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195: Austin Ecommerce Investor Reveals His Short-Cut To Scaling

Posted by Austin Brawner on April 16, 2019

 

Running one company can be a challenge. But what about running 12?

Our guest today is doing just that. Ecommerce investor Shakil Prasla of Pro Click Ventures joins us to talk about how he built his portfolio of ecommerce businesses. He shares what he looks for when acquiring new companies, how to hire CEOs, and what’s possible on the acquisition side of ecommerce.

Enjoy!

Episode Highlights

  • 4:38 Shakil Prasla’s background and how he got started in the ecommerce space.
  • 7:54 From website builder to ecommerce investor.
  • 9:57 How Shakil structured his 12 businesses and how they operate together.
  • 12:47 SEO and content: the importance of these when considering acquisition and future growth.
  • 16:39 Income and age of company: Why these two criteria are essential in evaluating a company to see if it’s worth buying.
  • 18:22 How Shakil is able to productively manage 12 businesses at once and the apps that help him to be more efficient.
  • 22:42 Shakil’s experience with buying companies with a bank loan and how to go about financing a loan.
  • 227:35 How Shakil gives his businesses a competitive advantage: through the lens of an investor.
  • 30:02 What Shakil looks for when hiring managers and CEOs.
  • 33:43 The incentive structure for the CEOs of Shakil’s businesses, and what he does if they quit.
  • 36:54 The other factors Shakil looks for when determining whether a company is a good buy.
  • 41:07 The advice Shakil would have given himself when he was just starting out.
  • 42:26 Shakil’s biggest mistake when buying a business.
  • 43:41 Shakil’s structure for reviewing prospective companies, and how many actually make it to the due diligence process.
  • 46:12 Why Shakil doesn’t believe you need to focus on one thing at a time to be successful.

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Transcript

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Austin Brawner: What's up everybody. Welcome to another episode of the Ecommerce Influence podcast. My name is Austin Brawner.

Andrew Foxwell: And I'm Andrew Foxwell. How are you doing, man? You doing all right?

Austin Brawner: I'm doing great, man. I was up today. I got up early, did some hot yoga. I'm feeling quite good today, limber, and ready to go.

Andrew Foxwell: Yeah, dude. I tell you what, I woke up today and I didn't do hot yoga. I also feel very limber and I feel great. So, take your pick. I'm just kidding. I have tried hot yoga actually, and it knocked me out. It was too much. I couldn't ... It was too much. I couldn't do it.

Austin Brawner: Well, now that you're a surfer, you don't need hot yoga because you're in the ocean every day.

Andrew Foxwell: Yeah, getting the gills wet.

Austin Brawner: Getting the gills wet out there, paddling around. There's nothing like a ... I'm in central Texas, so I cannot replicate the Pacific Ocean. The Pacific Ocean, diving in, there's nothing better in the morning than that for getting you going.

Andrew Foxwell: Well, I think that you haven't hit up that wave that had a lot of bacteria in it. That was the one that was like the surf place out in Austin. Wasn't that a story?

Austin Brawner: Oh. No, it was up a little bit north. I have hit the wave. There is a wave in Austin that I have gone surfing on a bunch of times. Super fun. That was not the one where the guy got the brain-eating amoeba. That was a different one. But I haven't gone since that guy had his ... got the brain-eating amoeba. It's about a couple of hours north. Not that chill.

Andrew Foxwell: Well I tell you, we have a great guest today. We really do. And somebody that we got exposed to through another colleague, and it's really amazing what this guy has done. Why don't you tell everybody about him?

Austin Brawner: Shakil Prasla has been out there buying ecommerce businesses for the last, I think, four or five years, building a portfolio, and he's gone from basically one business up to owning 12, and he installs his different CEOs, business managers, to operate those businesses for him after he purchases them. And he does it right away so that he's always in a position where somebody is in the management role.

And what's so interesting about the interview that we have with Shakil is he shares a ton of information about buying businesses, hiring, looking at it from an investor's perspective in the ecommerce space, and how much opportunity there is in the acquisition side of ecommerce, which does not get talked about that much.

Andrew Foxwell: No, it doesn't. It's really fascinating. Think about it from the financial standpoint, what he's looking at, and how he dives into each of these businesses and runs them, and what really moves the needle for him. So let's go ahead and welcome him on to the show.

Austin Brawner: Hey, Shakil. Welcome to the show.

Shakil Prasla: Hey, Austin. Thanks for having me.

Austin Brawner: Yeah, man. Real excited to have you here. It's one of those ... We were really excited when we got introed. You were somebody who we were like, "Oh we definitely want to bring him on." We've already given our listeners a little bit of a background on you, but why don't you take about a minute or so and just tell a little bit about how you would describe who you are and what your businesses do to someone who has never met you before.

Shakil Prasla: I'm a partner at ProClickVentures.com. We're an investment firm that acquires ecommerce websites, and so we've been doing this for about five years. We have certain criteria but we have 12 companies we've acquired during this span, and then they're in various niches. We sell anything from knives to greeting cards, to socks, to fashion accessories. Just pretty much any niche that is a business that's growing in revenues, in profitability, we do like to look into it and see if it would be a great fit for us.

Andrew Foxwell: That's awesome. I think you are exposed to a lot in the ecommerce space, and you see a lot, and we're going to get into those questions, but how did you get into this, and when did you make your first acquisition?

Shakil Prasla: It's an interesting journey I had along the way. After I got my MBA in 2013, I was on a crossroad of what to do in life. And so I started ... I pretty much went on Google and I researched the top jobs to have for an MBA graduate, and I was just digging myself in a rabbit hole just looking at different jobs from analyst to consultant, but none of those really interested me.

One of the classes we took in the MBA program was called A Life of Meaning where I try to foresee where I want my life to go, and basically on this Google search I came across ecommerce. And at that time Amazon was just starting off, getting bigger, and I thought to myself, this is pretty interesting, let me start a website.

And so I had no idea about SEO to web designing, to product sourcing, nothing. I just threw myself in there, and I looked online for trade shows. So I went to China in 2013, which is Canton Fair, which at that time I think was the world's largest trade show. And there's 60,000 booths there. I stayed there for two weeks, just walked booth to booth, and I decided to start importing cuff links and tie clips, and watches, just little fashion gadgets.

I built the website. It took about a year to really make it profitable, from finding designers, to making the website look good, to finding suppliers. And during this whole journey, I definitely learned a lot, but I wanted to do something more. I wanted to either create a bigger brand or just create a higher income. And so I thought to myself, do I wanna become a consultant and teach people how to start websites, or do I buy another business?

And so I started looking at businesses for sale in 2014. I came across Quiet Light Brokerage, which is a great brokerage company that sells different types of online assets, including ecommerce and software. And so, I subscribed to their email.

Three months later I came across MisterCold.com for sale. It was for sale for about $55,000, and they were basically just selling through their website, no paid advertising, no selling on Amazon. So I bought the company. I started Google advertising, and I sold on Amazon, and I made my money back in six months. And so I thought this was great. Let me keep finding opportunities where owners are under-utilizing a growth platform, technology, or something else which I have a little bit of experience in.

And so fast forward to today, we've acquired 12 companies in various niches, doing anywhere from seven to eight figures in revenue. During this whole journey, it's definitely been a lot of learning lessons from hiring, to firing, to strategies, to letting go of things, to not micromanaging. It's definitely been a process and a learning curve, for sure.

Austin Brawner: That's how we ... Hearing about what you're doing is how we got connected. I think we had met a couple of years ago at an eCommerceFuel Live Meetup here in Austin, briefly. And then Kevin Chen, after eCommerceFuel Live, he reached out and he was like, "Hey. I met Shakil at eCommerceFuel Live. You gotta get him on the show." He was like, "It's the craziest thing. He's running 12 different businesses. He's got multiple managers." And he was blown away. He was like, "This guy is doing some really interesting stuff."

Can you give us a picture of how your businesses actually operate together?

Shakil Prasla: With each company, obviously I've created its own LLCs, and then my parent company, Pro Click Ventures, buys into each LLC. So that's the structure we've kept. For the larger companies, we have a CEO that runs the whole company. And so, the job of the CEO is to ensure that our growth or the business is growing, the metrics are being met. They do the supply relationships. They hire folks if we need to.

And then below the CEO, you have the operational staff from customer service, to any type of pick and packing. And then what connects all the companies together is what I call our backend office, our shared resources. So we have our AdWords specialist, to SEO specialist, we have designers, we have developers, we have product scourers. They all work together for the whole portfolio in various capacities to really grow the company and sort of connect the companies together.

And the reason why we've done that is before we used to use agencies, and they were good for one or two companies, but at a certain point, it wasn't as great as we would have liked to, so we brought everything in-house. And when you spread it across 12 businesses, the expenses are way more manageable, for sure, for all these resources that we spend on.

Andrew Foxwell: I think that makes a lot of sense. Obviously, you're sharing and pooling those resources. You have an email person. You have an SEM person. Can you talk about which of those is, for a lot of your businesses, driving the most growth? Or maybe it's a combo. And I know it probably depends on the business too, but which ones are you like, that's really a powerful tool that we've seen across our portfolio, and a few maybe tactics that you're using on each of those?

Shakil Prasla: Honestly, if you look at our portfolio of 12 companies, I would say at least half of our traffic is still organic. That's one of our criteria when we acquire a company, we want to make sure that it has really good organic traffic.

When we first started acquiring companies, we bought a few Amazon companies, but our experience, our expertise, has been on the Google side of things, so we've acquired websites that are not reliant on Amazon. And so our main strategies on the SEO side of things is two things. It's link building and then content. Content's sort of the biggest thing is making sure that every week we have relevant content for each website.

So for example, we own SocksRock.com. If you Google custom socks or baseball stirrups, we rank number one organically. And that's because every week we have news articles or content, just things relating to socks, but not necessarily selling products to them. It's just giving them free information, like why promotional socks are great, or the different type of knitting processes in socks, or how to improve your batting average. Right? It's not related to our socks, but we sell a lot of baseball socks which drives traffic to us.

So it's just really giving away free content, and the hard part about SEO is you're not going to see the traffic tomorrow. It's like planting a seed and letting it grow. And so it definitely takes at least six months to really see the labor that you've put into SEO. So it's sort of like you have to be patient in how SEO works, but our biggest growth has been through SEO.

What we like about SEO, it's free traffic essentially. So compared to our competitors, since we're getting a lot of free traffic, we're able to spend a lot more now on advertising because now we're getting this free traffic from organic. 'Cause supplemented with paid advertising, we're able to pay a lot more of a higher CPA because we're getting that additional traffic organically.

Austin Brawner: It makes sense what you're talking about, also how you have moved from agencies. It's like you've built an agency in-house for your portfolio, which gives you a little bit of an advantage to be able to compete and drive traffic through SEO.

You touched on it a little bit. You mentioned that you've got companies of all different ranges and styles. When you're trying to make a buying decision, you hear a lot of different people that have different ideas about how to build a portfolio. I know that Bill DAlessandro from Rebel, CEO, he talks a little bit about their buying process is they look at a lot of skin care, health products, and purchase that way.

Besides just organic traffic, what are some of the things that you look at when you're evaluating a company to decide if it's a good fit for your portfolio?

Shakil Prasla: I love Bill at Elements Brands. I just spoke to him yesterday. Him and I have really similar goals. He likes to focus more on consumer product goods, and I like to do more of the custom products side of things. But for criteria, because at the stage we've been at, and just looking at so many prospectuses, I go through, I think, at least 100 prospectuses a month just reviewing different deals.

I have a 20-point checklist that the criteria have to meet, but the main ones are it has to have a certain amount of net income. So we always look for businesses that are at least doing half a million dollars in net income because we're using the financing to buy these businesses because we're getting CEOs to run the companies, we need to have a high business income to be paying for these things.

So the net income has to be high. It has to be at least driving 50% organic traffic. And then it has to be at least 5 years old. And the reason why it has to be a certain age is because if you look at a business that's 12 months old vs. a little more of an aged, the aged websites have a bit more strategies behind it, whether it's failed or things that have worked out. And so we like to capitalize on the data, the strategies, the email list, the social media side of things on those little more established websites. Those three things we generally like to look at when we like to buy a business.

Andrew Foxwell: I think that's really very smart. Good to look at all of those things. I think we have ... When we were getting to know you, we've been awe-struck in terms of a lot of people listening to this episode and a lot of the business owners that we work with, running one business is nuts. And I know we're going to talk about business managers and maybe that CEO role a little bit more, but how do you run 12 businesses and have enough time to join us on a podcast?

Can you give us an insight into how you structure your day to be as productive as you can to keep these things running? One thing I was thinking about, are there dashboards that you have? Are there reports that you're looking at? I'm sure the answer to that is yes, but how are you structuring your time to make it as efficient as it can be?

Shakil Prasla: I will tell you running that many businesses, it is hard, it is challenging, especially if a CEO does not work out, or they quit, or something breaks, or we have a Google algorithm shift where we drop some traffic. So yeah, there's those days where it's super stressful. But I think at the end of the day, I think the main reason why I've been able to run multiple businesses at once is I have great folks that work for me, number one, but number two, I think I've been good at not micromanaging and just delegating tasks. I think as entrepreneurs, we do have a tougher time delegating things, letting go of things, especially if we've created a product or a website.

And I think about that myself too that if I were to do that job, I would probably do it better, but at some points, you have to be happy with good enough. And so the way I operate things is yeah, we use Klipfolio for our dashboard which shows all of our metrics of revenue to CPA. So the managers themselves have this dashboard that they look at which it shows our margins, our growth, our CPA. And then every week we have a call. And so we use a Gantt chart to track progress on all of our goals, so at the beginning of every year, we come up with three goals, the CEO and us as partners, that we want to get to X amount of revenue, or we want to acquire X amount of customers, or we want to have X amount of new products, and then we work backward. How do we get to that extra amount of revenue?

And then so if our CPA's, let's just say, 30 bucks, and we want to get an extra million dollars in revenue, that means we have to get 30,000 customers. Well, how do we do that?

So we sort of work it on a monthly basis and break that down into weekly actionable items. And so every week I have a call with the CEO on the progress, and then we track all the projects on Asana as well, where I'm able to see the progress, how far it's gotten, what they're working on, what steps that they're taking, and it's just giving them feedback on hey, based off this conference or based on what I've told this person or learned from this person, I think you should look into this.

And so that is how I function everything is through these apps, these softwares, these calls. And I really empower the CEO to make these decisions, right? It gets incredibly hard when you buy something. You get a bank loan and then you hire someone else to run this company. So it's taking a risk on risk, and so the whole puzzle has to fit perfectly. And the way it does is you give the CEOs boundaries on here's the goals, here's the resources, here's the tools, and here's the background that you come from. Go make it happen.

And I and my partners are like the Board of Advisors or Chairman to be sort of like a bouncing board and bounce ideas off each other.

Austin Brawner: Sure, that makes sense. And I want to dive more into your relationship with the CEO role, but before we go in there, I'd love to hear your explanation for how you're buying these companies on a bank loan. What does that actually look like, and what does it mean to buy it on a bank loan? What are the things that you need to see for it to qualify, and what have you learned from buying some of these companies with bank loans?

Shakil Prasla: I think the cool part now about digital assets, whether it's software affiliated content or ecommerce, is banks are now willing to give loans on these non-tangible assets. Generally, people think that you can only get loans on houses or commercial buildings and stuff. That's not the case anymore.

When I first started buying five years ago, I could only do cash deals. Then I had to get loans off my other assets. I had to do refinancing to even come up with the money. But now, banks are willing to give loans. The most popular loan right now, it's called the SBA loan, small business loan, it's ... Pretty much any bank can give that loan.

It's basically a loan that is backed by the government, so if I were to default, the government would pay the bank. And generally, the terms of those deals are it's a 10-year loan, it's prime plus 2.75%, so I think now that's 8.25% interest rate. And then there's other criteria to even qualify for a SBA loan. You have to have a good credit score. You have to have a decent income. But the main thing is to make sure that the business income is able to pay the debt financing. I think generally, they look at about 40% ratio, the debt-to-income ratio generally. So if the business is making $20,000 in net income, the highest the bank would give you on that, the monthly payments is $8,000.

Generally, if you're buying a million dollar business, the bank will give you 80% of that loan. So that 20%, you have to come up with. And with that 20%, you could even get a seller's note. So to give you real numbers, if you buy a million dollar business and at a 3X average multiple that a business goes for it, it should be making about $333,000 in net profit. And if you take a 10-yr loan on that $900,000, your monthly payments may be around 12 or 13 grand a month. I'm doing quick maths right now.

So if the business is making $330,000 a year, that's about $28,000 a month in net profit, and then you have your debt payments against that which is $12,000. So you're left with $16,000 a month in net profit, and you only put down $100,000. So you're making your money back in eight to nine months on that cash-to-cash deal. So yes, you're taking on the risk of taking on a loan, but the investment just makes sense every single time where you're making your money back in 9 to 10 months. I think that's just incredible the way the numbers work, even with the CEO in place.

Andrew Foxwell: So here's the thing, I'm terrible at math but I actually understood that. That's awesome. Giving an idea of how you go about financing through that loan process.

The thing that I am thinking about in listening to you is I'm interested in the brands that you have, there's obviously a lot of them. Many of them are not in any ... they're in a niche, but they're not in a massive niche, and it doesn't ... It seems like obviously, you're making great products. You're putting them out there. But how do you think about competitive advantage for each of these moving forward? I just feel like there's online businesses that are superfluous. They're growing. They're everywhere. And consumer choice has never really been higher. So how do you ... SEO is a bit part of it, clearly right? You're driving a lot of organic traffic. You're driving paid. But how are you positioning these together in leading this organization to be thinking about their value propositions moving forward, and to try to give competitive advantage moving forward?

Shakil Prasla: I'm going to answer that through an investor lens or investor perspective. If I'm buying these companies at a 3X multiple, if I buy, again, a million dollars, $333,000 net profit, my whole goal is to just ensure that I keep that valuation as is, or just grow incrementally.

I know some people are all about, "Hey, let's grow this as quickly as possible." I have a different strategy. For the first six months, we learn the business. From month six to month 18, it's let's grow this company using the three goals we have. After month 18, let's automate it and prime to sell it. So my whole kind of philosophy is let's grow it to what we think are the quickest wins. And my exit plan is just to sell this whole portfolio. I'm buying them at 3X. If I get it to a certain EBITA, I will start attracting PE firms that will pay a much higher multiple.

So the example or the verbiage I give is on the Amazon side of things, people play the retail arbitrage game. I do multiple arbitrages. So it's just buying multiple smaller companies at 3X, combining them together, make it seem bigger, and then sell it to a private equity firm in the future. So that's the way I look at this portfolio.

Austin Brawner: Yeah, that makes a lot of sense coming in. Ultimately you are the investor. That is the lens that you have because that's what you're doing. And it seems like the reason that you're able to come through that lens, and the reason you're able to maintain that role as the investor, from the multiple interviews I've listened to with you, it really comes down to being able to hire someone to run your business, right?

Whether it's a CEO or a business manager, I've heard you talk a lot about this, for a lot of people, that is a hard concept to even put through their mind, especially people who've founded a business based on a product that maybe they're related ... that they have a lot of emotional investment in. Can you talk a little bit about how you think about hiring business managers and CEOs, and why you feel like you've had success in this space when a lot of people really, really struggle?

Shakil Prasla: It is hard. It's really hard to find someone good to run your company. I think maybe it's a little easier for me because I don't have that emotional attachment as the founders did, where they've been the brand or the face of the company, and they've built the SOPs and the whole processes in place. But still, I think the hardest thing is to find someone suitable, someone good, someone vested, someone that has a drive to really grow the company and take over it.

It is hard to find, but the way we go about it is I generally list these jobs, these CEO postings, on my LinkedIn, on Indeed, on ZipRecruiter. I'll go to conferences. These podcasts also help. Hey, I'm looking for a CEO. I'm always acquiring companies. Do you have the drive or the will to grow these companies?

The main experience I like to look for is someone with some type of leadership background, some type of management background, or even digital marketing background. I think the biggest kind of the growth for a company is the marketing side of things, so it's a huge plus and something we really look into if someone does have a marketing background, have worked at agencies. A couple of our CEOs have worked at agencies before where they drove the paid advertising side of things, and then they had junior analysts or junior paid advertisers underneath them where they have the leadership background too. So those types of people have been perfect for the CEO type of roles.

But it's really sort of a numbers game. We always bring a CEO on place during our due diligence process so they get to learn hand-in-hand with the previous owner on how to run the business. And then we just blast it through postings. We'll do a series of interviews, a personality test, and then bring them to the office.

I'll tell you guys straight up, it's hard to really know if someone's going to do a good job just based off an interview. If I want the job, I'm going to sell myself even if I don't have the relevant experience. I'll go look it up to see what these guys want, and I'll just pitch myself, right? So you will run into that struggle, and we've had people that have left. We've had people that we've had to fire. And it's just continuously finding that right person. But based off the listings and the experience and the series of tests, we've been able to find, and our current team is great and they've been working out really great so far.

Austin Brawner: And so when you are going through this, a couple of questions that pop up immediately in my mind. One of them is how do you structure incentives for these CEOs that you're hiring so that they're aligned, and then what happens, you briefly touched on this, but what happens when they quit?

Shakil Prasla: I've played with different incentives. Do I make this straight commission? What type of salary do I want to pay? My goal is to make my money back quickly because this is an investment, so how do I ... Do I give them equity?

The current structure we're using now is we do give a good salary to begin with, market rates, so we do pay a six-figure base salary. Then we give 'em a few incentives. They receive a bonus based off of the anniversary date. So if they've worked with us for one year, they get a bonus. If they work for two years, they get a little higher bonus. And so on and so forth.

We do also have a profit sharing pool where they get to partake in. So if our revenue stays flat, they don't make any money. If our revenue grows and our net margin stays the same, they get the profit. But in our contract, it doesn't make sense if they grow the revenue and our net profits drop. It's easy to turn on AdWords and drive a bunch of traffic, but if it's not profitable, we don't make money and they don't get that bonus. They do get the anniversary bonus, a profit sharing, and then we have benefits as well with a competitive salary. So that's how we structure on the compensation.

As far as when they leave, it really sucks whenever they leave because they're running the company. There are people that depend on them for direction, for leadership, and so that's when I will have to step in, or my partners will have to step in and run the day-to-day, or we may have to get another CEO from our other company to see if they have some bandwidth to take over. But it's just back to the drawing board and finding someone else to run the company.

During that transition of finding someone else, it's just a difficult time because now I'm not able to focus on the acquisitions, on these weekly calls, I have to jump in and become the CEO. So that is the hardest part about this model is because of the structure and we don't have backups for CEOs, we do run into those issues. But they've been minor. They've only been once or twice. We've been able to learn from it as well, and we take that ... That's why we have that compensation package of that anniversary date is so they stick around as long as they're happy with us.

Andrew Foxwell: Nice. Nice. Thinking about one of the questions we hear a lot from ecommerce business owners is what can I be doing better? And I think it'd be interesting for you to talk briefly about your process through due diligence of how you ... What are you really looking for? And it can be specific, but also like what are things that you're really looking for, and you can talk about the criteria you go through, but I'd be interested of really ... Are there special things of, I'm really looking for the dedication, or I'm really looking for the fact that there is, as you said, 50% organic traffic coming in, but also that there's some sort of paid program in place.

What are the other things that you're really like, "Oh, that's perfect. That's a perfect, perfect business that I'd like to buy." I'd also be interested in personality potentially of what you're thinking there.

Shakil Prasla: Yes. That's a great question, and the matchup of the seller and buyer has to be there. The trust has to be there. I've gone through deals where the seller has told me through the broker that he's making X amount of money, and once we get into due diligence and we look at the Shopify or their credit card statements, the number's way lower. So then the deal doesn't work out. So the biggest thing here is to have the trust between the buyer and the seller.

We've had deals where we've offered a lower amount and we've won the deal because of that trust, because of that empathy that we've been able to build, and because of telling that, here's a direction we want to take this company. Here's how we want to continue your legacy. So trust is, I think, one of the biggest things.

Financials is another thing. If I see on your prospectus that you're listing a million dollars in revenue, $100,000 in net profit, I expect during my detective work of due diligence financials that that's what the numbers should be. So definitely, if you're looking to sell or if you're looking to buy, ensure that you have clean financials.

I also want to make sure that it's not heavily dependent on the seller where if the whole brand is just on the seller and I put my face on it, if that would hurt the clientele, the audience, then that's sort of hard. It's hard to sell that type of business. So we definitely want to buy something that's not brand dependent, so if the brand really relies on you, it's how do you take a step back and ensure the operations are functioning without you. If you're able to take yourself out of the day-to-day, the valuation of your business will go up. And I'm talking from a buying side of things is if I find something that they could be easily replaceable, hey I'm gonna pay more for that business.

Besides financials, operations, trust, there's also the technical side of things. So ensuring that the website isn't outdated or isn't on GoDaddy platform, or something like that. We've had a few companies where we've bought something and when we've migrated things over, our SEO has tanked, and so we don't want to go through that again. So as long as the technical side of things, the platform and the website is updated, again, I would pay market rate or above for some of that work as well.

And then the IPs, the SOPs, if you have that, that's even added bonus. Yup. So that's the things I look for in a company.

Austin Brawner: As you've gone through this process and you've acquired, well, at least 12 companies, maybe more. I don't know how many exactly you've brought in. What's something that you wish you knew when you started that you know now? And maybe you could highlight a mistake that you feel like you've made when buying businesses in the past.

Shakil Prasla: The hardest part about buying a business, it's ensuring that you're going to have the drive and the passion to keep growing the business. If you look at our selection of products, they're all like random things really, and I've always focused on profitability, income, but if there's things that you're not passionate about, you're not going to want to grow the business. And I've had that instance where I bought something purely just off numbers just itself, and whenever I ... six months down the line, I just wasn't passionate about that particular product line. I had no drive to grow the company, and if you don't have that, then the company's not going to do well. So definitely, if I were to give myself advice, buy something not only profitable but that you would get excited about the product.

Along the ways, the biggest mistakes I've made when buying a business is just not doing good due diligence. When a seller is selling their business, they're doing essentially that, they're selling the business, and maybe they may make it look much better than it is. So you will have to do a good work playing that detective role in ensuring that you're using the tools out there, SEMrush to Google Analytics, making sure that what they're saying is correct.

And I have a buddy, Chris Yates, he owns Centurica.com. They do due diligence work too if anyone ... first-time buyers. But do good due diligence work 'cause sometimes ... When I bought my first company, I absolutely failed at looking at the link history of it, and they were doing a lot of black hat SEO, and when I took over, it tanked. And I worked my butt off to get it back up to where it is now. So definitely do good work on the due diligence side of things.

Austin Brawner: When you're going through the due diligence, what percentage of deals fail in that process? I know you said you go through about 100 prospectuses a month. How many do you feel like of those 100 do you get to the due diligence process, and then once you're in there, how many of those do you actually purchase?

Shakil Prasla: My structure is usually if the prospectus matches my criteria, and prospectuses are pretty long, usually 30 pages, and Q&A financials. As long as it meets the checkpoint, I'll ask a round of questions. And usually out of the hundred deals, I'll probably ask questions to 10 of them. After which if I like those answers, I'll dig in deeper, have a call with the seller, and that's usually two to three deals a month out of the hundred. And usually every quarter, every four months, I will place an offer on two businesses and will generally take four businesses every year into due diligence, out of which at least three of them do work out. So one out of every, whatever, four will not work out per year for us, unfortunately.

And it could be finding things out during due diligence that wasn't in the prospectus. For example, we were looking at this hats company for sale. It was ... numbers were great, but once we got into due diligence, we realized three customers made up 70% of the revenue. And that customer concentration scared us a little bit, so we tried to renegotiate the offer and we weren't able to so we had to back out of the deal. But there's going to be those instances where you learn something new that wasn't there during ... prior to the offer.

Andrew Foxwell: Right. Right. There's always going to be something that you find out, I'm sure. It's kind of interesting. When I do due diligence on my own business, sometimes I'm like, oh yeah. I forgot about that part of it. So it's interesting to hear your approach and the way that you're thinking about it.

To be conscious of your time, we just have one more question for you which is what is something you believe to be true that almost no other entrepreneurs or colleagues that you have to agree with you on?

Shakil Prasla: It's the model I work on which is, it's focus. I don't think you need to be focused on one product, one company, to be successful. And I think the majority of people would disagree that you have to be focused on a certain thing, and I am not focused at all. I am way away from being focused.

I run multiple companies in multiple directions and stuff, and there's different ways to measure success, whether it could be income, or making a difference and stuff. But to me, you could be doing multiple things. There's articles that people say, "Hey, don't have 10 tabs open at once. You're not being efficient." Or whatever. But I still do it. I don't focus on one thing, and I think that's been helpful for me in my journey is just doing multiple things. And doing multiple things has allowed me to just learn different things, work quickly, make decisions quickly, and so not being focused has definitely helped me, and I think most people would disagree that you have to be focused.

Austin Brawner: I think that's a really interesting point, especially coming from the perspective of somebody running 12 different businesses at one time.

Well, Shakil, it's been awesome and I really appreciate you giving us an insight into what you're doing, how you're running your business. If somebody's interested in learning more about what you're doing, what's the place you would direct them to learn more about you and what you're doing?

Shakil Prasla: You could just check out our website, or you could email me. It's Shakil, S-H-A-K-I-L@proclickventures.com.

Austin Brawner: Awesome. Shakil, thanks so much, man. I really enjoyed chatting with you, and we'll have to meet up here in Austin soon.

Shakil Prasla: Yeah. Thanks guys. Thanks for having me.

Austin Brawner: Hey guys, it's Austin again and if you've been listening for a while and you've yet to join the Brand Growth Experts membership, now is the time to do it. It is an incredible resource for you. It's my online coaching community. It's really the engine that drives the Ecommerce Influence podcast. We got about 115 members, all ecommerce business owners and ecommerce marketers, and in that community, I work with you guys one-on-one to help scale up your business. That could be scaling up advertising, hiring a team, diving into marketing strategy. So it's a really, really good resource, and we go really in-depth every single month on topics that we also talk about on the podcast. So if you've enjoyed the podcast, it's something you get some value out of, you're going to love the Brand Growth Experts membership. Head over to brandgrowthexperts.com and you can learn some more information. Can't wait to see you guys on the inside.

Austin Brawner: What's up everybody. Welcome to another episode of the Ecommerce Influence podcast. My name is Austin Brawner.

Andrew Foxwell: And I'm Andrew Foxwell. How are you doing, man? You doing all right?

Austin Brawner: I'm doing great, man. I was up today. I got up early...

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