Key Factors For Buying and Selling Websites

Key Factors For Buying and Selling Websites
January 23, 2013 Webmaster

things-to-know-before-buying-or-selling-a-website

When Buying Websites:

It’s important to evaluate a number of factors before buying a website. You may find my checklist below value for the basics necessary for a successful ‘quick flip’ or one-to-two day turnaround; of course every situation is different and you should make sure you are personally satisfied before proceeding.

1.  Did the due diligence return a positive search result?

2.  Do you have or can you raise sufficient funds for the purchase? Can you defer payment (and maybe sell it before having to pay)?

3.  If you had to resell immediately, are the statistics transparent enough?

4.  Do you understand the niche market and the technology behind the website to answer questions from potential buyers?

5.  What’s the site’s offered value in relation to the market for similar sites?

6.  Is the site going to hold long-term value? Short-term value? No value at all (i.e. personal blogs)?

7.  How quickly can all assets be transferred to and from your ownership?

8.  Based on your previous sales, can you think of a buyer to whom this site would appeal?

9.  What’s the break-even point for this site? Knowing your list as you do, can you make it return a profit? Are you aware of your break-even point for the site?

10.  How much value can add to the site in one day? Consider:

The design of the website;

The content of the website;

The monetization of the website.

 

These guidelines are useful when you want to move fast, and require you to have a working knowledge of due diligence and the ability to assess a website’s true value fairly.

It’s important to recognize your own strengths and skills as they apply to this process. The key is being able to identify areas when you can add value, based on the existing structure of the website and your own areas of expertise. Unless you are one of the rare few who are proficient at everything, you will need to select carefully in this regard.

When Selling Websites:

Whether you’re a broker or an individual, the key to selling any website is understanding its worth. Online businesses are easy enough to assess in this regard, based on profit generated by the website versus costs such as wages and site maintenance. Other types of website, for instance educational or informative pages, may be more difficult to fairly assess, even if they do generate revenue. In any event, it’s important to put together certain critical information before offering the website for sale at a brokerage on a forum.

First and foremost, price needs to be considered. Typically this is determined by calculating together the average annual revenue of the website; its running costs; and the costs for staff and maintenance. As a rule of thumb, you can estimate this total to work out between 300 & 600% of the site’s gross yearly earnings. (This may vary considerably for non-commercial websites). A prospectus should be drawn up illustrating all of the above to show how the price is derived and justified.

The second factor affecting a website’s worth is advertising. No matter what medium you’re using to sell a website, you should be able to present information on traffic, costs and revenues, successful keywords, page rankings and growth rates when asked. It’s also best to be informed about the status of the target market and any competition the website faces. If you can present all this information in a single document, buyers will be inclined to favor you.

Thirdly, think about where you will tray and sell your website. It is possible to find forums with dedicated sections for selling websites, and eBay has a separate category for them as well, but sensible and serious buyers will go to a reputable broker to find the websites they are looking for. Not only are good brokers experienced in all aspects of the transaction, and able to help the buyer make an informed decision, but also bear in mind that the best place for a website that is between owners to still acquire exposure is on a broker’s site.