Ray Preston 0:00
What we do is we help entrepreneurs exit every single day. And so that experience and that gamble led me to this really amazing opportunity and company that is totally different. And here I am two and a half years later leading a fantastic team of advisors, M&A-certified advisors, which is who would ever thought I’d say that in a sentence.
Anne Bibb 0:13
Welcome to Unexpected Journey, the show where each week top professionals share work wisdom and life lessons about their careers and what they have learned about human experience in the workplace. I’m your host and bed as the VP of Sales at Flippa.com. Ray leads an extraordinary team of M&A professionals with a singular goal in mind: to match high quality business owners with acquisition fit buyers. Ray is passionate about helping buyers find their dream digital asset and helping sellers find a successful pathway to exit. Stay tuned to find out more of his sales journey and the Flippa company.
Before we begin, don’t forget to subscribe and leave your comments below. Now let’s get started. And here we are with Ray from Flippa. And Ray and I have known each other for just a couple of minutes and I have been wanting to sit down with you for so long to catch not just catch up but to really kind of talk we’ve never really sat down and talked about how you got here. I mean, you’ve given me a few nuggets but not really kind of gone into the story. Yeah,
Ray Preston 1:38
it’s a story it’s a wild It’s a wild and unexpected journey for sure.
Anne Bibb 1:42
It really is and you know you’ve given me some hints you give me some topics but all I’ve really known you as is like Ray the God of Sales you know, Ray the guy that I always want to say send my salespeople to to learn from but when I really want to know is how did you become that guy?
Ray Preston 2:05
Was it intended? Yeah, no, no mo and most folks in in sales or sales leadership for that matter will probably tell you they they had zero intention of of getting into into sales.
Anne Bibb 2:17
So you know, you might you mean in kindergarten you didn’t like start selling people cookies and stuff like things from your lunchbox.
Ray Preston 2:24
Ya know? No, no, never never did that. Never did that. I was too busy. I was too busy on the baseball field there on the board.
Anne Bibb 2:33
I can see that with you.
Ray Preston 2:34
I never I was never the was never the guy that was knocking on doors. Asking people at 10 years old to mow their lawns I know those people those are those are some some great folks but that wasn’t me.
Anne Bibb 2:47
Not me at all. So so how did you how did you how did it start? Like how did you maneuver your windy road into the where you are today? Yeah,
Ray Preston 2:54
so it like anything it was an accident. My my my first sales job I didn’t even know was a sales job. And that’s a good story. I graduated from college with a with a Bachelor’s Degree in Aeronautical Science. So I went to school to be a pilot.
Anne Bibb 3:17
Okay, that’s one thing you’ve never told me and I literally would have never guessed that.
Ray Preston 3:21
I went to school to be a pilot I went to they call it the Harvard of the skies. It’s a school called Embry Riddle Aeronautical University and 50% of the airline pilots in the United States are have graduated from from that from that college from that university. So it’s a big, big, big feeder for the airlines. And so I always wanted to go in the Air Force as a kid. I did did ROTC and Junior ROTC so I did Junior ROTC. And then my first week in school, I did ROTC and was like, nope, someone yelling at me and doing that is not for me, I do not want to be in the Air Force anymore, not me. And so, so I shifted to Okay, I’ll be an airline pilot. So my first couple of years i i went through through my my bachelor’s degree as intended, you know, your typical undergrad classes that you would take as well as like, engineering courses and aviation courses included in that I got my private pilot’s license, got my multi engine license, got my got my commercial license, and then my third year, you have to continue to get physicals every year and the physicals tend to be a little a little. They’re more than your typical medical, physical and aviation physical right. And yeah, I found out I was colorblind, just right on the edge right on the edge of being colorblind. So I had passed some tests before. But But I didn’t pass this time and went into further testing and I was no longer able to go and be an airline pilot. But because of that. So So my original degree path was aeronautics, which is to go be a pilot, and I had to switch to Aeronautical Science, which is for all the people that can’t be a pilot anymore. And that was me. So I graduated kind of in the heat of the recession, 2000 2008 2009, there were no jobs. I had a degree that meant nothing to most places, I could have gotten an underwater basket weaving degree, and that might have done more for me. And so, like most young college graduates, I went and moved back home with mom and dad.
And had had $100,000 plus a piece of paper that I couldn’t do anything with.
Anne Bibb 5:47
There seems to be a theme around that in in the world right now. And or at least at least here, right? So but you found your way.
Ray Preston 5:58
Yeah. So what what happened was my, my mom was, at the time an adjunct professor at the University of Phoenix, which is an online, online school, where you can get degrees and such and she got me an interview. As for a role, I’m trying to remember the name of the role may look at it can never remember, the role was Admissions Advisor, or admissions director, something like that. So that was my first sales job. But I didn’t know as a sales job. Why was the sales job is because I was talking to to kids, and convincing them to go to college, convincing them to take out loans, convincing them to follow their dreams and their passions. And And yeah, that was the first stint in sales without knowing it was sales. And in that role, I did that for two, two and a half years. And by the end of year one, I was I was, like, the top advisor in the region. By the end of year two, I was like, top 10 in the country, and was like, this is cool. What’s next, but it wasn’t as it wasn’t a commission based role. So it was just salary. And that salary was like, back in the back in the day. It was like $18,000 a year I thought it was well, I thought I was rich. Oh
Anne Bibb 7:26
my gosh, we’re so dating ourselves with that. We offer that right now as a salary. And
Ray Preston 7:36
my first paycheck was like 500 bucks. I was like, Yeah, Rich. When
Anne Bibb 7:41
I tell people that my first job was at McDonald’s at minimum wage, and they’re like, oh, $7 and something. I’m like, No. Like, was like three something. Yeah.
Ray Preston 7:53
So what led sold again, I didn’t know it was a sales job. And I was I was doing really well at this at this role. And I ran in as one does. I ran into some friends at a bar in Phoenix, and they they were buying all the expensive drinks and things that I couldn’t afford. And I was like, What are you guys doing? You guys were idiots in high school. And they told me they were in sales. And I was like, what is that? And, you know, they they gave me the gist of what it is that they were doing. And I was like, that’s, that’s really that’s really interesting. You telling me I can make money for talking to people and selling them a product? That’s cool, etc? And they’re like, yeah. Like, where do I sign up? And that’s what got me that’s what got me in and my first proper sales gig. Outside of the education space, where that I was in for a long time, was at a company, a little known company called yp.com, which I’ll date myself again. It wasn’t called YP. When I worked for them. It was called the yellow pages I was about
Anne Bibb 9:01
to ask. I was like, Oh my gosh, are you talking about the Yellow Pages
Ray Preston 9:06
talking about the yellow pages? So so when I started working there, they had just rebranded themselves to yp.com. So my first sales gig was selling advertisements selling advertising space for the Yellow Pages.
Anne Bibb 9:22
Ray Preston 9:26
And so, you know, kind of learning the ropes there. I wasn’t there very long. I learned the ropes a little bit. And then I got into a company that I that I really loved and still use to this day, which is a company called ZocDoc. They are a they are a mobile phone app where you can book doctor’s appointments, dentist appointments, I you know, all the above. And that’s where I got my first kind of taste of do I want to continue to go down the path of individual contributor or is there a halfway for me too, to be a leader, and I was really clamoring for, you know, I think these managers are not so great. Can I do better? I think a lot of folks think that, but but at the end of the day being and being a manager and being a leader is really, really difficult. And I have respect for all those folks that that do it because everyone thinks they can do it better. But when you get into it, it takes some work.
Anne Bibb 10:27
I think that’s really interesting that you identified that, because you identified that at this point in your career, where you’re starting to really take off and figure out this is, this is what you’re good at, you’re good at sales. And then along that way you identify, not only am I good at it, I could be better with proper leadership and management, identifying that there are two separate things. And I could help others do that. Yeah. So kind of leaning a little bit more into that. During the pandemic, which it’s so weird to think that that started almost four years ago. Yeah, that’s wild. Like that’s wild to me. Yeah. But so many people were talking about how people were struggling during the pandemic, and it wasn’t, you’ll hear a lot of people that have been working remotely saying, it’s not the producers, it’s not the contributors, people don’t know how to manage and lead remotely, you have done that, you have tried to figure that out in a lot of different areas. So seeing that you’ve identity, you identified that very early in your career, I’m curious as to your thought, on how that contributed to people during the pandemic, that as a, as a global entity of the world, right? People just didn’t know how to manage and lead. Yeah, you had identified that as an individual in your own. You know,
Ray Preston 12:06
I think there’s, there’s a, there’s a few things and, you know, I had to learn this the hard way, as most people do. You, when you get into trying to manage a team, you at least at least at that point, I wanted them to, to be molded and shaped exactly like me. I wanted them to, to work as hard as I did, I wanted them to know all the answers just like I did, I expected them to, to put in the same amount of time and work and effort. And I’ll tell I tell people all the time. And it’s kind of an old adage that, you know, Hard work beats talent when talent doesn’t work hard, right. And I, I would actually say, I’m not the most talented person, I just work really hard. And I, I expected that from other folks. But you can’t you can’t make people work the way that you work or act the way that you want them to act, you have to find their their strengths, understand their strengths, understand their weaknesses, and give them give them the ability to leverage those strengths in the way that’s best for them. And so that was a hard lesson to learn early on. And still something that, you know, I struggle with, because, you know, some days I’ll put in some weeks, I’ll put in a 6070 hour week. And that’s just the way that I work. That’s not the way that everybody else works. And that’s not the way that everybody else is effective.
Anne Bibb 13:39
I love that. And, you know, we’ll definitely be highlighting that, you know, that quote and that belief, because I think it’s really a hard point for some managers too. And I really think I’m gonna differentiate this because I think it’s a harder point for managers to identify and get a hold of versus leaders to identify and get a hold of, to be both at one time is hard. Yeah, you’ve you’ve really been successful at that. But it’s a hard thing to be able to do both. And for managers to really identify that people aren’t. First of all, you can’t clone yourself. No, you can’t turn or be like, can you imagine more raising hands in the world? That could go either way. But it’s like, how boring of a place would it be if there was only one type of person? Oh, yeah. And the lack of innovation that would happen because there wouldn’t be debates or anything like we’ve just wouldn’t move forward without different personalities and individuals. And for a manager to get that and grasp that that you know what this individual isn’t performing with the scope and the definitions that we’ve put in front of them. instead of just saying, Oh, you’re out, but yet to identify, well, maybe they are understanding it in this way. Or maybe they need to work a little bit differently. And then they’ll become a top performer. That’s a hard thing to grasp. Yeah, instead of just tossing them out, but yet to change how we teach and how we allow them to work. Yeah.
Ray Preston 15:20
And it’s, it’s, it’s a, it’s a, it’s always something that you have to keep in the back of your head. Because it’s easy to fall back into, well, why won’t everyone just do it? The way that I do it? And that’s not the right answer.
Anne Bibb 15:36
So you’ve, you’ve kind of made this, you’ve gone and you’ve taken this windy road, from selling people into getting into college and Yellow Pages, and, you know, all of these things outbound engine into BPO. And now you’re at Flippa. Yeah. And what is, you know, where’s it going for you? Like, where do you see your future? Growth?
Ray Preston 16:04
Yeah, that’s, that’s a great question. And my answer, depending, depending on the time of day, or
Anne Bibb 16:13
part of the time, end of the quarter beginning of the quarter.
Ray Preston 16:17
My answer my answer to that is a little bit fluid. But, you know, at Flippa, as the as the VP of Sales here at Flippa. It’s, it’s a really, really interesting, it’s a really, really interesting marketplace to work at, and totally different from from what I’ve done in the past as as, as you’ve alluded to, I’ve, I’ve done, I’ve been in education, sales, I’ve been in tech sales, I’ve been in BPO, sales, all wildly different. And here I am. At a marketplace where people can buy and sell businesses. It’s not it’s not like a traditional sale, it’s not a lot of SaaS product or a service where I’m training a team of folks to collect credit cards, right? It’s, it is, it’s a different, it’s a different skill set, and a different team that’s being built, but what what the reason why I’m here, and what I’m doing is I, I can grow and scale teams, and coach and mentor and teach and train. And, you know, we’ve been doing this here at flip at least I have for the last two and a half years. And it’s it’s it’s been one heck of a one heck of an experience. And the next step for me, is, you know, what is what is the potential was a potential exit look like for Flippa? You know, what is the what is the growth look like here, and then, you know, my skill set as it’s evolved over time is around growing and building and scaling teams. So I’d love to do it again. You know, go to somewhere that’s generally small, that doesn’t have that, that leadership or that experience, and build it from, you know, them having one or two folks doing it and coming in and building it to 50 or 100 people or something like that. I love doing that. Love that. So
Anne Bibb 18:05
that that actually brings up an interesting question. I’ve known hundreds of salespeople through my career. And most of the time, not all of the time, but most of the time, they stay in a very specific lane of sales. You know, they this is what they sell, and they’re very good at it. They might might have from one company to another, but it’s always the same type of item or service that they’re selling. Yep, you have gone from multiple different thing and are constantly learning. You know, I have anybody else is picking up on this. Like Ray is always learning he went in, it started with kind of the, like University of Phoenix, and now we’re going back and he loves to teach people and he loves to learn new things. Like there’s a constant education field behind you. But you’re you always when you go to a new company, it seems like it has to be something different. I don’t want to do what I’ve always done before. Yeah, is there is that on purpose? Or does it just happen?
Ray Preston 19:12
Yeah, you know, it’s it’s, I wouldn’t say it’s on purpose. I’m not always looking for for something different. I’m not but the so so the step from the step from the education path to to tech sales, right. Was was was, you know, that’s a pretty standard jump, like it made kind of made sense. Right. So nothing too wild there. But the step from tech sales and to BPO. That’s, that’s totally different. Right? That’s a very, very different piece. The reason I did that is an outbound engine. It was a it was a startup, but it was a big startup. It was it was four or 500 people and I was I was a little fish in a big pond. You It was while I was while I was in a in a managerial type position, there wasn’t a whole lot of upward growth or upward momentum for me I was stuck, I’d be in that role for who knows when, right? Too much politics going around too much of that, that you got to deal with with companies of that size. And who knows, I might still be there and be still be in the same role. I have friends that are still there from four or five years ago that are that are doing the same thing. I’ve
Anne Bibb 20:26
had a lot of your, your former mentees that are amazing that I’ve worked with and would love to work with again, because you did a great job with
Ray Preston 20:35
them. And so what so what I did was I had a I had a friend who left that company outbound engine and went to this BPO, this BPO company, and he said, Hey, you got to come here. They don’t, they haven’t figured out how to sell this thing yet. And you would you would be you’d be the best mute on it. And I go, man, I’m making pretty good money. I’m liking what I’m doing. You know, I’m comfortable, I’m comfortable. And you know, I just got that itch to go. Okay, let me walk into this new thing. I think I was employee number seven. You know, there was one other sale hire that I joined. And very quickly figured out you know, how to sell how to sell the a great product and a great service. And grew that and took on the mantle of head of sales and, and that that drove my taking a step back from getting out of my comfort zone and going into the unknown. I remember walking into that apartment, that one bedroom apartment, which is where we worked out of walking into that one bedroom apartment going Oh, shoot. What did I do? I do. What did I do? I just left this beautiful, this beautiful office on the 15th floor in downtown Austin that overlooks the river free lunches every day a good paycheck. Good commission, really happy where I’m at what the heck did I do and
Anne Bibb 22:02
but what a gamble that turned out to be.
Ray Preston 22:04
And it was it was absolutely a gamble. It was it was absolutely a gamble. And it’s one that I’m thankful that I took and was supported by by my family and, and friends to take to take the leap and it paid off. It paid off that experience at the BPO of growing and building and scaling that team and experiencing an exit led me to Flippa, which is the world’s largest marketplace to buy and sell businesses. And what we do is we help entrepreneurs exit every single day. And so that experience and that gamble led me to this really amazing opportunity and company that is totally different. And here I am two and a half years later, leading a fantastic team of advisors, m&a, certified m&a advisors, which is who would ever thought I’d say that in a sentence.
Anne Bibb 22:57
That’s even whenever you first started there, I remember having this conversation and never saw your team becoming what you’ve built it to be today, it’s pretty amazing to see what you’ve built and so impressive.
Ray Preston 23:12
Well, thank thank you. It’s it’s, it’s it’s less about me and more about more about them. It’s finding the right folks that are just as hungry and want to win. And that’s, that’s that’s about putting together the right team and finding that team that wants to win just as much as you do.
Anne Bibb 23:27
Absolutely. And I do want to talk a little bit more about Flippa specifically, because I have a lot of questions about what you’ve done there. But before we do love to play a little game of this or that and have everybody get to know Ray, just a little bit more, you know, peek behind the curtains. Have you ever played this or that?
Ray Preston 23:49
I have not played this or that but I’m game for it. Let’s do it. All right.
Anne Bibb 23:54
So this or that. The way that we play it on the show is that I give two words or phrases and we’ll both answer and kind of figure out what why. So it’s really easy you know, nothing horrible although I did ask one spicy question
Ray Preston 24:13
what I love I love this question.
Anne Bibb 24:15
So first question, call or text.
Ray Preston 24:20
Oh call call call all day long. Yeah, yeah, I’m not a big texter.
Anne Bibb 24:26
Really. You always text me I know. I’m
Ray Preston 24:31
a caller though. I am a caller. I am a caller caller caller caller any of my any of my friends or my family, for that matter. I’m notorious for just giving them a quick call. And then we’ll have a very brief conversation and then I go Okay, gotta go bye.
Anne Bibb 24:49
Bye. Love it when somebody that I’ve known for a long time will call me and do that and they’re like, Okay, love you bye. Because they’re so used to saying love you to their family. And it’s just like slips off the tongue.
Ray Preston 25:02
I’m very notorious for doing that. I’ve got a reputation for doing that.
Anne Bibb 25:08
It’s awesome. So, I too am a color but I’m, I’ve gotten so used to people just texting me that see this game, it’s like you have to pick call, or you have to pick one of the choices, but I’m really more of a voice to texter. Ah,
Ray Preston 25:26
yeah, see, I also voiced a text. But every time I do it, it always ends up sending the wrong
Anne Bibb 25:32
stuff out of it. Like, and that’s why people love texting me is because I’ll send them some text message. And I like and then I’ll send like three of them in a row and not check them because I’m going so fast. And then I’ll say, stupid voice to text. Like, you go back and read it like a month later, and you’re laughing because you have no idea what you were saying. Yeah, but in the moment people figured it out. Yeah, yeah. Yeah, yeah. Sometimes saying people’s names.
Ray Preston 26:06
It’s the best I find myself when I’m texting. I’m usually I’m usually in my car driving, which is not what you’re supposed to be doing. Right? So I voiced a text when I’m in the car. What’s the text when I’m in the car? And then all of a sudden, it’s not right. So then I’m driving with my knee doing this. I’m a danger on the road. So
Anne Bibb 26:23
I will edit that out. The wife will never know. But she doesn’t no one heard her. Stand up comedy, or improv?
Ray Preston 26:38
Ah, that’s a good question. I like I’d really like improv. And I think I think that has to go with I love sports. And there’s a lot of improv and sports. I love I love getting on a call with with a prospective customer and client and it takes a turn that you’re not expecting and you got to you got to be able to think on your feet. And so there’s there’s improv plays a role in that, right? stand ups are great. But also it’s a it’s a practice routine. There’s doing the same thing every single time. And I like improv because I think it’s more challenging. And you really got to think on your feet.
Anne Bibb 27:19
I think this is one where I like I like where they mesh together. I love those stand ups where they have the interaction with the audience. And so that’s not like the same standup routine every time. Because it’s because they are interacting and I know that it’s but it’s, it’s very few stand ups that I like like that. So I would have to go with you on the improv because very much I don’t. I like that risk that’s associated with it and the fun
Ray Preston 27:50
Anne Bibb 27:54
And those are almost funnier because you’re like, Oh, that was that was terrible. Yeah. And sometimes when they ask the audience to throw things out, and they throw out like this thing that you know, they’re never going to be able to do anything. And then they knock it out of the park. And those are fantastic. Yep. Absolutely love those. All right, last question. Road trip. Or cruise.
Ray Preston 28:21
You know, I’ve never I’ve never been on a cruise and I don’t think I would be a cruise person. I’m definitely a road trip person. Nothing against folks that are cruise people. I’m just not I just I’m not the person that can just sit on a beach chair and having all the boozy drinks and all the food and the buffets. Like that’s That sounds cool. But I want to do that but not on boat. I want to do that on a on a beach at a at a resort in Mexico. This
Anne Bibb 28:50
one was hard for me. Because I’m the same i I’ve always been the same way. I’ve loved road trips. My husband and I took like a 5000 mile road trip around the US and love them. Yeah, I would love to like, do that more often. But I took a cruise. My mother had a bucket list trip. So I took her to Alaska. And when those Alaskan cruises, and I thought I was going to hate it. Yeah, because of everything you just said. But I didn’t factor into my head. The times that we would get off of the boat and spend all day like I took my 150 year old mother. What was it we button up bungee jumping. When you go from tree to tree?
Ray Preston 29:38
Oh, you want ziplining ziplining
Anne Bibb 29:40
videos of this old lady ziplining through the rainforest in Alaska. Yeah. Like I just didn’t factor all of that into my thought process. So this one’s hard for me. I’m having a hard time choosing because now she’s like, can I add a bucket like a bucket list trip to have you take me on a cruise through Italy and Spain and I’m like, oh, yeah, okay.
Ray Preston 30:07
That sounds enticing I think I think I’m a little stuck having having to choose road trip. I have a I have a way too big for me pickup truck that is just meant to be on the road. And so if I’m not driving that thing, what’s what’s the point?
Anne Bibb 30:20
If I had that truck, it would be absolutely road trip because we would be having a fifth wheel behind it and we’d be we’d be on the road all the time. That would be I would not even be a question.
Ray Preston 30:31
That’s That’s right. That’s right. Yeah. Fifth Wheel is necessary. Yes.
Anne Bibb 30:35
Absolutely. Like I completely am on board with you if we had that truck. No, no. Cruise. What cruise? What’s a cruise? No cruises for me. Yeah. All right. Well, thanks for playing. Of course, that was fun. I like hearing about I love talking through the answers and hearing how people think. So going back to Flippa. Yeah. Just so that everybody understands kind of what Flippa is. You’ve mentioned it a little bit that it’s a marketplace for, for businesses. But can you walk a little bit through because I know that it’s for both buyers and sellers, but I don’t. But I don’t know that everybody that’s listening really truly knows what that means?
Ray Preston 31:19
Yeah, yeah. So So Flippa is a is a is a platform that’s been around for about 15 years. And it is the largest marketplace to buy and sell businesses that are part of the digital asset class. So think SAS businesses think econ businesses think content, businesses think mobile phone apps and things like that. And our mission is to democratize the exit, we want to make business ownership and entrepreneurship, accessible to everybody. And we want to be the investment bank for the 99%. So we focus on deal sizes, business sizes, that are from $10,000 in value up to about $50 million in value. So that would be micro m&a, the main street and the lower lower lower end of the middle market. And that’s that’s where we live and operate as a company. To give you some context on the volume, and the amount of businesses that are bought and sold on this marketplace, every single year, we sold 12,000 businesses last year on Flippa 12,000. So there’s there’s a lot there’s a lot of businesses that are for sale, there are starter businesses, for folks that you know, maybe don’t have a ton of experience in, in in how to how to build from from scratch and Amazon FBA econ business, but there’s one that’s been built a little bit starting to drive a little bit of revenue, and that owner is willing to stay on and teach you how to grow that business a little bit. So there’s a there’s a whole economy on flip at the lower end of the marketplace that are building these kind of starter businesses, and folks that are interested in a bit of a side hustle, maybe they’re working a nine to five, and they want to, they want to get out of that nine to five, or they want to, they want to drive some extra income, they can buy those already kind of pre built businesses for anywhere from 10 to $25,000, that are cash flowing and driving revenue. And that’s, that’s a big part of the marketplace on the on the lower end of the marketplace. As you move up the value chain, you start getting into, you know, high six and seven figure deals, those are your those are your entrepreneurs that are that are that are already running, usually successful businesses that are looking to roll something else up into what they’re doing. You know, maybe maybe they’re, maybe they’re a content business, maybe they have a fantastic podcast, or maybe they have a great YouTube channel, or maybe they’ve got a great blog that’s driving, you know, millions of organic users every single month. And they’ve got a portfolio of these things and they want to roll them up an example of something like that is a business that sold a few months back called all about cookies, great name, but it’s not about chocolate chip cookies, unfortunately, it’s about like, cookies, GDPR cookies and things like that. Right. And this was a business that was was sold you know, for you know, mid seven figures had been running by one person for 15 years and was you know, in their 70s and ready for ready for an exit had no idea that their business was worth anything and and found us and we found a great buyer who has a publishing business and was able to roll that right up into what they did and was able to retire and set sales and in across the world with with a nice exit that he wasn’t even expected to get. So
Anne Bibb 34:49
I have a business. Yeah, an E commerce. I’ve been doing it as a side hustle didn’t really think anything about what was going to happen. After, yeah, whatever, you know, just just after, yeah, never, it was never a thought process. All I started it was just to do a side hustle and get a little extra cash. And now I ran across this conversation, right? And I’m watching the show right here. And I’m like, Oh, wow, this is possible. What is it that I need to be thinking about? If I’m going to reach out to Flippa as a potential seller? Yeah. Like, what kind of things do I need to, like put together be thinking about because I’ve never thought about it before? Yeah,
Ray Preston 35:43
yeah, that’s a that’s a? That’s a great question. And the question that, that our team answers all day, every day, and so when starting any business, you always want to start thinking about in the back of your head is what does an exit plan look like? Right? What does an exit look like? Having having having the thought that, yes, I can exit my business. So first and foremost, it’s having a good profit and loss statement. If you’re driving revenue, having a clean profit and loss statement is critical is one of the first things that you want to have. Hire a good accountant. absolutely okay to use a service like QuickBooks Online, or Xero, or something like that. There’s nothing there’s nothing wrong with that. In fact, at Flippa, we, we integrate with those platforms. So we can, we can help programmatically build a p&l for you if you’re using those tools. And so having your financials in order is is key. The way that valuations work, in this space, and in this market is typically based on your net profit, or your Ste or seller discretionary earnings, right? So if you don’t know what your trailing 12 months net profit is, as an example, very, very difficult to be able to value your business. And very, very, very difficult for a buyer to be interested in your business if you don’t know your numbers. Right,
Anne Bibb 37:06
let’s let’s talk about that for our new sellers. Yeah. What is a net profit? Can you walk through that? And yeah, those two acronyms that you just used? Let’s explain what those are to our, to our listeners.
Ray Preston 37:20
Yeah. So net net profit is is as simple as net profit is as simple as you have gross revenue. So you have all the money that you’ve made from your business, right? Let’s call it a million bucks, just just just just to play just to play have some play money, Monopoly money, right? So
Anne Bibb 37:37
you have to not believe I know, I always come out rich, you know? So
Ray Preston 37:41
I know, right? So let’s pretend that your econ business in this case, has driven a million dollars in gross revenue. That is all the money that the business has made in the last 12 months. Fantastic. So that that is your top line revenue number. So where are you get net profit, is we have to start subtracting all of your expenses, we have to start subtracting all of your expenses. So what are your expenses in an E commerce business? Your expenses might be cost of goods, right? So you got to pay for your inventory. Right? So your inventory cost something, you’re selling that inventory at a higher price. So what is your inventory actually costs? What are you spending on marketing and advertising? What are you paying your employees if you have any employees? What What are any of the other expenses that are happening every month, month over month or quarter over quarter that you’re spending on your business, you take all those numbers, you subtract them from your revenue, your gross revenue, and you have net profit. That is your net profit. So it is revenue minus expenses, there’s your net profit. And in an econ business, a good econ business is going to be operating with margins in the 20 to 30% range typically. Meaning that if you’re doing a million dollars in revenue, that you’re probably making two to $300,000 in net profit in net profit, a business day, that is generating two to $300,000 in net profit for an econ biz is going to sell for a, again, this is all relative and ballpark numbers here. But But according to current markets are market insights, the hundreds of 1000s of businesses that we’ve sold, and that we’ve sold scuze me and we’ve got that data, you’re looking at probably a two to a two to 4x Multiple on that two to $300,000 net profit, which means the value of that business is going to be somewhere between 400,001 point where what what is it what I say six, 3 million, so 369 900,000 So somewhere between 409 100,000 and then we can shrink that that at a valuation, by understanding the type of business you’re in, is it in a niche that’s more valuable pet niche? Is it you selling T shirts? Are you selling pet products? Are you selling supplements? Or are you selling jewelry, all of those play a factor into which end of that valuation that business is going to be at. And we’re not making those numbers up. We’ve sold hundreds of 1000s of these over the years. So we’re taking that data and that insight and able to put a current market indication on what those businesses are actually selling for. That’s,
Anne Bibb 40:31
that’s awesome. Now, what about you said seller, discretionary
Ray Preston 40:37
seller does seller discretionary earnings is is a little bit more sophisticated. And that is typically when a business is going to be a little bit larger in scale. So maybe generating you know, more more revenue. And seller discretionary earnings would be an example of of it working as you have your your total top line revenue, your gross revenue again, and you still have your expenses. But the reason why you would have a seller discretionary earnings is let’s say you’re the sole operator of the business. And you’re drawing a salary of half a million dollars a year out of that out of that gross revenue. And you’re spending 10 hours a week on the business. Right? Well, that’s fantastic. You’re paying yourself with your business great work. Right? But the new owner of that business is not maybe they’re not going to pay themselves at $500,000.
Anne Bibb 41:29
So I’m a seller, I have never thought about it, but I’m watching this this episode. And now I’m wondering, Is My Business sellable?
Ray Preston 41:40
How do I know? Yeah. Yeah, that’s a good question. And and a question that we, we deal with all the time, the answer is just about any business is sellable, just like it’s analogous to any house is sellable. Now there are, there are better businesses than others. It can depend on the type of business, the age of the business, the niche of the business, etc. My advice that I would offer to anyone that is interested in in starting or building a business, or is considering an exit in the future, is to have a handful of kind of things to have checked, check marked off, right. And those things are in the digital landscape, a SaaS, business and econ business, a content business. Age plays a factor, right? Age plays a factor. If you’ve started running a business, and you’re driving revenue three or four months after good revenue, after four months after starting that business, you can sell that business, but it’s not going to sell for what you want it to sell for, you need to have some age, you need to have some consistency of driving that revenue and seeing growth month after month, quarter after quarter, and so on Flippa smaller businesses can sell with with a with, you know, a years a years timeline, but our best highest valued, highest quality businesses have been running for minimum three, four, even five years in some cases. And that will help to drive more buyers to have a look at that business. Because it’s there, it’s less risky, it’s less risk averse, right? Number two is actually driving revenue. So actually a business that is driving revenue versus one that is pre revenue, you can absolutely sell a pre revenue business. Absolutely. But
Anne Bibb 43:47
no, really, that surprises me so, so all of these individuals that are listening, they’ve come up with an idea they’ve started a business, but it hasn’t generated revenue, you can sell their business,
Ray Preston 43:59
they can sell their business because somebody else doesn’t want to do the legwork to build the bones of that business. So the bones of that business are sellable, and somebody else can take it and then implement what they want to implement to it. Now to be to be candid, you know, a business like that’s not going to sell for hundreds of 1000s of dollars or millions of dollars, but but it is sellable. So if you want to walk away instead of getting nothing, you can get something right for the time and effort that you put into it. So So cash flowing will drive will drive will drive, evaluation age authority score. So think of using a think of using a tool like SEMrush semrush.com. It’s a it’s a tool that can help derive what your authority score is online, which is essentially a trust factor in how you how you leverage and drive organic traffic. So the higher your authority score is The more organic traffic you’re getting on your on your website or your business, and that will play a factor. So organic traffic plays.
Anne Bibb 45:07
So what is exactly is an authority score? I mean, is it like you hear of, you know, cost of acquisition or customer acquisition? You hear of like a net profit, you hear a lot of these things. And we’ve talked about a few of them. But what is
Ray Preston 45:24
it, those are all important? Those are all important. But what isn’t authority score, and authority score in in layman’s terms and how I like to describe it, because I’m not all that technical. But in layman’s terms is it’s your trust score, and how Google recognizes you. So what that means is, Google has an authority score of 100, it’s on a scale of zero to 100, Google trust itself. Apple, Amazon, you know, the fortune 500 businesses of the world, they’re going to have Google authority, or excuse me, SEMrush authority scores in the 90s. Right, that means that if it’s coming from Amazon, they’re going to drive their search algorithms to those people, because they’re more trustworthy than the others. Right? Whereas Flippa company like ours, we have an authority score somewhere in the 70s. So in the online m&a digital marketplace space where we are, by far the the oldest in the space, the most well known, the biggest, the largest. And so our authority score is much higher than any of the competitors. Now, if somebody is coming in and wants to get into the digital m&a market marketplace space, they’re going to have an authority score of one when they get going, because they don’t have the trust of Google. Right? So age traffic, trust of you are who you say you are. And you do, what you say you’re going to do is is how you can drive authority score up.
Anne Bibb 46:55
That’s, that’s very interesting in it, there are you mentioned SEMrush. Now, is there another way to know your authority score? Yeah,
Ray Preston 47:04
there are other tools out there. And if you just do a simple Google search, the tools that pop up first or second, they’re going to be the most trusted by Google. So they’re out there. We we partner with SEMrush. And we really like we really like what they do. So every listing on Flippa, will actually have an integration with SEMrush, showcasing where their authority score is. So you can use any ones you want. There. They’re all the way they track them are a little bit different. But But long story short, sem Rush is something we like to use here at Flippa.
Anne Bibb 47:39
Fantastic. So one of the questions I always like to ask guests of our show, is to give advice to individuals that are watching and learning and maybe they want to make a shift. One of your real impressive traits that you’ve done is you’ve you’re excellent sales guy, but you’ve switched industries. So what I’d like you to do is talk to that individual that may be watching right now. And what would you say to them if they’re like, I love sales, I’m great at sales. But I would too like to switch and maybe change what I’m selling? Because I’ve been selling? I’ve been in the same industry for a long time. But I’m scared to make that switch. What would you tell that person right now I’m gonna give you the floor? You talk directly to them? Yeah,
Ray Preston 48:29
so So I would tell this person that change will only make you better. When you start selling the same thing over and over and over again, we’ll use we’ll use real estate, a real estate SAS service as an example. Because that’s, that’s somewhere that I spent some time in. And you would have the old timers who had been doing it for five or six years, and they just had their scripts down. They had their rebuttals. They had their objections, if somebody said X, they had y ready to go like soldiers on a battlefield that knew exactly the tactics to take, right? It’s impressive, it’s really impressive. But if they got something new that threw them off of their script, they were dead in the water, they had zero chance to make that sale. And so I would always tell somebody to be a little be a little risk adverse. If you can sell one thing, you can sell anything as long as it is a good and quality product, as long as it is a good quality product or service. Take the take the risk because it’s only going to give you more, more ammunition and more arrows in your quiver to make you better doing the next thing so don’t get stuck in that same repeat pattern. You won’t grow you’ll just stay where you are. There’s no There’s no room to grow. So take the take the chance take the risk. It will only make you better. Yeah, it’s a little uncomfortable at first. Yeah, you got to figure some stuff out. But it’s worth it’s worth it because you’ll only get better and you’ll only grow as a salesperson. If you want to go down an individual contributor path, it will make you more valuable to future roles because they see how diverse you are. If you want to go down a management or leadership path, again, it’s the same thing you have you have more, you’ll have more gray hairs and whiskers on your ears, wisdom whiskers on your ears, that will just make you better and stronger. We
Anne Bibb 50:30
just call that glitter.
Ray Preston 50:32
Well, I don’t have any gray.
Anne Bibb 50:35
You were strategic, you just went ahead and took it all on. smart, smart. So I know that you do these exit road shows and those are posted. So anybody that’s watching, if you have a chance to attend any of those exit road shows that that ray does throughout the year or flip it does throughout the year, I highly encourage you to attend those. They’re not just in the US either. You’re hitting Bulgaria, you’re hitting Singapore, you’re hitting Australia, you’re all over the place. So definitely watch for those.
Ray Preston 51:08
Yeah, please do it. We’ll be in Dublin. In two weeks time, we have a fantastic European market. The cool thing about Flippa is we’re very much a global marketplace. And roughly 70% of the businesses that sell on Flippa are selling cross border. So it might be a European buyer buying an American business or an Australian business owner selling to a Bulgarian buyer. It’s it’s it’s a wild marketplace and a beautiful thing. So yeah, please catch us, you can catch me there. You can catch me on LinkedIn. As Ann mentioned, you can catch me directly via email email@example.com.
Anne Bibb 51:44
Those are listed below. They popped up on the screen. So
Ray Preston 51:47
if you have any questions about anything, I’m very much accessible. And we’d love to chat about anything as it relates to buying, selling, growing, investing in businesses.
Anne Bibb 51:57
And I think one of the things I really want to make sure that we kind of highlight here is we’ve spent a lot of time talking about selling, and how to sell your business and how to know when to sell your business. But you cater to buyers too. So if you’re interested in buying one of these businesses that people are really you know, talking about, you know, maybe maybe that’s a whole new episode. Maybe that’s our next episode and a few months that we come back and we talk about what what’s important to know when you’re buying a business. Yeah, that’s,
Ray Preston 52:25
that’s right. The buyside community at Flippa is huge. And if you’re looking for for deal flow, as we like to call it, we’re the place to find it. Yeah,
Anne Bibb 52:35
absolutely. So that’s just incentive for me to have you back on the show. Right. Thank you so much for coming on. And I always love spending time with with you and just getting to chat and catch up. But this was fun, because just getting to talk and learn a little bit more about Flippa and the links below. We’ll go back and please, if you do go to flip up, please make sure you saw you tell them that you saw Ray on Unexpected Journey, and who knows what will happen? Who knows. So I always love to let people know that you, you join them from there. And we really appreciate you joining the show and watching and seeing Ray here from Flippa. And we will see you again next week. Thanks everybody.
As we wrap up the episode, we would like to take this time to thank you for joining us this week on unexpected journey. Our guest information will be linked in the episode description along with a link to our hosts website, annebibb.com and our sponsors websites, remoteevolution.com, ethossupport.com, and yourcohort.co. Please don’t forget to like, subscribe and share on your favorite podcast app and on our YouTube channel so that you never miss an episode and we can continue to bring them to you. Let us know your thoughts on what we discussed in the comment section. And once again, thanks for joining us. We hope to see you again next time on Unexpected Journey