to do it yourself, and what I would refer that as is, if you want to learn just a little bit to be able to defend yourself and protect yourself, you go and you start taking classes. The first thing you could do taking your money back is, you take your money back, and you could put it into, it makes me cringe to say this Robert, it makes me cringe. You could put your money into a vanguard fund like the ET, are not ETF, but that's another way to do it, but of Vanguard, low-cost index fund with the S&P 500, and that would save you many of thousands of dollars a year just doing that, and you're just going to get the market return.

Because again, 90% of investors, or 90% of professionals, do not beat that index. If that's the case, why are you trying to bat, you have the 10% and you are able to get that 10% that are doing it, because you're not going to in and out of different mutual funds. Just let the market give you what it gives you and just ride that out.

Now if you want to take it to the next step and you want to start managing money more actively, then yeah, then you can start learning how to do that with options and things of that sort, and being more engaged, but the first step is just to do that.

Robert Plank: Cool. It sounds like there's, I don't want to keep you too long, but there's a lot of really cool steps people can take to basically get the power back, get the control back, don't let the fear and the greed take you over. Even if they don't know much at all just yet they can put it into a vanguard or an ETF, like an index fund or something, and then eventually work their way up to options. I want to talk a little bit about you have this program called OptionSIZZLE. Can you tell us what that's about?

Joshua Belanger: Yeah, optionSIZZLE's my website. That's what I started in the financials crisis, great time to do that, but that's when I started, and that was a whole medium of being able to teach people how to use options successfully. When I was in the financial industry and I was making my cold calls, I would talk about options, and I would try to use options, and compliance department would say nope, and also clients would say, man, options are to0, fill in the blank. I don't know much about options.

It started to become a recurring thing that, and even my own lack of success with the options in the beginning, because I lost $2000, which was my whole account at the time, on one trade, making mistakes people do normally starting out with options. Even though I had this series 7 license, which is a industry license which said I'm a professional, and I knew, and I could operate in the financial industry, it didn't teach me how to become successful at managing my own money or even using these instruments, so that's where I started to take it to the next level and really focus in on it, and get to where I'm at now of being in a place to use them and also help those that are looking to do the same.

Robert Plank: This optionSIZZLE, is it a blog? Is it a membership site? What is this exactly?

Joshua Belanger: That's the real estate. That's my domain. That's the area and when you go there you'll be enticed with a bunch of little articles, which are little daily emails that I send out. The whole point of that is to captivate you, to get in and start being engaged in. We have different products that I offer. I wrote this book called Fearless Investing With Options, and it really is the book that I wish I had when I first started, when I first started using options, or even studying for my series 7, because so many options books are just very vanilla. They don't even teach you a foundation to be successful. They give you insight but not anything that is actionable to be able to implement.

That's kind of the first process and I have other products in there as well that we offer to help that. It's almost I have a choose your own adventure approach, where somebody comes in and we provide something to them, and if they want to continue up with working with us, and we start on a low investment opportunity where they buy a book or report. If they want to continue on with the process then yeah, you get more information, which is more value, as you continue to go through the journey with us.

Robert Plank: They can try out and the more they get hooked, the more they can get.

Joshua Belanger: Yeah. I approach this as if you went to a karate class or a martial art class. You just don't get your black belt in one day. Everyone's ahead of you. You come in on day one, you're going to lose. There's nothing you can do. You may get lucky but you don't know anything, and you have to start at that, and you have to start working your way up. Now if you want to get that black belt, everyone's different. Maybe someone wants to get a green belt. Maybe someone wants to learn this one thing, which I would say that's not how you're going to become successful, but that's not my opportunity to tell them all you need is to learn that.

If you want to learn how to become a black belt I can certainly help you do that. If you want to learn that, then yeah, you have this, but that's where I let the things fall into place of where they, what they want, and how they want to approach it.

Robert Plank: I like that. I like that. From what it sounds like, your thought process behind, first of all your journey from point A to point B, and the way that you've explained the way that you trade and the way that you teach others, it sounds like, usually the 2 extremes of people who go through are either just try to flood you with all of the facts and figures, and then that's not helpful at all, right? It sounds like some of the textbooks that you read, and then the other extreme is someone saying, what you have to do it exactly this way.

I think what's cool about the way you've explained all this is maybe there's 4 or 5 different paths. Maybe there's a couple different places someone wants to end up and you give them the strategy to put different things together, and get to that specific place they want to get to.

Joshua Belanger: Yes. Some people just want trade ideas and it drives me up the wall because it's not just about the trade ideas, it's about the logic, but for so long, I know that you focus in on membership stuff, and I actually deviated from that. I had a membership. I had a recurring, and I deviated from it because I'm like, well, I want to teach people how to become masters, but not everyone wants to become a master.

Robert Plank: Some people just dabble, right?

Joshua Belanger: Some people just dabble, and it really took me to this experience where I was at this store, the grocery store, and they actually have a very nice wine collection, and they have really solid wine people there that really know, will supposedly they know, they could tell a hell of a story.

Robert Plank: They sound convincing.

Joshua Belanger: It's just not like any kind of wine place where you like, "Oh, is this good?" They'll tell you, like I bought this $100 bottle of wine. It was the most expensive bottle I've ever bought. I bought it because he told me about Giuseppe and his last harvest, and he told me the story, and I'm like "Okay. Giuseppe passed away on his last harvest and this is his bottle. Oh my God. I'm done."

Robert Plank: It was like he died as he was putting the cork in the last one.

Joshua Belanger: Almost. I'm like, man, I can just visualize Giuseppe on his rocking chair overlooking the harvest. This is his last harvest. I have the bottle and he's passed away. I'm like, how else would you want to go? I'm doing this for Giuseppe. Done. Let's do this, and then I get home and I had buyers remorse. I'm like, but it was one of the best bottles of wine I've ever had.

Anyways, but the guys there, they can tell you a good story. They can tell you about the regions and everything else. It really took me to this one time I went in, and my girlfriend Nicole, she's not crazy about the stories, but she was like, "Listen. We just got to go in because I have want to get wine. I don't want to hear stories. I just want to get a bottle of wine and let's go."

I went in on my own one-time and I was feeling the same way, so the guy that we knew, he was like, "Hey. How's it going?" I'm like, "Oh, I'm doing good," and I asked him, "Hey. I just need a bottle of wine under 15 bucks." He starts talking about all this, and it really took me to that point because I'm like, man. I just want the bottle of wine. I don't need to know everything about the bottle of wine, and it was my a-ha moment of maybe that's how other people feel. Maybe they just don't want to know everything that I know about options, the in-depth analysis, and the time involved. Maybe they just want to see, hey. Does this guy, if he has a couple good picks maybe I'll just follow him.

Now I look at it as giving them broccoli that's wrapped in bacon almost. I can still teach them how to trade options successfully with giving them picks. This was a little bit of a longer rant, but yeah. That's how people are. I'm still learning. I still, every day I'm learning. I might be further ahead. It doesn't make me better than anybody else. I know I have experience, which is what it is, but every day I'm still trying to get better. Every day I'm still getting after it, learning, all those things.

Just because you get to a black belt in a martial art doesn't mean your learning stops either. You continue to try to keep learning, and that's the same way with investing, and really just business and anything, life. It's just getting better every day.

Robert Plank: Yeah, you take too long of a break, get too comfortable, you backslide.

Joshua Belanger: That's where you start to cut corners.

Robert Plank: Yeah.

Joshua Belanger: That's where you lose your discipline.

Robert Plank: Scarier place to be. As we're winding down this call could you tell us, what's the big number one mistake you see people anywhere making their mistakes with their money, or with trading, or with anything in that category?

Joshua Belanger: Well, I think it's just proper expectations. When it comes to business, and just thinking about business and different things as well, it's just the expectations are not there. What I mean specifically is if you bought, I made the little joke about buying Amazon when it was, well, I don't know if I made the joke earlier. Some people think like, "Oh man. If I just would've bought Amazon's IPO when it came out in May," I think it was 1995, "and would've held it to this day, $5000 would be worth over $1 million."

That's one stock out of how many that's out there? It doesn't work that way, and there's no way that you would be able to hold that investment for that long. That doesn't work. Your fear and greed-

Robert Plank: The money would've burned a hole in your pocket. The 2008 crash would've done whatever, all that stuff, right?

Joshua Belanger: It's not smart as is. It's not smart. You've got to take your wins when you can. People talk about managing risk but they don't talk about the other side of managing risk, which is taking your wins, and taking that risk off the table. What I mean specifically, I had this business that I just sold. I started it 3 years ago, made some passive income. It was Amazon based. It was just a different type of investment. I'm threw some money at it, made some money, and for me I made money on it, I wanted to lock it up.

Could it keep going? Sure, but I rather take my money and find something else to put it in, and keep going. I don't care if I had the opportunity to buy Amazon stock. I would've never held it, and that's not how you can approach things and life, because that's an outlier. That's a rare event. That doesn't happen, and you can't approach it, so it's really about expectations and managing risk, and taking, when you manage risk it's not about the loss side. It's about the win side. It's about taking that win, and yeah, you hear about people who turned down Google's offer and look at them now.

Yeah, look at them, but there's not anyone else behind them. There's only one. You only hear about them because what about the other hundred or thousand people? They were lucky. They took the risk. That's big risk. Good for them, but when you're starting out your cushion for risk is very limited. Now when you get bigger, yeah. You can take on bigger risk and so forth, but it's just being able to quantify that risk and understanding it. With people in the marketplace, they put too much money at risk.

It's what we were talking about earlier with the traditional approach of 80% invested. When the market goes down, which it does, and will, those positions, they sell them at the worst case because they get margin called. With what we can do now, with being able to teach somebody like you or anybody, is that you can use 30% of your capital and still make those same returns, and have 70% in cash.

Why do you have cash? Well, because that's your lifeline. That's the only thing that you have. So what, you're not essentially making money on it, and you could make money, but you can't do that. You have to keep that in a safe place. You have to keep it because even if you're using 30%, when things happen, positions go against you, you have to be able to have that money to be able to buy yourself duration, buy yourself some time.

When things are great, things are great. When things are bad you have to be able to have something in the reserve tank to be able to buffer that, just to be able to buy yourself some duration. The same thing in business. I think it's the same thing in investing as well. A lot of people say trading, I say active. I don't do day trading. There's people who do day trading. That's fine for them. I've never been successful at it. I know very few people who have been successful. My approach isn't about day trading. My approach is about just being more active with your money and more engaged.

You don't have to change your computer every day and Johnny Mr. Market. You can be successful, make above average returns than the market provides, and you don't have to be chained to your computer.

Robert Plank: That's the dream because I know that that was a real problem with me, and I think that it comes full circle. Like at the beginning you said it comes back to fear and greed, and I think that I couldn't help but check that portfolio, check the numbers every couple of minutes, and it just emotionally messed me up. Especially if it dropped a tiny bit, I be like, "Oh my gosh. I got to panic sell," and if it jumped a bunch, I'm like "I got to buy some more," and then if I sold it and it kept going up I just, it was such a roller coaster. It sounds like you have-

Joshua Belanger: It's too many variables. That's why.

Robert Plank: Yeah, and it was just all on checks to.

Joshua Belanger: The way that I try to do that now, and we can do that with options, I read some of the information about yourself and how you like to create systems, that's the way that I now approach teaching people, to take those variables out of it, to manage risk before entry so you're stopping out. You didn't have an idea area of where things could go, proper expectations, so you're panicking, and you're selling at really the wrong time, and then also when it goes against you you're like, "Oh, man. Where do I sell it? Do I sell here or do I sell there?" Well, to create consistency you have to have consistency and a consistent plan, and to be able to execute that.

That's where a lot of people fail in investing because it's all variable, meaning that it's like calling audibles. Maybe I'll do it here. Maybe I'll do it there. Maybe I'll sell high. The market is random so to get consistent results you have to have a consistent approach and be able to execute on that. That's where I have started to really form into the fact of I'm going to help you become a machine, and I'm going to teach you exactly the things to be mechanical, to be systemized, and where you can use options to reduce your risk, create better returns, and have an approach that is going to help you take away that fear and greed.

Really the fear and greed is because you don't know what to do.

Robert Plank: That makes a lot of sense, especially planning your eggs ahead of time just sounds awesome, and also that the marketplace is random, and if you're also random, it's just a big mess. At least if the marketplace itself is random and you are somewhat structured, and ordered, and systematized, at least you can make sense, and you can get what you want out of it sounds like.

Joshua Belanger: Absolutely, and it's also eliminating opinions because no one knows. There's no such thing as a good stock picker. There's no such thing. Your probability of being right is 50% when you pick stocks. With options we can skew that probability of success even greater. There's a trade-off, which everything in life has a trade-off. You don't make as much money, but there's no such thing as unlimited profit potential. It's like a drug. It's like the crack of Wall Street. Going back to the Amazon thing, like oh I would've, no. There's no such thing as that.

If you're so scared that the market's going to go to zero or that this stock is going to go to zero, go bankrupt, then you can't have the other spectrum and think the same thing. Well, it could do that but I'm only going to buy stocks or options because I think that Apple's going to go to 200. There's actually expectations, that we could look at option pricing right now, that gives us an expectation of what the markets priced in. We're talking about billions of dollars that say that's not going to happen, or what the probability of that's going to happen, and we can quantify that. That's how we eliminate that opinion, how we eliminate the fear and the greed because we can provide the expectations, the predetermined outcomes, of okay. I knew that this had a 75% chance of winning, however there was a 25% chance that it wasn't going to win, but because I knew that that 25% chance was there, I already accounted for that loss because I knew that could happen.

It happened here but I know that I got that out of the way, and I'm going to keep going. Continue to be consistent because the odds, the numbers are, it's the same way how Vegas works. It's the same exact way.

Robert Plank: Better than going in 50-50, right? At least you somewhat hedged your bets.

Joshua Belanger: 50-50 bets are fine but you have to be consistent on when you take profits and manage risk as well, because you start to get variable data, and that kind of skew will really hurt you on doing that. A lot of people, they take a big loss and they go, because they didn't size correctly their position and they have a big loss, and they go, "Ah, man. I'm going to take a break." No. You got to keep going. You can't just take a break. You got to keep going because now you dramatically skew the numbers against you.

For some reason when it comes to investing we approach it like, oh my God. We don't know what to do, but everything else in life we take so much data, and we go by it, but in the marketplace it's like no. So-and-so knows more than I do. No, they don't. They don't know more than you because it's random.

Robert Plank: That makes sense to me. I really like everything that you shared with us today. I really like your message. Could you state for us one more time your website and your books, and anything that you want people to check out?

Joshua Belanger: Yeah. I don't have a strong call to action to several websites. You can only go to OptionSizzle.com, and that's where you'll be able to find more information about me, and if you're interested in, if you just want to take your money back, and we have a report on how you can do that. Take your money back and you have control over it, or if you want to take the next step, and you want to learn more about how you can make more money after you have that control.

It's a big step. A lot of people are very reluctant because they don't have the confidence in being able to do it themselves. There's still this fact of like, man. What happens if I do worse? That's the problem. People are so scared that they're going to do worse that they go, "Josh, I hear you. I know that I'm going to lose money or I'm getting ripped off, but I'd rather get ripped off this much then lose more by doing it myself."

Well, we could show you how to do that in a very simple process. I know it's a shrug of a shoulder, but that's how people really feel. There's a lot on the line. There's a lot of pressure on them, but we can go from there and you can visit OptionSizzle.com and you could see the book that I wrote, which can be a great introduction to learning how to be successful with options, and even for those who " know options" this is a good reeducation of maybe some techniques in a process that you didn't really know.

Robert Plank: That maybe they skipped over or something.

Joshua Belanger: Yeah. Correct.

Robert Plank: Cool, so optionSIZZLE. Everything is there. That's where the magic begins, where dreams happen. Josh, thanks for being on the show. I appreciated all of the witty banter and all the cool tangents you went on. We covered a lot of cool stuff. I'm really glad you're here, so OptionSizzle.com is the place to go.[/showhide]

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109: Flip Websites Using Amazon Associates and Amazon FBA with Jon Haver

Jon Haver from Authority Website Income and BrandBuilders and tell us how he flips website properties in his online portfolio, including the amazing story of how he bought a business for $50k and sold it for $350k just a few months later.

[showhide type="transcript" more_text="Display Transcript" less_text="Hide Transcript"]Robert Plank: Jon Haver has been building online businesses for the past 7 years and just recently left his day job to pursue online entrepreneurship full time. His current focus is turning Amazon Affiliate sites into FBA businesses and has generated a 500% ROI. I don't know about you guys but I'm super excited. How are things today, Jon?

Jon Haver: Things are great, it's a nice sunny day here and just looking out over some water at my [inaudible 00:00:42] office setup and it's fantastic.

Robert Plank: Just living the dream. Cool. I understand that you're going to be telling us today about affiliate sites and about Amazon FBA, so could you get us all caught up and tell us about what exactly is it that you do?

Jon Haver: Sure. I think like probably a lot of people I started out online just kind of as little bit of a hobby. Instead of playing computer games I was building a business, building up websites. Got more serious about it when my son was being born a few years ago and the model I picked at the time was building up authority sites, content-driven authority sites that make money by driving people to Amazon or other sites, but primarily Amazon Associates was my main passive income portfolio sort of income stream. One of the sites that I picked up -- like probably most people on the podcast had been hearing about -- FBA and how great it is. I, again, probably like most people, always had the struggle of chasing after too many shiny objects, so I always swore to myself that I wasn't going to jump into FBA until I had a competitive advantage. Then when I was looking through analyzing some of my sites in my affiliate portfolio, one of the sites I noticed was driving a lot of sales of a product that I was pretty sure was private labeled. I just flipped that model and said, "Instead of sending traffic to Amazon to a non-discreet product, I would send traffic to Amazon to a product that I was importing." I used an Amazon affiliate site to drive the growth of my FBA business that I started.

Robert Plank: I like a lot of what you just said there and a lot of your thought process as far as you look at the portfolio you have, you look at the competitive advantage you have because, I don't know about you but a lot of the people that I chit chat with and my peers and people like that, they'll build up a site -- like you said, like an authority site for example -- and they'll just kind of dabble a little bit and play around. They'll get a little bit of traction but it seems like, especially with stuff like Amazon and Amazon Associates and FBA and Kindle and pretty much any hot, high traffic marketplace, there's always the slap. I think what I see a lot of are people, after trying enough experiments they luck out into something good, but then they get slapped down a little bit and then they just completely give up. I really like what you just shared there how you had this site that was linking to some affiliate products and getting like 5%, 15%, and then you said, "Okay, well the traffic's going from A to B anyway so I might as well just cut out the middle man," so you get more money from the same traffic. Is that right?

Jon Haver: Exactly. With Amazon Associates, when the account's big enough you're getting 8%. My goal was to turn as many 8%'s into still make that 8% but also make -- whether it's 30% margin or 40% margin on my physical goods -- so turn as many 8%'s into 38%'s.

Robert Plank: Cool, so how comfortable are you with sharing some numbers or niches? How detailed do you want to go into this case study?

Jon Haver: Sure, I'm happy to share numbers. Because there was a sale I can't share much details about the ... I can share that it was kind of a fashion clothing product, so I can share that, but as far as the numbers, I share tons and tons of details about it at my website, authoritywebsiteincome, and happy to share all the numbers here. For my site, I started in September. I tried to come analyze it from a standpoint of if I was starting flat in September and just bought the site that I owned at fair market value, the website that I acquired plus then I went out and bought another website because I figured if one website was good in this space then two should be even better. It was a total investment including investing into the product of $50,000. Definitely not chump change. $50,000 investment I do an affiliate site plus physical goods, and then 8 months later I was able to sell that, plus the earnings, and generate a $350,000 cash into my bank account essentially between the prop for the months that it was operating, as well as the ticket price. That was a pretty sweet return, that sort of validating a model that I think is pretty interesting.

Robert Plank: That is cool. The numbers that you're sharing, it's like crazy real estate numbers almost. I'm really curious about that. I'm curious about how you located a site to buy for that amount and was that your budget? What kind of criteria were you looking for, because sometimes I'll look on, say like Flippa or something, and they'll have site for $100, $200, $500. Could you tell us about how you acquired that site in the first place?

Jon Haver: The site that I acquired in the first place was actually from the individual that I ended up partnering with on another business where he goes and actually builds these affiliate sites for other to people to buy. That's at Brand Builders. That site had come to me through my audience, but if I were to go out, as I have since then, to kind of try to rinse and repeat this model, the metrics that I'm looking at is I'd like a site that's doing about at least $2,000 a month of fairly focused sales on Amazon. $2,000 a month income of fairly focused sales, meaning if you have a general health site that's selling products, in a ton of different products, it's not going to have the focused energy that you need to be able to drive the sales of whatever product that you import. The high level metrics that I'm after are $2,000 plus a month in income, and then selling a lot of one specific product that we can definitely private label. If it's doing that then I'm pretty comfortable with moving forward.

Robert Plank: Would you say that's kind of your business model now is you find these sites where they're selling Amazon Affiliate links and you say, "Okay, my criteria, 2K a month at least, focused sales," and then do you also look for something in their library that you can convert into an FBA product?

Jon Haver: Yeah, that's exactly it. The focused sales of a product that I have a good chance of being able to convert. I'm still testing this model out. I've done it once successfully. The second time I went to do this the site had a substantial drop in earnings so it went down to 25% of the expected earnings. That really sucked. That's still a slow process on building that site up. I'm doing a similar model on some other sites, so is it my model? It's definitely a very big focus area for my business right now.

Robert Plank: That's really cool because I don't do any buying and selling of websites, but just from when you hear people talk about this kind of thing, they're always looking for the built-in weakness or the built-in untapped opportunity, so that's a pretty easy opportunity to spot there. I'm glad that you brought up -- I'm kind of glad -- one of the sites you bought kind of dropped in income, and that's something that I'm always kind of concerned about, just from casually looking at some of these sites for sale. They show these earnings but how do I know that they don't have some kind of outside traffic or they're just propping up the numbers in order to get a sale? Could you talk about that a little bit?

Jon Haver: Yeah. I wish I knew more. I fully trust the person that we bought the site from. It's one of these things where the earnings per visit -- the traffic has performed as expected -- it's just been the earnings per visitor has been substantially less than what had been planned. There were some challenges with link tracking at the start but we think we got all that sorted. It's unfortunately but it does seem to happen sometimes. I've so far been unsuccessful at really being able to pinpoint what the heck happened, what was the difference. The clicks seem to be the same, it's just the traffic is converting so much worse. Maybe it was a market shift that I just didn't detect and he was able to detect before he sold and that's why he sold. I wish I knew more right now. It's kind of one of those things. Ideally you don't have losers but if you're going to be investing in anything, some are going to be successes, some are not going to be as big a success.

Robert Plank: A little bit of a gamble. It's almost like you bought a house and then the next day or the next month they built a Walmart down the street and plummeted the value, right?

Jon Haver: Yeah, yeah, exactly.

Robert Plank: Cool. You went and you found the site that had a couple of criteria that you wanted and you bought it for 50K and you went ahead and turned around and sold it for 350K, and then you have this new site that's a little bit more of a fixer upper. What are your plans moving forward as far this whole site flipping thing?

Jon Haver: I'm continuing to be in the market for Amazon Associate sites and continuing to look for opportunities to try and really build, especially now that I've been full time, really build my team to be as world class as possible in both the Amazon Associate sites -- I've got a lot of experience in that space -- and then continue to build up my skillset in the Amazon FBA space. I think that model gives me a lot of flexibility and robustness from potential Amazon slaps, in whatever form that takes, whether it's an associate company shut down or a seller account getting suspended. I think my ability to drive off Amazon traffic is a sort of a strong selling point for this model.

Robert Plank: Do you have any plans for any other ways to monetize aside from associates and FBA?

Jon Haver: Yep. With the traffic there's a few benefits to this strategy, but we're starting to send them through ... I'm still involved in the [OneWeb 00:11:22] business that we sold that still has a ton of traffic, and we're starting to send people through an email capture sequence to get them onto our email before we send them off to Amazon, and in exchange for that they get a small coupon which drives up our conversions once they do get to Amazon, while at the same time we're collecting up to a hundred email opt-ins a day. We're looking to monetize that audience with other offers.

Robert Plank: That's cool. Any retargeting, any social media stuff?

Jon Haver: There's certainly opportunity there, it was just prioritized low on the stuff that I was going after quickly. I think especially now that we're getting a bit more of a funnel set up there's a lot of opportunity to get our retargeting and some other paid traffic opportunities.

Robert Plank: Only so much time in the day, right?

Jon Haver: Yeah, exactly, especially with the kind of potential sale. My ideal of this whole business was pull the build it, sell it, repeat model off, and try and get this ... One of the challenges with an online business is there's such high profit margins in them the challenge is in the ability to reinvest at a predictable and similar rate of return. Pay traffic you can certainly do that, and that's not the world that I've unfortunately played in to some extent. That was the model that I'm trying to find, and with it being a sale I just hadn't pursued those opportunities yet.

Robert Plank: Okay, fair enough. If someone is looking to kind of replicate what it is that you're doing -- I know you mentioned that first site, you lucked into it because you had a contact -- if someone was looking to kind of follow in your footsteps and take a couple of steps to go from locate an undervalued online property and buy it and turn it around and sell it, what do they do? If they look at some kind of marketplace and they see, for example, like a fashion or clothing site, how do you differentiate all these things for sale with what they should grab?

Jon Haver: It's tricky. That's what I've been discovering to be the biggest hurdle of this model is the good websites that fit the model for sale. A great marketplace for sites like this is Empire Flippers. Flippa you got to be able to weed through a lot of crap there. FE International's great as well but usually a bit of a higher price point, so Empire Flippers for kind of a under 20K investment into a site. That's definitely the place I would say. FE International again, really good. As far as does it meet the right criteria, I talk a lot about that on my website where I try and provide exactly, "Here's what I did, here's what I look for, here's what I'm doing now." To kind of help your audience on what you're looking for, it's just a product that you can ... If there's a website that's focused on selling a specific product and that product is available to be sourced on Alibaba, then that's kind of the key.

Robert Plank: Okay. When you do your research do you keep a spreadsheet or do you just look around until something interests you?

Jon Haver: Look around until something interests me and then I definitely have, I'm a bit of a spreadsheet nut and I definitely have a ton of spreadsheets that I fire things into to determine the potential profit of that conversion.

Robert Plank: Eyeball it just to find something that captures the interest and then the spreadsheets for the deeper research.

Jon Haver: Yeah, definitely.

Robert Plank: How do you know when to cut something loose or should you cut something loose as opposed to keeping the profits going, and how did you decide, "Okay, I'm going to price this at $350,000?"

Jon Haver: The 350 was the monthly sales, the net profit plus the sale price. The marketplaces are reasonably well developed for determining what the multiple is. The reason that I decided to sell as quickly as I did -- even though if I had held it for another 6 months I would have been making the money plus increasing my own multiple -- was that I believed the steepest -- if you plotted the rate of return versus time -- with this business strategy that steepest rate of return is in the initial conversion to FBA. The dream scenario is that there's always deals that are coming that I can reinvest the money into and I'm keeping that money on the steepest part of the curve.

Robert Plank: Okay, so you're just rolling full steam ahead then?

Jon Haver: Yeah, that would be the ideal scenario. That was not quite what I view it that way because of the deal flow and sites don't always perform as we expect them to perform but I'm continuing to work through those bugs so that we are continuing to go full steam ahead.

Robert Plank: Awesome. A few years ago I heard about some guy and he kind of did something similar to what you're doing and it just blew me away in the thought process. I think it was some kind of situation where this person, I think he had bought a website that sold a WordPress theme and then he went and hired some employees to fix it up. Then it got to the point where he was trying to sell it for something like $50,000 or some kind of precise number and then people were trying to low ball him and trying to buy it for like 20 grand or 30 grand. He was super annoyed because there was this property that's worth X number of dollars, and even if someone tries to undercut him 10%, 20%, that's like if someone tries to buy your house for 20% below what it's worth. It's kind of like a cool, unexplored area that I really like where instead of starting this whole thing from scratch, and everyone teaches about Amazon or FBA or associates or whatever, "Use this page bill, use this software," and so you're just finding something that's already been built up and making it better.

Jon Haver: We're certainly starting because our biggest bottleneck right now is the deal flow on the front end. I come from building a website passive income portfolio background. We're building sites with intent of once they have enough traction of converting them to the FBA business. We're trying to do both to get those sites on the front end, both building and buying.

Robert Plank: Right, so that way it's all very scientific. As we're winding down this call, could you tell us what you see, like the number one mistake all these website buyers and sellers making?

Jon Haver: It's the same mistake across, whether it's Amazon FBA someone's committing themself to, whether it's building up an affiliate site or investing in a site, a lot of people that move into this space -- and I'm absolutely guilty of this when I started as well -- it's a combination of both moving too slow and not fully committing to being successful at the process. A lot of people, and myself included, it was like, "Oh, this is kind of cool," and kind of half commit to it and then don't really through, don't do everything that's needed to be successful. As a result of that they're not successful and then they say -- and myself included, I'm not throwing stones here -- say, "See, it didn't work. Told you." Versus somebody that really just commits that this is going to be successful no matter what and they set up the processes to be successful. Those are the ones -- whether it's FBA or building an affiliate site or buying websites, they seem to be the ones that make an online business successful.

Robert Plank: It's like that say, "Whether you think you can or you think you can't, you're right." I like that about your message and that kind of comes full circle because you were telling us at the beginning that you were kind of doing this and that and kind of taking your time, but then once your son was born then that really pushed you into action to do everything that needed to be done.

Jon Haver: Yeah, absolutely.

Robert Plank: Cool, I really like everything you have to say. You seem like a smart guy, you have a lot of great advice, I like your message. Could you tell everyone where they could find out more about you and sign up for your list and buy from you and all that good stuff?

Jon Haver: Sure, there's two main places to see me. My main site where I talk about all the different things that I have going on is at AuthorityWebsiteIncome.com, and then the second place is if you're interested in what I just talked about from buying an affiliate site and then building it, converting it into an FBA business. A lot of people were interested in what we were doing, and then I partnered with a guy that I ended up actually buying the site that I just talked about from the case study in, and we now build affiliate sites for four people, and that's at BrandBuilders.io.

Robert Plank: Awesome, so Jon Haver, Amazon FBA, lots of cool stuff. I'm super impressed, so everyone go check out that website right now and thanks for being on the show Jon.

Jon Haver: No problem, thank you. Thanks for having your podcast.[/showhide]

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108: How to Sell a Business the Smart Way with David Barnett

David Barnett, author of "How To Sell My Own Business" talks to us about the process and specific things he does to sell a business, so you can avoid the pitfalls of dealing with an inexperienced broker and also save yourself the typical 10-12 percent commission brokers usually take when you sell your business.

[showhide type="transcript" more_text="Display Transcript" less_text="Hide Transcript"]Robert Plank: Today's guest is David Barnett. He's the author of How to Sell My Own Business, a Guide to Selling Your Own Business Privately and Not Pay a Broker's Commission. David, welcome to the show.

David Barnett: Thanks, Robert, for having me. It's great to be on with you today.

Robert Plank: I'm happy to be talking to you. How to sell your own business, how do you do it?

David Barnett: The book comes about because of my experience as a business broker. I spent 4 years working full time as a business broker helping people sell businesses and acting as an intermediary. I learned a lot along the way. 1 of the things, of course, that I learned is the majority of business owners would like to sell their business 1 day, but don't want to pay the huge fee associated with using a qualified business broker.

When I left that industry, for a couple of reasons, I started thinking about my time as a broker. I realized, "You know what? There's a market and an opportunity to help people do this themselves without using a broker, which is what the majority of business owners want to do anyway."

Robert Plank: That makes a lot of sense. Is it true? Somewhere I've heard some kind of statistic that 95% of the wealth is created by someone selling a business? Is that right?

David Barnett: I'm not sure about that, but I know that over 80% of businesses that change hands do so privately, without the use of a broker. People are out there doing these deals anyway. What I kept coming across, as a broker and then later just working as a consultant helping people buy and sell businesses on their own, is that there's a lot of bad advice out there and a lot of people out there who don't quite know what they're doing. 1 of the things that I used to say to people when I was a broker is, "Hey, I'm an expert. I can help you do this successfully." because it is a complex operation.

In my book, How to Sell My Own Business, I don't tell you everything you need to know to sell your own business. I tell you the process and I tell you what specific things that brokers normally do that the business owner does need professional advice to get done. You can get those things done on a fee-based service.

What most brokers do is they'll say, "Look, I'll sell your business for you and I'll package it up and present it to buyers and I'm going to charge you 10 or 12% of whatever we end up getting for you." You can get those expert tasks done sometimes for a couple thousand dollars each. If you're willing to pay as you go through the process and hire experts like you would hire a lawyer, or an accountant, you can end up at the end of the day pocketing all the proceeds of the sale and just having some expenses along the way as long as you know the process and you know how to get from start to finish.

Robert Plank: Instead of having someone do an all in 1 deal for you, you might have to do a little bit of hands on stuff yourself, a little bit of managing, but that way you just pay a flat fee instead of this percentage of what could be a huge amount of money.

David Barnett: Yeah. When I was a broker, I sold a couple million dollar businesses and had to present people with some commission invoices for, in 1 case, it was $98,000. That's a really big pill to swallow.

Robert Plank: Yeah, times 12%.

David Barnett: Yeah, my bill was $98,000. Why did I have to charge that kind of money when I was dealing with these people? It's quite simple. As a broker, I'm taking on all different listings. Not all of them will sell. All of them require my time. If I'm going to work full time and have 10 or 12 businesses that I'm trying to sell at any given time, over the course of the year, if I only sell 3 of them, I've got to charge those 3 sellers enough money to cover all of my time for my entire portfolio of companies.

Quite literally, what is happening, Robert, is the people who have good, profitable businesses that are what we would call "winners" have to actually subsidize the effort that goes into trying to sell losers.

Robert Plank: It almost sounds like you're being an actor. It's like do all these projects, not get paid, do all these basically auditions, or put in all this work and then 1 or 2 might pay off as a big payday. It sounds like what you prefer is to do things on a fee-based basis. That way you can have more of a predictable income.

David Barnett: From my own point of view, now that I'm no longer a broker, now that I am a fee-based service provider, what it means is that if I work with 6 different clients over the course of a month, at the end of the month, I'm issuing 6 different bills.

Each person is now just paying me for what I do for them. I'm not giving anybody any $100,000 invoices. I'm charging people a couple grand for the different things they might have me do. Let me give you an example. In my book, I explain why pricing is so important and the dangers of over-pricing, or under-pricing your business.

Many people will look at selling their business. They'll say, "Look, I'll put an asking price on it and if I can't get that amount, then eventually I'll come down." The danger with that strategy is that if you overprice a business, you will actually scare away what I call the reasonable buyers, the people that actually have an idea of what your business should be worth. If they see that you're asking double what it's worth, they're just going to assume that you're a nut.

They know that dealing with you is going to be a waste of their time. You're going to scare those people off. The people who actually have money, are financiable, have a good banking relationship, and a good credit score, who are qualified to run your business are going to be scared off. They think that you're unreasonable.

The people who won't be scared off, though, Robert, are the low-ballers, the guys who are going to offer half price on anything. What ends up happening is if you don't price the business right, you chase off those good characters, the people who might actually be legitimate buyers and you're left dealing with those other clowns who are going to try to get the lowest possible price. You don't know if they're going to be qualified at the bank. If you end up financing part of the transaction, you don't know if they're qualified to run the business, it's a bad story all around.

1 of the things that I do, for example, with my clients today is I do the evaluation and show them what their business will sell for based on what other similar businesses have sold for in their industries with the same sales level and cash flow so that they go into it with a realistic understanding of what the business is worth. Then I help them set the price. I also do what's called the packaging, which is to create the buyer facing documents so that they can make a creditable presentation to buyers when they come along.

That's another big mistake that a lot business owners make. They'll start sending out feelers within their network indicating that maybe they're interested in selling their business. They get someone in front of them who wants to buy. Then they're not ready to share their story. They don't have their financials prepared. They don't have a package of information to share.

They make this person wait, and wait, and wait. What ends up happening, like in any sales situation, is if you're not ready to act when the iron is hot, people cool off. That hot prospect then starts to look at other things. You lose their attention. There is a whole process here that people have to be prepared for before they meet that potential buyer.

Robert Plank: I like that and I like how it sounds like the advice you've given, the steps you take people through, it's a blend between you feeling out the company, and making judgement calls here and there. It sounds like a lot of it is backed by the data. It sounds like 1 possibility for someone is, like you said, go to that person that charges 10 or 12%, but that doesn't sound like a very good solution.

It sounds like the second possibility is for someone to try to do that themselves, but then it sounds like from the things you've listed there's all kinds of mine fields and all kinds of mistakes they could make. It sounds like you're the best blend of the 2 where you don't take this huge cut, but then you also do all the things that make sense that's in their best interest.

David Barnett: I'm obviously trying to position myself to be attractive to what I know is a big market, because I've got customers ever day. For some people, it's not for them. My book, though, is still for them. If you think, "This is a complex process. I think I'd like to hire a broker anyway." the first half of the book actually talks about why you would want to use a broker and how to identify a good one versus the people who are pretending to be business brokers.

There are a lot of intermediary types out there who will tell you that they can sell your business, but they don't actually know what they're doing. In my opinion, that's the worst possible place that you can end up being. I use all kinds of examples in my book of people that I've run across over my years in the business who thought that they were represented by a business broker who were actually dealing with someone that had no idea what they were doing.

There's an example in my book about a restaurant owner. The restaurant owner decided he wanted to sell. He hired a real estate agent to sell his restaurant. The real estate agent found 1 buyer after another. Nobody could seem to qualify for financing. The agent actually called me and asked me if I would help him send his buyers to the right place to get financing to buy this restaurant.

What I said to this agent was I said, "Look, you're asking me to give you my magic jelly beans basically. This is how I make my living." I said, "Mr. Real Estate Agent, why don't you send me your client and I'll do the deal and when the deal is done, I'll give you a referral fee." He absolutely refused. He said, "No, it's my deal, mine, mine, mine, mine. I want all my commission." I said, "Great. You go figure it out."

Here's the problem, Robert. Restaurants are a highly risky business category. Restaurants actually can't get financed anywhere. In almost every situation I've ever heard of if there's a restaurant that is a good, profitable business that has any amount of what we would call good will, there will be a certain amount of vendor financing involved.

A buyer will come along and they'll make a down payment and maybe they can borrow at the bank if there's some equipment there, or a building, or something like that. They'll never, ever be able to put the whole price together. The seller will always be required to do what we call "holding paper", or do some vendor financing.

Let's say that restaurant sold for a quarter of a million dollars. Maybe the buyer is able to put together half that money for closing day. The seller will receive payments maybe over 5, or 7 years. The problem with this situation is that neither the seller, nor the real estate agent knew that. They had probably met 3, or 4 perfectly reasonable, good, qualified buyers and they were ruining the deals for themselves because they didn't know what they were doing.

That's the kind of example that I point out when I say that, "If a business seller goes to the wrong kind of intermediary, it's the worst possible case. They'll actually end up saying, "No" to reasonable deals.

Robert Plank: It sounds like in cases like that where they might just take a deal out of desperation, or might be just that the process has been dragged on for so long, they'll just take anything it sounds like.

David Barnett: What usually ends up happening is this. Sellers reach a certain point of motivation where they decide they want to sell their business. Once that decision has been made, there's a clock that starts to run. The seller, now, they've made the decision, "I want to sell. I want it to be gone." The enthusiasm and the energy that used to be there to go into the business starts to wane.

When it starts to wane, the little things stop getting done. The polish comes off the business. You know what I'm saying? Eventually sales start to decline. With that, profitability starts to decline. If you don't sell the business quickly enough, the good will can start to erode. What happened in this particular case is something I've seen too many times. The owners actually closed the restaurant and ended up just trying to sell the building. They actually pulled the plug on all the value they had created over 20 years.

Any good will that existed in that business is now gone. The business no longer functions. Now they've got something that someone can finance, which is just simply a building. They're going to end up with less money in their pocket. It was because they hired the wrong kind of person.

Like I said, the first half of my book, I talk about how you identify a qualified business broker, what they should charge, what the fee structure should look like, the types of questions they should ask, how they should be coming about determining an asking price for your business. I've had a lot of feedback from people who said, "You know, I thought about doing it myself. I read your book and I realize I did want to use a broker and thanks to what I read in the book, I realized a couple people I met with probably would have been very dangerous for me to do business with."

Robert Plank: That's awesome. Yeah, it sounds to me like it's the kind of situation where it's like you take your car in to a mechanic. You don't have to know every little detail about your car, but maybe you should know a handful of things. That way you don't get ripped off.

David Barnett: Yeah. The most important thing you need to know is can I trust the mechanic.

Robert Plank: Yeah, and are they just totally screwing up, or do they know what they're talking about?

David Barnett: Yeah, yeah, exactly.

Robert Plank: Cool. You listed a couple of things so far. Can we unpack a couple of mistakes you see? We could go at both ends of it. What are the mistakes you see people trying to sell their business making and the mistakes that maybe some of these brokers are making?

David Barnett: People who are trying to sell their business, the number 1 mistake that I see them making is that they don't actually understand what it is that they're selling. That may sound silly at first. Let me give you an example. Let's say you have a dry cleaning business. You operate out of a building that you own. You're not actually talking about a business anymore. You're talking about a 2 businesses. You're talking about a dry cleaning business and you're talking about a commercial real estate business.

Just because your business happens to be the tenant of your commercial real estate business, doesn't discount the fact that there's 2 different businesses.

What'll happen is people will say, "Well, I own a dry cleaning business and I want to sell it to someone." If they insist on keeping the real estate combined with that, what ends up happening is now you need a buyer with deeper pockets who not only can make a down payment on the dry cleaning business, but can also make a down payment on the commercial property. The more money a buyer needs to have, the fewer potential buyers there are.

You can imagine, Robert, that out there in the world of people trying to buy a business there are obviously a lot more people with 50 grand in the bank than there are with 200,000 in the bank. If we separate those 2 things. This is 1 of the exercises I used to do with my sellers. I would say, "Look, let's look at offering the dry cleaning business for sale and you offer the building as an option to them. You say you can buy the dry cleaning business and you can buy the building if you want, but if you don't want to, I'll lease it to you on a 10 year contract with a lease."

Now what we've done is we've made the business to be bought much smaller and more affordable. Now there are more potential buyers, which means we can sell it more quickly. Once we get that dry cleaning business sold and we have the lease in place, we can now sell the piece of property to anyone who wants to collect rent. It's a completely different market, Robert, to people who want to buy commercial property.

What happens a lot of the time is that the seller will realize, "Hey, it takes a lot less energy to be a landlord than it does to run a dry cleaning business, so maybe I'll just keep the building for a few more years and create a passive income for myself collecting rent." What happens in a lot of cases is these buyers, after they've run the dry cleaning business for a couple years on their own, and they've got their own financial statements prepared for the time that they've owned the business, they can now go to the banker and qualify for a mortgage to buy the building.

Robert Plank: That's pretty cool. Yeah, that a good strategy.

David Barnett: Yeah. That's what I mean when I say that sellers don't know what they have to sell. The dry cleaner is in the business of understanding the dry cleaning business. He's not in the business of understanding how to sell businesses. A lot of these opportunities get missed because people will go out and do it on their own without any advice at all. They'll think that they need to sell everything as 1 package when in fact they don't.

I've actually helped people divide up businesses that were mixed together. I had a client who had an excavating business, but he was also doing recovery and towing at the same time. He was able to maintain all of the equipment in the same garage that he had on his property. He was out in the country. It made sense for him to have these 2 lines of work. It was 2 different groups of clients. When it came time to selling, there were very few people who were looking for an excavating and recovery business.

We split that business in 2. We sold the recovery business to another operator who had their own operation about 30 miles away. They were trying to grow geographically. It made good sense for them to buy that. Once he was left with purely an excavating business, he was able to find someone who wanted to get into that industry. Yeah, those are some of the common things.

On my web site, there's a free download called 12 things to do before you consider selling your business where I cover the top 12 areas that I've always seen people make mistakes.

Robert Plank: Great. Where can people get that?

David Barnett: It's easy to remember. It's HowToSellMyOwnBusiness.com which is the name of the book, How to Sell My Own Business." If someone wants to buy a PDF copy of the book for immediate download, they can get it at that web site, HowToSellMyOwnBusiness.com. You can also buy the book on Amazon, either as a paperback, or for Kindle.

Robert Plank: That's all great stuff. What I really like about the things that you've unpacked here today, David, is that there seems to be a lot of really cool strategies that have come about just from your years of experience and just from seeing all the different case studies. What I like the best was that last little strategy about cutting up the business and selling the parts like what Mit Romney did where you don't have to get all the way out. Selling a business might just be you sell part of the business off now and then get back in in a different way later or completely get out years from now.

I really like everything that you had to say. I really like where you have your book. Just to remind the listeners 1 more time what's that URL just to make sure everyone has it?

David Barnett: Sure. HowToSellMyOwnBusiness.com.

Robert Plank: Awesome. Everyone should go there and get that free report and check out the blog and get your book. They should just check out everything you have to offer.

David Barnett: Yeah. People who are interested either in buying or selling businesses, if you go to that web site, you'll also see a link to my You Tube channel. There's about 200 videos now. Almost all of them are about either buying and selling small businesses, or local investing.

I've got a few other books out too, Robert, that I had mentioned to you before on local investing and on franchise issues. Anything to do with buying, selling, financing, planning business is my area of expertise.

Robert Plank: Cool. It sounds like a topic, an area where a lot of people, it seems like they think they know, or they think they can figure it out themselves, but I like all of the little bits and pieces and all the strategy where you've taken something complicated and made it simple and distilled it for the rest of us. Thanks a bunch, David, for being on the show. I really appreciate the advice you have to share.

David Barnett: Thanks, Robert, for having me on. It's been a whole lot of fun.

Robert Plank: Same here.[/showhide]

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