Author bio - Jaryd Krause
Jaryd Krause CEO & Founder of Buying Online Businesses not only runs the Buying Online Businesses Podcast but spends his time travelling the world and teaching people how to buy websites that are already making passive income. For more info on Jaryd and his mission you can follow him by searching his full name on social or check out his website at www.BuyingOnlineBusinesses.com
There are so many great website businesses out there for sale that are making passive income with very little work required to run these website businesses. But why on earth would some sell a profitable website?
This question is far from new to me. As a matter of fact, almost every time someone asks me to explain what it is that I do and how I help people buy websites, this question always follows.
I totally get it though, because when I first saw websites for sale and the amazing returns that can be made from them, even I questioned it. Although the more businesses I bought and the more sellers I spoke to, the greater my understanding was around this question.
To answer the question I always like to relate website investing to property investing. Because when you buy a website business, what you are doing is simply buying digital property that makes money rather than physical property that makes money.
Which means the same reasons people sell a property investment applies to the reasons in which people would sell a website business.
Realistically though the seller wants to sell their profitable website because they want out and underlying that there are many different reasons depending on the website business, the person and their situation which we will dive into throughout this blog.
Is the website business failing?
Let’s get the scary one out of the way first because it does create a lot of skepticism around buying websites. It’s also quite normal to think that if someone is selling a website or anything for that matter there must be something wrong with it, right? And to be totally honest and addressing the elephant in the room, people certainly do sell websites because their website is failing.
Which is why I spend so much time teaching people how to conduct rigorous website due diligence to ensure they can tell the difference between a failing business, a business that is not failing and what opportunities are available to change and grow a business that does have work needed to be done to it to build it back up if it’s struggling slightly.
So the answer is yes, people do sell websites that are making a profit but are failing in different ways and if you are a seller knowing this then valuing your business fairly will allow you to sell your business much quicker. However, in my circumstance and for anyone who has learned how to grow websites, this isn’t such a bad thing knowing some websites need work. It’s the exact opposite and seeing some of these types of website businesses for sale can mean great opportunity.
Did they build this website to sell it?
Have you ever seen a website for sale that has only been around for 6-12 months and some times even less, but the business is making a good income. For example, it could be a business that was started just 6 months ago but is making around $2,000 per month?
I see these all the time and when you get started on your journey to buying websites you will start to see this too. And I think it’s good, it’s actually a strategy that some people use to build their wealth and grow an online business empire. What they do is they have learned how to get really good at starting websites and making them profitable in a short amount of time.
I like this because starting a website to make money online or any business for that matter usually has to pass the 90% failure rate that all startups face. This is what led me to buy websites because I found it smarter and easier to buy websites where someone else has done all the hard work and the business is making a profit before I even buy.
Which means another reason that people sell websites that are already making a profit is that that is their strategy. They start a website build it up over a few months, usually 6-12 months or a little more and then they sell it and make a good profit from doing so. The crazy thing that people may think is that the person who started it, is cashing out and getting more money back than they put in and whilst that is very true I believe it is also very fair.
Because there is a certain skill in starting a business and to get it to a point where it is profitable and easy to manage and there are certain time costs that these people put into building the business in which some people can forget to factor in. In fact, the more people that start website businesses to sell them the better, because it gives me so many more great opportunities and investments to choose from.
Can the owner keep the business going and growing?
We have all been at this point before whether it be in business or life. Where we get to a certain level of success and we don’t know how to keep growing and achieving new heights. And no matter how hard we try, we keep doing the same thing we have always done and wondered why it’s not working.
The same goes for websites businesses and their owners. I see this often where I speak to sellers and they really do love their business and they want to see it succeed and grow even bigger than it is when selling. However they don’t know how to do it, they don’t either have the time nor do they have the dedication and energy to keep pushing the business to new heights.
In these cases, I find these sellers certainly are sussing out the new possible buyer just as much as the potential buyer is sussing out their business. The reason for this is because the business the seller has built, grown and created is their kind of like their ‘baby’ in a way and they want to ensure it is going to safe hands.
These sellers can be emotionally attached to the business in different ways and knowing they have put so much time, money, effort and energy into their business. Having it going to a great home really is just as important to them as the money they receive from the sale.
Does the seller need the cash & what for?
People invest for all different reasons and I always come back and relate website investing to property investing. You have people that invest in property hold onto it and you have people who buy, renovate and then flip those properties.
Just like property investing, people do the same with websites investing. Some people do want to buy those websites we have already talked about that are failing and need work or buy websites where the owner hasn’t been able to scale it. And they then grow those websites and either flip them or they grow it and hold onto it for a while and then eventually want to sell.
All in all most people do sell their websites to cash out and spend their money wherever it is they wish. I once nearly bought a birdcage business off someone in America who wanted the money from their website to go to a college education. Another seller I talked to wanted to sell their website so they could afford surgery.
Whilst some people want to cash out and buy things, other website investors I have spoken to honestly want to sell so they can take their money from the website sale and re-invest it into another project.
It certainly is great to know why websites sellers do sell profitable websites. Although, what an even more important thing to know is how to perform great due diligence. This way you can ensure that no matter the reason they are selling you can detect whether the website is a good investment or not.