James Thomson 4:37
So let’s talk about some of that automation and slps and so on. And let’s talk about it within the context of building a business that as of the last 12 months or so there are now realistic options for private label sellers to get to a point where there are outside investors interested in potentially buying their business. I’d love to get your take on What has happened to create all this recent interest in these private label businesses, when many of these types of businesses, they’ve been around for 20 years since the beginning of the Amazon Marketplace, what why now what’s going on?
Norm Farrar 5:13
Well, we’ve been around for a while the Amazon Marketplace, both of us young, we slide back in 2014, trying to sell a business. And people were saying, Amazon will not let you sell your your brand, you know, they, it was crazy. And all of a sudden, people started to see that Amazon is a real legit business, you can actually make something and some serious multiples, if you if you did your research, and you had the right deal. So the more that’s an especially now with COVID, because e-commerce is expanding so quickly, is the cream of the crop are going to rise. And they’re the ones that are going to take advantage of really what’s out there in the marketplace right now is learning how to do it properly.
James Thomson 6:01
So the level of sophistication that one needed to become successful as a private label seller 10 years ago, five years ago, two years ago, there was still an awful lot of throwing stuff up against the wall, and some stuff would stick, some stuff would not stick. But there are now folks that are saying wait a minute, I know exactly what I need to do, I’m going to jump in. And in two years, I’m going to exit with a very successful business, I’m going to have something that we’re going to call a brand, someone’s going to buy it from me that that’s a much more of a mechanical roadmap that people are now putting in place. What do you think’s going to happen over the next couple years as people get more sophisticated? Now that there are these external investors excited about the possibility of buying their business?
Norm Farrar 6:47
Well, first, I think people really do have to manage expectations. There’s a lot of malarkey out there about you know, what the multiples are, what you know, getting things in order, and what are buyers really looking at these aggregators that are lined up? What are they looking for, and learning how not to be taken advantage of, I think the biggest thing right now that we can do, as sellers on Amazon, is not just sell on Amazon, you’re a real business, treat it as a real business, right from the get go. And that means building the brand, a doing your research, not just jumping in, now understand where you can go do real competitive analysis, if you don’t know how to do it, hire somebody, knowing where and how to spend money. But at the end of the day, that brand, if you can build a brand that’s consistent in solid, if you’re the authority in the industry, and you can build trust, you’re going to get sales, and that’s going to help you out but it’s all about consistency with that brand. And like you just said, people in the past, you could have been selling anything, it didn’t matter. Anything about brand. But now that Amazon is becoming more about brand and building a community, we have to do it. It’s a captivated audience. And then we have to go for me, I’ve heard this from different people that Oh, only stick on Amazon. Well, you know what? I’m too old of a dog, you know, one legged stools? I’m not, I want to be diverse. I want to be able to go out there and take that brand and take it onto Shopify or take it on to Walmart. And you can’t just trust Amazon, you’ll get that email one day, and who knows what’ll end up happening? Right, right.
James Thomson 8:39
So So let’s talk about how the conversation has changed within your mastermind. What are some of the new questions being asked today or the questions that are being asked a lot more than you’ve ever seen before?
Norm Farrar 8:51
Well, first of all, it sounds so crazy, but is it saturated? That’s wild.
James Thomson 8:58
Norm Farrar 8:59
Absolutely not. Absolutely not. And fear, fear of the Chinese. Where Why do you need fear? If if you’ve got different types of audiences out there, one that you’re going to target and be product cannibalized? You know, go for it. If you want to make pennies rather than dollars do it. Yep, yep. But okay, well, how can I compete with the Chinese? All right, higher perceived value, you know, learn how to build that brand. Talking about what do I need to do at the very beginning. So you know, talking and talking through, do your proper accounting, put together repeatable tasks through slps. Then build up a staff, you know, and a loyal staff. Don’t go and pay pennies on the dollar, you know, build it like they are your staff, depending on you. So that’s another area and then talking with experts. Where are the you know, what can I do to protect Probably create the most optimized valuation that I can get. And that’s talking probably to a broker. Now, don’t wait until you get approached. Why don’t you sell when you’re at your high, you’re doing really well. And you know, you’ve done everything you could to possibly control your expenses, to maximize what you’re doing, and to just basically have a turnkey operation. That I think is probably the most important thing when an aggregator is coming to look at you, can you just hand it over to them?
James Thomson 10:33
So one of the things that I realized and talking to someone who is actively engaged with sellers like you are today, you know, you are a source of information for many sellers, for folks who are coming to you who haven’t been using your services up to this point, where are they getting their information that ultimately leads them to you? Because quite frankly, there is a lot of malarkey out there. So as I work through all these new additional issues as a seller that oh my gosh, how do I position myself, somebody will buy my business? Where do you go to get good information on those types of issues?
Norm Farrar 11:09
There are, unfortunately, there’s a lot of people that try to do it on the cheap, they’ll go to YouTube, they’ll watch videos from 2017. Yeah, they’re getting great information. I like to tell people to spend money. If you’re going to make this an investment into yourself, you’ve got to go and find a course find a great course, take the course, then you don’t want to go to 10 different gurus telling you 10 different things, find one or two people that fit your personality, and listen to them. I hear so many people that are so conflicted, and they’ve got so many apps, and they’ve got $400 a month here, $200 here, right? It’s not worth it, and it just it just muddies the water. So find a good course find a good mastermind, and probably as a business person, find a good guru or Nakuru up, find a find a mentor, somebody you know that can really help you grow.
James Thomson 12:18
So you talked a moment ago about this whole concern about saturation. And the flip side of saturation is if this is viewed as a pot of gold, for sellers, oh my gosh, I gotta hurry up and get a piece of the action here. That being said, Is this going to be in your view, you know, this opportunity to sell your brands is something that’s going to stick around for several years? Or is there a sweet spot where sellers should be saying I need to get my act together, get my business ready to sell in the next six months? 12 months, 18 months? What are your thoughts around how long this is going to last? And if it is going to continue to last? What does it look like a couple years out from now?
Norm Farrar 13:05
Well, I always start the business with the exit plan in mind. But if I’m, let’s say I’m working in the business, and all of a sudden, I’m noticing that there’s a trend or the trend is starting to Peter off. Yeah, definitely do want to sell high. You don’t want to be selling when you’re on a decline, it’s going to kill you. So that’s one of the first things to take a look at. constantly look at your competition. And it’s important to see if if they’re because we’re all entrepreneurs, if they’re pivoting on a dime, take a look at what’s good, bad and ugly. Yeah, I call it The Brady Bunch effect. I go in, and if my my even on launch, but if some of my my competitors are changing something, Amazon comes up with something new, I test it out. And it could be on pickfu. It could be on usability hub, but I just see if I’m at least at the level of my competitor, my top competitors, or better and if I’m not then I go back to the drawing board to keep that going. The other thing is, where can you diversify your brand? You know, do you have if you’re selling soap? Are you gonna get into bath bombs, you want to bring in other products that you can leverage off of the brand. And probably another area that if you could, while you’re gaining speed, can you get into recurring revenue. That’s a beautiful business model. I love recurring revenue. And if you can do that as a brand owner, then that’s great. It’s always coming in. It’s really just monitoring at the end of the day. I talked to a broker, I would get the information, see what advice that they would give and then start to build out everything that we’re talking about today. And make sure that you’re not headed for a decline. If you are then I would be trying to sell fairly quickly. I don’t think there’s going to be anytime soon that you’re going to see, you know, just Amazon, this piece of gold that you’re looking for. There’s lots of gold though. There’s lots of little nuggets out there. And everybody, as long as they’re action oriented and put things into place, and don’t think it’s a get quick read, I hate seeing these guys on Lamborghinis. It’s not it’s a business. It takes
James Thomson 15:27
no currency. here we come. Yeah, here we go. There we go. So let me ask you this, you’ve been working with Amazon sellers for quite some time. If I came to you today and said, I want to get into this space, I want to become a private label seller. There’s a number of different issues where maybe the discipline should have been there in past generations of Amazon sellers. But let’s talk about today. Best practices, I’m jumping into this space of private label, branding, private label selling. Talk to me about operating procedures, how do I need to think about getting operating procedures together when I’m new, and I’m trying to learn, you know, what works,
Norm Farrar 16:08
what doesn’t work. There’s a great book on the market. My firt, my, I had a hyper growth company back in the 90s, I was losing it. I read The E-Myth by Michael Gerber. It changed everything like just systemising. I went through the E-Myth Academy and got everything in place. That’s the probably the very first thing if you’re looking at, you know, getting getting into the business. Prior to even sourcing anything I know in my head that any repeatable task I’m going to put into an SLP. And I can explain that very quickly in a couple of seconds. But it’s going through each system, methodically, but not what iffing it to death. Yep. No, you can’t say, oh, what happens if this happens, or what happens if you can look at it? If it looks like the planets have lined up, then go for it. We’re doing something right now, this is another unique challenge that we do in our mastermind, Tim and I are putting up our own money. And we’re putting this thing called million dollar challenge. So we’ve got 12 months to make a million dollars in sales, okay. And it’s, this is how we do it. This is how you do your competitive research. This is how you’re doing your product opportunities. And it’s just kind of structured that way. Like, when you go in, especially for your competitive analysis, you’ve really got to take a look. People skip over that. I think too quickly. Product opportunity, people think oh, let’s go to Alibaba going to a retail store and check it out. Talk to the sales people in the retail store. You know, I I learned that on my podcast. I had a guy on talking about it a almost a year ago. And it was Wow. That’s that’s an interesting idea. Try it. It works.
James Thomson 18:03
So what do you learn? What are you learning?
Norm Farrar 18:07
Why are people buying the product? What colors what packaging? What’s working in retail that’s might not work in Amazon and take advantage of that opportunity. Lots of cool one go in and you can go and see what’s selling what’s moving. What are the leaders in the category, they might not be on Amazon. And you can take over that trend or try to get in right. And I’ll give you an A great example. Toe fungus remover. Okay. Okay, when in if you saw the bottle, I had a company come to me talking to me about toe fungus remover. Now I did proper research, but I just noticed that it’s a brown bag product. It’s medicinal, most of it was ugly. And so we changed the packaging to make it natural and wellness oriented gave people a feel good up the perception. So we could get 24 bucks instead of $9. And treated it like a you know, I treated it like a real business where all the others had, including this guy. He had a powder blue package with a yellow toe dripping and look like oozing warts. And it was it was horrible. But we changed it and we got those cells from he added on the market for 18 months doing $1,000. And we had it as high as 124,000 a month. Because we change the messaging. I’ll tell you, it’s easy. It’s not easy to do. But if you see a niche, you can go after it. And if you know a little bit about it like pet or beauty or whatever it is, go for it. But one of my probably the biggest tip I could give today is product innovation. If you can go Kevin King is great for this product innovation. So you go You find a product, how can that plastic shoe stretcher that seven other people are selling be different? Either color material quality, something IE packaging. And that’s how you can help build your brand.
James Thomson 20:15
So what are you telling? Or what are sellers should be thinking right now in terms of the time to actually build a brand, before they can get to the point where potentially selling it is realistic. Two years ago, the concept of selling it was foreign today. I’m hearing people getting in and out in 16 months, that that’s not necessarily the norm. But how long do you think it takes to build something that constitutes a real brand with real following a meaningful story, and so on so forth, that an investor would say, I’m ready to buy that from you?
Norm Farrar 20:51
Yeah, or steal it from you if it’s too early. So you know, and that’s why I’m going to come back and say, My thought is 18 to 24 months, if you can sell within that time period, that’s a reasonable time, if you’re going over 24 months? I don’t know. But I think that’s a reasonable amount of time to get a fair deal. And you know, it gives it gives us a sell on the high rather than low.
James Thomson 21:22
What does it mean to build a successful brand on Amazon? And I’m asking you this question. As a guy who was a marketing, academic, and branding had certain things in place, a brand on Amazon isn’t necessarily the same thing. It’s not necessarily a PNG type brand, where you’ve got big billboards, and big end end of aisle displays, and so on. But what does it mean to be a successful brand on Amazon?
Norm Farrar 21:51
Well, a successful brand, it’s a micro brand. So these are, you know, we’re building a brand from scratch and trying to play with the big boys. You don’t have to, you don’t have to spend hundreds of 1000s of dollars, but you have to know where to spend your money. If you’re going to a guy on Fiverr, and you’re spending $5 on a logo doesn’t say much about your brand, but right from the get go. If you’re thinking about building up that brand, you’ve got to get quality, the branding, like get spec cards and make sure that you’re not bastardizing, the logo, it’s always consistent. Making I do a pre, whenever I’m getting into a brand or into a product launch, I always try to do a pre launch to help build the brand prior to launch. And that will, you know, maybe I’ll go and I’ll get a real like a traditional press release, I might try to build up my influencers. To get it going. I’ll build out the website, just so I can drive traffic either to the website for some deal, hooking them back over to Amazon, yes, yes. And my social media. So that’s the start of a brand. Your brand then is getting and, and building that culture, the culture within your business, that might be you buying into it. But for me, it’s my VA is or my contractors or my employees, buying into what we’re trying to achieve and living the brand. It’s so important. And you’ll see this with really good franchises that they have the proper training. And I say proper training, because as a single amazon seller, and you’re trying to go on this sales roller coaster, right, you’ve got your brand, you’ve got this product, but then you you have you’re working 25 hours a day you hire a VA, you don’t properly train that, that person, they don’t know what they’re doing. And then you’re done with them, you start screaming at them, because they don’t know what they do. And you take back the job. And you wait till you go 25 hours again. And it’s a it’s a sales roller coaster, you never get it right. And this is where the The E-Myth taught me how to do this. And this is sit down and record a video, but properly trained from the get go. And when you become when you get action oriented or performance, a performance based culture. That’s your brand. I mean, it really is your brand. You’re starting from the top down, and everybody’s working to Oh yeah, we could do this. Take suggestions. If you’re screaming at your staff. Nobody’s gonna give you suggestions. So building that staff or building your contractors is so important as well, bigger and the other thing that might not sound that big. But there’s two things if you’re if you’re working with people overseas, check out what type of cell phone they’re using their internet and their computers. If we have if we invest in them will buy them computers, buy them phones, make sure that their internet rate now that gets them up to speed. But what was I going to say something about the contractors. Anyways, it’s just so important for those things to happen, and then consistently Build Content, build content on your brand. I’ve got one keyword phrase, I was doing a podcast once on just keywords. Okay, and we had chewy number one, this is all for the one keyword under the one brand I had chewy, number one amazon.com amazon.ca, a couple of others, all four images were ours. And then the whole second page except one, were all from our influencers writing content, or from press releases or content being driven. Now somebody types in that. Who’s the authority?
James Thomson 25:59
Naturally, you become the authority, you’re naturally the brand, you’re top of mind. That’s that’s what this is all about. I want to go back to something you said earlier, you mentioned brokers. And one of the fascinating things that I’m seeing now that there are literally dozens of these aggregators, and investors that are jumping in, as you know, many of them are proactively reaching out to brands that didn’t realize they were about to be sold. And they’re having conversations saying, hey, I’ve been watching you, I love your brand. And I want to make you this offer. And brands are saying I didn’t realize that people were watching, I didn’t realize that you could put together an offer that had millions of dollars in it. How do you think about this process of brokers, waiting for people to reach out directly to you potentially doing a strategic deal? How realistic are some of these options for different types of sellers, especially if the seller isn’t necessarily on the same timeline as a potential investor.
Norm Farrar 26:58
If you’re in a good mastermind, you can start to ask about brokers and probably get some feedback. I mean, there are a lot out there. I like to be proactive, reach out, talk to a broker, and make sure that you get you know, some references or referrals, you know, and then, typically what I found, I’m not sure about you, James, but though they want to work with you, the more that they can help you and there’s no charge, usually it’s look, let’s take a look at your business. And then if they can get it built to a certain point, then they’re interested it it’s Win Win, they’ll get more money for it more money in their genes, more money over to you. And it’s important where I see a lot of people going the wrong way, trying to do it themselves. And they’re just messing it up. Because they don’t want to pay the brokerage fee, right. So anyways, I think that if you’re trying to do something on your own, and you’re trying to sell it and you’re trying just to save a few points, you’re, you’re missing out on an extra zero.
James Thomson 28:08
So as a mastermind manager, if I can call you that the manager of a mastermind, what changes are you having to make with regards to your content, the way you interact with members? Now that there’s all this investment activity? How are you having to adapt to that to provide more of the right kind of relevant questions and answers discussions? How does that work today?
Norm Farrar 28:33
What’s finding the right people as members to come in? So you know, getting XYZ aggregator you know, to join, getting them to present, right, right from the start to the finish, what to expect how to put together an exit plan, how to run or how to, how to minimize expenses, what to look for. And these are the things that you can put out, not through just like say, Tim or myself, there’s a lot more smarter peoples out there that know a heck of a lot more about putting a deal together, get them in, get them talking. And then if they’re part of the group, there’s always questions especially like within a Facebook group, that okay, it’s, it’s, they’re being tagged, and then you’re getting the information. Probably the easiest thing.
James Thomson 29:24
So I guess you’ve partly answered this question, but from the sellers in your group that have gone on to sell their business, what kind of unexpected insights have they been able to bring back to the remaining members who haven’t yet sold their business? But what kinds of things have you learned or have they learned where you said, Wow, we just didn’t realize that was going on? That’s really useful insight.
Norm Farrar 29:49
First of all, probably one of the main issues is due diligence. It’s not just Oh, it’s done. And over somebody makes you an offer. So we hear that a lot that they weren’t prepared to, for the offer to come in or at first look to the actual check being signed. Yeah. And then it’s the differences in deals. So people that have said, No, I don’t want to sell right now and see different deals coming through now either getting a portion upfront being paid a consulting fee, a performance based deal. There’s all sorts of deals on the table. Let’s see, I’m trying to think what is I, probably the people that I’m thinking of that would come up with,
James Thomson 30:49
I probably would say that some of them would say that they sold too quick.
Norm Farrar 30:56
They sold too quick. And I know one person in particular, that should have shopped around, don’t take the first deal. These are pretty, you know, standard sort of thoughts, but it’s so important. The structure of the deal, how long is it going to take? At the end of the day? What are the fees associated with it that, you know, are there any hidden fees? What is my earn out? You know, what’s my act? What? What can cause me not to get better and out. So, you know, I had one person. Now, they weren’t part of this group, but was in another group that ended up about six months into the deal, a lawsuit was filed. It did not get disclosed. And guess what happens is a deal. So, it’s these are things that have to come out even if even it’s the worst information. You know, if it looks bad on you, if it’s a skeleton in your closet, during that due diligence process, you really do have to bring it out and say, Oh, you know, is there any chance of a lawsuit? Oh, let me think. Because if there is I could affect if something comes up. Right. It could affect it.
James Thomson 32:15
Now, disclose, disclose, disclose.
Norm Farrar 32:17
Yeah, yeah. Yeah, absolutely. Now used to be. And who was it? I don’t know, I was at the Prosper Show. And somebody was talking about taxes and not disclosing their taxes. Yeah, I think it was you. Yeah. Yeah, that was talking about it. And, and anyways, I mean, all these little things have to be upfront. I am, I had a tech incubator, and this is back. Probably 1999. And I had an offer come in, I had no idea how long the process would be. And this is, this is very, this is critical. If it takes you off your game, because the process is going to, you’re going to be absorbed into this to get that paycheck. And if you’re not prepared to do that, you either have to bring somebody in, who can help you. Or you’re gonna take your eye off your business. And that could have some really severe effects.
James Thomson 33:25
Especially if you have a hyper growth business, like many Amazon brands are, yeah, you’re 40 50% growth each year, and all of a sudden, you’re now sitting with a potential offering, you’re growing 5% 5%? Because you can’t you can’t keep focusing on 25 hours a day. Yeah. Well, let me ask you this. When you think about what a mastermind can do at this point, to help members become successful, given that success now includes potentially a big, lucrative, external offer. Where do you see yourself as a mastermind manager evolving, the types of services and offerings that you provide today, to help members do better when it finally comes time to exit?
Norm Farrar 34:13
Probably the best thing that we can do is provide the best resources possible. If if you’re in a mastermind, and another thing I would probably do is examine, who are who’s involved with the mastermind. Have they been involved with Amazon? Do they are they doing anything other than that? Or are they just, you know, a couple of people that are giving you some wisdom in are at at your expense? I think it’s important that you have top people involved and that you’re getting the resources. So a lot of the times in masterminds like the our mastermind, will have resource materials will have files there will have training there that People can go and and talk about the other thing is, are they willing to discuss it? Are you able to, if people have an interest in a topic can be fairly rapidly talked about? If people need, oh, hey, I’m going to be exiting? or What can I do? Well, let’s do a hot seat so we can improve the listing, or just the ability to build the overall online business. So you have to have those types of members and experts involved. That’s probably the best thing that I can advise people to go out and hunt out groups out there that can provide that information.
James Thomson 35:43
Normally, I want to wrap up our conversation today by asking you a little bit of a loaded question. I know some of these investors are paying fairly high multiples for some of the private label brands they’re buying. How do you see them getting the value they need out of that investment? these private label brands that have grown quickly, and it only convinces somebody that they’re ripe for purchase? How do these investors get their value out of these businesses? What do investors need to do to take it to the next level?
Norm Farrar 36:13
Well, I think you have to gauge the business you’re going to be buying. And if the business is already fully optimized, and it has whatever growth it is, that’s simple. But as an investor going out and trying to find a business, that quality quite hasn’t blossomed. They don’t understand PPC properly. They haven’t built their community, great brand. Great look. That’s where the investor can take their time, as long as they have the team and build up and blow up the company. There’s so many opportunities, I see it all the time where I’m looking at fairly good. I’m talking about just recently, this week, I’m looking at this eight figure $16 million company on Amazon, and I’m looking at their listings and going to give it to me just, you know,
James Thomson 37:11
I wish, that’s beautiful. If you can take that on and make the easy upgrades.
Norm Farrar 37:16
Yeah, but it’s finding those diamonds in the rough and it doesn’t even have to be a diamond, it could be a piece of coal. But there’s so many sellers out there that just don’t have that expertise. So out of a 10 you’re looking at a five or look at a six where you’ve got that wiggle room to bring in your group and to make this thing pop to become the authority. Too many too many brands are afraid to spend any money to become the authority, and there’s so many out there that could just do a fantastic job. That’s where you take advantage as an investor.
James Thomson 37:54
Norm, I want to thank you for joining us today on the Buy Box Experts Podcast. For those of you interested in learning more about the Centurion League, please visit privatelabellegion.com/mastermind. Join us again next time on the Buy Box Experts Podcast. Today’s episode is brought to you by GETIDA. GETIDA is a global leader in Amazon FBA, auditing and reimbursements. GETIDA analyzes your Amazon data, reconciles your FBA inventory and files claims reimbursements on your behalf. No obligations, no hidden fees, just GETIDA recovering your money. GETIDA helps you get your money back into your pockets so you can focus on investing in more inventory and growing your business. To learn more, check out getida.com. That’s getida.com.
Thanks for listening to the Buy Box Experts Podcast. Be sure to click subscribe, check us out on the web and we’ll see you next time.