Enough Money To Buy A Toyota: The Rise, Slump, and Sale of My Side Project

This is the story of a side project my business partner and I started on nights and weekends for under $10,000. Of how that side project became a controversial-yet-profitable small business doing $15,000/month with 2 full-time employees. Of how that business declined to $3,500/month. And of how we recently sold that business for $30,000 — you know, not millions, but enough to buy a Toyota.

It may sound like the story of mediocrity. But I don’t see it that way. Some business results transcend ROI.

The Launch

Four and a half years ago, at the end of February 2012, my business partner, Emory, and I launched Loft Resumes. I’ve already written about our launch and how it went far better than we imagined it would. We always thought Loft had potential, which is why we decided to pursue it. Our feeling was “Hey, we think this is a nice little niche. We’ll launch it on the side to learn ecommerce and maybe make a few bucks at the same time. If it ends up being big, well, that’s great.” We didn’t go into it with huge expectations — more like just a hope that it could be something big.

The Hate

All along, we wanted to start Loft Resumes because we saw a need in the market for what we were offering. We knew “designer” resumes weren’t right for everyone. But, because friends and family had used them pre-launch to land jobs, we knew they worked for some job-seekers out there. We wanted to provide a service for a reasonable fee that would bring value to our customers. We couldn’t guarantee a job but we thought we could give some folks that edge they may need to stand out in the job market.

Not everyone saw it that way.

I received my first hate mail shortly after Loft launched. Then we noticed in the comments section of some of the blogs we were featured in that many people didn’t like Loft. We had a lot of people in the career counseling industry and resume writing industry who said that using Loft Resumes was like putting lipstick on a pig, that hiring managers would immediately throw out a designer resume, that if you couldn’t design a resume yourself you shouldn’t use one, that designer resumes wouldn’t work in ATS software, that we were preying on desperate job seekers with an expensive service. And that’s just a smattering of the negative comments. We even had people write entire negative blog posts about us. That was a weird feeling — to create something with good intentions and for a specific target audience and for a specific purpose only to have those intentions and that purpose misconstrued. I could write an entire blog post responding to the negative comments but it’s not worth the effort at this point.

A Real Business

It wasn’t but a few months after I wrote about our launch that the business started taking up enough of our time that neither Emory nor I could work on it in our spare time. Emory was working in the creative department of a local advertising agency and I was running a software startup (which ended up not working). I didn’t want to quit what I was doing but Emory was looking to move on from where he was. So, we decided to bring Emory on full-time to run Loft. It would work out better with him running things than me anyway; because he was a graphic artist, he’d be able to fulfill orders as well as run the business side of things.

So, all of a sudden, we had a full-fledged business. Loft was growing. Emory was doing marketing and sales as well as fulfilling some of our orders. However, we also realized that he couldn’t run/promote the business and do all the order fulfillment by himself. So, we also used contract workers to help with that. Over time, we added another service, resume writing, so that we could offer our customers a full resume package. Since we weren’t resume writers ourselves, we hired resume writing contractors to fulfill those orders. Along with this new writing service came new headaches from a management standpoint — we had to coordinate with all of our contractors and make sure they were performing at a high level.

Emory did a great job running the business. He did it for about 2.5 years. He helped grow Loft into a real business doing around 5 figures a month and, to be honest, I didn’t do a ton to help other than taking part in strategic meetings. Eventually though, it was time for him to move on. He was getting burnt out being the solo operator. At this point, there wasn’t a ton of creative work to be done with Loft and he missed that side of his career. He ended up getting a great job offer as a creative director — a job that would be more financially lucrative than Loft. So, he took it.

Hands-Off

Fortunately, we had a great option lined up moving forward. Emory’s wife is great at sales and customer support and had been looking to switch jobs. So, we brought her on. Throughout her tenure with Loft, we saw our conversion rates increase. One of the downsides was that she wasn’t a graphic artist, so she wouldn’t be able to fulfill the orders. For a while we just used our contract designers but over time we realized it made more sense operationally and financially to bring the resume design portion of the business in-house. And, great news — Emory’s sister-in-law was a graphic artist and was looking for a job. So, we hired her. We now had two full-time employees.

At this point, Emory and I were pretty much hands-off — me probably more so. I bet I spent about an hour a month on Loft. My previous software business had failed but I had started another one, MoonClerk, and it was starting to work.

The good news for Loft was that revenue was stable. The bad news is that with an additional staff member and with our outsourcing of resume writing, our costs were higher than before. So, our profitability took a hit. Revenue-wise, we had some of our best months ever during this time though.

We never really found a paid-marketing channel that worked for us. We tried a bit of PPC, but that didn’t work. We tried some other forms of advertising, partnerships, and affiliate marketing but none of us had a real expertise in these areas or a great interest so we didn’t really apply ourselves to making them work. We did work on our SEO over time though and that, along with the free press we had received over time from publications such as Buzzfeed and FastCompany, was what drove much of our traffic and revenue. It was kind of frustrating though because we didn’t have the levers to pull to drive more sales.

After Emory left, we did less marketing and experimented with fewer marketing efforts overall, though we still did try to publish the occasional blog post and social media post to keep things fresh. We also hadn’t really updated the website much since early on in the life of Loft. Overall, we weren’t doing much to move the company forward.

The Decline of 2016

Nothing inherently bad happened with our business operations in 2016. We still provided a great service. Our customers still found jobs. But our business declined. It was a sales and marketing issue.

It started when, in early 2016, Emory’s wife decided that she wanted to move on. She was ready to work with a larger team and to not have to “run” a business. Fortunately for me, MoonClerk had been doing really well and I needed a full-time person to work on customer success so she came to work for MoonClerk. We decided we would try to use her departure as an opportunity to lower Loft’s fixed monthly expenses. So, we moved customer support over to our full-time designer. Our full-time designer would now take care of customer support, order fulfillment for designs, and coordination with our resume writers.

Unfortunately for Loft, that left us without anyone to run sales. The lack of a salesperson lead to a decrease in our conversion rate. Emory’s wife was great at talking to our customers over the phone, over live chat, and via email and easing their fears and conveying the value Loft could potentially bring to their job search.

We also saw a decline in our traffic. We hadn’t really done any marketing in the previous 12–18 month — not even a blog post — just sales to our existing traffic. I’m sure that hurt us from both an SEO standpoint as well as from a referral traffic standpoint.

All these factors lead to a decline in Loft’s revenue in the first half of 2016 and our worst 2 months ever when our sales went down to about $3,500/month. We lost money in those months.

The Sale

Emory and I both knew in order to turn Loft around, we’d need to invest time, energy, and resources. The website was due for an update or redesign, we needed to do some marketing, and there were plenty of other improvements and changes we could test out. We knew even if we did all of that, as with any business, there wasn’t a guarantee those actions would work.

More importantly, neither of us had the motivation to spend the time and energy to carry out those tasks. I was focused on MoonClerk now. And Emory had moved forward with his career and other side projects. We still loved the mission of Loft Resumes and loved helping our customers land their dream jobs. Our hearts just weren’t in the business side of Loft anymore. So, we decided we’d sell.

At first, before Emory’s wife left, we investigated using a business broker to help with the sale. But our most recent financials for 2016 didn’t look great. They told us to try to reduce expenses to get the financials in a better position for a sale. That’s one of the reasons we decided not to replace Emory’s wife. Instead of making the financials look better, our revenue dropped and they looked worse. So, we decided to see what we could get through an online auction on Flippa.com.

I was skeptical of Flippa. Most of what I knew about them revolved around the sale of web domains and affiliate and ad-related websites — not actual operating businesses. I was surprised to find some real businesses on there, particularly in the ecommerce space. We consider Loft Resumes an ecommerce/service hybrid so I decided to give it a shot. I was pleasantly surprised at the amount of verification they required for sellers — it made me feel better that potential buyers would see us as a legitimate business. I decided to put as much information as possible on our listing and to be as forthright as possible with how the business was doing, what its opportunities were, and what the drawbacks were. Being completely open was the right thing to do from an ethical standpoint. But it also helped differentiate us on Flippa amongst other listings that didn’t provide a ton of information.

I set a reserve price but didn’t set a Buy-It-Now price. I wanted to see how the auction would play out over the roughly 4 weeks I had it listed. Pretty immediately, we started receiving a good bit of interest. The comments section on the listing was pretty active and I tried to publicly answer everyone in-depth. We also received a lot of private messages. People started bidding and within a couple weeks we had reached our reserve price. Some people asked about our Buy It Now price. I told them we didn’t have one but we were open to looking at offers. Then, the day before the auction was to close, we did receive an offer worth looking at. We might have done better by letting the auction run, but probably not a ton better, and we ran the risk of doing a little worse. So, after a bit of back and forth on price, we decided to accept a price of $30,000.

I had been operating Loft Resumes under an LLC that also had revenue and expenses associated with other side projects. Years ago, I probably should have broken Loft off as its own LLC but I never did. So, we structured the deal as a sale of assets of the LLC rather than actually selling the LLC itself.

Flippa’s escrow service, along with some phone conversations with the buyer helped me feel confident we’d actually get the deal done in a timely and safe manner. It did take a couple of weeks to get a contract together — I used a local attorney I’d worked with before. Once the buyer and I agreed on the content of the contract, we set a date to close the sale. The actual closing was pretty quick. We both signed the contract, I handed over the login credentials for all of the online services we used, and the buyer released the funds from escrow. We also did an introductory call with our full-time employee. We included 2 weeks of training and she did most of that.

The Wins

We didn’t make millions from Loft. But starting, running, and selling the business felt like a win.

1) The biggest win for me as a cofounder was a personal one. Before Loft Resumes, Emory had been working at an advertising agency. It came with the requirements of a typical job — be at the office in the morning, leave late afternoon, limited lunch, meet deadlines, work some weekends, etc. After Emory came on full-time, his Dad received the news that he had cancer. It was a long arduous process of treatments. Unfortunately, his father passed away. Over dinner recently Emory shared with me that Loft came along at the perfect time for him. It provided him an income but also allowed him to work his own hours and work from wherever he wanted. His family lives one town over, about an hour away. Working at Loft allowed him to be there when he needed to help his family out and just spend time with them, before and after his father passed away. Emory is a friend. You can’t calculate the ROI of having been part of something that helped your friend in that way.

2) We helped a lot of people land positions in their dream careers. I know Loft Resumes isn’t the perfect solution for every job seeker. But hearing stories from customers about how we helped them land a job that makes them feel alive is a rewarding feeling and helped the hate mail sting a bit less.

3) Not only did we provide employment for Emory but we also employed two other human beings full-time and provided extra income to a number of contractors. It feels good to start what you thought was going to be a side business and end up helping other people support their families.

4) We made money. We quickly repaid the investment I made to start the business, every year we operated at a profit, and we sold the business at a profit. It wasn’t millions but that’s a pretty good “side project” if you ask me.

The Lessons

I haven’t had enough time from the sale of Loft yet to properly recognize or articulate all of the lessons I’ve learned from the starting, running, and selling the business. There are a few lessons that come to the top of my mind though.

1) If there is such a thing as a passive income business, I sure haven’t found it. Every business takes work. And not just at launch. Businesses have a natural atrophy — if you’re not working on them, they die. It’s just the speed at which they’ll die that’s unknown.

2) You never know a business’ potential. Would Loft Resumes sell a few resume designs a month or would we solve a major pain-point for job seekers and become a multi-million dollar business? We had no idea before we launched. There are plenty of business I never thought would work that ended up being huge. There are plenty of businesses I thought would be huge and never went anywhere. You never know until you try.

3) Haters gonna hate.

The Future

As for me, I continue to focus my efforts on my SaaS business, MoonClerk, which helps small-to-medium sized businesses accept recurring payments online. MoonClerk continues to grow so I have my hands full there. I also help run Rice Bowls, an orphan care nonprofit.

Emory is at the job he took after he left Loft Resumes. He’s also been part of some cool projects, like a local print shop co-op.

We’re excited about the future of Loft Resumes. The new owner is super excited about continuing to provide great service and about growing the business. We have every reason to hope and expect that with the right focus and effort, he’ll be able to do just that. So, if you’re in the market for a new resume, I’d like to recommend a cool little service I’ve heard of — Loft Resumes.