The Real Value of a Brand! Earn Monthly Income or Sell for a Lump Sum!

7

brand checkToday I am so excited to have in my hand the “down payment”  of the earnings I will received from selling off one of the brands/businesses that I’ve started and developed!

Today I want to look at what went into creating the brand, the sales history, the benefit I’ve received from it, why I’m selling it, and the total sum I will receive once the sale is complete!  We’ll also talk about how you can potentially do the same!

Before I begin, I want to be clear that this is a completely new experience for me.  By no means is this a “how to sell your business” post.  I’m simply sharing my own experience.  Selling a highly valued business is likely much more involved than what I cover in this post, but this has certainly opened my eyes to some new possibilities!  I’ll talk more about that toward the end.  For now, let’s look at exactly why and how this all came about.

WHY I STARTED THIS BRAND:

This was one of my private label endeavors based on a lot of research of trending products.  I was able to find a U.S. supplier (big plus!) at a great price.  There seemed to be a lot of room for profit and the sales ranks of the top competing products were amazing!

This seemed like a winner right off the bat, so I went ahead and had logos and packaging designed, placed my first order and away I went!  With all of this said, there were several factors I overlooked, unfortunately, which prevented this brand from taking off as I’d hoped.

MISTAKES AND REGRETS:

If you’ve read my whole story, you’ll know that the first time I ever private labeled a product, it was essentially by accident.  At the time, I had already found a hot-selling, low competition generic product and decided to put a “brand name” due to the competition finally “catching up” to me!  This was a great strategy, but in the end, it was still a bit of luck!  I had a lot of success expanding on that existing brand (adding new products, building a website and a list etc), but I ultimately wanted to see if I could repeat the process- to start another brand from scratch, but this time- on purpose!  The brand I’m discussing today was my first attempt at this.  It turned out this ended up being my “learning brand” where I tried a lot of things and failed many times.  With this said, through many failures, I also learned a lot of what works (which transferred into the next brand I started which was incredibly successful!)

Let’s talk about a bit of what I learned and why I ended up deciding to sell the brand rather than ramp it up to make potentially good income off of it (which the next guy will likely do!)

BELIEVE IN YOUR PRODUCT

When I first started looking into internet marketing, I took a lot of courses that were great and I would still recommend, but some of them focused on something I have a difficult time with- promoting a popular product rather than a product you actually believe in!  For new sellers, the question comes up again and again “should I sell something I’m interested in?”  I believe the answer is yes and no.  If the product you’re interested in does not have demand or profit potential, then no, you should not pursue it.  You will end up pursuing a hobby, not a business.  If the product does have demand and profit potential, then take a look at the competition, keywords, competing brands, similar products (to potentially build a product line) etc.  If this all “checks out”, then sure!  Sell something you love  (just be aware that you may not “love” it as much after it becomes your “job.”)

On the other hand, if you promote or sell a product based on popularity alone, but you know nothing about the product or have no personal interest in the product, this can be a recipe for disaster as well!

I personally have learned to target products that fall somewhere in between “personal love” and “would never use it.”  I do sell some products that I actually love.  For the most part, however, I now target products that I don’t personally use currently, but that I’m interested in and want to learn more about and would consider using or know someone who would!- Products that I can get behind and actually feel great about selling!  The fact is, if you’ve got a great product, customers are going to get excited about it!  You’ll want to be able to share their excitement with them (genuinely.)  This was the main problem with the brand in question.  I stopped believing in the products and lost interest!

The problem was not even that this was a bad product line, but it was in a micro niche that I became less and less comfortable with the more I learned about the industry.  Note this was all based on my personal values only.  There is nothing innately wrong with the product line, I just realized that I was not able to personally stand behind the products any longer.  I also realized someone else likely could stand behind the products and could potentially do very well in this industry!  This was when I began as much research as possible regarding selling “the business!”

HOW MUCH IS A BUSINESS WORTH?

There are so many factors that come into play when selling a business that the perceived value can vary wildly!  The most common and basic opinion I’ve heard, however, is that a business is simply worth whatever it made in the past year in revenue.  This brand made me around $10,000 in the past 365 days in revenue (not profit) so I started there.  In addition, I had inventory that was worth just under $8,000 (at my cost).  Now, the potential profit (plus cost) of that inventory is over $40,000 if sold at retail price.  At the price I was currently asking per item, however, the total would be just over $20,000.  This looks great on paper… it looks like the business is worth between $30,000 and $50,000, except for a small detail- at this point, the inventory was barely selling!  Not only that, but much of it has been sitting for close to a year or more!  I was eager to get rid of this inventory.  If I didn’t, I would either:

A. Be hit with massive “long term storage fees” or

B. Need to remove over 1,500 items and probably sell them off in lots for pennies on the dollar on Ebay!

As you can see, I was quite a “motivated seller.”  The fact was, unless I did some serious promotion and advertising (which I did not plan to), the inventory would have likely just sat, made a few dollars here and there and eventually lost it’s value completely meaning I would have suffered a big loss!  With all of this in mind, I used $10,000 as a starting point for selling this brand!  Let’s talk about the options that I tried before ultimately getting a “bite” and selling it off!

1. Hire a business broker.  After searching the internet regarding how to sell a business, I came across several business brokers- many of whom deal with online businesses.  It wasn’t long before I found that this simply was not a viable option for my business.  I was told they like to see businesses that are making a minimum of $50,000 per year before they even consider it!  This option was out for this particular brand.  I was recommended (by one broker) to check out flippa.com.

2. Sell on Flippa.com.  I was aware of flippa and you probably are too.  If not, this is the world’s largest marketplace for selling websites and e-businesses.  The challenge for me was, my business was based almost entirely on Amazon/FBA and involves physical products.  There is likely a market for this somewhere, but those who browse Flippa are not generally looking for an FBA/physical product business- they are looking for an income generating website.  I put my listing up anyway and got almost no interest whatsoever.  On to my last stop…

3. Sell on Ebay.  Yup!  Who knew Ebay had a whole section of businesses for sale?!  I really did not think I had much hope going this route.  I looked at the completed listings of businesses for sale.  Not only did this type of “business” not exist on Ebay, but the businesses that were listed rarely sold- with the exception of some “website in a box” business which sold for between $9.99 and $20.00.  I didn’t think I would make it happen on Ebay… and ultimately, I didn’t, but Ebay did open the door for me!

On Ebay, I started the bid even lower than before (less than $9,000) and I got exactly zero bids.  I was preparing myself to suffer a big loss on my inventory and shut down the brand that I had worked fairly hard to build up!

Just about this time, I was contacted by someone who found the listing through Ebay.  Since there was a website associated with the brand, he simply contacted me through the website.  From there, we began negotiations directly!

Numerous questions were asked as he did his due diligence.  This included questions about the age of the business, the ownership, the brand, annual sales, cost of products etc- basically all of the questions you would want to ask before dropping a major chunk of change on a business.  I ultimately added him as a user to my seller central account and gave him access to everything pertaining to that brand.  This allowed him to see everything in detail including all sales reports, product history- everything right down to the number of hits on the pages (yes, Amazon does give you this information if you have a professional selling account!)

Ultimately, he made me an offer of $9500.  I thought it over through the weekend.  Yes, this was a fairly low amount considering I could sell the inventory alone at my cost for around $7,800, but the fact was, it wasn’t selling and I did not have a lot of hope of selling this inventory in bulk anywhere (particularly after no bites on Ebay for the entire business!)  Considering I started the Ebay auction for under $9,000, I thought I’d better take it… but then, I realized something I have that would add some extra value!

ADDING VALUE:

I ultimately gave him this option:

A. He could take the business “as is” for his asking price.  He would be given the inventory, brand ownership, the website, and all contacts (graphic designer, supplier etc) and I would leave him to do with it as he wished

or

B. He could have everything above plus I would walk him through the Amazon FBA process (he had never sold on Amazon before), I would provide him with my promotion strategies and essentially help him build this business up!  I offered 30 days of this- for an additional $2500.

He chose B.  By using my knowledge of selling on Amazon, I was able to take the price up from $9,500 to $12,000!  Could I have gotten more?  Maybe, maybe not, but the fact is, if we had not come to an agreement, I had no other buyers on the line and likely would have liquidated the inventory! Now, instead, I have a down payment of $8,500 in my hand and the rest will be delivered after our 30 days of training (beginning when he receives all of the inventory)

GOING FORWARD:

My hope is that this new owner is able to gives this brand the time and attention it deserves and causes it to thrive and make some serious money (which is very possible with enough effort!)  I personally couldn’t be happier to free up some money to focus on other endeavors and be finished with a brand that I was quickly losing interest in!  I’m excited about moving forward and trying some new ideas and new products!

TAKE AWAY:

This experience has helped me to see the benefit of building a real business as opposed to just “selling on Amazon.”  A “real business” can be sold off while simply “selling products on Amazon” cannot (Amazon does not allow users to sell their Amazon accounts). This is not to say the other areas of business I focus on are not valuable (arbitrage, wholesale, media etc) but rather that all of these areas have some serious potential off Amazon (as well as continuing sales on Amazon)! Going forward into the future, I plan to put a lot of effort into building my business into something that can one day be sold off.  Building multiple brands seems like a great start since I can easily continue what I’m doing while selling off portions of the business here and there (and then starting more!)

All in all, though the course of it’s life, this brand made me over $27,000 – from initially starting and selling the products (over $5000) to the most recent year of sales (around $10,000) to ultimately selling it off ($12,000).  If I started over, I would have done many things differently, but even with so many mistakes, it ended up being a fairly profitable learning experience!

If you have started your own brand(s) or are thinking of doing so, it is a good idea to consider on the front end, the possibility of selling somewhere down the line.  This can be a great income making strategy.  I will definitely keep you all updated on future developments I make in this area as well!

On an unrelated note, my family and I will be traveling out of state to visit with my wife’s family starting tomorrow (November 26th) and we’ll be back on Monday, December 1st.  This will be a great opportunity to see just how “passive” my income really is!  With that said, I will likely check email once or maybe twice a day, but my focus will be on spending time with my immediate and extended family.  If you write and don’t hear back right away, don’t worry, I’ll get back with you sometimes next week!  I hope you all enjoy the holidays as well!

As always, thanks so much for reading!  If you want to learn more, please sign up below!  Currently I am giving away my ebook absolutely free which covers all the basic strategies of what I do and you can too!  Thanks again for your support!

 

7 thoughts on “The Real Value of a Brand! Earn Monthly Income or Sell for a Lump Sum!

  1. Thank you for sharing your knowledge. It is nice to read about your success and how you have learned so much and willing to pass that knowledge on.

    1. HI Zacharie,
      I’ve had success with several product types- a lot that I’ve picked up in arbitrage sourcing. This helps test markets in a low-risk way! Pet supplies tend to be really popular and sell fast. If I can manage to find health and beauty items for a good price (cosmetics, make up, hair dye etc) this can be really great. The best part about these is they are discontinued constantly and people become loyal to “their product.” Once it’s discontinued, if you can buy up a bunch of it, you can make some serious money because the demand far outweighs the supply. There are Amazon sellers that make a whole living from this model. I also sell lots of toys and games- particularly this time of year! Hope this helps!

  2. hey Daniel,
    Thanks so much for taking time to share this; it adds up to your continued valuable posts; as Dave mentioned above we are all waiting for your upcoming ebook.

    Have a happy thanks giving day all of you!

  3. Thank you for this great information.

    Enjoy the well deserved time off with your family and…

    Happy Thanksgiving!!

  4. Hey Daniel -

    Congrats on your recent sale, and thanks for taking some time to document your experience here.

    Enjoy your time away and happy Thanksgiving… we are all looking forward to your upcoming revamped ebook! :)

    - Dave

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