I Acquired a Business for 43% of Its Asking Price and Now Profit $40k Per Month!

From working remotely while traveling around the world – to acquiring a business for 43% of its asking price and 4x’ing its revenue within a year, Mike Swigunski has a lot of cool insights on deal-making, delegation, pricing strategies, and more.

In short, Mike is an inspirational example of a remote worker turned entrepreneur.

And if you grab a pen and paper to take notes, you may walk away from his interview with some potentially life-changing, actionable tips!

Watch The Interview

Drawing from his time working at Empire Flippers, Mike gained valuable insights into the intricacies of the acquisition process for a software business.

A key takeaway from Mike’s experience is the importance of understanding seller motivations and using factual data to structure deals for effective negotiation.

The acquisition he gets into was structured to enable a quick return on investment.

Again, thanks to his experience brokering several big deals with Empire Flippers, he has a deep understanding of monetization opportunities in the online space.

Pricing psychology and benchmarking were crucial in the immediate aftermath of acquiring the business. As he outlines, he prioritized testing prices, optimizing the pricing page, optimizing customer service, and ensuring mobile-friendliness for enhanced user experience. 

He also chose to add a free trial of the full suite of tools, remove a free basic plan, translate the site into multiple languages, and focus on improving its conversion rate optimization.

His success is also attributed to his focus on lean operations and strategic outsourcing for important tasks like code auditing.

And he stresses the importance of hiring the right talent, mastering delegation, honing managerial skills, and possessing marketing and sales expertise.

All of this helped the site go from $10k in monthly profit to nearly $40k per month at the time of recording—all within a period of approximately 14-15 months!

Topics Michael Swigunski Covers

• Transitioning from working abroad to acquiring a software business
• 4xing profit within the first month of acquisition
• Insights on monetization in the online space
• Acquisition process details, negotiation, and deal structure
• Post-acquisition Strategies
• Pricing adjustments, checkout process streamlining, etc.
• Understanding seller motivations and conducting thorough audits
• Data-backed decision-making and pricing psychology principles
• Benchmarking, pricing page optimization
• Conversion rate optimization
• Hiring the right people, delegation, and managerial skills
• Marketing and sales
• And more!

Links & Resources

Transcription

Jared: All right. Welcome back to the niche pursuits podcast. My name is Jared Bauman. And today we’re joined by Mike Swizgonski, Mike. Welcome. I got your name, right? I think I was nervous about saying it. I practiced it a couple of times. Welcome to the podcast. 

Mike: Yeah, Jared. Thanks so much. It’s a tough name. Don’t worry.

It’s a, I’m used to it my whole life. People, a ton of different variations of it, but overall it’s a, it’s no worries, but I’m looking forward to chatting with you about, uh, online business space. 

Jared: Yeah, it’s going to be good to have you. You know, we’re talking, um, about a couple of different subjects as they roll into your story here.

Acquisitions software as a service. I mean, what could be better than talking SAS on, on a, uh, on a Wednesday morning here, but I maybe before we dive in, as we like to do on the podcast, give us a little backstory, a little history about yourself. Bring us up to speed with where the story starts today. 

Mike: Yeah.

So I guess the cliff notes version is I got started. With kind of working and living abroad very early with study abroad, fast forward to my senior year, I decided to take a study abroad group over to Europe. I was working for the university of Missouri and essentially my first job out of university was working for a university in Prague teaching financial economics.

Now, why is this relevant to the online business space? Because it started this movement. This light bulb moment for me where, Hey, I was able to show up overseas in a new country, find a prestigious job and essentially be able to work and travel. Right. And then that slowly transitioned from working at physical locations overseas to working remotely overseas.

Right. Working for tech startups, working in sales and marketing. And, uh, I was, I was. Eventually, you know, fast forward, let’s say five or six years later, I was, uh, hired on early at empire flippers. I was employee number four there. So that was a very pivotal moment for me because one, I was able to put my marketing and sales skills to test with a hyper growth kind of foundation to build off of, but also on the flip side, Seen behind the internet, how is everything monetized and what’s real and what isn’t real.

So I helped scale the company over there from around five employees to hundreds of employees all around the world, brokered, you know, more than 120 million worth of deals. And. Eventually put my, my kind of belief in the industry to like, Hey, let’s, I, I, I believe in this industry of buying businesses. I believe in entrepreneurship.

Let’s put it to the test. And so I had my first acquisition, uh, for a software business and that kind of sparked this whole, uh, Ordeal of again, buying my own portfolio and then also helping others on both ends, buying and selling right. 

Jared: Empire flippers is a name I think a lot of people will be familiar with who listened to this podcast.

What was, you talked just a bit, maybe I can just ask one question about that. You talked a bit about like understanding what’s real and what isn’t real in terms of making money online. Like, could you unpack that maybe a little bit more? I would be so fascinated to hear some of the high level. And I know you can’t share for NDA and all different things like that, about the specifics.

It’s from a high level. Like, what does it look like when, what were the big, I guess, the big coming to knows from a high level about where people really make money online and maybe where people don’t make money online. 

Mike: Yeah. I would say the first, like the level one barrier for me was just, Hey, this stuff actually works.

There’s a lot of people doing it. And again, it’s a bit of the survivorship bias where you’re seeing the most profitable, you know, mature businesses. But one, just believing that you can make a lot of money online. And there’s a lot of people who are probably less educated, less qualified doing that.

They’ve just done it for longer. They’ve taken higher risk and they found the right opportunity. But you know, the second thing is a lot of boring kind of day to day businesses just make a lot of money. Like, you know, if you want to just. Be the, the toilet King person selling toilets online. There’s like niches like that, that aren’t very exciting, probably aren’t going to be the highlight of the event at a dinner party, but they can make some really good money and they can actually be sold for a great deal of.

You know, of money later, right. They’re very sellable businesses because there’s not a face attached to it and identity attached to it. And so while I love personal brands and I, I think that’s, it’s always powerful and always helps you leverage. There are a lot of niche businesses that are making millions of dollars a month and nobody would, would have any idea.

Jared: Well, let’s talk about the business that you bought. I mean, is that a good place to launch us off? I think, I mean, we could probably talk way more about empire flip is your time. They’re the deals you saw, but I mean, I will say from the outset that I’m, I’ve always had this underlying desire to buy a SAS product.

So I was secretly very excited for this interview to begin with. Maybe let’s, let’s, let’s dive into the acquisition process and any relevant details that you were looking for. As it relates to what you bought. 

Mike: Yeah. So I would say like, I had a smaller acquisition before this, this kind of bigger one. Um, and that was sort of a testing ground for me where I was like, I was able to implement a lot of quick fixes in this, get my return on investment in under eight months.

And so I was like, okay, I can do this for a smaller business. Let’s put the funds together. Let’s do it for something bigger. Because if. If it already has that solid foundation, there’s going to be exponential growth. So, uh, this deal, uh, was listed for around half a million dollars, I think five 15, if I remember correctly.

And I have an acquisition program where I help first time buyers. And it was actually, uh, A deal that myself and my student were looking at my student had certain investors and pretty strict criteria. They didn’t want to deal with something that was outside of the United States. They didn’t want something that was fully custom built.

So they’d pass on this deal initially, but I’d spent. Let’s just say six weeks talking to the seller, doing due diligence on it. And while it wasn’t a good fit for them, it was a pretty good fit for my skillsets because I saw a lot of the reasons that this people were passing on this deal as opportunities.

And those opportunities were something where within one or two months, we could really grow and scale this business. And to give you a few examples of what that means is. The things I loved about the business were it was a one owner business, one developer who had no real lens for marketing. They found the right niche.

They got a little bit of track, like traction and it just snowballed over time. They were more developer focused, building new features, building, uh, you know, improving things and actually overdeveloping it where after we acquired it, we asked them to turn off five or six different features because they just weren’t being used.

So that was kind of the foundation of why we love this deal. And a few of the things that we, we really saw for growth opportunities was it’s a 10 year old business. Ranking very well has a huge moat around it because to build this business from scratch, the software business, and that’s the reason I love the software space.

It has a bigger moat than almost any other business model for 10 years of development work. This guy’s billing 150 per hour. It would have cost us way more, even if we outsourced to India or Ukraine to build this from scratch, but it comes with a huge database of customers. It comes with a lot of ranking on Google.

And essentially a proof of concept in the industry that’s working. So we’ve got a 10 year head start and let’s just say over half a million dollars of dev work into this business. So that foundation was great. Then there was all the low hanging fruits where they haven’t raised the prices for 10 years.

They hadn’t tested any other pricing points. And that was for me in general with software. One things I love is where if you’re selling products on other platforms, a lot of times you’re at the mercy of the affiliate, you can’t adjust the prices or you just don’t have enough control. Day one, I can get in there and change the prices and test a higher price plan, change the pricing structure around.

So that was one of the things I loved. The second thing I loved about this, this deal was they didn’t have recurring revenue set up. So. Again, another, a software business that doesn’t have recurring revenue is crazy. Like their process was they would let the person’s billing expire after a year. And then they would just send them a couple of emails and that’s it.

And so we set up auto billing. We moved from, uh, having the option for yearly and monthly. And so those two fixes alone just really have, have snowballed. And then the other biggest thing was the onboarding and, uh, payment, the payment selection or pricing plan, uh, sort of layout was really clunky to figure out which plan to sign up for.

You needed a spreadsheet. It was so complicated that even after talking to the seller, I still didn’t understand which plan was a good fit. So we can, we made it very simple within 10 seconds. Everyone can understand which pricing plan is best. And then we raised the prices and made the onboarding process a lot easier.

So the, to actually pay, you would go through the checkout process. After you did calculus to figure out what pricing plan to select, you would get sent to a checkout page. Then on that page, you get sent an email in the email. You would have to click to go to a payout, a payment page. And so it was just like this five or six step process that was really.

Convoluted. And the other thing was they, they collected all these unnecessary details. So we, we streamlined the checkout page. We got rid of, let’s say 90 percent of the fields that were required to check out. And we, uh, we kind of switched the layout for, for the pricing plan. So they had a freemium kind of like free plan.

Uh, model, but the problem with their free plan model was it only did 10 percent of what the software did. So it really wasn’t giving users a good experience. So we moved to a, uh, 14 day trial where they got to use the whole software, explore exactly what it can use. And that’s all those changes alone have, uh, you know, more, more than Forex, the, the profit in the business.

Jared: I mean, hearing 

Mike: you 

Jared: describe this granted, it takes a little bit of a savvy. Person to understand that these are opportunities, but still here, you describe it, even if somebody picked up on one or two of those, this feels like a good deal, why you mentioned that you were able to see through a lot of the reasons other people were passing on the deal, how long had the, had the, the business, how long have the SAS been on market for, and what were the big reasons people were passing on it?

Mike: Yeah. So it’d been on the marketplace for let’s say over six months. And the other reason is just in the half million dollar range. It’s a real, it’s kind of a dead man’s zone for, uh, most solopreneurs. It’s too big for most solopreneurs and it’s too small for most portfolio buyers. 

Jared: I’ve heard that. So 

Mike: it gives me a kind of a competitive advantage to navigate in that space.

Um, that the main, the main reason people were passing on it, one, it was, it was set up in the Netherlands, little complicated business structure. Uh, the second thing was, uh, A lot of the customers are, are Dutch based. Uh, so it’s not all U S and then the third thing was, it was a custom software that a lot of people just aren’t super familiar with.

Uh, so it’s built on Microsoft Azure, um, which is pretty big. A lot of people, it’s not too hard to find a dev in that space, but. Usually it’s fairly expensive to do dev work versus, you know, WordPress, right? To make our dev changes likely is three times longer than to make dev changes for a WordPress site, uh, just in general.

But overall it’s like you, you still have a lot of control over the custom software. So there are some pros and cons to it, but I think that kind of, those main Things scared off, uh, most buyers. So 

Jared: whatever you can, you can share your comfortable sharing. What was the framework of the deal? You mentioned around a half million dollars.

But it’d been set in the market for six months. How did you end up structuring the deal and getting it over the line? 

Mike: Yeah. So, uh, after talking to the seller, which again, I’ll get into why this seller understanding the, the seller that you’re going to be buying from is so important to have a good understanding.

Good gut feeling and have them understand the question. So that was a huge portion of why we love this as well. But as far as the deal structure, it was listed for five, 15, half a million dollars. We negotiated a deal for two 25 upfront with a 90, 000 earn out with that 90, 000 earn out had stipulations where all of those changes I mentioned before, all those opportunities had to be.

Completed and adjusted by the seller. He was going to have to do the dev work to make those adjustments, setting up Stripe, changing the pricing pages, you know, getting the checkout process, streamlined all of those things before that earn out would start. So it wasn’t super simple, but in general, he agreed to that structure.

We had a, a bit of back and forth. So our initial offer was a little bit different, but that was the, the offer Essentially we agreed to 225 upfront, 90, 000 earn out, I believe over 20 months after the, uh, the, the earn out stipulations were met. The seller was, the reason he was selling it was he was having a child, wanted to have a clean exit from the business, focus time, more time on his family.

And essentially what happened was he got started working on those stipulations, realized that it was going to be a little bit outside of his comfort zone. He was. You know, gearing up for wanting to have a clean exit and just didn’t want to do three more months of work on the business. So he walked away from the 90, 000 earn out in the first month of, you know, after we signed the agreement.

So we re signed an agreement, made sure, Hey, we, You know, this is not normal in the, in the eminence MNA space. Most people don’t walk away from 90, 90, 000. Right. And so we, we made sure, Hey, think about this, talk to your business partner, talk to your family, sleep on it. And eventually, uh, we renegotiated where we would do the dev work ourself and that 90, 000 would just get reverted to us.

So our, essentially our 90, 000 interest free loan or seller financing, or however you want to look at it, just got wiped away. So month one, I think we netted around 15 to 20, 000 in profit. And then we netted this 90, 000, uh, deduction in, let’s just say our, our debt was cleared in month one. So we’re looking at a six figure month one, where we got 30 percent back of our, our capital.

Uh, so that alone is very rare, but it can show you the power of having a deal structure. That kind of reduces your risk. And that’s the type of deal structures that I love doing is having some type of creativity where it’s really going to ensure the success and reduce the risk for your business. 

Jared: How are you able to negotiate, you know, at two 25, even plus a 90, 000 earn out.

That’s three 15 business. I think you said it was like around five 15, like that’s about 60 cents in the dollar it’d been sitting on the market for a while. Like how does someone, I’m asking this to, to, to, to, to, to, to, to, to, to To think about the person on the other end, uh, listening saying I’m seeing businesses for sale.

I think they’re overvalued. I think I could do something with that business. And I think if I got it for a certain price, it would make sense, but I don’t want to offend them. How do they walk through? How did you walk through that process to get the business for what you thought it was worth without kind of breaking the whole deal up?

Mike: Yeah. So typically what I’m doing is Trying to figure out what’s their motivation for selling. Right. That’s a big one. Again, not to say that I’m using that as leverage, but just understanding what their timeline is, what is a win win situation for them. And then being able to structure something like that.

You know, in this instance, It’s one thing to say, Hey, it’s two 25 without any sort of reasoning. We were able to say, Hey, we don’t think it’s worth this based on, uh, you not actually having recurring, uh, subscribers set up, you know, this isn’t automated. The other thing was, you know, that I listed as a lot of these opportunities was, Hey, these, these things aren’t working where a business that’s valued at this multiple should have all of these things done.

Working, you know, fine tune. And then there’s the risk of it just being outside of the United States, a big portion of the customer base. So it’s one thing to low ball somebody. And again, this wasn’t a, I wouldn’t consider it a low ball offer, but it’s another thing to send a, uh, an offer. With criteria and sort of factual data on why you believe it’s worth that.

So there’s two very different approaches. And I think sellers are more. Receptive to something where they can understand your perspective and why you think it’s, it’s comes to that valuation. Right. So 

Jared: clearly, I mean, it worked out well, you guys obviously had a great relationship throughout the process, or at least from what you can see from the way that the deal points went through.

Um, I mean, if it’s possible, like, uh, and then we can kind of get into breaking apart some of the things that you did, but, um, what sort of revenue. And profit. Are you looking at when you have a business that is selling for that price range? And I think another thing to look at, or at least bring up is the fact that this was a single operator.

And so. You know, do you look at their salary, their replacement salary? Uh, these are important considerations because if, if they sell the business, yeah, once they’re, once their time in the deal structure is up, you perhaps no longer have the lead developer anymore, which it sounds like that’s exactly what happened to you.

So how do you kind of look at the profit of that business, whether, you know, it’s in this deal or in general, especially as a single operator where their ownership and salary or time spent in the business are sort of kind of mixed together sometimes. 

Mike: Yeah, so this was a big portion of why we wanted that earn out, right?

You know, we didn’t We didn’t calculate the dev work costing anywhere near 90, 000, but in general, that was a portion of why we structured it that way. Um, as far as like how much profit it was making, it was making around 11, 000 per month in profit. Uh, it did have a database of customers. It was fairly, uh, consistent year over year with 10 years of data as well.

It’s like, uh, a really reassuring, uh, kind of benefit. Structure that they, they had set up. So that was a big thing was that it was making 11, 000 in profit. And what we were able to do as far as like outsourcing and calculating, how do we divvy up those tasks? We did an audit of everything that the. The current seller was doing.

And a lot of times sellers overestimate what’s essential and sometimes they underestimate it. Right. So you really have to understand what you’re getting into. Some people say, yeah, one hour a month, I just update the plugins. And then you get in there and it’s like, okay, well there’s, you know, they’re checking Facebook ads.

They’re doing this every day that, you know, there’s like all these other moving parts. So you really have to audit that. And I would say. Uh, this guy was, was doing more than necessary. Um, so the first thing we did was, uh, again, we calculated the expenses of how many hours he was. Working with customer service tickets.

And then also how, how often did he need to update the software? Not. Tinker tinkering, you know, doing new features, but like core essential, keeping the lights on, keeping things optimized. So with those calculations, that also helped us justify our lower valuation. Cause Hey, we got to hire a technical VA to fill in for.

For this situation where they’re going to be responding to tickets, if we grow traffic by this much, our tickets and emails, uh, support requests are also going to Forex, right? So we had to kind of calculate for all those things to really justify, uh, this price point and also come to an understanding of like, what are, what are going to be the operating expenses for us to run the business?

But in general, It’s been pretty low and we’ve been very lean with, Hey, we want to make this a very profit focused business. So we have a fractional customer service agent that only bills us for the hours that they’re answering tickets. We use a, uh, Uh, ticketing software that can monitor how many hours, how many replies are out and all these other sort of important KPIs.

And so that was the big thing. And then also the dev stuff, we were able to, to find some devs that would also work project base, right? So anytime we need them, we just don’t have a dev on staff because on most businesses, this size, it’s just eats into too much of the margin. 

Jared: Makes sense, man. Good analysis.

I’ll tell you, you guys really got your ducks in a row here on this one. That’s, uh, uh, really reduced the, probably the, the amount of, uh, potential problems that can, uh, be uncovered once you get in on the business. Um, let’s talk about, you know, the, the, let’s spend the second half of the interview here talking about the strategies you deployed on the way in, um, of, you know, that had the most immediate impacts.

And I think this is a great opportunity for people to hear and learn. This is a strategy that people use a lot is to buy businesses where, because of either your expertise or because of, um, just obvious insights, because the owners hadn’t been doing it, you can get immediate increases in return. So, um, you’ve spoken kind of from a high level about them, but like, let’s break some of those down, whichever one you want to start with and talk about how you’re able to, I think you said 4X the profit within the first bit, uh, bit of time of taking ownership.

Mike: Yeah, so I would say the the three or four things that come to mind that have moved the needle the most one was just We, we really increased the prices, right? The pricing, uh, in general was about, we, we 10 X it more or less. Uh, it hadn’t been updated for 10 years. We looked at anything similar marketplace, but again, the thing I loved about the software was there’s not really any competitors it’s used by a lot of universities and schools.

These schools don’t care it’s, you know, for a hundred dollars versus a thousand dollars, isn’t really that big of a deal for them. And so we had a really good idea about who, who was actually buying our product. If it’s somebody who’s super financial conscious, or if it’s somebody who’s, Hey, they’ve got a government budget.

Again, they’ve got to get it approved and everything, but there’s no way that, uh, you know, from 500 to a thousand dollars. Is going to, uh, lose customers in this case. Right. So we had a good understanding of what our ideal customers were and how we could increase the prices for new people. Right. We didn’t, uh, you know, anybody that was on a legacy plan, they were able to, you know, increase the prices.

Essentially go the next year at that price. And then after that, they could renew on the newer prices. So the pricing thing, that was like the quickest fix, right? You know, you can go in, test different prices. I would always say, when you’re trying to buy a business, ask, how did you come up with these prices?

Why is it currently this price? And when, what other prices have you tested? When was the last time you tested them? So ask them all these questions and you’ll be surprised by how Little people test prices in general. They just don’t do it or they just, Hey, we looked at our competitor and they were charging this.

So we charged this, but that was five years ago. And you know, you, you do X, Y, and Z different than your competitor. So why, why, why would you have the same prices as them? So there’s a lot of pricing psychology. There’s a book I love. It’s called cash for tizing that talks about. Pricing psychology, and it’s backed by real world data studies.

And they just released a new book called cash for ties in online. That’s supposed to be very relevant to the online space. So I use a lot of tactics that I’ve read in books and then also what things I’ve seen work in real life. So. Uh, adjusting, increasing the prices right out of the gate. That was a huge win setting benchmarks first to figure out, Hey, we’re getting this many people into our store and this many people are converting, right?

So you need to have a benchmark to figure out what that looks like before you go ahead and make all these changes. The next biggest needle mover was really just going and adjusting the pricing page. It was very, it wasn’t mobile friendly. It wasn’t easy to determine, you know, what plan to pick. And so.

Doing all of that, making it very SEO mobile optimized and the checkout flow a lot easier. And essentially this is a combination of pricing, price testing and conversion rate optimization, where we did a lot of best practices to figure out, okay, I know all these best practices work, let’s put them to the test.

And so. The CRO fixes with the pricing fixes with some of the optimizations for mobile. Those things were, were big needle movers. The third thing was setting up Stripe to have automatic billing where now we had a monthly and yearly option and people just get billed, uh, you know, every month or every year and they don’t have to worry about it just charges their card.

Right before it was a very clunky process to get. People back on their plan. So those were the three big things. The fourth biggest thing was we switched from a free basic plan. So there’s three paid tiers and a free basic tier. We just removed that basic tier and made all the three core tiers, uh, a free 14 day trial with a credit card.

So those four things, or those four tactics, I would say were the biggest needle movers, but we did a lot of other things. We’ve translated the site into, you know, let’s say 60 different languages. Uh, that’s also been a big needle mover. There was. Basically no content on the site at all. Maybe a few. So we, uh, we had a lot of content and SEO adjustments as well.

So in general though, like the, the sort of analysis I love the, the fastest way to scale up a business is every day you have traffic and users coming to your website or your store or your, or whatever. Just imagine you have a hundred people come to your store every day consistently. And right now you get 10 percent of those people, you get 10 of them to buy.

Well, the fastest way to two X is to get 20 of those people to buy. And there’s a lot of different tactics to do that. Instead of having to double your traffic converting at 10%, you can double your sales conversion rate and get to that 20 percent a lot faster. And a lot cheaper, um, usually to double the traffic, you have to spend more on ads.

You have to do some type of paid promotion to really get that traffic up. And so if you’re able to focus on the CRO conversion first, everything else you do is going to convert at a much higher rate. So those were a few of the big, big adjustments that we made. 

Jared: It when you come in to a business, whether you’re getting hired there, whether you’re taking over because you bought it, like you see a lot of opportunities and maybe you go deploy 345.

Um, how did you measure which one of those were having the biggest impact? Like, was it obviously you saw huge increases, but was it was there a risk that you didn’t know which, which thing you did was helping the most or which thing could have actually been? Holding you back. 

Mike: Yeah. So we, we definitely went in with a mindset like, Hey, we understand these are the best practices.

And typically you want to isolate one sort of variable, test it for a month. See if it goes. We just knew that the state that the business was in was so under optimized. That all of this stuff would have a compounding effect. So we tried to focus on one feature at a time, make sure that it was working functional, that the numbers were looking right before we rolled out the next one.

But we, we weren’t really following the typical CRO for three months before we, you know, we changed from the blue button to the red button. Again, that wasn’t the case here. We were like, okay, we’ve got the, the pricing plan updated. Traffic and conversions are staying above. They’re increasing. Let’s roll out the next thing.

And so we, we went at a pretty fast pace because we just knew we were very confident with all of our experience that this, these changes were going to be the things that really moved the needle. And so every month that this business didn’t have this, we’re losing customers that aren’t. You know, recurring customers anymore.

Um, we’re not getting them on the new pricing plans. We’re not getting them, you know. Onboarded and sold as, as high as we can. So we understood that potentially it could, it could go the wrong direction, but we were able to deploy it, see our benchmarks, and then deploy the next thing. 

Jared: I’m really curious specifically about one thing, how much, um, like how many people, when you introduced monthly versus yearly, uh, because previously When you bought the business, everybody was just on like a yearly plan.

Is that right? Or how was it? And then it was a yearly. So how many people, you know, what percent of people, if you look at it now, take advantage of the monthly versus the annual plan? 

Mike: Yeah, I’d say it’s about 70 percent on monthly and 30 percent on yearly. Um, usually again, we have different avatars because we’re a software used by schools, universities.

So we have one avatar who’s faculty and then another avatar who’s students. A lot of the students prefer the monthly plan and then a lot of the bigger, you know, kind of multi thousand dollar, uh, contracts are, are going for the yearly because they save two months. They don’t want to, you know, get approval every month.

They just want to do it once, get it approved, uh, send one invoice instead of 12, you know, that type of situation. So that’s, uh, that’s kind of the split. I would say like user base is probably 70, 30, but revenue as far as like actual profit. It’s probably the flip side, right? Where a lot of the students are on the monthly on the lower plans, but a lot of the universities are on the, the yearly.

Jared: What an interesting, I mean, you basically, you know, I know that’s not exactly how you look at it, but you know, you took a, a way people could buy, you introduced a different way for them to buy. And 70 percent switched to the different way. In other words, the client base was paying yearly and that was your only option.

And then in the end, 70 percent of them preferred to be on a monthly basis. That’s really interesting. Um, Oh, go ahead. 

Mike: No, I was going to say, uh, yeah, basically. I think the biggest thing was we just made it easier for people to check out, you know, like, You don’t want to add a ton of friction to your checkout process.

You wanna add as little friction as possible. And so in general, just having those two options, uh, there’s a lot of people and a lot of data points that, that point that having a, a yearly discount, you know, you get two months free or whatever is going to be good. And it’s good for our, our certain avatar.

And the monthly is good for another part of our avatar. So understanding who your clients are and their. Their checkout flow and why they would do things a certain way is, is super important to understanding the customer journey. 

Jared: That segues really nicely into my next question, because you talked about how the pricing was convoluted, very difficult to understand which, you know, which option to buy, and there was a free option that you determined, let’s not do that.

Let’s just give 14 day trials of everything. I, I think. When I think about a business SAS product, I might buy, and one that I’m not an expert in a subject matter, not an expert in, like, I might look at pricing and say, Hey, that looks confusing, but I don’t know this, the ins and outs of this business well enough to know what to change it to.

Like, how do I simplify this if I’m just coming into this business? How did you go about yes, knowing that it needs simplified, but more importantly, how did you guys figure out and land on how you would price and structure things? 

Mike: Yeah, so it was definitely a combination of just. Guessing and checking.

Right. So we, we, we saw where it was at. We saw other software that, that did kind of not a one to one there’s no real competitor that’s one to one for what the software does. Um, and then we also saw like that as an advantage, like, Hey, universities and students, this is part of their curriculum. They don’t change, you know, year to year, they’ve been doing the same curriculum for 10 years.

They use our software to help teach this curriculum from the university side. Again, we understood that a 500 or a thousand dollar thing isn’t really going to move the needle. It doesn’t matter for them. They’re just getting approved by the university. And so they already have the budget set aside for this.

So I think that was the biggest thing that we saw was we knew our avatar. We knew their spending habits and kind of. How, in a sense, there was this business sort of has a monopoly where there isn’t an easy competitor that can do exactly what the software does. Um, and so we understood that we had that as a competitive advantage and we weren’t charging with that in mind.

So that made it very easy to justify that we can, you know, charge a higher price, deliver a better, uh, checkout product and a better, you know, overall product experience for, for our users. 

Jared: I think you clearly had a huge impact right out of the gate just by taking the existing product and the existing client base and making all these changes.

Have you done much marketing since then? Have you opened new marketing channels? You talked about optimizing the website for search traffic a bit. Like, has that paid off? Like what outside of the leveraging of the current. Customer base that you did. What else has been done? Have you done, or have you tried to do to grow it?

Mike: Yeah. So, uh, lately the new, the two, I guess, biggest things we’re focusing on was, uh, getting content up and ranking, and now that’s bringing in a lot more traffic and that was, again, I was like, 20 blog posts, but translated into like, you know, let’s just say 60 different languages. That’s a lot. And now that we’re getting in that traffic, we’re, we’re thinking of ways to better optimize and again, convert that.

So we just launched an exit intent, a pop up that gives people a free. Let’s just call it a free ebook for, for the niche. And then we also set up new abandoned cart, uh, campaigns. So there was no abandoned cart system. And so when we changed the pricing checkout process, again, they weren’t capturing any of those emails.

So everyone who abandoned cart, they had no way of getting those details. With our new structure, we were able to capture them in early on. We set up a very, you know, just best practices, abandoned cart, uh, It wasn’t super optimized, but now we were able to, uh, set up the abandoned cart, but also figure out what language they’re in.

And we’ve seen really good results from, Hey, we send this in Dutch. Now it’s converting three times better than when we sent it in English, probably is a good hunch that, you know, we have a huge Spanish user base as well, that we should probably be translating all of our emails to Spanish because Dutch people.

Their English level is like 95 percent fluent, but almost every Spanish speaking country, say like Chile, Columbia, you know, Spain, their fluency level is a lot lower. Right? So let’s just say some countries on average, only 10 percent are speak fluent English. Right? So you can kind of understand that having your emails and content in Spanish is really going to move the needle a lot more than just having an English.

So the exit intent pop up to get more opt ins, the abandoned cart, right? And then we had, uh, let’s just say 100, 000 people that were on this basic plan and we emailed them initially when we switched over, but now we’re doing email campaigns to them to try to get them reengaged. Uh, so we’re sending like one or two reengaging emails to this database of 100, 000 people who were just on the free plan, never bought anything to try to reengage and get them on one of our, our free trial paid plans.

Brilliant, 

Jared: brilliant guy. I didn’t even think about the language thing. You know, that’s not something you probably hear a lot of, but that would make a lot of sense. And I can’t imagine how much work it would take to translate and put together. Did you actually redo the actual, uh, SAS product in the, in, in say Spanish as well, not just the emails and blog posts, or are they still interacting with a SAS product in an English language?

Mike: Yeah. So that was kind of the interesting thing. And one of the reasons we saw this as like one, we checked like, you know, We checked our Google analytics data to see, Hey, where are people coming from? Who’s visiting our page, but why are they converting so low? That’s probably a good language to, to test first, right?

Because they’re coming to our page. They’re not buying in this language. So initially I think there was four languages that it was translated to. So we just picked. Uh, the most, the highest traffic data that we saw. So understanding like what languages you can look at your analytics to clearly see, Hey, we’re getting a ton of people from, let’s just say South Korea.

Uh, we have nothing in Korean. Their English level is not super, uh, fluent. It’s probably less than 10%, I think, fluent. And so you can really see, Hey. We’re getting this many people. If we translate to Korean, we’ll, we’ll convert a big portion of these people. So yeah, as far as like the language stuff, that was the first step was figuring out what languages to focus on.

And we have the backend product was already converted and working in 60 languages, but the front end wasn’t. So that was the big differentiator where it was like, man, we have. The main software working in all these languages, but we don’t have the front end matching up to that. So that was a big sort of adjustment that we, we made.

And again, the translation stuff isn’t too bad. It’s more or less like with our developers, we were able to get a spreadsheet of all the terms. Translate those, have somebody test it and get it, uh, deployed on the front end. 

Jared: I want to ask you about the code base that you got. Um, you know, with a SAS product, one of the most important things is the actual product.

I’ve heard horror stories. We’ve all heard the horror stories about people who bought something and it turns out that the code base wasn’t exactly built the right way, but whether you’re not familiar with code or whether you’re familiar with code, but not familiar with the specifics of this industry, whatever it is, you This stuff happens.

How did you go about verifying it? Did you really worry about it? Was it just a risk you’re willing to take and maybe just again, give people some insights into how they can think that through if they’re considering a SAS product to buy? 

Mike: Yeah, that’s a, a really good question. And. A lot of people, when you’re buying a business, there’s a thing called due diligence, right?

Most people are familiar with due diligence from the financial standpoint, from the SEO standpoint, but with the software business, you also need to add in an audit for the code, right? So we hired two different developers that were familiar with the code to do coding audits with the seller. Again, They’re spot checking certain things, certain features.

And then again, we also use the software ourself to make sure that, Hey, make sure you look at this part of the code to see why, why this is a little finicky. And so we essentially had two different audits of the code from two different developers that didn’t know each other to see if there was anything to worry about.

And then we also just asked the seller to, to kind of give us a little bit of insights. Again, that’s going to be another big thing that really helped us, uh, understand again, we had him agree to a certain hourly rate for doing any dev changes. Again, I wouldn’t always count on that unless you have the deal structure where it’s in their incentive to make those changes.

So I would say it’s always good to have that as a plan. A for example, in the agreement, you can say, Hey, we’ll agree to, you know, let’s say 60 an hour for any future dev changes. Uh, of course they can say no, but just having that is a good option. The second thing was this seller had a 200 page manual to run the page and it had 15 different versions of it.

So he was constantly updating it. And again, this is another reason I love this seller. And I love this business was it gave us a lot of confidence that this guy put a lot of passion into it. He wanted to go into the right hands and he had a lot of the infrastructure where. Anything that we needed to change, we would have it in this manual instead of having to ask him.

Uh, so this manual had been really helpful. And then the second or third thing was we negotiated a pretty extensive training period. Uh, I believe it was 90 days. So for software businesses, especially a complicated business, I would say you should, uh, You should really have a longer training period where he’s, he was directly working with our developers.

Once we, we kind of re negotiated, we’re recording all those calls, you know, making sure that our developers are, are updating any SOPs or anything like that, so that way we’re, we’re. If the developers we hire, let’s say they, you know, they, they, uh, we have some conflicts or something and we need somebody else, then you have all that stuff documented if you need to bring in a third, third party developer.

Right. So all of those techniques are really important when buying a software business and again, for training, you know, what do you do to prevent somebody from disappearing as you. You tie that in the contract that they don’t get paid. No money is released until the training has been completed. Right? So having that stuff in a, in an agreement is super important.

Jared: You talked about getting an audit done, a code audit. You talked about the developer that you worked with, but also, you know, someone who you had to bring on, obviously, because, uh, the original founder. Want to move on quicker than you anticipated. Where do you find all these people? Are there marketplaces for it?

Like, do you have any good resources you can share with people about where to go find an, uh, a software audit, a code audit, a, uh, you know, a coder to help work on a project, like you said, on an ad hoc basis, not a full time person you’re hiring, just someone you’re kind of using when you need them. 

Mike: Yeah. So the, the two best ways, the first place is Upwork.

I always. Put a job on there, I’ll, I’ll boost it for, you know, 30 just because it gets a lot more applicants. I’ll also invite a lot of applicants. You can invite usually up to 30. So what I’m filtering for, for those applicants is usually a minimum. They’ve at least earned 10, 000 on the platform. Likely more, um, then have, they have a 90 or 90 percent success rate.

That’s another filter. And then I also look at the reviews to see, do they have experience doing this exact thing that I want? Because a lot of times they might be great at another type of coding. Uh, but again, they, they aren’t going to be a good fit for this project. The other structure that I like to do is I like to do instead of hourly, I like to have them, uh, do an audit.

To figure out how much work it’s going to be, and then set a maximum number of hours. So that way we, we kind of have that built up into milestones or a structure where, again, we’re not overpaying so many dev projects they get in and it’s like, well, we just need, you know, one more week or two more weeks or three more weeks.

I was like, Hey, we agreed to this maximum number of hours. You had one week to get in there to figure out how long this was going to take. And. You know, that’s kind of on you guys to figure that out. We can’t release the rest of the payment until this, these milestones are complete. So really understanding how to work with developers, how to structure things correctly is going to be super important.

If you’re not a technical founder yourself. How to hire devs is also a really important skill. So the first place is Upwork. The second place is going to be your personal network. I’m in a lot of entrepreneurial communities. A lot of times there’s developers or, you know, I have friends that run development agencies where they have pods of developers and they’re able to, to kind of give me a lot of insights and tips on, you know, how to actually.

You know, get, get a good developer on board. 

Jared: Maybe as we start to come to a close, I wanted to ask this question. And again, I’m just thinking it through. I’m trying to put myself in the mindset of buying a SAS product online. Like I said, I’m super intrigued by the concept. So a little bit of a personal question, but what, whether it’s looking back on it or just because you knew from your days at empire flippers, or maybe probably a combination of both, but what skillsets are important to you?

To pull this off, um, a lot of people listening are going to have some sort of web experience, maybe not developer experience, maybe content creation or affiliate marketing, but pretty much everybody listening here is going to have some experience in the online space. We’ll say, and I’m guessing a bunch of people are going, yeah, but how do I know if I have kind of the nuances that it takes to pull a project like this off?

I’m guessing a lot of people like me are thinking, man, this is intriguing. And I have experience in online, but do I have the right level of experience? So what type of skillsets do you think are important to, to, to pull a project like this off? 

Mike: Yeah. So I would say the fundamental one, let’s just say to like, maintain the business, to acquire something, maintain it, potentially grow it a little bit.

But the biggest thing is going to be, how do you hire the right people and how do you understand delegation? Right. Uh, and again, there’s a lot of ways to structure deals to make sure that the, the VAs are coming over or that the. The seller of the deal is going to help you train a new hire or something like that.

Uh, but I would say understanding how the operations managing people, because almost every business is going to have at least one or two VAs or employees involved in it. So understanding how you can hire the right people for the right job. That’s crucial. So if you, if you don’t understand how to hire people and how to, uh, You know, maintain and work with them, how to organize them, I would say like, so managerial skills and sort of hiring skills are two kind of important things.

If you’re going to have any people involved in the, in the industry. The second thing is, Marketing sales, right? Those are the two ways to really grow a business. Those are two fundamental things. Customer service is the other big thing, but again, that’s a fairly easy thing to outsource to a VA, right? So marketing sales are two other skill sets that I think if you have any sort of skills with SEO, with, you know, Paid media buying with affiliate marketing, anything like that, you’re going to have another one up to really grow.

And usually it’s going to be a skill that the seller of the business wasn’t doing. Right. So in this example, you know, we could just turn on retargeting traffic again. That’s something on our, uh, our timeline to test out, just retarget people who didn’t buy, right. Pretty simple, you know, 10 a day retarget in the Netherlands where we have the highest chance of a conversion, but we see now that there’s so many other opportunities and just converting the traffic that’s already coming before we even do that.

So understanding landscape, having a, either a sales or marketing, uh, technique or background is also going to be super helpful for, for growing the business. Right. 

Jared: Mike, this has been such a fun interview and thank you for coming on and sharing, uh, this, I mean, this story, uh, just remind us what was the timeline from when you bought to today when we’re doing the interview, how long has it been that you’ve, I mean, again, just a reminder for people, you know, had about a half a business listed for about a half million, uh, paid a lot less than that because of a good deal structure and have four X of profits since then.

How long has that taken? 

Mike: Yeah. So we took over the. Deal in January. So, uh, not January this year, January, uh, 2023. So a little bit, let’s just call it, you know, 14 months, a year and 15 months. Yeah. 

Jared: Amazing. Thank you for coming on the podcast and sharing the story here. Where can people. Follow along with what you’re doing.

Um, you know, catch up with you if, if they want. 

Mike: Yeah. So global career book. com that has everything I do. Um, you can get a free copy of my audio book, global career, how to work anywhere and travel forever. It’s got, you know, I think almost 450 five star reviews on Amazon. Uh, and global career book. com has all my socials.

It has everything that I’m, I’m staying up to. And again, Mike Swiginski on, on Twitter. Instagram, LinkedIn, Twitter, all the social media platforms. So Mike, 

Jared: thank you for coming on. I really appreciate it. I’ll have to get an update from you in the coming years on how this project continues to unfold, but great story and a continued success to you.

Thanks 

Mike: again. Yeah, Jared, thanks so much for having me on and looking forward to hearing from all of your listeners. Don’t hesitate to reach out if you guys have any questions. 

Jared: Awesome. 

Mike: Thank you so much until we talk again.