Buying an eCommerce Business Instead of Starting One

Matt Edmundson (00:04)
Welcome to the eCommerce podcast. My name is Matt Edmondson and you are listening without a doubt to the best eCommerce podcast there is to listen to ever said a man with no bias whatsoever. Now, welcome to the show. It's great to be with you here on this sunny day, beaming to you from sunny Liverpool. So it's great to join you. If you're new to the show, a very warm welcome to you. We talk about all things to do with

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Well, we said, didn't we, Michael, we have this, this thing now called e-commerce founders. have e-commerce experts and we have slingshots. We have the three types of ⁓ podcast episode, we're now doing. Technically you're not the founder, but you do own the business, which is called discounted Catholic products. So we're going to get into Michael's story about running an e-commerce business and why he decided one day to buy a company.

rather than do a startup. mean, well, let's jump straight into that. Michael, welcome to the show. How are doing?

Michael Simpson (02:55)
Yeah,

I'm doing well. Thanks for having me on.

Matt Edmundson (02:59)
no, I've been looking forward

to this. Because like, because before we hit the record button, one of the things that we know about you is that you purchased the company, which you now have, rather than doing a startup. What was that thinking? Why did you go down that road?

Michael Simpson (03:15)
So I got my start in e-commerce back in 2017. I heard about this thing called retail arbitrage on Amazon. You go to a store and buy something that was like discounted and go put up for sale on Amazon and people would pay full price there. So I tried that for a little while. ⁓

Didn't work out great. eventually found some, local suppliers, some local products I could sell on Amazon, like grocery products. So I live in New Mexico in the Southwest U S and kind of famous for like a green chili, like spicy chilies here. And so there was a manufacturer here that sold them and you could go buy them in a local grocery store. But if you had moved away to the other side of the country, you couldn't get those products anymore.

Matt Edmundson (03:45)
Mm-hmm.

⁓ yeah.

Michael Simpson (04:05)
But people still look for them on Amazon. They're willing to pay a premium price. So I started doing that and I grew that business to like 50,000 a year in revenue, but it was just a side hustle. ⁓ And it wasn't something I was super passionate about. I just sort of came across this opportunity and ran with it. ⁓ But I knew I enjoyed e-commerce and as I sort of sat there and looked at it around 2020.

2019, I was trying to decide, do I want to try to grow this current one or, or buy something and, know, buy a business that already had, was already larger and could basically, you know, pay me a full-time salary. Cause the other one I made, you know, a few thousand dollars a year in profit. It wasn't really much. ⁓ and that was right after the, around the time I read the book, buy then build by Walker Dybold, a great book about entrepreneurship through acquisition.

Matt Edmundson (04:48)
Yeah.

Okay.

Michael Simpson (05:01)
Um, I'd always been an entrepreneur at heart. even studied it in college. You know, they let you get a master or a bachelor's degree in that, which in retrospect was probably not the, I look back at college and realize that, uh, almost everything you learn in business classes is not super applicable in the real world. It's like, do you want the option a that gives you a 12 % return or option B that gives you a 15 % return?

Matt Edmundson (05:12)
you

Yeah, yeah, it's one of those isn't it?

Michael Simpson (05:28)
Well, obviously option B, but then real life, there's 27 options and you have no idea what the percent is gonna be.

So after reading that book, started looking, signed up for some lists with ⁓ various brokers. And after about a year and a half, ⁓ finally saw a business come across my desk that looked really interesting. And ⁓ long story short, ended up buying it.

So.

Matt Edmundson (05:56)
So the business

you bought is the website now Discounted Catholic Products, is that right?

Michael Simpson (06:01)
Yeah,

discount Catholic products. So, I had a couple of criteria as looking at, ⁓ so I've been in the army national guard for 22 years now. When I started looking for businesses, I was actually deployed overseas. ⁓ so I was making pretty decent money there, saving up some money to put towards a down payment. And one of the parts of that is I have security clearance and most e-commerce businesses basically act as arbitrage for China.

You buy a product in China for a dollar, sell it in the US for five to $10. And that wasn't really something I was interested in doing because one, like wiring $50,000 to a factory in China would probably raise some eyebrows for having a security clearance. And two, I just, felt like eventually that wasn't sustainable. Like at some point that arbitrage opportunity is going to disappear. And I'd rather have something where I have suppliers in the US or elsewhere in the world.

Matt Edmundson (06:52)
Yeah.

Michael Simpson (07:01)
⁓ and then I'd, I'd sold on Amazon and I saw just how incredibly fickle Amazon can be. You know, you could have a multimillion dollar business and you get one complaint, one bad actor trying to sabotage your listing and the whole business could fall apart, you know, get your account banned, something like that. So I knew I didn't want something that was heavily reliant on Amazon. Plus back then that was when all the aggregators were buying up Amazon businesses and the prices were wildly inflated for anything decent.

⁓ so my criteria, basically it doesn't have suppliers in China and it has kind of its own website. And then ideally, you know, a pretty good email list, a large customer base, because ultimately when you buy a business, like that's what you're buying, you're buying the existing customers and that goodwill and those supplier relationships. So if it was a, a new business that didn't have a lot of existing customers, there's not really a whole lot of value there. ⁓

Matt Edmundson (08:00)
Yeah.

Michael Simpson (08:00)
you know,

it makes more sense to start it than try to buy it. ⁓ and so, and then, you know, I had to have find, find something my price range, couldn't buy a business that costs $5 million. I didn't have that kind of money. ⁓ those are sort of my four criteria. And I looked at probably 30, 40 businesses before this one came through in my inbox. And, ⁓ and then the final one was, you know, I needed to be interested in the product. ⁓ I didn't want to sell women's clothing.

Matt Edmundson (08:03)
Mm-hmm. Yeah.

Yeah.

Michael Simpson (08:28)
I didn't want to sell, you know, snake oil, just some random supplement that I didn't believe in. ⁓ even though know that's, that's hugely popular in e-commerce cause the margins were fantastic, ⁓ insanely competitive. Yes. So, ⁓ this one just kind of checked all the boxes and we, my wife and I, you know, had a meeting with the seller within a couple of days and just everything seemed great.

Matt Edmundson (08:40)
Yeah, but insanely competitive, right? So, yeah.

Michael Simpson (08:56)
And then we just kind of pushed forward and closed on it. ⁓ That was a five month process, which was a huge roller coaster for anyone who's ever bought a house. It's like that except for much, much worse.

Matt Edmundson (09:10)
Yeah, yeah, for both parties as well. I mean, I've bought businesses and I've sold businesses and it's not, it's not straightforward really from either side.

Michael Simpson (09:19)
No, it's, it's, used to be in commercial real estate. And so I'd seen from the outside, you know, dozens and dozens of sales of commercial property. And it's relatively straightforward. Like, but when you go to buy a business, nobody's really, you know, very few people have done it before. So the buyer and the seller are almost always brand new. ⁓ and fortunately the seller had a broker, but we didn't. So I had to learn everything on my own.

Matt Edmundson (09:28)
Mm.

Michael Simpson (09:47)
You know, I didn't have anybody holding my hand. So, ⁓ fortunate that book by them build, you know, there was a Facebook group there that was able to ask some questions and find a few people that gave me some advice. ⁓ but it was just a lot of kind of learning by doing and trying to figure it out. cause ultimately the broker worked for the seller. Like he didn't have my best interest at heart now.

Matt Edmundson (09:49)
Yeah.

No, no, no, just wants his money, right?

Michael Simpson (10:12)
Yeah, he wants the deal to close. That's ultimately what the broker wants, whether it's real estate or business, the broker wants the deal to close. They don't really care what the price is because it's better to get 95 % of the price than zero. ⁓ And it was felt a little adversarial with the broker. And then we talked to the seller and she was super nice and warm and friendly.

Matt Edmundson (10:14)
Mm-hmm.

Mm-hmm.

Michael Simpson (10:37)
And, you yeah, that's fine. It's, okay if we delay the closing a little bit. And then the broker would be like, no, the deal is going to fall apart if you can't close tomorrow. And, ⁓ so there was a lot of that. And like I said, it was definitely a roller coaster trying to, get to the finish line of closing. and a big part of that was, so here in the U S we have the small business administration and they have a loan program that you can use for expanding existing business.

Matt Edmundson (10:53)
Yeah, no doubt.

Michael Simpson (11:06)
But more importantly, you can use it to buy, uh, buy an existing business. And this was during COVID. And so, you know, the government has thrown out free money. So they had a lot of, uh, a lot of incentives to try to get businesses to grow and to start. And at that time it was, you could get 90 % financing. So if you came up with 10 % down, if it was a half million dollar sale,

you only had to come up with $50,000 in cash and then you could buy, you know, borrow 450,000. And so, and then also there was usually a fee that they would charge of a couple percent. They had waived that fee and then they also said, oh, by the way, we'll pay your first three months of payments free. Yeah. I think it it started out as six months and by the time we finally closed, it was down to three months, but still.

Matt Edmundson (11:39)
Yeah.

wow. Okay.

Michael Simpson (12:00)
Between those two things, that was like $30,000 that we saved just by getting it closed in time. Yeah, which was massive. No.

Matt Edmundson (12:05)
which is, yeah, not, not to be sniffed at really. It's

a, it's, it's a nice saving. It's interesting because the SBA loan, which I've heard many things about, ⁓ to the point where actually with one company we have, which we're looking to exit at some point in the future, we've wondered, we, do we move the operation to the U S because it's, it seems to be easier to sell the business in the U S because of the SBA loan, right? ⁓

but this sort of government backed loan that helps you buy businesses just doesn't exist in the UK. ⁓ I don't know about other countries, but I do know it doesn't exist here, which is a bit of a shame.

Michael Simpson (12:44)
I think I've heard that ⁓

like Japan might have a similar thing, but I know that, the, U S Canada, Australia, you know, whenever I've heard people talk about buying businesses, it's just.

Matt Edmundson (12:48)
Right.

Michael Simpson (12:55)
It is such a massive ⁓ advantage to be able to do that. And definitely, I'm sure it drives up prices because it's just like, if people had to go buy houses and save up hundreds of thousands of dollars before they could buy a house, ⁓ nobody would be willing to pay that much. But if you can go get a mortgage and you only have to come with that monthly payment, prices explode. And it's the same with businesses.

Matt Edmundson (13:06)
Mm. Mm.

Yeah.

Yeah, exactly. Yeah.

It does it from my point of view, selling a business, the America, if it, because our business is international, it becomes actually a little bit more attractive. I think there's to be fair for that business that I'm thinking about this is a little bit more complicated than what I'm making out. But it, you do look at it and go with that actually makes things a little bit more attractive because we think it will be easier to sell. And we think, like you say, it was probably more valuable because of the easier access to capital.

I need to investigate it further, Michael, if I'm honest with you, it's one of those. How did you value the business, right? Because you're looking at 20, 30 companies, you want to get back into e-commerce, there's lots coming across your desk, they've all got a price tag. Most of the time, the prices are pretty made up by the agents, really, aren't they? And sometimes you look at how in the world did you come up with that price?

Michael Simpson (13:48)
Yeah.

Matt Edmundson (14:11)
So how did you and your wife, because I imagine your wife's probably the most important sidekick in all of this, right? How did you guys come up with a valuation for the business that you were happy to pay?

Michael Simpson (14:19)
Yeah.

So the, looked at a couple of different brokers that had listings and the one that I was mostly looking at was a quiet light. And I'd looked at a lot of their listings. They were pretty generous with, you you sign an NDA and you could download stuff. Some other ones were, Hey, we want to see that you have a half million dollars sitting in your checking account before we'll let you look at the business, which was absurd. Like people buying businesses don't necessarily have the cash just sitting there.

Matt Edmundson (14:48)
Yeah. Yeah.

Yep.

Michael Simpson (14:54)
And so, and they had a good reputation. I'd heard a lot of things, you know, from other people in this space. ⁓ They just, they priced businesses fairly. ⁓ You know, they, they generally got pretty much the full asking price because they priced it a reasonable multiple. ⁓ So at that time in 2021,

Multiples were definitely higher because, ⁓ you know, you had all this demand from COVID. So all, almost all of the e-commerce businesses were booming at that time. You had all these aggregators on Amazon buying up anything. ⁓ And then you also had, at least in the U.S., all these, you know, the SBA loan and very low interest rates at that time. ⁓ You know, I think the prime rate was like two or 3%. It was just...

Matt Edmundson (15:36)
Yeah.

Yeah.

Michael Simpson (15:43)
money was so cheap, so we had all those factors together that were pushing up prices, pushing up multiples. ⁓ This one was priced at about a 3x multiple, which seemed to be pretty reasonable. That was kind of the market standard. ⁓ Stuff would go up to 4 5x, and this was based on sellers discretionary earnings. So basically profit ⁓ in retrospect.

Matt Edmundson (16:05)
Yeah.

Michael Simpson (16:11)
probably not the best way to look at it, but it is kind the industry standard for smaller businesses because we knew we were buying a job. Like the business was not large enough. We didn't have enough cash to buy a business that could just support us, support the business, support a full-time manager and, you know, still throw off hundreds of thousands dollars a year in profit. It was much smaller than that. The profit was like a hundred thousand dollars a year. So I figured, okay, that can pay the loan and still pay me. And if we grow the business then

you know, we'll be all right. ⁓ And it sort of worked out that way, not quite, but yeah.

Matt Edmundson (16:48)
Well, I was going to say, you fast forward four years.

Do you have any regrets? Do you think that you're still pleased with what you did?

Michael Simpson (16:56)
In retrospect, probably overpaid. ⁓ I think that was kind of the market at the time. And so probably should have been a little bit more aggressive in negotiating down the inventory that we purchased. ⁓ We did negotiate down some, it's a, you know, the business we sell thousands of products. I think when we bought the business, they had something like 11,000 product listings on the website. Yeah. Not all those were live. You know, some of those were things that had been.

Matt Edmundson (17:09)
Yeah.

Holy cow. Okay.

Michael Simpson (17:25)
because the business was started in 2003. So we were buying, that was definitely an appeal was this business was 18 years old at the time. It wasn't going anywhere. It had survived through recessions and things before. So we felt like, okay, this isn't gonna go to zero. Maybe it'll drop a little, hopefully it'll grow, but it's not gonna drop dramatically by any means.

Matt Edmundson (17:28)
Mm-hmm.

Yeah.

Michael Simpson (17:53)
And so when we looked at the inventory, there was just a lot of stuff that was just stale inventory, know, something where there was 10 in stock and the last year they'd sold one or two. And you multiply that by thousands and thousands of products. And we just ended up with a lot of, you know, some things that sold through pretty quickly and then other stuff that I think we're probably, you know, four years later, it's still sitting on a shelf. Now, even if we paid 25 cents on the dollar, we probably still pay overpaid for it.

Matt Edmundson (18:09)
Mm-hmm.

Right.

Yeah, yeah.

Michael Simpson (18:24)
⁓

and then the other part I would say, and I didn't really have an option in this, but I really wish the business was about twice as large. ⁓ if it had been even a little bit bigger, ⁓ that would have provided a bit more buffer between what the loan payments were and then what we could afford to pay ourselves. ⁓ it was, it was kind of right at the bottom end of what we were looking at. ⁓

Matt Edmundson (18:34)
Okay.

Michael Simpson (18:50)
But because I'd looked for a year and all these other businesses were all, you know, it's, they sell three products, they're all made in China. They rely on Facebook ads, they rely on Amazon. It was just all these things that I wasn't interested in. And so when this one came across, I probably let that, let the fact that it finally fit my criteria get the best of me. And we offered full price and, you know, offered even to, put like a, some earnest money down to kind of seal the deal.

Matt Edmundson (18:58)
Mm-hmm.

Michael Simpson (19:20)
And the broker said there's another, you know, there's another buyer out there that's interested. Um, the seller later told us, like right after I met you and your wife, like I told the broker, like you guys have the business, like she wanted to sell to us. Um, so we didn't know that at the time, of course, we thought like we needed to be competitive and offer pretty close to asking. Um, and I thought it was fair. And I thought, you know, I did a lot of underwriting and I thought the numbers could work and.

Matt Edmundson (19:40)
Yeah, yeah,

Michael Simpson (19:49)
as long as we grew it, would be fine. ⁓ It just proved to be a little bit harder to grow the business than I assumed.

Matt Edmundson (19:56)
Right. Well,

let's talk about that. how, I mean, the business you bought ⁓ is not dependent on Facebook ads. This was one of your criteria. So how do you grow it?

Michael Simpson (20:05)
you

That's really been the challenge because so we are, know, I'd say most e-commerce business fall into demand capture or demand generation. You know, if you are selling something and you're relying on Facebook ads, you know, our influencers, like you are generating demand by letting people know that this product or products exist, that maybe they had no idea of before. You know, I think of,

bought some earplugs or something like that, that I had no idea existed until I saw a Facebook ad. And I got to say they got me that one time. Like that's the one product I ever think of that had no idea existed. I saw an ad and I ended up buying them. ⁓ But we are on the demand capture side. You somebody wants to buy one of our products. They're probably going to go on Google. They're going to search for that keyword and we will hopefully, you know, show up in an organic result or a Google ad.

Matt Edmundson (20:37)
Mm-hmm.

Yeah, yeah.

Michael Simpson (21:04)
and capture the business that way. And then hopefully they will come back and buy more because we'll send them emails, stuff like that, or they'll just remember, we bought this thing last year, we need it again this year, let's buy it again from that same business. And so that was really what I was looking at was that demand capture. And so what I've found is, ⁓

Matt Edmundson (21:04)
Yeah.

Michael Simpson (21:29)
The upside of the demand generation is if you find something that works on meta, you you can ramp from spending $100 a day to $10,000 a day, and you can just explode your business. Of course, it's highly competitive and your returns probably not going to be as high in that ad spend. With Google, because we're targeting people that are already looking for the product, they're much more likely to buy it if they click through. So it tends to be cheaper to advertise there as a whole.

⁓ but there's only limited demand, you know, we sell, ⁓ like prayer cards and if somebody is searching for prayer card, hopefully we'll get the sale, but we can't generate, you know, 10,000 more people searching for that term that month. we're kind of the whim of the market. What's what are people searching for? And hopefully we can show it for more of those searches and get more click through and convert better on our website. But the end of the day, there's just a limited, ⁓

Matt Edmundson (22:00)
Mm.

Yeah.

Michael Simpson (22:26)
slice of the pie that we can capture. So, and we're pretty reliant on Google has their performance max ad product, which when we bought the business, that was kind of where everything was moving, ⁓ where Google basically said, Hey, we have all this data in our black box and give us the money, tell us what you want to sell. We'll figure out the rest. ⁓ and with thousands of products, like trying to manage that would have just been.

Matt Edmundson (22:29)
Yeah.

Michael Simpson (22:56)
⁓ trying to manually manage that kind of thing, which has just been impossible. We had an agency helping us, but, ⁓ I just can't imagine how inefficient that would be trying to set the bid for, you know, literally tens of thousands of different search terms, ⁓ trying to figure out how much to bid for this or what to advertise for and which things to negate. ⁓ so with, with Google, you pretty much just, Hey, this is my target ROAS. Give it, give us some money.

Matt Edmundson (23:01)
Yeah.

Yeah.

Mm-hmm.

Michael Simpson (23:27)
you know, give it a budget, say what you're looking to sell and you're kind of at the whim of them. ⁓ so that's been hard because we can't just say double the budget and expect the performance rate remain the same. ⁓ as we tried to ramp it up, we've moved to a different agency. They've done better, but we still just kind of seem to hit a ceiling of like, much can we spend and, still be profitable. So.

Matt Edmundson (23:40)
Yeah.

Yeah.

So, and, me. So you're, you're maxing out Google shopping ⁓ as best you can. Is that your main channel for new customer acquisition or have you, have you found others?

Michael Simpson (24:09)
Yeah, that's definitely our main channel. Probably 50 to 60 % of our sales are coming through Google Ads. Google Organic is probably another 15%. Email, maybe another 15%. And then the rest is sort of direct traffic or everything else. We've tried social media. It just hasn't really worked.

Matt Edmundson (24:30)
Yeah.

Michael Simpson (24:36)
You know, it's just one of those things where we made a decision early on that we can't do everything. And so better to focus our efforts on the Google ads, which we know work, um, then trying to, you know, get, you know, 10,000 Facebook followers and get one or two of them to come to our website and actually buy something. The, the previous owner had tried, um, Facebook, Instagram, um, Pinterest, and they were paying less social media manager like

Matt Edmundson (24:54)
Mm-hmm.

Michael Simpson (25:05)
$900 a month to post on those platforms. And I looked at the metrics and it's like, well, you're paying $900 a month. And according to Google analytics, about a thousand dollars of sales in the last year came from social media. It doesn't seem like a very good investment. So I, I canceled that right away and we've tried it off and on. Um, but it's one of those things where I think you just, you really have to be focused on that and just be able to

Matt Edmundson (25:21)
Yeah.

Michael Simpson (25:32)
be willing to dedicate that time to post every single day, to make all this content. And I frankly just wasn't interested in that, didn't have the time, didn't have the skills to do that. And so we decided, you know what, we're going to focus on Google Ads and ranking on Google and our emails and leave those other marketing channels for the future.

Matt Edmundson (25:56)
Okay. And so I, I'm curious in it, because you say that growth has been your challenge. you, you're so, do you feel like you have, ⁓ maxed out Google ads and Google organic yet? ⁓ or are you still like, no, actually we've got a lot of stuff to do here before we move on to other channels.

Michael Simpson (26:19)
I think there's probably still a lot of things we can improve. ⁓ when we bought the website, I was like, well, it's, it's running on this old platform. It wasn't on Shopify or any other it's running on able commerce, which I never heard of. And most people in the industry have never heard of. And so I was like, we'll, we'll migrate to Shopify. I've heard of people, you know, buying businesses and they migrate to Shopify. That should be easy, you know.

Matt Edmundson (26:29)
Mm-hmm.

Yeah.

Yeah.

Famous last words, right?

Michael Simpson (26:48)
Yes,

yeah. Probably spent about $30,000 on a migration that I ultimately pulled the plug on ⁓ because we just couldn't get it across the finish line. ⁓ I got there a year into it. I'd been paying an SEO agency to help us with the 301 redirects for the migration. I'd been paying some web designers ⁓ and just trying to get everything migrated and with thousands and thousands of products and

Matt Edmundson (26:56)
Yeah.

Yeah.

Michael Simpson (27:17)
hundreds of categories and a product catalog that was frankly kind of a mess. I tried and put a lot of hours and a lot of money into it. And I got pretty close to the finish line and I'm in a mastermind group and everyone there said, Hey, if you do this, like your sales are going to drop. They're going to drop in the short term, like guaranteed. And we were sort of in a cashflow crunch at the time.

And so I decided that, you know, this is not the time to try to migrate and potentially have sales drop in half when the business was already kind of struggling. Um, so we'd taken on some debt, some short-term debt to pay for that expansion. And, you know, had been paying myself and trying to pay the loan. And so it all kind of came to a head about a year, year and a half ago. I just said, you know what, we just, we need to stop maybe at some point in the future, try to do that migration.

and improve the website. ⁓ But for right now, just didn't make sense to do that and take that risk.

Matt Edmundson (28:20)
When do you think you'll do it? Well, I guess the question is, do you think you'll do that knowing what you know now?

Michael Simpson (28:26)
I do think we will. Um, one of the things we looked at was, so when we bought the business, you know, that's the downside of buying a business versus building it is you're kind of stuck with something that somebody else built. You know, you don't get to make the decision of this is the brand. These are the products. These are suppliers. This is the go to market. This is the product market fit. Um, we sort of fell in on all that and I never really loved the idea of like being a discount store, you know, I,

really e-commerce kind of works best for that premium market because typically if you're buying stuff online, like you have above average income, know, the people that are willing to spend that money to buy something online have shipped to their house, tend to have a little bit higher income. so premium products, luxury products tend to work better. know, discount products work better like in a in-person retail setting a lot of times. And so, and the other part was, well,

Matt Edmundson (28:59)
Mm.

Mm-hmm.

Michael Simpson (29:23)
Like our products weren't necessarily discounted. Like most of our metals and prayer cards are made in Italy. You know, we have crucifixes and things are made in Italy, made in the U S you know, we do still have some products are made in China that our suppliers purchase and we purchased from them. ⁓ but really it was, it was pretty high quality products. And so, but we couldn't afford a premium price because we were a discount store. So I bought the domain name catholic products.com for quite a bit.

Matt Edmundson (29:46)
Yeah.

Michael Simpson (29:52)
And figured, okay, this will help us kind of move up market. We can drop the discount and hopefully bring in more premium products at a higher price point. And then that will make sense where we can spend more money to acquire a customer. And now if our average order value goes from $50 to 60, 70, 80, because we're selling more expensive products. Now, instead of paying $15 to acquire a customer, we can afford to pay 20, 25 and still get a good return.

Matt Edmundson (30:19)
Mm.

Michael Simpson (30:21)
And in theory, that should open up more customers, ⁓ you know, and grow the business. So that's still kind of long-term goal, but ⁓ we just had to take that pause because ⁓ sales were kind of dropping and cashflow was tight and knowing that if we did this, potentially the business would drop for, you know, three to six months ⁓ while we worked through the migration and Google caught up and said, yep, this is the same site.

Matt Edmundson (30:43)
Mm.

Michael Simpson (30:50)
We're still going to show your ads. We're still going to show you an organic rankings and our customers, you know, start seeing emails from somebody different and realize it's still the same store and all that. So.

Matt Edmundson (31:01)
Hmm. Have you, did you guys look at the idea of say, we've got this new domain, catholicproducts.com. and I get why you've bought that. And I, I get why you want to take the word discount out of your URL because it is limit you, think in a lot of ways. I remember when we had a beauty company that was based on discounting for a number of reasons, a friend of mine,

A guy called Rich Rising, who's an absolute legend, Rich, he drew on a napkin, triangle. And in one corner, he put ⁓ service. In another corner, he put price. And in another corner, he put quality, right? So you've got these sort of three corners in this triangle. And he said, listen, he said, you can have a company that's got great customer service and that sells ⁓ high quality products.

but you can't do that cheaply, right? So you can do these two corners. You can't do that third one. You can't have a high quality product and sell it cheaply and it not impact. So do you what mean? So it's like on this triangle, you said, you, Mac, you need to pick two. Cause I was trying to do all three at the same time. And actually it was a really, it was really helpful because it meant we shifted our business model from being discounted to being more service focused.

Michael Simpson (31:55)
Mm-hmm. Yep.

Matt Edmundson (32:23)
And so the first year our sales fell by 20 % doing this. ⁓ but the following year, our sales just went nuts because that, by that point you had the opportunity for your service to kick in. And so I can see why you're thinking this way. Have you thought about the idea of building a second site with catholicproducts.com and using your Shopify migration there?

Michael Simpson (32:47)
I

Matt Edmundson (32:52)
and then eventually pointing the discounted Catholic products to that.

Michael Simpson (32:56)
I have thought about it. The big holdup has been the inventory management. we carry, so currently on the site, we probably have about 5,000 products live. Um, we carry probably 2,500, 3,000 of those in stock. Um, and then we drop ship the remainder, which are things that are, you know, either larger, more expensive, like a sterling silver jewelry that, you know, is purchased very rarely.

Matt Edmundson (33:14)
Mm-hmm.

Michael Simpson (33:26)
⁓ one of the benefits of the niche we're in, ⁓ is just, you know, if you only think about Catholics, like there's a lot of saints. And so there's a lot of products related to saints, know, St. Michael, St. Francis, ⁓ you know, we just have new, new St. Canani, St. Carlo Acutus, the first millennial saint. so many of those have products related to them, whether it's like a medal or prayer card or a little statue or something like that.

Matt Edmundson (33:38)
Yeah. Yeah.

Michael Simpson (33:54)
And so any particular product category, might have hundreds of products within that category. And so the catalog just explodes very easily. And so we have thousands of products and we carry most of them in stock. so trying to manage that inventory across two sites, ⁓ it's already been kind of a nightmare managing inventory. That's been a long-term struggle. That was a big reason why we wanted to migrate because our current system, it's, you you...

Matt Edmundson (34:18)
Yay.

Michael Simpson (34:23)
You get a return and then did it get put back in inventory? And then we sell a lot of things in bulk. That's kind of our niche is we sell a lot of products in bulk. And so we'll, we'll get up 500 metals from our supplier and we'll sell them in singles, but somebody might come along and say, I want a pack of a hundred at a discounted price. And then we have to go in and manually remove a hundred singles from the inventory for that order.

Matt Edmundson (34:49)
Right.

Michael Simpson (34:50)
And there's just so much room for human error and issues there, miscounting, you know, the supplier didn't ship us 500, they shipped us 497, you know, and just all those things. And so we constantly run into that. So that's been the, the big holdup between trying to do that. And I also do wonder about the migration, you know, like, uh, the website's 20 or 23 years old now. So Google.

Matt Edmundson (34:53)
Mm-hmm.

Yeah, yeah, yeah.

Michael Simpson (35:18)
We don't rank super high ⁓ organically, but we certainly rank for a lot of things. so Google, you know, we're sort of thing. Whereas this other domain name is brand new. So if we put something on there, ⁓ then we'd be trying to run a second ad account, a second organic thing, kind of competing against ourself. And then if we did finally do the migration, is that going to screw it up because all these backlinks have been built up over years. Now we're going to change. Is Google going to say that like something fishy

is

going on here. Just all those concerns have kind of stopped me from trying to do run a second site at the same time.

Matt Edmundson (35:49)
Mm-hmm.

Hmm. Yeah. Yeah. I mean, fair play. You've obviously thought

it through. It's, it's interesting, isn't it? When you're sort of at this sort of juncture where you're like, I, I know what I want to do. I need to do the website updates because technology is definitely moving forward at a rapid pace, especially with AI now. and so the way search is

Michael Simpson (36:15)
Yes. Yeah.

Matt Edmundson (36:21)
changing. So more and more people are using AI to search. So we definitely have to make sure that the system works for that. But these all become quite crucial decisions, don't they? You say, just backtrack a little bit, Michael, you said you're part of a mastermind. How does that help you in the business? Because one of the things I hear from entrepreneurs all the time is it's quite a lonely place to be.

Michael Simpson (36:34)
Yeah.

Yes.

Matt Edmundson (36:51)
You know, if you're running a company in an office, then fair play. But if you're running your business from home, it can get a bit lonely and a little bit isolating. Is that why you joined the Mastermind or was there other reasons?

Michael Simpson (37:02)
Yeah, I just, I'd heard so many people. Um, so one of the, one of the first podcasts I started listening to way back in 2017 was the Ecom crew and they, they kind of talked about that and talked about masterminds they were in and how helpful it was. And, you know, a lot of times it wasn't even the business stuff. It was more of the, sometimes kind of the personal thing of just being able to talk to other business owners because you know, you're.

Matt Edmundson (37:26)
Yep.

Michael Simpson (37:27)
your friends you made at a job or in college that are working a regular job, like you can't really talk to them about, know, yeah, I just spent $10,000 on Google ads this month or, you know, isn't your business making so much money? It's like, well, that's revenue. That doesn't really mean anything. That's numbers on paper. It's what actually gets deposited in the bank account at the end of the day. And after you pay all the expenses, it really matters. So. ⁓

Matt Edmundson (37:36)
Mm-hmm.

Yeah.

Michael Simpson (37:51)
Yeah, so I was in a group there and they kind of put out, we have an opening in this group. And so I reached out and it's been really helpful. ⁓ Everybody's sort of in different places. They're mostly around the same size, like kind of in the low seven figures ⁓ for the most part. I think we've got one guy who's quite a bit larger. ⁓

Matt Edmundson (38:14)
Yeah.

Michael Simpson (38:17)
A couple of people have bought businesses, some of them started businesses. We've got two in the UK actually, the rest are in the US. There's like a, we pay basically a moderator.

to help kind of manage the meetings. And I think that's super helpful because I tried to start one with another guy a while ago and we got three people and we met once and then the third guy dropped out. And the second guy, me, it's just, you know, if you're not paying something for it, if you're not like held to account for it, it's really easy to say, well, you know, I'm really busy this week. I just, I'm not going to make that two hour meeting. ⁓

Matt Edmundson (38:45)
Yeah.

Mm-hmm.

Yeah.

Michael Simpson (39:00)
And so just having that like two hour monthly meeting, we do one-on-one phone calls, with, kind of going around the group and yeah, I've definitely got a lot of value from it. It's mostly just been a sounding board to say like, Hey, does this make sense? Like, should I, you know, should I migrate at my website? And then somebody being able to be super brutally honest with me and say,

Matt Edmundson (39:10)
Mm.

Yeah.

Michael Simpson (39:23)
Or if I'm talking about, I'm thinking of doing this new marketing thing and this or that. And somebody saying like, no, stop what you're doing. Go pick up the phone, call some of your existing customers, like churches that you've sold to in the past. If you need money today, if you need cashflow, like call your customers and try to make a sale today. Send an email today, like raise cash. Don't try this thing. That's going to take six months. Don't worry about your branding. Don't worry about.

Matt Edmundson (39:43)
Yeah.

Michael Simpson (39:51)
this future project, getting a trademark like you need cash today, you need to pick up the phone and dial for dollars. You need to send an email and get some sales today. ⁓ So that's been very helpful.

Matt Edmundson (40:01)
Yeah.

Yeah, that's the power of the mastermind, isn't it? I think that the sort of working in these groups. a ⁓ quick plug, suppose, ladies and gentlemen, if you would like to join something like that, we do have cohorts. So do come along and check it out. But we, we don't charge for it for a number of reasons. ⁓ but we are quite strict. If you don't turn up, you're not in, ⁓ for very long. That's for dang sure. ⁓ and I think with those kind of groups, you, you get, you get out what you put in.

Michael Simpson (40:13)
you

Matt Edmundson (40:34)
⁓ and I think that the people that often complain about not getting the value of the people that actually don't turn up, they don't respond on the text messages and all that sort of stuff. You know, it's, ⁓ it's, think you've got to be willing to give into it, but if you do those things are invaluable. ⁓ and I'm in, I'm in quite a few little groups and I just, I think they're awesome. ⁓ I'm a big fan, a really big fan. What does the future look like?

Michael, where do you want to take it? What's your big goal for the year?

Michael Simpson (41:03)
you

So, right now, because the business kind of, ⁓ sales sort of dropped in 2024, they've, they've started to recover now. ⁓ but it basically got to the point where I realized like, just couldn't afford to have the business pay me anymore. and so decided that, I need to take a full-time job and help pay the bills. we've got seven kids. So, you know, ⁓

Matt Edmundson (41:21)
Mm-hmm.

Yeah.

Michael Simpson (41:33)
Unfortunately, the businesses couldn't support me anymore. So I hired and also my wife was going to be having our seventh child here about a year ago. And so she'd been working in the business. ⁓ you know, and basically we hadn't really been paying her and she'd been doing the pick pack and ship and some of the customer service. And so we knew that that was ending. So fortunately we were able to hire her sister. So we kind of kept it in the family.

Matt Edmundson (41:57)
Mm.

Michael Simpson (42:00)
And that's worked out really well. So she's been able to keep running the business and handle the day to day things. Well, I've, ⁓ I volunteered for a mission with the national guard. And, ⁓ so I've been doing that for the last few months and that might turn into something full time. so the goal is just continue running the business, pay down the debt, keep growing it. And then at some point here in the future, when we're kind of in a better cash position, ⁓ you know, reengage on the migration.

Unfortunately, that means probably all of the Shopify theme we bought, all the things are gonna be out of date and we're gonna have to practically start over. ⁓ But everything we improve on the website now, every product image we update, every product description we update ⁓ is just gonna carry over to the new website. So I think that we can still do work now that's gonna carry forward. Every customer we get today is a future returning customer. So hopefully we'll be able to...

Matt Edmundson (42:47)
Mm-hmm.

Michael Simpson (42:59)
knock that out in a year or two and make that migration and the rebrand and all that. But right now I would say we're still just kind of in survival mode. ⁓ And sometimes that's all you can do. As long as you stay in the game, you can win in the end.

Matt Edmundson (43:09)
Yeah.

It's a really interesting point, isn't it? And I, I get why you go, well, actually the biggest drain on cashflow is usually salary, usually the owner's salary. And so you take that out and you give the business a chance to recover. I've found with businesses, certainly businesses that, you know, we've been involved with or acquired, if we acquire a business with a lot of debt, then that's usually a sign that.

Michael Simpson (43:26)
Yeah.

Matt Edmundson (43:44)
you have to rethink quite significantly the structure of that business. So whether we're going to add liquidation or administration is another question. You know, it's, one of those where,

I know, for example, like on Shopify, they have the Shopify capital loan system and it's just really easy to go on there and go, well, I'll just take out a loan, right? Just to get through this period. The trouble with that is you're, you're counting on a good period in the next period to not only pay back the loan, but also to pay you enough to live. And so ⁓

Michael Simpson (44:10)
Yeah.

Yeah. And they're,

they're advertising it like a 6 % fee. And then you run the numbers like, no, that was like 25 % interest. is. We, we, we got, it wasn't Shopify capital, but, um, yeah, we used one from American express. I think they bought cabbage, which was kind of one of the original.

Matt Edmundson (44:26)
Yeah, it's it's a lot of money.

Mm-hmm.

Michael Simpson (44:39)
Online

lenders. And so yeah, I took a line of credit from them, which is basically a fixed fee loan. And when I finally got that paid off, you know, that was like, no, I'm, I'm never touching this again. Fortunately, we got a line of credit set up with our bank who we got our SBA loan through. And that was much, you know, it's a regular line of credit. So the interest rate was like prime plus 1%, which was much, much better. Like

At the time, I think it was, you know, six, seven, 8 % nowadays, like 8%. and we don't, you know, we can borrow the money on it. We can just pay back the interest every month and leave the principal loan.

And so that's been, that's been huge from a cashflow perspective. We didn't have that, ⁓ either we would have gone out of business or I would have been like liquidating retirement savings to go pump money back into the business probably. ⁓ but because we had that, that cash, that line of credit, we were able to borrow some money when, things were rough. And then as things got better, pay it down, pay it down, ⁓ and not get to zero. So.

Matt Edmundson (45:23)
Yeah.

Yeah.

Yeah,

yeah, that's an interesting one. I hats off to you. I think my my encouragement would be if you're listening to this and you do get into this taken credit, like Shopify credit and things like that. I think just be careful that you don't I've seen a lot of companies get caught in this perpetual cycle. So I borrowed 20 grand this quarter, which means I need to borrow 30 grand next quarter, which means I need to borrow 40 grand, and the loans get bigger. And they never and you're

by you're borrowing more money to pay back previous loans. But, it, and the cycle sort of, ⁓ just increases and I, I get the complexity of that. ⁓ and I think sometimes, you know, I'm probably going to do a few episodes on how we do it, how we manage cash flow. I think it's, you know, I think those things are quite important, essential really, ⁓ to the business. ⁓ that's for sure. You, you say you've gone full time, ⁓ back

Michael Simpson (46:36)
Mm-hmm. Yes.

Matt Edmundson (46:45)
⁓ working, how much time do you spend on the business now?

Michael Simpson (46:51)
Realistically, I probably get like, you know, half an hour a day, just kind of checking my email and things like that, checking on sales briefly. ⁓ I'd say in an average week, I'm probably only able to put in, you know, four to five hours. ⁓ My mastermind group joked, Maurice was like, well, you know, things are actually kind of turning up and I've actually been working on the business a lot less and it's doing better. And they're like, I think we identified your problem.

Matt Edmundson (47:05)
Mm.

Hahaha

funny isn't it when that's actually the case and you're just like well yeah I suppose just

Michael Simpson (47:23)
Yeah. And if I look back,

you know, that's one of the things that I've kind of struggled with over the years. Like there's only so many levers to pull. Like in the short term, like if I go in and I spend 30 minutes rewriting a product description for a product that sells, you know, $200 a month on average, like, was that really the best use of my time? Um, you know, and is that really going to even make a difference? You know, for all I know it'll

Matt Edmundson (47:33)
Yeah.

Michael Simpson (47:52)
do worse, know, the old product description was fine ⁓ or how do you new image or something like that. And so I probably did find myself ⁓ in the last few months before I went full time with another job, like.

Matt Edmundson (47:53)
Mm-hmm. Mm-hmm.

Michael Simpson (48:05)
Am I really using this 40 hours a week in the office productively or am I just, ⁓ let me go analyze this other thing or let me go do this kind low priority, easy task instead of focusing on what are going to be the big things that are actually going to move the business forward. ⁓

Matt Edmundson (48:23)
Yeah.

And I think actually, Michael, like at the end of every podcast, now we're doing this thing, you know, what's saving the best or last, like, what are your top tips? And I don't know if that is your top tip, but it would definitely be one of mine. Stop fighting about on the things that don't matter. Because I think as, as entrepreneurs, it's easy to get distracted by the shiny objects.

Michael Simpson (48:44)
Yeah.

Matt Edmundson (48:51)
And understanding what's going to move the needle the most and then doing that no matter how much you don't want to do it. I think that's an important skill set. ⁓

Michael Simpson (48:51)
yeah.

Yes, as soon as we're finished here, I'm going to go get an email ready to send out. And I'm going to test whether the A-B tested to see if adding 10 % off site-wide works versus doing nothing.

and just get an email sent out because that's one of the few levers I can pull where it's like, I send an email today, I know I will get X number of clicks and it will generate into Y number of sales, you know, somewhere in there. ⁓ and those are people that would not have come otherwise if they didn't get that email there in box today.

Matt Edmundson (49:32)
Yeah.

Michael Simpson (49:35)
But I would say ⁓ my top thing would be cash flow management. ⁓ it doesn't matter if your business is profitable or not, you can be wildly profitable and still go out of business if you run out of cash. And so ⁓ people probably have heard about a 13-week cash flow forecast.

Matt Edmundson (49:49)
Mm-hmm.

Michael Simpson (49:57)
I found that kind of too hard to do. And so I went to a daily cashflow forecast. So I look only about a month ahead or so, but I forecast every single dollar, ⁓ daily. I look at my bank account balance every day, look at the credit card bills coming to, ⁓ forecast all out because, ⁓ you know, when you're in a tight space, you have to be able to look at it daily and see, all right, at what point, you know, Hey, three weeks from now, and this big credit card bill is due for all those Google ads we ran last

Matt Edmundson (50:21)
Yeah, yeah,

Michael Simpson (50:27)
month, do we have the cash to pay that? And if not, I got to change something now. You know, I got two or three weeks, I need to send an email campaign. I need to call a customer to see if they want to order early. I need to do something to generate cash today. Um, you know, or hit or tap that line of credit. Um, so I think being really diligent about forecasting your cashflow is probably the biggest takeaway.

Matt Edmundson (50:40)
Yeah.

Yeah, I think it's such a powerful statement. Cash is king, as they say, and if you run out of it, you're screwed on so many levels. ⁓ love that. Michael, if people want to find out more, what's the best way to do that?

Michael Simpson (51:05)
Hmm.

So you can go to the website, discountcatholicproducts.com. We do ship internationally. We definitely ship to the US or the UK. Probably aren't going to ship to Canada much since they just started a postal strike there. And we don't want to get stuck trying to ship something there and then find out, UPS is going to charge us a hundred bucks. But we ship all over the world. So that's one. I'm on LinkedIn, not very often. And then I'm also on Twitter or

Matt Edmundson (51:22)
Yes, yes.

Mm.

Michael Simpson (51:38)
X these days, ⁓ Michael underscore in underscore biz. just joined that about a year ago, so I had to ⁓ get creative with the username. All the good ones were long since taken. So.

Matt Edmundson (51:47)
⁓ Long

since gone. thing about, I still call it Twitter as well. Michael, I'm not going to lie. said X, what's that all about? Just go back to Twitter. Elon, if you want my advice, just rebrand back. It's much better. Not that he wants my advice. He's doing perfectly well without it, apparently. But listen, Michael, it's been lovely to meet you and great to hear your story.

Michael Simpson (51:53)
Yes.

Yeah.

Matt Edmundson (52:13)
Really fascinated that you bought the business, the ups and downs that you've gone through and the resilience and the way you, think, are safeguarding cashflow, I think now with the way you've done it makes a lot of sense. But if there's one question that I could answer for you, what would it be?

Michael Simpson (52:30)
So I think it would be, ⁓ how do you grow market share in a demand capture business? ⁓ How do we get a bigger piece of that pie knowing that we can't change how many people search for that on Google? ⁓ So how do we capture a bigger chunk of that?

Matt Edmundson (52:47)
Yeah, very good. I will, of course, if you're a regular listen to the show, answer that question on social media. So if you, if you haven't done so already, do come follow me. Uh, but it's a great question. Um, and I have, I have lots of thoughts, uh, listening to you talk on, Oh, I would have you tried. Have you tried, uh, you know, as everybody does when they listen to somebody else talk, don't they? Everyone's got lots of ideas. Um, but I think,

Michael Simpson (53:01)
Yeah.

Matt Edmundson (53:12)
I'm going to watch with bated breath, actually, how things work out for you. But yeah, thanks for coming on the show, man. Really, really appreciate it.

Michael Simpson (53:22)
Yeah, absolutely. Thanks for having me on. Bye.

Matt Edmundson (53:24)
No problem.

Well, there we go. What a great conversation that was. And of course, if you're an e-commerce like Michael, fancy coming on the show and sharing your story, we'd all love to hear it. The ups, the downs, the bits you like, the bits that you don't, come and share it because I think it just helps everybody when we all add value to the whole system. just get in touch with us. You can go find out more at ecommercepodcast.net. There's a little link which says, ⁓ a guest on the show. Go check that out. We would love to hear from you.

But yeah, that's it from me this week. That's it from Michael. I hope you have a phenomenal week wherever you are in the world. I will see you next time. Bye for now.