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Ask HN: Best marketplace for passive income businesses?
89 points by sharemywin 6 months ago | hide | past | web | favorite | 47 comments

I'm founder of FE International (mentioned quite a few times in this thread already). We've done over $100m deals in the online space and have won various awards (e.g. for my business partner, Ismael: https://www.ibba.org/press-releases/2016-ibba-member-excelle...)

When searching for a business to buy, make sure you do your due diligence. There's a lot of junk out there and many "brokers" just make up their numbers/claimed legitimacy to win business. Once you've got past that, you then need to do due diligence on the business itself.

Passive businesses are not impossible to find, but it does depend on your definition. You can't buy any business and do absolutely nothing (truly "passive"). Even something low maintenance will require 1 hour a week, especially if you want it to last for years. Expect to pay a premium for businesses like this but be very cautious around claims from a seller. Number of hours worked is the easiest to misrepresent (and the hardest to prove). Almost every seller claims to work "2 hours a day" but IRL I've never met a business owner who works less than 10 a day :)

To answer your question directly, don't just look at marketplaces, check out brokers and advisors too. If you're upfront with what you're looking for and budget, most will send you options that are a good fit.

Good luck with your search!

I had a bad experience dealing with you guys and I hope you can improve your NDA process. You make buyers sign a 2 year NDA. No problem with that except that you claim that the NDA is not specific to one sale but for all sales for the 2 year period. I had signed one already but when I inquired about another company after 1 year had passed, your team tried to force me to sign another NDA and gave the worst excuses when I tried to ask for the reason.

Either it is a 2 year NDA or it is not. If you want us to re-sign the NDA after 1 year, say so. Otherwise it is frankly misleading and a lie.

Sorry to hear you had a bad experience - happy to take on all constructive feedback so I appreciate you bringing it up!

The reason we ask for a 2 year NDA is that this is the generally accepted length of time that NDAs are enforceable in all 50 US states. We do ask buyers/investors to re-sign after 1 year so that our sellers are comfortable that there is at least 1 year remaining on all NDAs at the point of us listing a business.

That being said, on some listings sellers request that new 2 year NDAs are signed with all buyers/investors irrespective of how long is left to run on a pre-signed document. This is usually limited to 7 and 8-figure listings.

Sellers and buyers/investors both generally appreciate our strict approach. Making sure that we are operating diligent process when it comes to NDAs and sharing information is important for sellers as well as a new owner of the business.

Happy to jump on a call to discuss further if you would like: https://calendly.com/thomassmale.

I think I'm looking for a service business that I can focus on the billing, accounting, sales and marketing side. So, yes I get what your saying about "passive" The Risky part there is the employees have a lot of leverage over your business. I'll check out your site, though.

Flippa is decent, but there is a lot of garbage to wade through to find anything real. Empire Flippers is a little better, they vet the sites some before posting them. Bizbuysell.com is mainly focused on brick and mortar businesses, but there are some online businesses for sale there as well.

Having said that, finding a true "passive income" business that is profitable and someone wants to sell is challenging. Most of them (that I have found) end up being scams. Do your due diligence and scrutinize their income and expense reports, traffic figures, etc. I can usually "smell" when something isn't right.

I bought a coupon site on flippa and realized a lot of the traffic was from images of coupons. that linked to the site.

No way to do due diligence before hand?

You don't know what you don't know. the traffic lasted a couple months. only spent a $1000 on it. I just wasn't willing to put copyrighted material on the web linking back to my site to get traffic.

I find it kind of funny how many sites on flippa make tons of money but the people just "don't have time" for a "no maintenance" site. And when you look at the charts it's, of course, all traffic leading up to the listing and nothing more.

FE International is known to broker a lot of SaaS company sales. I haven't sold/bought a business with them, but I have friends that have.

It's not a marketplace per se, but it might be what you're looking for.

[1] https://feinternational.com

Patric McKenzie (patio11 here) sold either or both of his businesses via FE Int'l - Bingo Card Creator and Appointment Reminder. IIRC he has written about both experiences on his site kalzumeus.com .

s/Patric/Patrick - was a typo.

I've heard really good things about FE International, and, since they're a true broker, everything they sell seems to be super legit. I've also had some contact with them when I was thinking about selling some of my sites, and I was impressed.

The fact that they're a true broker, though, means it's not worth their time to sell sites with lower earnings, so I haven't seen anything much below $2k/month in revenue.

Also, from talking to them, it sounds like they have a network of buyers that they can privately pitch your site to if you're looking to sell quickly and are willing to take a slightly lower multiple of earnings (in exchange for a quicker, easier selling process, it seems).

Oh, the other site for this I've heard of this EmpireFlippers.

Careful what you wish for, 'passive income' can take on a life of its own.

I jumped into the branded domain aftermarket thinking it is the perfect passive income business to support my primary project. After a building a retail site and acquiring a bunch of quality domains the sales trickled in. So did the inquiries and customer support tickets. As sales increased so did the demand on my time. Now I have to choose between a fledgling/growing passive side business or (more likely) flip it and focus on my main biz.

The lesson is its hard to serve two masters, no matter how easy the math looks. Unless your Elon Musk.

Isn't this a great problem to have? Most people can't get one business to traction.

Not sure if you're looking for a marketplace to buy or launch a business, but I'd say the Atlassian store might be an interesting one.

A lot of (business) users who are willing to spend money. A lot of ratings/reviews you can improve on to make a better product and a big ecosystem.

Just wondering what is Atlassian's share of any sale? Additionally, how do they view apps which might have a similar purpose to an official but priced lesser?

Atlassian's cut is 25%.

NYSE. Seriously. If you want to buy and be a completely passive owner, buy stocks. You'll at least be able to minimize risk.

Buying and growing a business can be just as hard as starting one. If you want to own a business, you have to be able to sell/market their product. If you can't sell to one or two people to start a business, what makes you think selling to 100s in an established business is a good idea?

If you already have a stock portfolio and need to diversify. Look to real estate. Even then it's not completely passive, but hey you can at least hire a management company.

If you still want to passively own a business, specifically a web business. Take the $3,000 or whatever you want to use to buy a site and instead launch your own site. Spend the money on ads to drive traffic to your site and learn the valuable lesson that you can't just buy your way to success...

This question is a bit too vague. I'm not sure how it got 17 up votes. I would only up vote it if it was more clear.

We need to know the motivations in order to be able to answer.

Are you looking to buy a turn key passive income business?

Are you looking to sell?

If you are looking to sell what are your skills?

Can you, for example, write a Wordpress theme or would you do you want to sell physical goods using a drop shipper?

If you update the questions I'm sure some people will be able to help.

It got up voted I think because a lot of people are looking for this type of thing.

Honestly, I threw it out there to see what type of websites are in the space.

I asked for clarification and gave multiple possible interpretation.

Your answer assumes I am wrong about it being ambiguous and vague but you don't say why.

I'm not trying to attack you I'm trying to be helpful so you can clarify your question.

Can you please answer the questions?

A lot of people seems to have assumed you meant to purchase a passive income business. Is that the correct interpretation?

Because a "marketplace" is also a website that sells good and service and a passive income marketplace could mean one where you can list goods and services on it without having to be hands on fulfilling each order individually. If you meant that, there are literally dozens of possible types of products and not all of them are suitable to everyone.

You seem to be overthinking this.

Perhaps. I still have no idea what he is asking for :(

I'm just going to assume the majority of posters are right and he's looking to buy a turn key passive business.

I come from an eCommerce world where there are a lot of hands-off drop shippers. I don't think it is unreasonable to have thought he might have been asking something like "What's the best place to drop ship on to make the most profits?"

I sold passive income sites in the $300-$600/mo range on both Flippa and BuySellWebsites (not sure if it's still around).

I would not suggest either due to the # of scams.

Really it doesn't take more than a year to make a website profitable. 2-3 to get it into hundreds or thousands. Do your keyword research with adwords to determine avg. cpm, or if you are selling products build out a social media following.

Can you give examples of some of the sites you sold? I'm having a hard time believing something that is a successful established passive income stream sells for that range. Seems more like it would be more selling site templates and infographics without a real customer base.

And if there's no real customer base then it is hardly passive since you need to build the business.

I think he meant he sold sites making $300-$600/month on those sites. Not that the sites were sold for those prices.

That being said, CryoLogic, any course, books etc. you recommend to learn about the process?

Not sure about the best but one is Flippa.

Wanna buy one of mine? Thinking of positioning for sale a Business SaaS app, a Sales/Marketing Automation app and a transportation related app. Keeping the one that's earning the most... sorry.

how would I get a hold of you?

His profile at https://news.ycombinator.com/user?id=moflome links to https://moflo.me/ which has a contact link and a phone number

Places like IndieHackers and forums. I guess HN is also not a bad place to ask.

E.g. I have a passive income business that I could sell given an interesting offer.

You seem like a good person to ask the question that's appeared on this thread already a couple of times: if the business produces "passive income", why would you want to sell it? I.e. if you put little-to-no-effort into running it and it gives you an income, surely you would (in the long run) lose money by selling for a lump sum that bears any relation to the business's income.

one reason to sell income generating sites: to raise some capital to use on growing other site.

I think that if you were to lease out teleportation devices you would be pretty well-off

Why would someone sell a passive income business? By definition it's basically free money.

Lots of reasons. Just beware on marketplaces (Flippa, EmpireFlippers) etc. which have varying levels of vetting (from none to basic verification) as sellers often make up reasons or are lying about hours worked.

Some legitimate reasons to sell something "passive"

- Have another business growing that needs cash - Need a lump sum of cash for X - Lower tax rate (generally) paying capital gains vs. income tax - Cash in the bank often beats future uncertainty - Being passive doesn't mean it's low risk or doesn't keep you up at night

Same reason you would sell any business really. If the price someone is willing to pay for it is higher than what you expect is the discounted return over time, then you should sell.

If a passive business costs you $1000 on the free market to buy/sell (nevermind whether you own it already or not, the opportunity cost of acquiring/retaining it is the same for our decision making purposes either way), and it only returns $10 per year, that's a 1% return on your $1000.

Then you would wish to sell the business and spend the $1000 on a strictly better investment like a T-bill which returns more than 1% per year on a $1000 investment.

Good reasons:

-More money for a bigger/other project.

-Desperate for cash.

-Don't want to deal with bookkeeping accounting hassles.

Bad Reasons:

-Income stream about to dry up (although buffet did OK with that scenario)

-Fraud/Scam - probably need to do some research on this to find ways to detect it.

It still takes some energy to maintain. It's passive, but it's low.

You might also sell it if someone else thinks that they can do something to ramp up revenue in the business.

They are never entirely passive, and revenue can drop precipitously very quickly.

Invest in tokens and ETH, BTC, BCC etc.

I did buy some 3 GPUs makeing aobut $5-$6 a day. Probably would have done better just buying BTC when it crash a month ago.

What are you mining? There are profitability calculators available, last I saw Monero has the highest return on investment.

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