Website Flipping – Buying and selling Websites as business model

Buying and selling websites, or flipping, as a business.

There are 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 is President and Founder of Website Properties.com. Having started Hamocks.com, Strollers.com and Drums.com as an early e-commerce entrepreneur, David's 25+ years of experience in the internet and Website Brokerage industry gives him a unique and experienced outlook on all things internet.