Flippa.com Honest Review: Scam or Gold Mine?

Transcription:

Hey there. We got to get here and today I’m going to be giving an honest review of flippa.com. Now, as you can see here, they claim they are the number one marketplace to buy and sell online businesses. And after my years of experience in the industry, this is probably true, they have the biggest inventory of online businesses.


So compared to other brokers and other marketplaces, I’m essentially going to give you my honest opinion of flippa.com. Some of the good things about it, and a lot of the bad things and truth about buying on flippa.com. And why you should probably should or shouldn’t consider it for buying an online business.

So let’s go ahead and get started. Right now, for those of you joining in who don’t know me, my name is Mike Swigunski, I am with full transparency, I was employee number four at a competing company called Empire Flippers. During my time there, I’ve helped broker more than $120 million of online businesses, I’m still very active in the marketplace, and I’m still helping people buy and sell online businesses.


So this is a common question that I’m getting from a lot of people, because they’re new to the industry, they’re new to the space, they don’t have five or six years of experience like myself. So they’re one of the first places that people come to is flippa.com, I want to go out and try to be as unbiased as possible because I personally have not made an acquisition through Flippa. But I have talked to loads of people who have, and they have actually gone through the process of buying. So with that information in mind, I’m trying to be as unbiased as possible to give you the reality of what it’s like to buy a business on flippa.com. And kind of what my thought process is on Flippa or other marketplaces out there.


Whenever I work with somebody who’s buying a business, I’ve seen the interior and the behind-the-scenes of Empire Flippers, that’s my preferred marketplace. And the biggest differentiator between Flippa and Empire Flippers is curation. Now, what is the curation and that’s going to essentially mean, like Craigslist, on Flippa is going to be kind of the analogy I use where somebody can go in, they can create a listing, and they can essentially say that their business is earning any amount of money, they’re spending X amount of money because there’s nobody really validating or verifying this information. So that’s a big portion of flippa.com is people can go on there and say whatever they want. And a lot of times these businesses aren’t actually factually earning the amount of money that they’re claiming. And that’s the big problem with Flippa. Where other brokers and other marketplaces come in is they have some sort of very strict curation standards, where they’re spending four to six weeks vetting these businesses. And usually, between 70 to 80% of the businesses that get submitted to these marketplaces, don’t get approved. A lot of times, they’re not making enough money, or they’re just not an industry that’s acceptable for that broker or that marketplace. There’s a variety of other reasons. Or maybe they just found out that, hey, this, this business isn’t making enough money to be sold on our marketplace.


So a lot of times that inventory, usually around $50,000 and below will end up on a marketplace, like Flippa. So I want to say that, again, one of the big issues with Flippa is you have to sift through a lot of the stuff, a big portion of it isn’t going to be easy or good to find. And essentially, it’s like finding a needle in a haystack because there are some legitimate businesses being sold on Flippa, obviously, but for every legitimate business, there might be 10 or 20 ones where maybe there are scammers or maybe there are people who just don’t really have their books in order. So maybe they really think that their business is making $10,000 a month in profit. You know, they’re spending $6,000 in expenses, but Oh, I forgot about my software, I forgot about my hosting the domain, all the other ad expenses that I’m putting on there, maybe they just don’t have a good track of that. And that’s honestly, the number one thing I find when working with sellers is they just don’t have a good understanding of their profit and loss. And a lot of times, when you’re buying a business, you really need to hone in on the p&l statement, which is the profit and loss to make sure like, this business should be using the software. Why don’t they have that added, they’re their main traffic sources coming from Facebook, but they don’t have any Facebook ads in their expense column.

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These are a few things to look out for. So let’s just go through how Flippa works, because there’s a few different ways of how it actually works. And they have a few different options. If you’re looking to buy something you can go through here and you can see all the services. They have a due diligence service. So if you’re essentially looking to buy a business flipper will send you a due diligence report. Meaning after looking at this business, they’ll go through and give an extra check to make sure it’s legitimate. And they’ll be checking a lot of different factors. How are the backlinks, how are the SEO, what other factors Got the business kind of look good, which, which parts of the business look bad, the flipper broker is going to be something that’s a little bit newer to Flippa. So essentially, they take the stress out of selling. And they’ve got other brokers that they kind of recommend. So you can look at these brokers. And they’ve got the deal flow here, which was essentially a branch of Flippa at one point, for my understanding, and essentially, if you want to find brokers, you can go ahead and kind of use this curated list of brokers to actually acquire a business.


So flippa.com is going to be searching websites. And that’s kind of the main thing, if you’re looking for just a shell of a website, it might be something good. Let’s just look at fitness on flippa.com. So this is going to be different than the broker side. Again, we see here, all about peloton.com. So it looks like it’s making $212 per month, and it’s being sold at a 4.9x profit. So not a bad thing here. But again, you know, if you are going to make an acquisition through Flippa, let’s say you have another peloton site and you see a lot of synergies where this person, you know, you can put in your affiliate, you can use the traffic to really monetize it. So a few things to look out for is once you sign up here, you can kind of see more details about the traffic. I don’t want to break any terms here. So I’m not going to share that.


But yeah, basically, the site is one year old. It’s making, you know, around $200 per month. I guess it’s that’s after the commission. So monthly profit. I don’t know what their expenses are. It says $527. So they must have some expenses for adding new content, maybe backlinks or something like that. But again, some of the things if you are going to buy a business like this, I would make sure that you are looking at the traffic sources. Where’s the traffic coming from? Has it been consistent? Is all their traffic coming from Facebook? Or is it coming from certain different websites? So check out the backlink profile? So the pageviews look like quite a lot. So that’s a lot of page views. For some type of business that’s only earning, you know, $200 per month in profit. So that’s something that I’d be a little skeptical about is like, why is it getting so many page views, but it’s actually not earning that much money?


It could be a new site, it’s only a year old. So maybe it’s just not targeting the right people. Or maybe the page views are coming to a part of the website that isn’t monetized. So maybe 10,000 page views go to an article that’s not really related or not really well monetized. And that could be an opportunity for somebody.


So yeah, that’s just something kind of taking a look at the businesses on here. A lot of times, they are a lot smaller, and a lot of times they aren’t really earning so much. So yeah, usually the profit can be $629. Here, let’s see if we can just go ahead and make the monthly profit, a minimum of 5000. Just take a look at some bigger businesses. So they do have some larger businesses here. Let’s take a look at this one because the domains out. And let’s see what the premium website classified it says verified listing. It does look like the seller here. Let’s see what it says. So seller verification, I believe this means we saw this thing here. Verified listing, from my understanding, means that the expenses have been verified. So the email address has been verified the phone number hasn’t. They uploaded a government ID and then the payment method is escrow.com. So again, this could be something that looks legitimate. But you really need to make sure that you’re taking a look at the expenses and also checking out the profit.

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So where is the money coming from and then taking a look at what type of expenses they have? So looks like this is a eCommerce business and figure out what market they’re selling on what type of information about that. Again, there are a lot more details that go into those but again, there are legitimate businesses on here, but a lot of times there’s not going to be a lot of recourse for figuring out you’re gonna have to do a lot more work to find a good legitimate business. So here we’ve got a business verified it looks like the shopping. Shopify information has been verified. So let’s just take a look at this one. Fit pro smartwatch. So this is at a 1x Multiple which is kind of unheard of for anybody selling a business. 


The revenue multiple points two so it looks like it’s making $12,000 a month in profit and they’re looking to sell it at 1x which honestly, seems a little sketchy. I don’t know why they would want to sell a business for that low. Maybe They’re just not aware of the details. Or maybe they’re just again, this could be a potential business where they’re not actually making $12,000 a month. So normally a business like this would be selling for, you know, 30 times that much. It doesn’t have a lot of information FitPro smartwatch. It’s one year old, getting a lot of views per month. But again, this seems like a business that should be worth more. And again, if it’s too good to be true, maybe that’s why or maybe they’re just trying to do a bidding system where that’s their lower, lowest point, and they’re wanting to bid up the price.


So let’s see what it says here for the vetted data verified listing. Again, the revenue has been verified the primary expenses, the traffic has all been verified. And then again, their Google Analytics and Shopify information. So that’s been one of the biggest critiques with Flippa. And it sounds like they’re doing a lot of things to actually verify stuff, which is good. And again, if you’re going to be buying something I highly recommend, don’t send anybody a PayPal or wire or anything like that, make sure you’re using a service like escrow.com. And the way escrow.com works is you send the money, and during that time period, the business will be transferred over to you.


And again, you didn’t make sure that all of the passwords and all the information is transferred correctly. Because they don’t want to you don’t want to have a backdoor. So some sort of example, if somebody was to get creative with a long-term scam would be to Yes, we put all the money in escrow, we transferred the business. And then they’ve somehow programmed a backdoor. Meaning, hey, after I transferred everything, I got the money out of escrow.com, I go in, I can just hack the website because I made myself a user and kept myself as an admin. And then I was able to go ahead and kind of get the site back. Again, if I don’t think a lot of people are going to do that. Because I am an optimistic person. I think most people have good intentions. But this is something that you need to look out for. And if you’re going to be if you’ve never migrated a website or business before, it’s a little bit more complicated than that there’s a lot of steps that need to go in there and make sure that all the security stuff is transferred over to you properly before making an offer. Let’s see, look for verified sellers review financials review traffic schedule call. And that’s something that again, I would make sure to always schedule call, especially if you’re going to spend six figures on a business, make sure that communication is solid, make sure you go with your gut, if there’s anything that kind of seems off, it’s probably best to just move on to looking for other businesses. Overall, Flippa is a good starting point. But again, if you’re a buyer, you might be able to find some deals. But a lot of times if the deals look too good to be true, it’s because they are. So that’s why I stick with vetted marketplaces that take care of all these curation standards. And they also handle the escrow and migration process. So you might have to pay a small premium for that. But again, it’s well worth the risk of having to use a broker. So again, it’s well worth the increase in price to have peace of mind that you’re buying a legitimate business that’s been vetted. It’s been going through a really rigorous due diligence process, there’s going to be a strong escrow team in place, meaning that during that escrow period, they’re going to be migrating the business. 

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And if anything comes up that isn’t up to par, you’ll be able to get your money back and it’ll be secure. escrow.com does have a few issues because it’s not really built for online businesses. So you could potentially end up with your money being held there. Or it could be pushed out even though you don’t own the business, or you haven’t had the business transferred. So there are a lot of issues there. But overall flippa.com is kind of like craigslist, you do have to sift through. And you do really have to know what you’re looking for. To make sure that you’re going to be buying a business that is legitimate and is earning what the seller is claiming there are legitimate businesses on Flippa. But it’s going to be a little bit harder compared to other marketplaces and other brokers that are spending four to six weeks of time going through a rigorous process to make sure that the business is legitimate. If you’re looking to buy a business, if you’re looking to sell a business, I help buyers and sellers, find businesses that are going to be a good fit for their skill sets and their budget, and also I help them implement a growth plan. And on the sell side, I hope you go to the place where you’re going to get the most money in the fastest period of time and an exit. So I’ll leave a link below where you can set up a free consultation with me and we can talk more about what you’re looking to achieve. So if you’re looking to buy a business, I help you walk through the process, show you what’s going to be the best talk about your budget, see what’s going to be kind of the best process for finding a deal that’s going to be a good fit for you. And if you’re a seller, I talked about Exit Planning, which is essentially going to be Hey, what is your goal? When do you want to sell? What is the state of your business? And what can you do to improve your business before a sale? So if you’re interested in either of those options, I’ll leave a link below where you can get in touch and you can set up a call with me.


So take care. Let me know if you’ve bought a site from Flippa. How did the experience go? I would love to hear from you. Leave a comment below. And feel free to reach out to me if you have any questions. 


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More About This Topic:

Flippa.com is a marketplace for buying and selling online businesses, with two headquarters based in Melbourne and San Francisco. It serves to connect buyers and sellers of websites and other online businesses. As of the time of this writing, the company reportedly has 120,000 registered ‘buyers’ with access to over $8,200,000,000 in available funds.

 

 

Founded by Mark Harbottle and Matt Mickiewicz, as the SitePoint Marketplace, Flippa was given its own separate identity in June 2009. Flippa’s revenue is largely derived from the sale of websites, apps, and online businesses through its marketplace, along with the sale of domain names as well. The marketplace’s most expensive sale up to date was planetrx.com which sold for US$1,200,000.

 

Other notable websites and domains sold through the Flippa marketplace include Mark Zuckerberg’s former website Facemash, shipyourenemiesglitter.com, and Retweet.com. Flippa’s platform is free for buyers and currently has a total of 120,000 buyers. Sellers pay Flippa a commission on the sale of their web properties.