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Blog Profits Blueprint

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Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | 30yr Birthday Post

Locating Office Space

Searching for an office in early 2004 was one of the hardest things I have ever done as an entrepreneur. I certainly learnt a lot of lessons during the two months it took to find somewhere appropriate. Dealing with agents, building owners and leases provided many an opportunity to develop new skills but is not something I would want to repeat. I started by doing web searches and calling up every agent I could find by collecting phone numbers from the commericial vacancy signs that are littered throughout downtown Brisbane. I also had an agent contact through a friend. I ended up viewing many spaces, most of which were either too expensive, too small, wanted contracts that were too long or not the right type of space for a school. Eventually though I realised that perhaps my dream office did not exist so I started settling for spaces that were not exactly what I wanted, but functional.

Then the real nightmare began. I finally accepted office locations and started making applications. On THREE separate occasions I thought I was all set to move in to an office only for owners to change their mind, or other tenants to block my entrance. One owner just didn’t seem to want my money as I had to continuously badger him to get any answers. I eventually gave up on him. It was an absolute roller coaster ride and I had all but given up after the third rejection when I stumbled across a place just on the upper outskirts of downtown Brisbane on the border of the suburb of Spring Hill. It wasn’t perfect, it wasn’t modern, but it was big and comparably cheap. I signed a 1 year lease with an option to renew for another year after the first.

Selling MTGParadise.com

It was during time spent searching for an office that I realised that I really needed to remove myself completely from MTGParadise.com. For the previous year the site had been puttering along well enough and I was still earning advertising revenue but I had all but stopped doing any work to improve the site and it was stagnating. I don’t know why I didn’t think of it earlier, but suddenly the idea that I could sell the site popped into my head. While the money from the site was nothing amazing it was certainly significant enough to calculate a valuation for the Magic community. I went to work and calculated my past monthly incomes and came up with a price range that I thought was fair. My price meant that the buyer would like recoup the cost within the next 1-3 years assuming revenue consistent with the past years. If they wanted to do more they could certainly recoup the cost quicker and then start making profits.

I became quite excited at the prospect of gaining some capital from the sale of MTGParadise.com and perhaps more importantly removing myself completely from the maintenance of the site. However I didn’t want the site to go to just anyone, especially not some USA buyer that might absorb the site into a business and destroy the community. Ideally I had hoped to find an Australian buyer so my intitial thoughts were some of the local card store owners and even the current advertisers on the site. However if push came to shove I needed to get out so I would sell the site to an overseas buyer if necessary. I sent out some emails announcing the sale to some specific contacts in Australia and some major overseas card stores. I had some interest, in particular from one of the main Australian gaming stores, Sydney Games Centre, but nothing came to fruition.

I released the news on the MTGParadise that I was looking for buyer. One person contacted me to discuss the sale, Scott Hunstad from Sydney, who as “ssteven” was a regular in the community and one of the sites heavy traders often referred to as a virtual card store by other members based on the sheer number of cards he had available and the volume of trading he conducted. I gave him my asking price and we went away to talk it over with his business partner, Paul Van Der Werk. He came back with an offer that I thought was fair, we nutted out an agreement where I would remain for a few months to help out with the transition and continue to host the site for at least 12 months. The deal was done.

Over the next 12 months the new guys slowly took over the management of the community as they learnt what was required. We had quite a bumpy ride at time as the site continued to bring down the server at the current host but eventually we found a new host that could handle the traffic. During this time a new card game entered the collectable card game industry to compete with Magic called Vs System, which drew on characters and events from the Marvel and DC comic franchise. This game went on to become a significant player in the industry and Scott and Paul capitalised on this by opening a sister site called VSParadise.com. Later they went on to open another site for the YuGiOh card game and called it YGOParadise.com. The guys also fostered relationships with the company behind the new card games, attracted new advertisers for all the sites and continued to add new features including a $1000 article writing competition. All in all I was very pleased with the new owners because they continued to pour energy to revitalise MTGParadise and grow the community and gave me a profitable exit strategy as well. It was a win-win situation.

Running an English School

My office space was huge. I had two large office style rooms, two larger conference style rooms, a large reception area and a kitchen. When signing the lease I was hoping to perhaps rent a room or two to other business tenants and reduce my costs but I never convinced any one to join me (for the entire time I was in the office I was using my network contacts to find a sub-tenant and had a handful of people visit, but no one ever joined me, except my mother who did some private counselling and called the place her “city office”).

Aussie TutorI initially named my school Aussie Tutor but later decided I wanted to brand it under the BetterEdit name for future cross marketing so changed it to BE English School with the orange and blue from BetterEdit. Running an English school was a completely different challange to running an Internet business. It meant I had to be somewhere to open the doors and answer the phone everyday. It meant constantly doing face-to-face sales with English students. It meant recruiting teachers which involved personal interviews. All these new experiences and challenges I took head on, always focusing on getting my English school off the ground and profitable.

Ryan who had been tutoring with me at the library since the beginning agreed to stay on and we worked out a casual arrangement with a set number of hours. Ryan was an outstanding English teacher and carried the school for most of the time. I also had a few other teachers come and go but always had trouble finding a balance of teacher availability and student demand. I experimented with many different pricing structures, class sizes, concepts and ideas but never really managed to find a balance that worked. More often than not I didn’t have teachers at the right time, students grumbled about the pricing (often they were already spending thousands at expensive city English schools) and even when I finally did manage to get a good handful of students studying at once they never stayed for very long. I spent a lot of my time developing procedures so we didn’t lose out from student no-shows and establishing communication procedures between tutors, students and administration. All in all it was a mess to work out and while I was enjoying the challenge not a lot was working from a business sense and profit was far away.

BetterEdit meanwhile was chugging along well. I landed a significant business client that would feed a few thousand dollars of work per month over much of 2004. During the negotiation stage I had a meeting with the CEO of the organisation which was a good learning experience and required me to dust of the old suit and tie. BetterEdit Student work also continued to come in, though it wasn’t growing much because I had been spending most of my time on the English school. I spent many days sitting in my English school office at the computer working on BetterEdit projects while classrooms that I was spending $1400 a month rent on were empty.

By mid 2004, about half way through my 1 year lease, I decided I no longer wanted to run the English school. I reached a point where BetterEdit was demanding my attention and I was struggling to handle both projects well. BetterEdit was funding the English school and much of the income was draining away into rent. I started the English school for many reasons, but one in particular, a need for more human interaction which I thought would be satisfied from working with teachers and students, turned out to be far from reality when put into practice. English students, logically, have trouble with English so having a conversation was more pain than pleasure. Teachers were coming and going and I was frustrated by their lack of reliability, which was completely understandable since I did not offer much stability in terms of working hours. In the end though it was because I could not run both businesses at once that I decided to shut down BE English School and focus all my attention on BetterEdit.

I still believe the English tutoring model can work profitably but you need to be able to employ a teacher full time so that you always have a teacher available to meet student demand, and build it up from that. It’s even better if the business owner is a teacher as well, prepared to teach 20+ hours per week, which I was not, because this keeps costs down without loss of teaching hours available. Nonetheless the experiences gained from running the English school were invaluable, and while the business was not a success, certainly the experience for me was.

Breaking My Lease and Heading to Canada

With the mental choice to close the English school decided I still had the issue of a large office draining my finances. I redoubled my efforts to locate someone to take over part or all of the office but unfortunately never located any buyers. My mother occasionally used the office and I continued to “go to work” at the office running BetterEdit but it was largely a waste of space.

CanadaMy family were due for a trip to Canada and we had planned that summer to head to Toronto. It was while I was swimming some laps at the pool that it dawned on me that I could make better use of this trip and stay longer. Traditionally our trips to Canada have been short affairs and I had promised myself on the last trip to make better use of the next visit and stay longer. It’s a long way to go and a lot of money to spend just to endure a family “holiday” for three weeks. By the end of that swim I had decided to stay in Canada for a few months with no definite plans for departure, I would play it by ear. We were to leave early December and I would be staying for at least three months, possibly more depending on how I felt.

I decided that if I did not have a replacement tenant by November I would try and break the lease, using a “move to Canada” as the reasoning. By November nothing had changed and I headed for a meeting with the building owner. He was of course not pleased but I managed to leave with an agreement that would only cost me one month’s worth of rent. I will never be happy about all the money I put into rent in 2004 but I left that meeting feeling satisfied that this business journey had come to completion. I was off to Canada and would skip out on the Brisbane summer in exchange for the harsh Canadian winter.

Continue to Part Five of Yaro’s Business Timeline…

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