Story: How I built and sold a $20,000 business in 1 year

I built and sold a $20,000 business as a side-hustle in 2020 and 2021. Here is the story in detail.

As the world shut off in early 2020, my regular work came down from 70 hours to 20 hours a week. It wouldn’t stay there. But - an opportunity it was.

I wanted to learn SEO and a more organic way of acquiring customers and leads. I took the course “Search Engine Optimization” from California Davis on Coursera. I did it during the 7 day free-trial. That gave me the basics.

There had been a lot of chat if EDMs still worked. EDM - Exact Domain Match. A domain that matches the exact keyword you are optimizing for. Not to jump the gun - but oh boy it did.

I also knew that recurring revenue both compounds and trades at a much higher premium to regular revenue or even reoccurring revenue. So I was settled on a subscription business.

• Recurring revenue - Contractual ongoing revenue at a fixed time. Spotify.
• Reoccurring revenue - Individual purchases, but made frequently. Uber.
• Regular revenue - Individual purchases that aren’t made with a high or certain frequency. Furniture.

I can’t code and I didn’t want to invest more than $1,000 into the project. Remember, this was to learn SEO. That ruled out any software or B2B businesses. So that left me with consumer product subscription.

I searched AHREF for keywords like “X subscription box” with a volume above 300 monthly searches. Checked to see if the domains where available. I found multiple like:

• Hunting subscription box (yeah, I still bought the domain)
• Fishing subscription box (yeah, I still bought the domain)
• Puzzle subscription box

AHREF - An SEO tools to find keywords, # of searches and their difficulty.

Hunting was hard - gear is expensive and you can’t really give them that wow-feeling. Fishing had a massive player - Mystery Tackle Box. Then there was puzzle subscription box - with no visible competitors. A couple of puzzle production companies had sub-sites for subscription boxes, but there was NO buy-button. Idiots..

Time to set up the shop and test demand. I knew that I was going to optimize for search, so Shopify was out of the picture. I ended with Wordpress and Woocommerce running on Digital Ocean. Wordpress is the gold standard for SEO. Digital Ocean is just so fast. Golden combo.

I set up the store. That part was easy. Anybody can do it. Google a theme for subscription boxes, installed woocommerce subscription, paid a freelance designer from UpWork to create a mock-up of the box, saw a couple hours of YouTube and I was essentially up and running.

I copied most of my text on the site from Barkbox and Birchbox. The two biggest subscription boxes at the time. Pricing was set so I would have a profit-margin of roughly 15%. I also made the crucial decision of having only curated puzzles - the customer couldn’t decide. That means I could buy in bulk every month.

I reasoned my way to two boxes. A monthly one for the people that are really into it. A quarterly one for users that do it on a rarer occasion. Solid reasoning. Ended up with roughly an equal number of subscribers on each product.

No matter how great you are. SEO is slow. Too slow. We needed some juice!

You can buy expired domains with good backlinks at domcop.com, links at seoclerk.com or regular domains on auctions - these are high-risk solutions. An internet-friend of mine spotted a puzzle domain for sale on GoDaddy with good links and high DA (Domain Authority). I purchases it at $399. Made a 301-redirect, which means a permanent redirect that sends all links, traffic, etc. to your site. 301-redirect sounds hard and technical. It’s actually a setting in GoDaddy. Very easy.

That almost instantly made my traffic increase week over week and with that came my first sale! A monthly subscription box. But as you have probably guessed from the story. I had no inventory yet. I was just testing.

I drove to the nearest UPS store and purchases a box with filler. Then to a hobby store to buy a couple of puzzles. Packed them up in the back of my car. Nothing fancy. Then back to the UPS store to ship it.

It was a hole in ground. Probably a $15 loss on each of the first couple of orders. But I wasn’t optimizing. I was making sure there was demand.

I was about to run into my first real problem. Inventory. It was in the middle of the coronavirus epidemic and everyone was buying puzzles. I emailed every single producer. They had a few here and there. I snapped them up.

New customers kept coming, so I briefly DM’ed with Moiz Ali (from Native). He recommended ShipMonk as a 3PL. We got up and running. It’s easy. They have a woocommerce integration and you just tell your suppliers to send the goods to them.

3PL - They store, pack and ship your products for you.

Now almost everything was automated. I still struggled to get enough puzzles in inventory, but customer acquisition was on autopilot. Mother’s Day hit and I got a ton of new subscribers. After reviewing some data - 80% of our subscriptions were gift… We included small cards in the boxes and changed some copy of our website to accommodate this discovery.

Next issue was shipping cost. A puzzle is heavy. About a pound. Shipping prices was out of control and ultimately cut way to much into our margin. I was left with a few dollars of profit. That’s okay for SEO, but also means I couldn’t spend any money on marketing.

We added a puzzle mat as an up sell with high margins. That helped, but ultimately wasn’t enough. It was a success as it was added on roughly 20% of orders.

That’s ultimately what made me sell the business. Low margins.

My hours was ramping up towards 70 again and while Puzzle Subscription Box was on autopilot, I was still struggling with inventory every month.

I had followed along as Andrew Gazdecki had make a big fuzz launching MicroAcquire. Posting fast and big sales.

I made a profile, connected Stripe and wrote a short description. At this point, we had roughly 120 subscribers, +$3,500 in monthly revenue with +$300 in monthly profit.

The overall rule for small recurring business is that they shouldn’t sell for less than 36 months of profit. That’s mostly for affiliate sites that has an intrinsic risk of Google killing them. So I decided to list for 5 years earnings - $18,000. While bigger profitable companies usually sell for 7 - 10 years earnings. My site was smaller and riskier.

I got a ton of request to review the business, ton of questions, a couple of low-ball offers and I sort of wrote it off. Then a week later (two weeks after listing), an e-commerce holding company reached out and was interested. Immediately followed by a private buyer. The holding company offered $20,000 and I relayed that to the private buyer, which countered with $21,000. I asked the holding company what a contract would look like and then send that to the private buyer. To show, I knew what I was doing.

He asked for a bunch of screenshots, screen-share, etc. during the due diligence and we finalized it with a call. He had good insightful questions and most of all probably wanted to make sure I didn’t rip him off. Fair enough.

Andrew, from MicroAcquire, helped along the way. It was a new platform and I was definitely given the VIP service for a relatively small deal. Huge applause!

We used Escrow.com - he funded the account. I handed over the access to his email and marked my tasks complete in the software. A couple of days later. He checked it off and I received the money.

That was a long story. While it seemed exiting. It was actually boring. In a good way. It was slow, but predictable. Boring, but profitable. Outside of inventory and shipping there were no setbacks or surprises.

Key takeaways for IndieHackers:

• ALWAYS test demand before investing significant time or resources
• ALWAYS have an intended acquisition channel before starting a business
• ALWAYS get going with minimal investment (less than $10,000) no matter what
• Have a community or group of builders to ping-pong ideas and help each other
• Be a hacker; do grey-area things, try the new new things

Feel free to hit me up with ANY questions.

Follow me on Twitter: https://twitter.com/bernardmbaruch_