If you are new to the buying websites game, the reality is that it’s like any other investment: the risk of losing everything is there. On the other hand, it’s very possible to see a quick and strong return thanks to the flexible nature of the internet, something that many of our buyers have been able to do!
Understanding how to take a careful approach to listings that interest you (this goes for listings at all levels whether it’s through an online auction, private party, through brokers, etc.), is critical for safeguarding your cash, time, and energy when looking at established websites and web-businesses to buy.
As a buyer of an established website, here are some questions we suggest asking yourself and the seller on every deal:
What is the seller’s true motivation? While “I’m selling to free up time and money” can be a valid reason to sell, we suggest looking even deeper. Look at general trends surrounding the niche/product/service and then look at the website itself (is it at the tail end of a big product launch, for example), consider any legal risks, determine if it recently got hit by a Google update or manual action, etc.
Does it align with your goals and interests? Every buyer should have a criteria that they use to filter out listings. For example, a buyer of ours only looks at sites that are over 2 years old, in the wedding, photography, and family/children niche, takes less than 15 hours a week to maintain, is making over $1,000/month in profit currently, and is being sold for less than a 2.5x multiple on the last 12 month’s total profit. This is very specific, and for good reason. It helps this buyer save time, money, and effort now during the search as well as when they take over and run the website.
What will it really take to run the website? Find out what the exact daily and weekly tasks are going to be in order to maintain the website at it’s current levels, then double check (sellers tend to underestimate this). Time is money, so if some tasks aren’t currently outsourced you’ll have to figure the value of your time vs. hiring it out, then plan for a little extra just in case.
What will it really take to grow the business? As a buyer, you should know the immediate, short term (next 3-6 months), and long term steps to take that will increase the value of the website and plan on having the necessary budget and/or time to actually take action. Not having a plan (broken down into daily, doable steps) will lead to feeling overwhelmed after the sale and most often results in a site losing value over time. This plan should be formulated as part of the due diligence process, before making an offer. Also look for areas of the site to save money, i.e. cheaper hosting, optimizing paid ad campaigns, etc.
Any buyers or sellers of websites out there that can add to these questions from your own experience? What are the most important things to you when making a purchase?