How do you buy and sell websites?
Website Broker – Ryan Sorensen answers these questions and more in…
Creating a profitable business for buying and selling websites
Just like other investments such as real estate, stocks or brick and mortar businesses, there is a significant advantage in selling businesses online.
However, with the bright side comes the risk!
In the experience gained from launching my own sites and working as a broker at Flipping Enterprises (I completed $1.3 million in business in 2012), when sales were done correctly, you could be rewarded handsomely and mitigate many of these risks.I'll look at a 10-step plan on how to buy and sell your first website profitably and relatively safely.
To get the mindset right, think about buying and selling businesses online like you would launching homes.A smart home fin tries to buy an undervalued property that can be upgraded to minimal costs that they can sell for a profit after a certain period of time.Simply put, there are people who make a living full time by closing only 4 or 5 of these deals a year.One of the differences between launching a short-term home and launching a website is that you will have the opportunity not only to earn money selling your website, but in the meantime to add a monthly profit stream.
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Selling a business is one of the most important financial decisions you'll make.Make no mistake!If you own an eCommerce, Amazon FBA, SaaS and technology, service-based, Adsense, affiliates, digital products, or content-based businesses and are thinking of selling or just want a valuation, our recommended website broker team can help: Request your free website evaluation & Get out of strategy today+++++++++++++++++
10 Steps to Making a Profit by Buying and Selling Websites
=> Enjoy these 10 steps and, above all, take action!
1. Know your limits
- Money
- Time
You have to be honest with yourself.How much money can you afford to lose?Really think about it.If you lose that $5,000 you plan to invest, could you survive?No investment is guaranteed, no matter how attractive it is.You need to prepare yourself by knowing how much money you are able to put in. Once you get that number, think about how much time you can spend running a new business.While many websites are passive in nature, there are a few things you'll need to do to increase their value.Be prepared to spend some time acquiring the knowledge or skills needed to work on your new acquisition.
2. Find out which sites will grow
One term you may have heard before is "evergreen" niches.This type of niche has no obvious expiration date and is fueled by constant human needs and desires.Examples include auto insurance, consumer electronics, clothing, sports, business, beauty and health, etc. It's crucial to keep lifecycle dates in mind on websites that may interest you.If you buy a site that makes money on something that will soon become illegal due to recent legislation passed or that relies on a passing fad, you may find yourself out of your own pocket.
One positive reason for buying an established site, no matter how competitive the niche is, is that it has a performance history to measure against.If it has earned $1,000 per month in profits from search engines, you will know what keywords it ranks for and where it can be scaled down.You'll also see what revenue sources are used and what quick chances to instantly increase profits (negotiating better affiliate payments, optimizing ad placements, increasing conversions in sales funnels, etc.).Just as a home fin looks for simple fixes and improvements such as carpet replacement, painting, and kitchen renovation, you should look for websites that can be improved and enlarged.
Also, find those that align with your interests.It will help you stay motivated when things get tough.Here's a basic checklist:
- Evergreen niches
- Inverse potential
- Aligns with your interests
3. Where to find websites for sale
As some of you may have seen, the quality of sites for sale can sometimes be very poor.Wading through everything is part of the process and something to remember in most cases, you get what you pay for. Don't expect to be able to buy a quality gain of $5,000 per month for just $15,000 (3 times the monthly multiple) – it can happen when a site is still in its early stages and unproven, but that's not the norm.In general, a good range of being like a buyer is 12-18 times the average monthly profit for a relatively small site ($ < $ 50,000).If you earn $1,000 per month, an asking price of $12,000 to $18,000 is reasonable.However, each listing and its seller is unique and you can still get great deals, especially if you can spot growth opportunities.Below are some of the most popular places to find websites for sale:
- Website brokers (FlippingEnterprises.com, Wesellyoursite.com, etc.)
- Website marketplaces (Flippa.com, Bizbuysell.com, WebsiteBroker.com, etc.)
- Forum marketplaces (Experienced-People.net, "websites for sale" section of Warriorforum.com, Digital Point forums, etc.)
- Directly from the buyer (Google search, email contact, or people you know)
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4. How to conduct rapid due diligence
As a general guideline, use the following questions for each list you are interested in as a quick "reject" filter:
- Why are they selling it? Common red flags are dying niches, borderline products/services, such as unlocking your phone or downloading movies, and recent Google update hits (loss of traffic from Google updates can be recovered and represents a unique opportunity for those with the skills and resources available).
- Do they provide evidence of revenue and traffic? Look for revenue screens that show the website URL or evidence that comes from the requested source and traffic analysis from a trusted platform like Google Analytics.
- Can you trust the seller? Take a quick look at their account feedback and history and do a Google search on their name and look at at least 2 pages of results.
5. How to conduct thorough due diligence
If a site passes the first test and you want to dig deeper, most sellers will be willing to send you specific details.Take a deeper look at:
- Traffic analysis. Are there periods when traffic was idle?Are their traffic sources well distributed instead of relying too much on one source?Take a look at their reference sites.Is there anyone owned by the seller and will the links remain active after the sale?
- Revenue proof . If necessary, ask the seller to provide a video about them logging into their affiliate or merchant accounts and proof that it is from the requested URL or associated account.For example, get reports on the "URL channel" for Google Adsense.
- Talk to the seller. One of the best ways to earn trust is to talk to the seller on the phone or on Skype.Not only will it help you understand who they are, it will increase the chances that they will be willing to work with you on the price when it comes time to make an offer.
- Talk to a professional. If you're not sure how to proceed or aren't sure about the process, talk to a third party.Many brokers are willing to offer "buy-side" services and help with due diligence.A third party can help remove any emotion from the deal.
6. Making the right offer
If you think this is the right site for you, it's time to make an offer.The key is to start with your lowest bid but make it high enough to grab sellers' attention.If they're asking for $10k and that's a multiple of 18x monthly profits, offering only $2k will most likely give you nothing but an annoyed opt-out email.70% of the asking price is a good place to start.
Providing reasons why you're offering a lower amount by highlighting some downsides of the website can help your cause.Even having the money and being able to try it and help the seller trust that you would take care of the site are ways to swing them to take you on someone else, even if the offer is lower.
To give yourself that edge by going to bid, study this informative summary on how to trade effectively, published by Inc. magazine.
7. You own the site, now what?
The short answer to these questions is: get to work!The more you increase your monthly profit, the more it will be worth it once you decide to sell.Literally thousands of articles have been written on the topic of website traffic building and monetization, some of the best can be found on the Income Diary here and here, respectively.
If you don't have the time, resources, or energy to do the work yourself, make sure the person you hire has good references/feedback and isn't overloaded.You may be able to increase your profits simply by finding cheaper help, but make sure you don't sacrifice quality: SEO (search engine optimization) work, customer service, and sales reps are a good example here.
Another key point is to automate and arrange the website where possible.A site that requires the owner only 5 hours per week to perform basic maintenance will sell for more than one taking 20 hours per week.
8. Make the decision to sell
If your website is attractive enough — steady, growing traffic and earnings in a solid niche — it will most likely sell for more than you paid for it, even if you've only owned it for a month.Ask yourself the following questions to determine if it's the right time to sell for you:
- Have you exhausted all possible ways to optimize traffic and earnings? This is why many sellers decide it's time to let go.But don't feel bad, buyers may see expansion opportunities that you don't.
- What percentage of your investment has already been returned? Will you get a positive return on your investment if you sell now?
- What will you do with the proceeds from the sale? If you're selling to invest in a different website or project, stop by and think about it for a minute.How likely is this new project website to make the most money?Is it worth taking a potential hit on the price by not waiting any longer to sell, for example if you have a few months less or if it is during the generally slower season for buyers during the summer?
If you have to sell it due to poor website performance due to a Google update, sudden changes in available monetization options, etc. and you need to reduce losses, our suggestion is to do everything possible to stabilize it or sustain it sale in time for someone else to stabilize it and we hope to cultivate it.Once revenue reaches zero, the value follows.
9. How to sell it
That's the best part!Selling a website works the same way you would sell any other product online – it needs to be put in front of your most targeted audience.You will find the most qualified buyers in the same places where you went to buy a site, through brokers, marketplaces, directly and in industry forums.Key points to remember:
- Prepare by keeping detailed traffic and revenue logs (Google Analytics, monthly profit/loss statement, access to reports from affiliate networks or merchant accounts, etc.)
- Be sincere, honest, and willing to help with due diligence questions. Most buyers just want to have a clear picture of past performance and, more importantly, that they can trust you.
- Do not be greedy . Unless you have the time and patience to wait for someone to jump to your unreal asking price, it's best to stick to the "sweet spot" which is where both the buyer and seller feel it's right.Monthly profit multiples from 12x to 24x are a good choice. If you're not sure, do a quick research on what similar sites have sold on website brokers' "sold listings" pages or on Flippa.
Brokers specialize in selling ads at fair prices and within reasonable time for a successful commission.Most will give you a free valuation and advice on how to sell it themselves if they can't accept it or how to increase its value.
If you venture out on your own by entering one of the markets make sure you filter out scammers by always using an escrow service (we recommend escrow.com), review their feedback and past activities, and talk to them on the phone or Skype before accepting their offers.
10. Rinse and repeat
Pay at the "University of Life," as my mother used to say, taking steps and taking notes.So, follow the advice of many Internet marketing experts: once you have a system that works, repeat! If you end up losing some money on your first deal, don't give up.You will have more confidence and experience to try again and we hope to make a profit.
Conclusion
A colleague of mine bought a site for $2500 that earned $200-$300 per month.It changed the way it was monetized and brought it down to over $2000 per month, without doing anything for existing traffic.3 months later he sold it for $25,000 for a profit of almost $30,000.
While this is one of the most successful website launches I personally know on a percentage increase basis, it's not that uncommon to find.Just like traditional real estate, established quality websites and domains will increase in value over the long term.
If you have any questions about the process of buying and selling websites, please feel free to ask me in the comments.If you are interested in our website brokerage services, please visit flippingenterprises.com.
Thank you for your time!
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