Posts tagged "website business"

There is a lot of websites popping up recently promoting the fabulous virtues of flipping websites for a living and making BIG money. Many offer extensive courses and consulting on the do's and don'ts of this business model. There are certainly plenty of self proclaimed experts and gurus who are now exploiting this niche by selling off their e-products and personal coaching on how to capitalize on unwitting, naive, or unmotivated sellers. The premise is to find websites that have certain fundamentals like age, search engine positioning, and original content that have been under optimized and under monetized and convince the owner to sell at a lower multiple - say 10 - 15 months net profits. Once accomplished, the new owner, flipper, redeploys the site with better on page optimization(keyword enrichment in tags and copy as well as good internal linking/navigation) which can be accomplished pretty quickly and getting more back links using keyword anchor text in the links to make them more effective. Concurrently, new monetization elements such as pay per click(PPC) code like adsense, banner ad networks, paid links, affiliate program links, etc are placed on the site or reformatted to more strategic positions on the pages for better conversion. The end game is to improve monthly profitability and traffic so the site can be sold for more money - and typically at a higher multiple!

The strategy can work very well for entrepreneurs who take the right approach and do their homework. I have personally bought and sold over a dozen websites in the past, selling them for 10 -20 times what I purchased them for because I had developed the websites into thriving profitable businesses with solid fundamentals and cash flow. That is the point - to create better website opportunities for a future owner that is more solid fundamentally and more viable long term with lots of upside in profits. Buying an existing business that has a good foundation saves a lot of time over creating a site from scratch - so it can speed up the process of becoming very profitable and has more history of stability and growth which buyers will appreciate and value.

Most of the website flipper gurus seem to focus on the lower end market for websites for sale making a few hundred or few thousand dollars. Personally, for a more seasoned investor/ buyer, I think it is a much more interesting and potentially lucrative focusing on existing website businesses that are already producing healthy monthly profits and are worth more than $50K. The reasoning is that the right kind of business that is throwing off this level of revenue can literally explode to 4-5 times that amount with some basic strategies implemented once purchased. You generally get what you pay for and so buying an internet business with better current revenues can be much more of a lucrative venture with less risk than buying less robust cheaper sites and trying to manage many small sites to flip for modest profits

The biggest areas of improvement to a website are optimization of the meta tags, and page copy to improve SEO rapidly. Many times a site can leap in position overnight just by improving the Title and description tags to target better or more keywords and phrases. Improving and honing the body content so every page of the site is unique will go a long way to improving SEO. Internal linking with keywords - using the main keyword phrases in the sites navigation - will make a big difference as well - providing more link relevancy as long as every page of the site has unique content. After the websites "on page" optimization has been implemented, the back links the site has pointing to it from other sites will radically bump the site's natural positioning over time - sooner than later with established older sites. The key here to is to get links from sites/pages that have good PR, are relevant in nature to your site and use keyword anchors in the link. Some experts argue that it makes no difference if the site is not relevant - this can be argued currently - however it is in Google's and other search engine engineers best interest to continue to refine their algorithms to achieve better results for users - results that are relevant and not manipultaed by massive inbound linking strategies.  I think it is better to to concentrate on quality more than quantity personally and expect this to pay off in the future.

Getting more traffic inevitably equates to more revenues for a site, however it does not guarantee it. Herein lies the next opportunity for a website flipper. Once the sites optimization is underway, the other areas to consider renovating are the sites layout and graphics.. Many of the best opportunities can be improved simply by giving a site an updated web 2.0 makeover. Visitors to your site will leave in a nanosecond if the site doesn't appeal to them quickly - ugly colors and graphics, busy wordy layout , poor quality digital images, etc. By giving the website a facelift - which doesn't necessitate spending a great deal of money - can improve the stickiness and appeal of the site and lead to much higher page impressions and conversion of the monetizing elements embedded throughout the website.

If the site is a content based model offering information, the areas to grow revenues will likely be with PPC links, testing different layouts and positions on the page, affiliate programs related to the subject matter - check out www.clickbank.com for thousands of e products to offer , paid one way links , banner ads , and even webpage advertorials.

For e-commerce websites, spiking sales revenue and profits can be ramped up by adding new products and product categories that get further optimized, implementing a targetet extensive PPC campaign with good copy and hundreds of tertiary keyword phrases for the individual products and categories, integrating an affiliate program and recruiting strong affiliates, promoting to existing customers who have purchased in the past - offering loyalty programs and incentives to return and buy more, and adding a toll free number for ease of contact (make it easier for customers to order and be comfortable they are dealing with a legitimate retailer).

Some websites and business models will be easier than others to optimize and monetize so be sure to measure all the attributes of the website itself, the niche, the model - ie e-commerce, social networking, forum, blog, PPC, etc - and see how much work will be involved post closing. This will determine the viability of the purchase - buying an e-commerce site may not be appealing to some buyers unless it is a drop ship model because of the need to inventory product, process and ship orders and answer the phones - all of which may necessitate hiring employees. This  may be ideal for a website owner that is expanding and has some infrastructure in place to manage the new acquisition until it is ready to sell again.

It is important to be clear as well on the timeframe of the investment. The longer you are willing to hold and build the sites revenues, the better the new history and the larger the multiple you can expect on the net profits. If you want to maximize your profit on the flip, it will be better to hold for at least 6 months before listing again to establish the trend. Remember, buying cheap sites is not guaranteeing a larger profit on the other side - look for solid sites as mentioned above that you can sink your teeth into for a longer period of time and you will enjoy much higher returns and profits when you sell your website business.

 David Fairley

Preident,

www.websiteproperties.com

On the eve of turkey day and a well deserved long weekend, I thought it would be appropriate to give thanks for the business I find myself engaged in currently. As a website business broker I spend my days conversing with website owners wanting to sell their internet businesses and budding internet entrepreneurs looking for the next deal. I get to interact with a very interesting cross section of people and generally have very stimulating conversations.

I am thankful for the opportunity I am presented with daily to offer advice and help people achieve both financial success and financial freedom from both sides. Many new buyers looking to start out on their own, away from corporate America after 20 years, get the thrill of finally owning and building their own business that they can operate from their home in their pajamas instead of commuting to a skyscraper in their suit and tie!

I get to assist sellers who have worked hard developing and building great fundamentally solid website businesses that are attractive to many buyers. I get to celebrate their joy and new found freedom after a deal is closed and often maintain long term relationships with these clients often participating in their future business deals. 

I am thankful for working with a dedicated, intelligent and fun staff and partners who know the value of team work, customer service, loyalty and excellence! They make it easy to enjoy my company, manage its growth and celebrate its successes too!

To know that the deals we broker are fair and balanced and are a win win win for all parties, including websiteproperties.com, is a great feeling. I truely am blessed doing what I love and helping people achieve their dreams and goals and building great relationships along the way.

So, I will enjoy my time off over this festive holiday, but undoubtly I will find time to creep back online to read and answer some emails because when you do what you love, it is not work.

Happy and safe Thanksgiving to all my readers, clients and prospective buyers who visit an read my blog.

David Fairley

President,

www.websiteproperties.com

The historic day has arrived after 20 months of an intense political race, economic uncertainty and global recession. How does the effect of the election and the apparent recession affect your internet business or the opportunity of buying a website business now?

I am personally looking forward to completion of the process and hope that ultimately the division in this country is reigned in and we can start unifying to take on the enormous challenges of this new century. I think that in itself will allow people to refocus on their opportunities and challenges in their personal and business life without the distraction of the political pundits and abrasive political campaign ads.

The internet has been more of a harbor in the tempest of this economic meltdown - many prospective buyers are looking at investing in solid cash flow internet opportunities because there is a greater sense of control of the potential returns that in the volatile real estate and stock markets. In addition, internet businesses tend to have more resilience to economic downturns because the more affluent and educated consumers are shopping online, researching online and saving money online instead of spending more time and money driving to make purchases for certain products. Website businesses also have a broader market to sell to - with a national or international customer base verses a more local or regional market like most brick and mortar businesses.

In economic downturns there are always niches that thrive and opportunities that become much better deals than they were when the market was up. This means it is a buyers market with more attractive opportunities to consider and at less inflated multiples than a year ago. Looking for an established website business for sale that has a long history of growth, profitability and stability will be a wise investment in a downturn providing the niche is resilient to consumer spending - such as necessity items verses luxury products.

There are lots of excellent opportunities to cherry pick now that will be worth a lot more when we rebound from this morass of poor leadership and uncertainty into a new era of global respect, a healing in this country and new opportunities arising from the enviromental, economic and health challenges we face currently.

 David Fairley

President, www.websiteproperties.com

Recently, we have had some issues come up with non compete agreements for a few deals we are working on. I felt was a timely opportunity to cover this aspect of a website business sale for both buyers and sellers.

Every internet business for sale will incorporate a non compete agreement or clause at the very least. This non compete element of the business is there to protect the prospect who wants to buy a website business from an unethical seller who sells their existing business and turns around and starts another similar or identical business that competes with their old site! Of course this could devastate the new owners hopes of maintaining or growing their newly acquired business opportunity, as the seller would have complete insight on the marketplace, vendors, customers, marketing and advertising channels, etc. The non compete is designed to effectively legally eliminate this scenario from unfolding.

The usual length of time is 3 years, however some business opportunities necessitate longer terms - 5-7+ years and some buyers demand more protection. If their are proprietary products, software, business practices that need exclusivity to stay competitive, then a longer term may be in order.

On the side of the seller, the term should not be as big an issue - assuming they are done with the niche and they typically have infinite other ideas and niches they would like to pursue! The seller's case usually involves not being limited or restricted to explore and develop other businesses providing they are in unrelated niches or businesses. This is usually accomplished by specifying exactly what they can not pursue - based on exactly what they are selling currently. An example case is identifying espresso makers and accessories as the specific products off the table - but perhaps not coffee beans, for instance. Making it crystal clear in the non compete agreement will avoid any future problems of overlap or competition, intentionally or otherwise.

In the case of another client, we discovered after going into due diligence when an LOI (letter of intent) or written offer was presented with the traditional 3 year non compete clause, the seller would not accept it? We discovered subsequently, that the seller had multiple sites in the same space selling a similar product! Whether this was naive exclusion or intentional misrepresentation is debatable, but what is important is securing a deal with the protection of a clear and concise non compete that is reasonable and fair to both parties. Obviously, this was a deal killer and likely saved the buyer from an unsavory experience.

In the end, most sellers sincerely want their buyers to succeed beyond them and are very accommodating with this aspect of the purchase agreement. If both parties place themselves in the other's position, a fair and balanced non-compete, purchase agreement and completed business for sale transaction are the final result.

 David Fairley

President, www.websiteproperties.com

Sometimes during a negotiation between a buyer and seller, there are definitive signs that start rearing up that lead to what is known as "deal fatigue". This can happen as early as the LOI (letter of intent) stage - which is where an initial written offer is submitted and is negotiated, accepted or rejected. It can also happen well into the due diligence phase.

In the case of the seller, it may start becoming clear that, although they may have been agreeable to a deal initially, the buyer's behavior and manner during the due diligence period may cause concerns about the future dealings with the buyer after closing. These can be anxiety about the buyer competence to manage the business (the seller's "baby") and the amount of support and maintenance that will be needed to transition the business. It can also be an attitude of nickel and diming and trying to chisel away at the agreed upon price and terms unreasonably. It also can be awareness that the buyer has unrealistic expectations or limitations they want to incorporate in the final purchase agreement that creates unnecessary risk and responsibilities on the seller that are beyond their control - such as guaranteeing specific SEO ranking, traffic and sales. The business history and fundamentals should be reason and motivation enough to make a purchase decision - which inevitably contains some risk as there are certainly no guarantees in business. Buyers need to assess the risk reward factors of a business for sale while concurrently evaluating their own skill set they bring to the new venture to determine the probability of succeeding or meeting their goals and aspirations.

Many times, these early warning signs should be weighed and a decision to walk from a deal and trust that a more harmonious deal will follow. This is much easier when the seller is not under pressure to sell or in a rush to sell. They can afford to be patient and wait for the right buyer and deal. The right deal usually means it is a smooth and fluid process where both parties are respectful and even.

 On the buyer side, when a deal is agreed upon initially and they enter due diligence, red flags can start appearing in the form of incomplete data, inability to corroborate data or financial numbers, unorganized or incomplete presentation of materials to verify the business history, and erratic or highly emotional responses from the seller. If a seller is too pushy with closing in an unrealistic time frame - like 1 or 2 weeks instead of allowing a more normal due diligence and closing period of 3-4 weeks, this may be an indication of future problems. It is important that a buyer is kept current on financials of the business and that they know the seller is focused on the business health during the process. Any signs of impatience, or excuses for abnormal discrepancies in the numbers or current sales may be a sign the business is being dumped. If too many red flags show up, a buyer should really consider moving on to find an internet business for sale where these are not present.

Business transactions are primarily about dealing with people and relationships. Buyers and sellers typically will share at least 60 -90 days in a support and training period and so building a good relationship from the start - during the LOI and due diligence phase - are good indications of how the transition of the business phase will go. Both website buyers and sellers should be choosey when consummating a deal. The easiest and smoothest internet business for sale transactions are usually the most successful for both parties. If it is not win win across the board and clean and clear it is probably a good idea to move on and wait patiently for the ideal.

David Fairley

President, www.websiteproperties.com