8 – From Burnout to Buyout: Making Your Web Design Biz Worth Selling

[00:00:00] What’s up y’all? Welcome to the Web Design Empire where we share stories and strategies to help you build your web design empire from a side gig to multi-six figs. I’m John. This is Kelly. We’re full-time freelance web designers who’ve escaped the real world. Broke up with our job. So sad. Our bosses, our cubicles and our commutes over 15 years ago, and we haven’t looked back.
We’re also course creators, web design store owners, web design coaches. Kelly owns Airbnbs. I’m a touring professional musician. All that to say we are building our empires with an S multiple things. Right. Kelly, how are you doing this week? Yep. Good, good. we’re actually getting ready to, host a Halloween party this weekend.
So that’s what’s going on over here. We’re actually playing a Halloween show on the [00:01:00] 31st. Are you really? And, and, I just found out that, wait, how does Christian music at a Halloween party work? Well, this is the cover do not band. This is the cover version of the, of the band.
So there’ll be, this is beyond. The two piece version of the band. So we’ll be playing all cover songs from the fifties all the way up to now. Is it like Halloween themed songs or is it just good old rock stuff? Well, we’re gonna do, we have our regular, well, it’s everything from the Beatles to like ACDC.
Right. And, and love it. And, and pop music and then a couple guys couldn’t make this gigs. We had to bring in a couple new guys. And it’s a lot to ask them to learn the songs that we’re doing. So we wanted to learn like two or three, like Thriller and a couple other Halloween Halloweeny songs.
But instead, what we’re gonna do be hard. I, it would be, I would, that would go hard for sure. and I’m sure we’ll learn that at some point, but it’s just too much to ask these couple new guys coming in for this one show to, hey, learn these 20 songs and these three more that we’re only in.
Yeah. so what we’re gonna do is every half hour or so, [00:02:00] we’re gonna have Brian karaoke and bring a couple people on stage and they’re gonna karaoke thriller together or karaoke some other song together. Um, monster Mash. Just give it more, that kind of vibe. And I, I heard he’s dressing up as a vampire with the teeth and everything.
Oh, nice. I’m like, how’s that gonna work? You gonna sing with those teeth in like, what are, whatcha you gonna, Ooh, what? Yeah. Wouldn’t that have an effect? What? Are you dressing up as well? I wasn’t, but now, but, but now, well, you have to, I have it on my calendar now tonight. I’m gonna think about what I’m gonna do, what I did before you have on your calendar to.
Think about? Well, yeah, because I gotta a costume, I gotta think about like, how much do I want to spend on this costume and oh my gosh. And I can’t, I can’t, I gotta be car. I mean, I can’t be like Batman and have no neck and play drums. Like, it’s just not gonna work. I gotta, and I gotta think about’s. It’s gotta be something that, that can kind of be visible from the, from the chest up because I’m, I’m sitting behind the drum kit.
You know what? I got the perfect, I got the perfect costume for you because [00:03:00] my husband is getting it on Friday. He’s gonna be Bob from, uh, from Beetlejuice with the tiny head. Oh, okay. So his head, his head will be right here. So you could be you that you could see the tiny head. That would, that would work.
That would work. And I’m gonna be Beetlejuice. That, that’s, oh, I, you should gotta send me a picture. Can’t wait. You gotta send me a picture. I’ll, and my dog is gonna be a sand worm, so it’s gonna be pretty, pretty great. What’d you do last weekend? Well, we were going to take the kids to the pumpkin patch. I have a one and 3-year-old, and the pumpkin patch is an hour away. So it’s kind of a commitment.
and I don’t want to go on the weekends because it’s just slammed. Like they have all these chaos. They have fields that are filled with parking. Like, it’s just, just, just feel like Disney world blocks of fields. Yeah, it’s crazy. and so since we work from home, we went on Monday. Perfect.
We got there right when they opened. And , my kids loved the little jumping pillow things. The big, huge, massive. And we went over there and normally [00:04:00] on a weekend, you’re gonna have 20, 30 kids on that thing. There was nobody on there. And my kids just running around. Yeah. And it’s like, yeah, that’s what this is all about.
You know, you build your, build your thing where you can go to do stuff like that on a Monday. Heck yeah. When no one else is there and you kind of got the whole place to yourself or with other, that’s the best other folks. I get jealous of the pumpkin patches because they make all their money within like five or six weeks for the year. I know. And I’m just like, what if we could, what if we could do that? What if we could, I know, I would love to, I would love to see their business plan.
You know, just like how that shakes out. And I know some of them do like weddings and stuff too and off seasons, but, , what a wild. , business plan.
Now this one that, there’s kind of two main ones where I live. there’s this smaller one that’s probably 30 minutes away. Which I haven’t been to in a while, but the one that I would go to in Omaha, it’s, it’s massive. Like they have carnival rides now. Massive. It’s like to see everything, you’d probably have to be there for eight hours. But I always think at [00:05:00] some point they were like, okay, we’re the cute little pumpkin patch, and now it’s, it’s just grown into this.
Enterprise massive, you know? Yes. Yes. And, and, um. It kind of goes along with our topic today. It does. I should say our, our title today is, why and How to Build a Sellable Business and Get The Most Dollars You Can For It. So I don’t know if folks know this, but Kelly and I do offer a web design coaching, web design, business coaching, and one of our, what would you One of our coachees students Is that mentees? I, I don’t know. Mentees. Yeah. Mentee. Mentees. We’re just making up words today. I think that’s a real word. Pretty sure. And so she’s a killer web designer doing her thing, but she’s a one person shop, right? Yeah, one person shop. she hasn’t really worked out with any, .
Subcontractors, yet she is the sole person doing everything right now. , and she asked us last week like, Hey, . Do I what? There were [00:06:00] previous questions that she asked that had brought up this topic of, well, if you’re ever gonna sell, you need to do it like this, or whatever.
and we’ll get into those whatevers here in a bit. but her question came back as. Is there something wrong with just having this business by myself and running it that way? and keeping it small and keeping it simple. And it’s like, of course not. but you came to us to get to multiple six figures and when you get to that level.
You have to be thinking about these kinds of decisions, like having that five-year plan, having that 10 year plan of down the road, and if selling is in that future, or maybe if, maybe it’s not. But regardless, these are just best practice things to do to have your business run smoothly and make it able to scale or sell if and when you choose to do so.
It’s come up often enough, in recent talks that, we figured we would do an episode on it. Because it’s good info and John is quite passionate about it. [00:07:00] Well, and the, and one reason that sets our coaching program apart from so many other coaching programs is that there’s two of us that Yes, you get for coaching, I tell people you get two sharks like on Shark Tank when two sharks do a deal together.
It’s like you get both of us, you get Lori and you get Mark Cuban but, , Kelly and I. we both started the same freelance web designers. And then Kelly’s remained a solopreneur, a solo freelancer this whole time, but utilizes some subcontractors, which we’ll get into. Yes. And then, , eventually I partnered up with a guy.
and then we’ve built a team. There’s six of us now. And so there’s this, right, two radical different ways that we’ve, that we’ve got to multiple six figures. And so this, mentee is kind of like, which way should I go? And it’s like, well, you don’t have to decide. That necessarily right now, but knowing an end goal of what you want to do with your business eventually Right.
Helps determine that path, right? Yeah, [00:08:00] exactly. and I think a lot of the stuff we’re gonna get into today, I already said this but I’ll repeat it ’cause it’s important is laying a foundation for just good business practices and setting up processes that, allow your business to grow in a way that is scalable without. Burnout. And that’s the goal, burnout because we’ve both seen , the downside of, what happens if you try to do it all yourself. so first of all to answer her original question of what’s wrong with me? Just doing my business, just me the whole time.
Or can I do that? Can I just be a solopreneur the rest of my life? and not use any subcontractors or anything? Just me be everything. And then, you know, when I’m, when I’m done, I’m done and I shut it down. is there anything wrong with that, Kelly? Well, I can think of a few things. The first one, and I think our knee jerk reaction to that was you’re gonna burn out.
If you keep going at the pace, you’re going, you keep getting clients the way, ’cause she’s [00:09:00] grown to six figures pretty quick. Mm-hmm. And so in her specific situation, again, everyone’s situation is totally different, but for her specific situation. John and I can see, the writing on the wall.
If she keeps going the way she’s going, she will get to a point of burnout or she’s going to be turning business away. And so we don’t wanna do either of those things when growing a business. And again, her goal is to grow the business. And , so burnout is definitely a concern with just leaving it as is and doing it yourself.
and then of course, turning money away, is a concern, unless you’re okay with that, I don’t like to turn money away, especially recurring revenue. but then the third thing is just. Giving up , and calling your business quits at some point, that’s totally fine.
, but what a missed opportunity, , for being able to, have it be an asset that you can sell to someone else for , a really good chunk of money. , if you set it up appropriately, which is what this conversation is all about. So those are my, that’s [00:10:00] my reaction.
I, I think we went into all those things. Oh man. She got more than she bargained for on those responses. Yeah. We went into a lot of detail. I guess two coaches means double the responses, what it means. And something that. Is also true is , let’s say you decide to stay solo the whole time.
Well, the more clients you build websites for, the more admin that’s gonna pile up and the more little support requests, right? Yeah. are gonna start piling up. And so then eventually the. Thing that you love doing, designing new websites, you’re gonna have less and less time for that because you’re gonna be just stuck in this support world and following up with building and Yep, I’ve been there.
I’ve absolutely been there. That is so true. Well, and I think that’s ultimately what would lead to that burnout, because that’s what happens is , you’re stuck doing stuff you don’t really wanna do. or not why you got into it. Is that admin, it’s the support.
it’s the stuff that PS is really easy to contract [00:11:00] out. . Another reason why to build a sellable business is, you’re putting in place good practices that’ll save your sanity even if you never sell. Even if you never sell, so. Exactly.
Yeah. It’s just good business sense. Good best practice. And as someone who, you know, my business grew from an outta control hobby that I never. , I got to six figures with zero processes, zero prospecting, and zero business plan. I was just winging it every day.
As someone who did it that way and then got to this point of burnout that we’re talking about where I was just stuck and drowning, as I say, drowning. If I had done all, what we’re about to talk about. Well, and setting up those processes and having a plan and doing things, best practice way, I would’ve never, gosh, not only would I have made way more money in the process, but I would never have gotten to this, chaotic point of burnout where I had to completely redo my business. I told her, I was like, [00:12:00] yeah, I remember when I brought my partner on board, which I didn’t bring him on as a partner right away. He actually didn’t know anything. He didn’t know how to build websites or anything. I just had a gut feeling he’d be really good at it.
But when I first brought him in on a little $500 a month retainer, I was in the middle of 28 different projects, and she was like, my God, how did you get 28 projects? I’m like, well, they weren’t all mine. Probably 10 of those were. Clients that I was working directly with, and then some of the other ones, I was on a retainer for a record label doing websites and MySpace pages for bands.
So that was probably another eight of those. And then I was a subcontractor for two other. Web design agencies. I guess I would say at that moment I felt like I was drowning.
and that’s why I brought someone on. But when you’re drowning like that, you’re not serving your clients the best that you can, you’re just trying to get it done and move on it. It’s just, it’s just like a treading water. survival mode. Yeah. You’re not in business growth mode right then.
It’s just [00:13:00] putting things into place before that happens because if you’re at this long enough, it’s gonna happen. So to cap off the why piece is, why build a sellable business even though you have no plans to sell it? Well, number one, you might change your mind. but number two, then it’s a nice little dial and you can say, oh, I, I have this network of subcontractors.
Or maybe you build a team who knows what, but I can insert myself now. Doing the things I love doing and let someone else do those little support tickets or let someone else follow up with billing and I can just keep doing the thing I love., and there’s a great book, called the E-Myth that kind of tackles why you should get this set up.
The two sentence version of it is gal loves baking pies. So she starts a baking pie business, and then eventually it grows. That, now she’s no longer baking pie, hobby, gone outta control. Yeah. She’s hobby. Gone outta control and she’s doing, and now she’s got mess with,
client onboarding in the web design world, it’d be client onboarding and answering all [00:14:00] those questions and getting their content from them, , which can take more than half the project time , and then billing and then following up with billing and asking ’em to leave a review.
All this non-design stuff, all this non baking, the pie stuff on pie. Yeah. , and then she ends up toward the middle of the book. Almost like, I don’t like making pies anymore. Yeah. That’s the other reason why you should build it so you can just kind of insert yourself where you want and dial that up.
Alright, well let’s shift over to, how, how do we do this? There’s two different ways that we’ve done this, so let’s just go with what we recommend for our mentee. Which is, , kind of your route.
I would say yeah. , what we recommended to her , for now is to get some contractors on board, , more than one, because, you know, one can disappear quite quickly, get two, three contractors , in general contact, that are on board for when you need them. but the, I think the first step with her was figuring out what she wanted to subcontract, , because for me.[00:15:00]
The first subcontractor I hired, and it was a super easy decision, was for the ongoing support requests. that’s something really easy. it’s low level work. I can just kick it over to, , I have a gal on retainer, and I don’t have to do any of that and it’s so nice. but for her where she thought she could use the most help or where she needed, what she didn’t love the most was actually design. And so that’s what we suggested is to find, a couple design contractors. Granted that design contractor is gonna cost more than a support contractor. so again, there’s a lot of variables and factors there, but I think the first step is figuring out what you don’t love about your current processes and what you can subcontract. That’s the first step. And then , finding a couple, at least a couple contractors to have on call. So when I first, my partner’s name’s Jake. When I first brought him in, I had him help with content collection. ’cause I just, I would do the initial email like, Hey, here’s the content we [00:16:00] need.
And at that time, what we were using Dropbox, there was a folder for each page from the site outline. Right. You know, and, and he would follow up. But, , the other thing that I hated doing, and, , you probably laugh at me, but I hated following up with clients to pay their bill. Oh, so much, so much so that I told you did that yesterday.
Here’s, here’s 10 clients that all owe me still. They’re over two months. I’ll give you 25% of whatever you collect. And he was like, wow. He was like, great, no problem. He had zero problem reaching out to these folks and be like, pay your bill. That’s a sales guy. And I was, and I, and to me, I hated that.
And that’s when I realized, oh man, he’s good at the things that I don’t want to do , hopefully this could grow into something. But, so yeah, a team of. of contractors. And fortunately for our mentee, she went through Break Into Web, which is our online web design school.
which means her alongside hundreds of other students all know how to build sites the same way. and that’s a great [00:17:00] pool that she can go to and be like, show me your design work. And she could probably snag those two or three subcontractors from that pool of people. Yep. Other things I, that I’ve already touched on is dialing in processes, and that’s something that you’re gonna have to do before you bring on contractors anyway. So, we even talk about that in our course, to get to six figures. It’s about having those established so that when you do get to the point where you need a contractor, you already have an established process that you can just say, Hey.
Follow this. So yeah, I think processes are extremely important. Sales process, a project process, a follow-up process, all of those getting into place, I think that even comes before the, hiring a contractor. Whoops. Going backwards now. No, that’s a good, that’s a good point.
Like I, obviously during this episode, I have to mention. The Built to Sell book by John Warlow. Yes. I’m actually gonna mention two of his books and one’s later. [00:18:00] But in Built To Sell speaking about processes, one of the points I put was try to productize your offering. Yes. and can you truly productize a, a custom website?
A website? Not, not a hundred percent, but you can productize it quite a bit. Yes. And make a lot of those repeatable steps, processes. Yes. Settle on those. That way when you do bring someone in, you’re very clear on what you want them to do, and they know what they’re doing. , but you’re right. Process first, because even in setting up that process, , that would help your business anyway, right? Yes, exactly. I think that’s the overarching theme here.
Like even if, even if you don’t wanna sell, even if you’re not even thinking about selling, these are things that you should be doing anyway because. It’s good for your business. I will say, you know, and in the first chapter of Built to Sell the guy’s name’s Alex, and he owns the Alex Stapleton Agency, which is another thing. Try not to name your business your name. If you, especially if you wanna sell it, that’d be awkward.
Yeah. But anyway, he’s running around from [00:19:00] meeting the meeting and this client’s upset because their SEO isn’t what they thought this bank is upset because they’re waiting on three branch posters and someone else is upset on some website copy. And he’s like the guy and he gets buried.
He’s drowning and he decides, that’s it. I want to sell my business. He goes to a broker and they’re like, well. You’re not going with your business to the new owner and you’re doing everything. So your business is kind of worthless right now as far as a buyer’s concerned.
And that’s when they’re like, let’s pick a lane for your offerings. Because at the time he was doing print, he was doing kinds stuff, SEO, all kinds of stuff. And then once you pick a lane. And it could be websites and maybe you want to add in copywriting and SEO, who knows what, right? We only do websites at artillery.
Once you pick that lane, then guess what? It’s way easier to productize or processize. Is that a word, processize? Sure. We’re making up more. Yeah, you can [00:20:00] processize that lane that you picked. When it comes to making processes, I think people get stuck in like the finiteness of it.
And, I just wanted to point out, processes will always continue to evolve. Like even if you have it perfect right now. It will continue to evolve in the future. , so don’t get paralyzed by trying to make this perfect process. just start somewhere and then continue to evolve and tweak it as you go, because that is just the nature of the business. Well, How also to build a sellable web design business. Well, obviously if, if you want a sellable web design business, there’s two sides to your web design business that can be sold. There’s the service side, the side that mm-hmm.
You’re actually making the website and you’re projects and your, and your, your projects, thank you. And you’re getting paid that project rate, whatever it is, 3, 4, 5 K, 10 K, 20 k, whatever that might be. There’s that side of your business. and those projects come by either word of mouth referral, other [00:21:00] inbound or outbound marketing things.
We’ll get into that in a little bit. and then there’s the recurring revenue. Recurring revenue hosting part of your business. Yeah. The which is far more valuable. There it is. Which is far more valuable. So obviously we’re gonna say, if you’re not selling website care plans, hosting and maintenance plans, what is wrong with you?
You need to start, you need to start doing that. You need to start doing that because that, little story. There’s a guy in the state where , he’s older and he’s done web designing.
and he’s been doing everything. Him and his son. His son has a full-time job and he’s like, Hey, are you guys interested in buying my business? We’re like, well, we’re interested in buying your hosting clients. And so we didn’t buy a service side of his business. We weren’t even interested in the service side of his business because it’s like.
It’s, you know, without him. Yeah. And he did say, Hey, if people come to me the next few years, I’ll send them to you guys. And we worked out a little 15% thing with him. Great. but we ended up buying his hosting clients from him, and that’s where he made a good [00:22:00] amount of money.
And we’re in talks with another person in Omaha about buying their hosting clients someday another solopreneur, when they decide, , to be done. So obviously the hosting, the recurring revenue is the thing you’re gonna get. Two is the thing, and the more clients that you have on it, the more multiple you’re gonna get.
You know, so if you only have like 20 to 30 hosting clients, you’re not gonna get three, three times their yearly revenue. You’re probably gonna get one or two maybe. But if you have 500. 3, 400, 500 or more than some big agency that’s got a lot of money’s gonna gobble you up and give you a nice three to five x on those yearly revenues.
And when you’re talking three to five x. John, can you go into a little bit of detail about what that means? Well, I know there’s this thing called EBITA. I don’t even know what it all composes of, read Built to Sell. I read it and forgot, obviously. But basically what we did for this guy that we bought 20, around 25 sites from him, was basically, Hey, how much is your month?
Or, [00:23:00] well. He wasn’t charging his clients as much as we are for our monthly hosting. So step one was, Hey, make sure your clients want to move to us at this new pricing. It’s a little more than yours, but they get a little more. And then once we knew, okay, 25 of ’em said yes, we basically took the 25 times that monthly number per year per client.
And then we worked out a multiple. on that, and I think he got, he maybe like a 1.5, 1.7 x somewhere in there on that. Gotcha. So let’s make it easy. Let’s say , we’re charging a hundred dollars a month, so $1,200 , per client, right? $1,200 per client per year.
And he has 20 of ’em, so that’s 24 grand. so one X would’ve been, Hey, here’s 24 grand. For your 20 clients to come over. Two X would be, here’s 48 grand. That’s kind of how it worked. Mm-hmm. Right, right. I don’t know if people realize that’s how selling businesses works, that’s typically how selling businesses works though.
So, yeah, and I think John’s point is on the project work, you’re not gonna get a [00:24:00] multiple there. But for that recurring revenue. Side of your business, you will get a multiple, you’ll get a two x or three x again, depending on how stable and how big that chunk of business is. that’s far more valuable than the project works.
So again, another plug for that recurring revenue. the only question I wrote down. When it comes to selling that recurring revenue piece of your business. because for example, you and I bought a web design store that had monthly recurring revenue, right? It had so many members each month.
Yep. But the membership was going down when we bought it, and so we were able to use that as like a, Hey, this business is kind of sinking here. We’re not gonna pay two three X for this thing. we gotta turn it around. but with hosting clients though, most of them can’t just quit your hosting.
They have to have their website up. the churn is much lower for churn is much lower. And so for the web design maintenance as opposed to subscription. Services. Yeah, so when we bought this guy sites, we didn’t even, we didn’t even consider what shape are the sites in. Didn’t matter how long have they had their website?[00:25:00]
Didn’t matter. Like all that mattered was they’re paying for monthly hosting and they absolutely need it. Yeah. Now, another thing that we didn’t ask, and we get asked this question a lot, is, Hey, when you go to sell your recurring revenue side of your business. shouldn’t every client be on a year contract?
Because if I’m the new buyer, everybody could quit the next month and now I bought nothing. And it’s like, you know what, when we were buying those 25 sites, we didn’t even ask him if he had a year long or a three year service contract with the, what are your thoughts on that?
I mean, my thoughts on that as, I got my business owner hat on, not my business buyer hat on, but as a business owner, hosting is simply a month to month thing. there are options for annual hosting with a little bit of a discount at like the hosting companies, but clients generally for that kind of stuff don’t like the long term contracts, and so the month to month is a much easier sell. and it makes them, trust you that much more, especially if month [00:26:00] after month, they continue to see that you provide good service and then they’re just never gonna give that up.
Plus the annual fee would be a much bigger number on their credit card bill when they looked at Yeah. And, and they would be more of a red flag of, oh, what is this expense? We are against that for sure. Okay, well, let’s, let’s, I knew if I didn’t say that you would. Let’s shift over to the service side of the bi, the project based side. How do we build this project side to where it can be sold? , , what are some of your thoughts on that, that you might have? I think in order for a project side to consider to be sold, I think one of the main things is it can’t just have your solopreneur face and name and hands attached to every single piece of it.
like mine is currently. So I am currently in the process of. You know, I, I have no, no thoughts of selling my business anytime soon, but I [00:27:00] also am realizing none of my kids are probably gonna take it over. So eventually I’m gonna wanna sell it. And so I’m thinking of these things now and realizing I’m gonna have to start taking my name and face and hands off of every single piece.
So that’s definitely one thing. and then I think the other, well, I think the other big thing. I’m not sure if this even relates to, to project, but the other like warning I wanted to put out there was to not have any one or two clients make up a big chunk of income that would be a red flag when selling.
totally. Because again, the buyer’s gonna know, oh, if I lose one of these clients, there goes half my revenue. So. That’s a, that’s a good point. Well, what’s funny you bring up your kids. So my Pilates instructor, he’s 29 and his mom started the business and she still works there.
And she sold him the business a few years ago. See, I would just, I would just hand it over. I was gonna ask you, would you, would you sell it to your kids or would you hand it over? I would, absolutely, I would happily hand it over. I would [00:28:00] happily hand it over.
Oh, well, and I think that would be, like, that would be the ideal transition, right? Like they would obviously need me to, show ’em the ropes and all the stuff. , but I think that’d be the ideal transition, but yeah. Does it ever work that way? I mean, I know my dad wanted, my brother and I to take over his electrical contracting business.
That didn’t work out. When he told, when he told me, yeah, I bought it from my mom. I was like, oh. I looked over at his mom and I was like, oh. And she’s like, yeah. I was like, okay. Wow. Discount. That’s a different kind of family. Get a family discount. He’s gonna start charging his mama for the lessons she took.
I, I have some thoughts on like, so obviously, like I said, with the break web coaching that we do, you get two of us. We’ve built this different ways and we’re pretty much at the same income level. And so you’ve done it as a solopreneur, you have subcontractors, and then now I have a partner and we have a team.
So if I ever sold , it’d probably first be to my partner or we have to sell it together. But the new owner, [00:29:00] not only do they get all the hosting clients, we talk about that the hosting side’s the same for both of us. Right? New owner gets hosting clients that just keep paying their bill.
Great. Awesome. but on the service side, new owner for us would get our team that continues to build the websites. Right? like I only work on maybe 15 1 5. Percent of the websites we build now, we build about 80 sites per year. I might work on 12 of them. So obviously in our situation now there’s a lot more headaches, there’s a lot more red tape, there’s a lot of cons that come with building a team and instead of just doing it as a solo freelancer where you can just kind of fly wherever you want, there’s some pros too.
So obviously a new buyer of our business gets the team. Right. Okay. that’s probably the biggest pro is that it can sustain without you. We’ve had these conversations before where John can actually disappear for a month on tour or on vacation or whatever.
And it’s not gonna affect his business. they just won’t set up projects for John for that month. whereas I can’t, I can’t do that. Well, maybe. [00:30:00] And so there’s a lot. Maybe you could. I mean, if you’re, if I get the correct contractors in place, I have the ongoing support person.
I do need like a server support person as well, or like a hosting support person, who, like, if a site goes down, they can manage that. If I did get that person in place, then yes, I could disappear for at least a fraction of time, but I wouldn’t be having any new project. I mean, I guess I could, if I had some, if I had some design contractors too.
My, well, my argument, is, let’s say you had three subcontractors that were doing everything in your business, minus. minus whatever you wanted to do, which I don’t even know. What would you want to do? What if you like, if you like, um, design.
I like design. Design. Okay. All great. I, I know I’m not the best at it, but it’s still my favorite. You’re great. By far. The most you’re Stop. Stop it. Stop it. She’s great at it. Okay, good enough. and let’s say eventually you found a subcontractor that was amazing at design too, and you were like, man, I could, now I can disappear for a month, you know?
Right. Yeah. I still check my email. Even when I disappear for a [00:31:00] month, I’m still probably working an hour a day, like just. Replying to people or whatever and the team, they have questions on stuff. Yeah. But here’s my, here’s my gamble. My gamble is, I bet if you had a team of subcontracts in place and you were talking to a new buyer, and somehow you said, Hey subcontractors, I’m paying you each this retainer every month. This new buyer’s gonna pay you the same. Will you commit to go work for them? It is just as good as do you think, well, hey buyer, here’s the team of employees. And they can, ’cause they can just quit. They can quit a month after. Normally what you do is , you’d say, okay, hey, employees or subcontractors, either one, if you stay on for six months, you’re gonna get a $5,000 bonus or something like that.
Like you kind of get them and you build that in because the new buyer knows, well, John, if you and Jake sell your team is six, you got four people left. They could all quit in three months and then I’m screwed. Right. Your whole point about how just in general on freelancing on like, Hey, your full-time [00:32:00] job isn’t as secure as you think.
it’s kind of that idea of like, Hey, these employees , aren’t as secure as you think they can move on. You know? And so that’s why I’m like. Telling our mentee, Hey, don’t even worry about building a team right now. Build a team of subcontractors. Maybe someday you’ll hire them, but if you don’t, you could still.
Make them part of the sale of your business. That’s my thought. You could, I’m curious. I feel like we need to do some research on that. ’cause I’m curious if that happens often, like a team of subcontractors goes along with a sellable business. that just, that seems wild, but I’m guessing that probably does happen.
Early on when I was a subcontractor for two different agencies. If one of those guys would’ve said, Hey John, I’m selling the business normally. I’m giving you $1,500 per project to design and build these in WordPress us. The new guy’s gonna give you $1,500. You can meet him here.
You can hang out with them, talk to ’em. What do you think? Are you in or out? I’d probably been like, I’m in. I mean, you’re, you’re right. That’s a great [00:33:00] point. And that in that scenario, a contractor is probably an even better sell than an employee, honestly, because nothing really changes, you know?
Don’t, ’cause they’re remote, they don’t care. They’re, yeah. Yeah. I think where the difference would come in value wise with the team is if it’s management level and true. And I’m not sure, is anyone at artillery concern management level don’t, we don’t have, besides Jake, we don’t have that middle, we don’t have the middle management layer.
Right. So, so yeah, that’s where I can definitely see that value. And the book built, so sell goes into that as well, is that management level. ’cause then they can train, you know, if the employees quit, that management level can come in and train the other ones , to where the other ones were and they know all the processes, all that.
But without that level, I’m not sure. It makes much of a difference value-wise on entry-level employees versus contractors. Interesting. So , my only other. what do you call it, norm, that I want to tackle? We just tackled the, hey, can subcontractors be just as good of employees in the sale?
You know, one tier employees, let’s say you [00:34:00] convinced me there’s an argument to be made. Alright? This other argument, which we just had with our mentee not arguing with her, uh, discussion, but she was told by somebody, another guru, that, Hey, referrals are great, but not as good. Oh, are we getting into this?
This is a whole episode, John. Oh, is it? Okay. Alright. Maybe I should. Well, I guess the short of it is, let’s not get into the whole thing, but in the same way that subcontractors could be sold along with a business. Let’s say I have a business that for the last five years I can show a new buyer and you could too.
Hey. Because of my SEO position on Google and other stuff. And because of my business’ reputation and our Google reviews and all that stuff, you can see that we’re getting, let’s say for the last five years, we’ve got an average of 10. We leads coming in from those sources, Google, word of mouth people, our clients telling referrals.
Is that just as [00:35:00] good as if I’m saying, man, I’m spending X amount on ads for my web design business and I get 10 leads a month. I think it’s way more valuable. I do too the former than the latter I do too. Google ads. Or crapshoot and that evolves constantly. Granted your, business referrals and stuff evolve as well, but, the existence of a.
Just a proven, referral based business, or, I mean, it’s not even all referral based, you’re talking about SEO , and Google, listings as well. , you can’t fake that stuff. Whereas ads is essentially just kind of faking it, like anyone could do that.
so it’s a different level of value in my opinion. And I would argue that your 10 leads per month on average coming in from referrals and word of mouth is probably more predictable than your x amount of leads coming in from ads. Because if totally, if Google changes level of leads, one thing.
Right. So we will save [00:36:00] the rest of that maybe for our next episode. We’ll see. It’s cold. It’s cold leads versus warm leads, which is like not even comparable. Yeah. I mean, it’s, but the argument of, of, well, you know, we will tackle in a future episode, maybe even next episode, Kelly. Yeah. Let’s do it.
Well, hey, your business is based on referrals, so that’s not good. you have to, you have to have, have up a sales machine. A sales machine. All right, well, my last two notes on this whole topic of selling a business, why design business and how to get the most dollars for it.
You need to read the other book by John Warlow, the Art of Selling Your Business. ’cause in that book he talks negotiation strategies. He even talks like, here are the best group of buyers for your business. And it’s usually okay. It’s usually companies that make, anywhere from, five to 20 times your revenue.
If I always try to sell to Kelly, like I’m not gonna get as much if I try to sell. And you wouldn’t need, if you tried to sell to me as if he would’ve tried to sell to a big agency downtown that has Sure. 20 [00:37:00] XR revenue. And there’s some, yeah, there’s some other things.
Or I’ve heard also selling your business, like you wanna keep things. It’s, oh gosh. It’s kind of like a, a strip tease almost. Like you’re kind of, you’re, you’re, I know. I’m sorry. It’s a fun analogy. It’s usually cars. You’re just, you don’t reveal everything at once.
You just, oh, you reveal, you reveal a little bit and a little, I don’t know what else. I need to find a new analogy, obviously. No, that’s, that’s a good one. I get it. But you, you visual, you know, you, you’re just like, ah, you, you keep things close until you know that they’re really
yeah. And the other resource is, , I’m a John, wear a little fanboy. Okay. He also has a weekly podcast called Built to Sell podcast, where every week he interviews someone who has sold their business. Some for, I’ll be you in like 10 years. You too. Some for many millions. One episode I watched after a lawyer fees, the gal lost 500 K.
Oh no. Yeah. So have there been any web designers on there that you’re aware of, or agents? Probably. Agencies, yes. Oh yeah. There’ve been, oh yeah. And then, sometimes he’ll interview acquirers, like, Hey, [00:38:00] what are you looking for? Oh, when you go to, so it’s a fun, listen, so yeah, all the John Ware list stuff.
Built a sale book, built a sell podcast, and then the art of selling your business. Anyway, , any final thoughts, Kelly, on the why, how?
And get the most out of your business for now. I’ve said it already, but just following those best practices, regardless of if you’re even thinking about selling right now because they will do your business good anyway. that and. To also point out everyone’s situation is completely different.
So the specific situation we’re talking about with , our mentee and our situations, are probably different than yours. So it all depends. and having a mentor to help you through, your specific situation is, , probably a good, good idea. My final thought is if you don’t set up your business to run without you and be sold someday, or mainly run without you.
You won’t regret that. If you don’t do that, you’re gonna regret that you didn’t do it at some point. Yeah. You’re gonna, want those processes. You’re gonna want that [00:39:00] help. Yeah, for sure. So, alright folks, thanks for tuning in, joining Kelly and I today on the web Design Empire.
Also check out break into web.com. Learn how you can break away from your daily grind. Become a freelance web designer like us, create the empire you’ve been dreaming of. And as we’ve mentioned, we have web design and business coaching on break into web as well. Alright. Cheers y’all. We’ll see you next time.