Via Forbes : Justin Goff, 31, has created two million-dollar businesses with no employees other than the owners—an eBook company and an online health supplements store. The secret of this entrepreneur from Columbus, Ohio has been mastering Facebook FB +0.00% marketing.
His skill at scaling revenues at these ultra-lean businesses has put him in a small but growing group of entrepreneurs who are reaching at least $1 million in revenue as “nonemployer” firms. These are generally companies run by solo entrepreneurs or partners who do the work themselves or rely on contractors and automation.
The U.S. Census Bureau found there were 30,174 “nonemployer” firms that brought in $1 million to $2,499,999 in 2013. That number has grown from 29,494 in 2012 and 26,744 in 2011.
And there are many more nonemployer businesses getting close to the $1 million mark. In 2013, there were 221,815 bringing in $500,000 to $999,999, a number that held steady since 2012.
Many readers who have been following this series on million-dollar, one- and two-person firms have been especially curious about entrepreneurs who run internet businesses. Goff’s story offers some interesting ideas on how to make the most of the digital age to scale a business small enough to run from your home.
Goff’s first million-dollar venture was an eBook business he co-founded at a tough point in his life, in 2010. A contract gig where he had been doing search engine optimization for a website dried up—and along with it, 90% of his income. Meanwhile, he and his girlfriend broke up. At age 27, he was contemplating moving back in with his parents because he was running out of money.
But the pressure sparked his creativity, and he soon partnered with his personal trainer to create an eBook called the 31 Day Fat Loss Cure. His trainer had been in the army and, after taking a desk job, wanted to get back into military shape. He used the short workout he had done in the army to do that and began sharing his exercise and diet tips with clients like Goff. They soon realized they had enough material for a 60-page eBook and put it up for sale on a global internet retail site called Clickbank.
With only about $2,000 to his name, Goff began spending about $100 a day doing Facebook marketing for the book. Through trial and error, he gradually learned to write ads that would attract buyers.
“I was losing money on them but slowly started improving the conversion rate by changing the sales copy and the ads we were using,” says Goff. “That kind of stuff makes a big difference.”
Goff gradually went from losing $100 a day to losing $50, then $10, and finally breaking even. When an ad finally began making money, he would increase the number of people in his target demographic—college-educated people in their forties and fifties—to whom it was displayed. Soon it was not unusual to make $2,000 a day, he says. Within twelve months, the book was bringing in more than $1 million a year, he says.
“Once you learn Facebook ads, it’s a great skill to have,” says Goff. “You can scale really quickly, which is great for the one-person business. It gives you a lot of leverage, where you don’t need more employees. I went from making $100 day on Facebook to $2,000 a day. It was no more work for me and 20 times the revenue.”
Of course, as he points out, he did have to pay for the ads, so he and his partner had to subtract that cost from the $1 million to arrive at their actual profit.
Goff and his partner eventually disbanded the eBook business when the trainer wanted to move on to other pursuits, he says.
Goff moved on to selling supplements at a site he founded called Patriot Health Institute in 2013. He focused on supplements to help men in their fifties and sixties feel more energetic. After using a similar Facebook marketing strategy to promote the business, he built the solo operation to $1 million in revenue before selling it in the summer of 2014. A third party fulfillment center shipped the orders for him.
Here’s where we get to the messy part of solo entrepreneurship. One reason Goff sold that business was he learned something many people do when scaling up: It’s hard to keep up with customer service when you run a tiny business. When I Googled the name of that firm, I noticed there were several complaints online and asked him what had happened. He responded candidly.
“One of our biggest issues when we were growing was we were really good at acquiring new customers and making good product they liked,” says Goff. “Our biggest problem was customer service. We tried to do all of our customer service by email at the time, which later we realized was a mistake. Our market was mostly people in their fifties, sixties and seventies. A huge part of that market wants to talk to someone over the phone.” Although the company later offered phone support, handled by a third party, he concluded that its service could have been improved, too.
Goff’s original goal was to keep his business as small and lean as possible, but as he discovered, that doesn’t always work. “In this situation, it definitely backfired a little,” says Goff. He estimates that out of about 40,000 sales, the business received about seven to 10 complaints. “In the overall scheme of things our complaints were super low,” he says. However, as we all know, in the internet age, those that someone posts online can live for posterity.
The experience provided a valuable lesson, though. Goff realized that while he was a very good copy writer and knew how to attract people to his website and convert them to customers, he needed to learn more about operations.
So, after selling Patriot Health Institute, Goff was ready to scale in a different way. He became silent partner in a bigger supplement firm that had operational support in place. “Personally, it now is a better fit for me than the one-man show that I was trying to run,” says Goff. “I realized there’s a limit to what you can do with the one person company. You really can only get to about $3 million or so in revenue before you have to bring on employees. If I wanted to build this into hugely successful supplement company, I needed infrastructure and people to help me do it.”
Even though the excitement of running a million-dollar, one-person business ran its course, what he learned was still valuable. One key lesson, he says, was to be patient about internet marketing promotions and allow himself time to experiment. “There are so many people that start out, try something one time and it doesn’t work, it’s not a huge hit and they’re done,” he says. “They think they’re going to set up a product and two days later, it’s going to start making them money. That’s not how it works.” Now that he knows what does work, he’s ready to put it to the test on a bigger scale.
Elaine Pofeldt , Contributor
I’m a former senior editor at Fortune Small Business magazine. I have written about entrepreneurship for publications such as Crain’s New York Business, Fortune, Money, Inc., Working Mother, CNBC and many others. I’m also co-founder of 200kfreelancer.com, a community for indie professionals looking to build a thriving business.