Flippa adjusts pricing and adds key services as it evolves to service high value digital businesses

Flippa adjusts pricing and adds key services as it evolves to service high value digital businesses

At Flippa, we are always looking for ways to add value and we will always add new features to support our growing ecosystem of business owners, buyers and the brokers who often support them.

 

Over the last few months we’ve been working on several ways to improve our seller and buyer experience. This has included the introduction of Flippa Escrow, high value business sales, dedicated account management for both sellers and buyers and the introduction of a broker program. Moving forward, we’ll also be investing for efficiency and to protect the integrity of the marketplace. This will include:

  • ID verification to assure buyers and sellers
  • Seller declarations to pre-qualify business inclusions
  • In-platform buyer / seller messaging services
  • An easy to use profile creator

And today, we are announcing new pricing plans designed to better suit our three core services. The new plans take effect effective immediately – Monday 5th November 2018 and are as follows:

  • Asset Sales including the sale of a domain, app or starter site, i.e. something not generating any revenue, can be sold for a listing fee of $25 and success fee of 10%.
  • Self Service Business Sales  is best suited to profitable businesses with a minimum six month trading history. Sell for a listing fee of $200 and a success fee of 10%.
  • Broker Supported Business Sales will match you with a specialist broker. Best for those with annual profits of 200k+. Sell for a listing fee of $200 and a success fee of 15%.

The 10% success fee on Asset Sales and Self Service Business Sales is a reduction. This was previously 15% for Credit Card payments and 12% when using Flippa’s escrow service. Flippa still absorbs the escrow transaction cost.  

 

Note: Pricing and fees are in USD. Your sell price should always be in USD.

New Services – Buyer and Seller Management

We’re pleased to announce that Flippa has introduced Buyer and Seller Management services. These services are free and designed to streamline the sales process for you.

  • Buyer Management takes the hard work out of the search. If you are looking to buy a business over $50k, simply schedule a call with one of our buyer managers here. They’ll learn about your needs and explain the matching process. They’ll then search for businesses on your behalf and will act as matchmakers.
  • Seller Management takes the hard work out of the matching process. This service is designed for businesses priced over $50k. You’ll be matched to an account manager post listing and your account manager will ensure your profile is optimised and that buyers are verified before they are put in touch. They’ll be by your side every step of the way.  

Coming Soon

We’re excited to announce that we will soon introduce two new services designed to improve the integrity of the Flippa platform – we take the security of our customers very seriously:

  • ID Verification. Flippa has partnered with the award-winning Jumio to ensure that both buyers and sellers are verified before listing or making an offer for a business. This service will be released in November 2018.
  • Platform Messaging / Negotiation. Flippa is working on improvements to the existing messaging functionality. This will enable in-platform messaging and negotiation to ensure buyers and seller private contact details remain confidential and that all communications are confidentially and securely stored. This service will be released in January 2018.

Helping to support the thriving business sales ecosystem

We’re excited by the progress we’ve made in recent months. We are proud of our history as an asset marketplace but we have evolved. Our vision is now to service buyers and sellers of businesses globally by connecting all parties, key services, and facilitating the end-to-end business exchange in a trusted and efficient environment.

 

Is it time your business jumped onto Amazon FBA?

Is it time your business jumped onto Amazon FBA?

If you already have, or you’re contemplating, a start-up with an actual physical product to sell, then you have probably heard of Amazon FBA – but what is it exactly and what are its advantages and any potential drawbacks you need to know about?

Well, as a budding mature-age entrepreneur myself I’ve been very interested to follow the progress of one of my friends, Georgina, who has been steadily building a very successful business in high quality skin care products, emulating the well-known and pricey Aesop’s range, but with some extremely creative additions as well.

Like so many other successful start-up businesses, Georgina’s was initiated in her garage, where she worked hard to experiment with bases and herbal ingredients (some of them very expensive) and the mixing, matching and blending processes to create not just practical but alluring fragranced skin products – from hand-wash, to body wash, to nourishing body oils, and later on perfumed candles and aroma diffusers.

The design of packaging (again very expensive) was a major challenge. Logos and branding took time and creativity. The initial sales (obviously on a loss basis for quite a while given the development costs) were to family and a network of friends. But there was a vision. The vision held firm and the viability grew. Finally there was proof of concept as the sales took hold online and some great exposure was achieved when a major Melbourne homewares brand with several suburban stores agreed to stock some of the range.

By now the garage was completely outgrown. It was time to lease a bigger space just for the production itself, and the rental was a significant expense. Georgina took on a couple of university student casuals to help her – but by now the real problem was storage, managing inventory and delivery. Packaging and posting individual orders and hand delivering the store orders had become unmanageable and Georgina was completely out of storage and handling room.

Amazon FBA (Fulfilled by Amazon) entered the Australian market space just 12 months ago – at exactly the right time for Georgina. As a great example if IaaS (Infrastructure as a Service), Amazon FBA manages every aspect of the pick-up, storage, inventory management, order shipping and even customer returns.

It’s useful to clarify that your product does not need to be sold on Amazon itself (although of course it can be). The winning point of differentiation for Amazon FBA is that it’s an end-of-the-line system which saves your business time and money because Amazon stores your products and manages their delivery in your direction. The fulfilment fees are extremely competitive, given Amazon’s vast network of storage, delivery and inventory management systems. Their advanced data management systems allow you to monitor and track all inventory, orders and deliveries as they are happening.

The fulfilment fees include all packing of orders, inner packaging and delivery, even including the management and accounting for any returns. Separately there is a monthly storage fee, based essentially on your cubic metres of stored product. It would be impossible for a small start-up company to access its own rented storage facility in an equally cost-effective way.

All of Georgina’s products are classified by Amazon FBA as ‘standard-size’, but companies with large physical products such as craftsman-made tables and furniture are also accommodated on a different storage fee schedule. One potential financial hiccup to be aware of, is that Amazon FBA storage fees have a price hike (literally tripled) in October-December because of the premium on space in the lead-up to Christmas, but this applies to the storage fee only, not to processing and delivery fees.

Obviously, costs will depend on the kinds of products being handled, but as an indication in Georgina’s case, her typical $30-$40 product has a per-item cost of under $3 for picking up, packing and shipping, plus around $30 each month per cubic metre of stored products. In the case of her business, that’s a lot of product she doesn’t need to store, package and handle for shipping, allowing her and her couple of part-time assistants to concentrate on what they find more interesting and enjoyable – developing and actually making their product range.

For a small business, there are really very few drawbacks in using Amazon FBA. Initial account set-up, including business and individual identity verification, and learning the system for preparing product for FBA collection is a bit complex initially, but once managed it’s plain sailing. It’s also sensible to check out the very large number of order fulfilment alternatives to FBA offered by many companies now for Australian-based businesses. Few can rival the economies of scale of Amazon, but the best deal for your business may depend on exactly what it is you’re selling and your own production or sourcing processes.

In this article, I’ve concentrated on Amazon FBA for Australian-based businesses creating physical products for sale. However, it’s important to remember that there is a massive growing global enterprise in third-party selling. This is where the trader sources products from an original supplier literally anywhere in the world, and then markets it with a price markup, often at a huge margin. Using Amazon FBA the third-party seller can create a highly profitable business without ever actually handling the physical merchandise at any point at all.

A variation on this, and one that is often highly successful is the ‘Private Label’ approach. This is where an already existing product is sourced, usually from a low-cost producer overseas, and branded with the third-party seller’s own logo and brand name.

Now that’s a completely different scenario from Georgina’s business, but a very interesting one to explore in a separate discussion another time along our journey.

 

Interview with Online Investment Expert Jeff Hunt

Interview with Online Investment Expert Jeff Hunt

We caught up with website investor and internet marketer Jeff Hunt this week. In the interview below, Jeff shares his experiences around becoming an entrepreneur, his favourite monetization methods and growing his own website portfolio.

What was your background before you started operating in the website/online business space and how did you make the switch to being your own boss?

I worked for IBM as a Project Executive, operating 9-figure outsourcing deals for Fortune 100 companies. Then I took a totally opposite direction moving my family to a small central Asian country where we served students and families in a humanitarian role.

While overseas I started some small businesses that needed websites, so I got my feet wet in the internet world for the first time. Soon I discovered that websites were not just marketing channels for brick and mortar businesses but could actually be income-generating businesses in their own right.

Seven years later when we moved back to the United States I had started generating cash flow from my websites. I decided not to reenter the corporate world, and instead to grow my online portfolio primarily through buying websites.

What prompted you to make the jump?

When I bought my first successful website – Note: my first website purchase was NOT successful – I discovered I could make a couple of thousand dollars a month from a relatively simple online business.

I didn’t know exactly how to do it at the time, but I knew that if I could make $2K per month, I could probably grow that to $10K per month. That was the magic moment that convinced me it was possible to do this full time.

What does a typical day look like for an online business investor?

I think it is different for everyone but I start every day at Panera Bread which is a coffee shop/bakery about a mile from my home.  I work from my laptop and sometimes I stay there all day, but usually, I hang out in the morning and work from my home office in the afternoon.

I don’t have an official office because I use freelancers to do all the day-to-day operational tasks. Although I’ve had websites using almost every business model, I tend to focus on content websites that are more passive.

Depending on the phase, there can be plenty of work to do, but it is almost never urgent. That gives me the flexibility to take days or even weeks off to do non-business projects. It also lets me meet with friends, family and other entrepreneurs any time during the day that they are available.

When did you first discover Flippa?

My Flippa profile says I made a purchase 9 years ago. I probably had an account before that.

What is your favourite monetization method?

I love non-transactional monetization because it doesn’t require customer service or personal selling. Display ads, lead generation and affiliate monetization methods fit these criteria.

I’ve done dropship, FBA, SaaS, eCommerce for digital products and straight services business. All have pros and cons.

What are the first three things you look for on a website?

I start with the fundamentals.

Traffic and income graphs should be flat or going up. If there are peaks and valleys, there should be good explanations for those. Age and consistency are important.

I look for inappropriate concentrations. Too much traffic from one source, too high a percentage of traffic landing on one page, too much traffic from the wrong geographies, an unusual mix of device types, concentrations of expense or revenue – all of these are potential negative signals.

There needs to be a well defined and understandable process for customer acquisition. If I don’t understand a repeatable process for getting traffic or customers, I back away.

Why do you buy websites?

I try to identify opportunities that have the potential to be held for the long term. Occasionally something will turn up that is riskier but has some strong upside potential. These deals have to come at a lower multiple to offset the risk. They typically either do well and lend themselves toward a flip, or don’t do well and hopefully at least pay for themselves before going to zero.

What are the steps you take to grow websites that you’ve recently purchased?

The quickest wins are usually in the financial realm. On the revenue side, adding entirely new monetization sources using existing traffic usually increases revenue by more than it cannibalizes. A classic example is adding display ads to a site that is monetized only with affiliate links.

You can also easily increase revenue by patching holes in the funnel. Adding upsells and downsells, optimizing conversion rates, making additional touch points to prospects and following up with existing customers can all yield revenue growth.

Another financial move is eliminating or reducing expenses. Business owners often spend money on non-critical functions or overspend on basics like webhosting or freelancer support.

Traffic improvements often take more time. Basic on-site SEO improvements can sometimes result in substantial traffic growth. Things like site speed, title optimization, heading optimization, and content updates make a difference.

How did you learn how to run and operate a website?

I learn from anywhere I can. The basics of WordPress and setting up a website were all self-taught. But I’ve taken many courses over the years to learn methods and systems. I’ve also hired coaches along the way and pay for membership in high-level mastermind groups. Spending money on mentoring and networking can help you focus and speed up success.

You’ve been focusing a lot more on teaching and coaching recently, even writing a few articles for us talking about website multiples and another discussing how to make one of your website investments passive. Do you still actively buy and sell websites or is most of your time spent helping others acquire and grow their own portfolios?

The vast majority of my time, energy and resources is spent on growing my own website portfolio. I negotiated the sale of two of my sites this morning. While I really enjoying teaching and coaching, my main focus is on growing the value of my website assets for an eventual exit.

You also have several courses and webinars over at FlipMinds. Can you tell us more about what Flipminds is?

Flipminds is a community of entrepreneurs that Sunil Jaiswal has developed over a period of more than 10 years. They are investors in property, traditional business and online businesses.

In the early days, most of the group were property investors. As online real estate became more compelling, I joined the Flipminds team to help train entrepreneurs on how to develop cash flowing assets in the world of web businesses.

Now we have an active member community, mentoring resources and training in topics like paths to Financial Freedom, Website Investing, Property Investing, Online Business and Content Website creation.

When it comes to making mistakes when buying websites, what’s one thing you wish you knew sooner?

It is natural to think that putting less capital at risk is safer than putting more capital at risk. That would be true if all businesses had the same intrinsic risk profile.

But the truth is that older, more established, higher quality online businesses are much safer investments than their less expensive but lower quality counterparts. So I would have avoided many mistakes simply by focusing on businesses with better fundamentals.

That is not to say that it is impossible to find good websites at lower price points. It is also not to say that all, or even most, larger online businesses are low risk. That isn’t true. Even very high-income sites can have attributes that make them bad bets. Websites generally have high ROIs and with those ROIs come risks that have to be accounted for and mitigated.

Compared to 5 years ago, is it easier or more difficult to find a deal when looking for a website? How does the future look for this?

It is more challenging to find underpriced deals today than it was 5 years ago. There are more buyers now and the buyer community is better educated and has more resources for making informed investment decisions.

Additionally, price levels are going up. Multiples are growing not only because more buyers are entering the market but also because website assets have attracted the interest of private equity groups, larger private investors and institutional investors.

Despite the fact that big-money investors have entered the fray, there will continue to be opportunities for buyers and sellers at every price point because there is a market for websites at every stage of size and maturity.

As technology evolves, online apps take on different forms, adapting to a variety of devices and platforms. This creates new business models, new niches and new ways to deliver online solutions that will continue to create opportunities for anyone willing to master a little corner of the market.

I am very optimistic about the marketplace for online business. Economies grow by increasing the productivity of their workforces and websites and internet technologies are key elements of that productivity growth.

 

If you want to learn more about buying an online business, you can sign up for Jeff’s free training course via Flippa here.

Jeff Hunt is an internet investor,  marketer and website owner. He actively buys and grows websites with the intent of creating multiple passive income streams, and enjoys capitalizing on internet opportunities to help others to do the same. You can learn more about Jeff and his courses here.


Tips for first time buyers: You’re about to acquire your next business…so, move everything to the cloud (and take advantage of the migration to SaaS)

Tips for first time buyers: You’re about to acquire your next business…so, move everything to the cloud (and take advantage of the migration to SaaS)

If you and your business are already big users of SaaS based tech then you’ll know exactly what that means and how you’re using it. If so, then you certainly won’t need to read this article. If at the other extreme you think you’re not using Software as a Service at all yet, you’re almost certainly wrong about that. At the moment Dropbox, just for example, is rapidly heading towards a billion individual active users globally, with most of them still on ‘freemium’ access. STOP STORING FILES ON YOUR DESKTOP. Given the stellar SaaS advantages, small business and corporate-based paid premium Dropbox usage is sky-rocketing. So the odds are that you are already, at the very least, using this particular iteration of SaaS very regularly. If your business or start-up enterprise is to prosper, then one key essential is to understand the benefits and costs of the numerous SaaS offerings and lever these to your best advantage.

How much time should you be sending on this?

Chances are that regardless of whether you are selling products, services or personal experiences, your business is based largely on your own and your team’s communication and people skills. So the question is, what proportion of your time should you be spending on managing your IT structures when this isn’t your core business, your passion or your skill set? The answer is obviously, as little as possible. And this is where SaaS comes in.

If you decide to go largely stand-alone or ‘on-premises’ with your IT management then you are committing a significant proportion of your available time and resources to maintaining the currency of applications; creating adequate, retrievable and shareable data; and ultimately taking on the burden of servers, storage and network sharing capabilities. That means you won’t have the time you need to develop your real business – or else you’ll need to hire a specialist in-house IT person or small team, which even if viable isn’t cost effective.

There are intermediate options such as Infrastructure as a Service (IaaS) which comes in at the network sharing stage and provides the external servers and storage. However, it is generally much better to commit from the outset to fuller scale SaaS, which externalises all applications and data management. This enables you to concentrate on core business and to be free of software access constraints so that with no downloaded applications to manage and keep updated you can work from virtually any computer or device in the world, along with other members of your team. The cloud application services, managed by a third-party provider, are run directly through the internet web browser and don’t rely on any downloads or installations by you at all. That means that ‘on the road’ functionality becomes exactly the same as ‘on premises’ functionality for you and every team member.

What are the main advantages?

So, the major advantage of using SaaS is that it frees you to devote your time to what you are really passionate about and trying to achieve in your venture. It’s a great way to launch e-commerce with no software or server issues, no need to buy expensive downloaded software programs, no problems with access from mobile devices, and unlimited capacity for real-time data and document sharing with team members.

SaaS takes on the management of virtualization, in which a local workstation operates exactly as if it was using an installed application without this actually being the case. Additionally it enables users to remotely access their own personalised desktops from any device in virtually any location. Hardware virtualization ultimately enables an off-site third party processor to behave as if was many different individual processors working on the same hardware from team members’ own locations. The advantages include greater efficiency and lower costs as team members can access the company’s networked information from anywhere, embracing the increasingly expected (because cost minimising) BYOD approach.

What about the cost?

The costs of using SaaS are generally very manageable with the key advantage that levels of service access, data storage limits and the like, can be adjusted at any time. SaaS is commonly used to deliver business applications such as accounting programs, customer records software including management of orders or bookings and, for larger businesses, HR management software. Automated multilingual versions of documents can be included. There is obviously much lower up-front cost, as you are essentially renting rather than owning the asset, virtually immediate set-up and access as the applications are already fully configured in the cloud, and there are automatic updates and easily managed scalability, with plan upgrades (or capacity downgrades) adjustable on demand. This flexibility is a great advantage and there is essentially no significant hardware, software or server depreciation to be factored in.

Are there any disadvantages?

There are really very few disadvantages of SaaS. The initially understandable concerns around data security breaches are not really well-founded, as the enormous success of cloud-based accountancy provision such as Xero attests. However, the dependency of SaaS on uninterrupted fast internet connectivity, plus the potentially lower speeds compared to on-premise user applications can cause some occasional headaches.

When you are ready to choose your SaaS provider, then as with any contract it’s a case of ‘buyer beware’. As with everything, it’s easy to enter into a provision agreement but it can be much harder to exit it. In particular, carefully check the provisions for exporting your data to another destination of your direction if you leave that provider – and ensure that the export will be in a standard format which will enable it to port over to another SaaS provider.

Migrating data can be very costly in terms of time and money. That’s why it’s a good idea to move your own business data to a SaaS provider from the very outset or as early as possible. There is no definitive list of pre-eminent SaaS providers, partly because most of them specialise in a particular market segment. Request Service Level Agreements (SLAs) from a few providers and carefully cross-reference them, as well as verifying the vendors’ reputations and their customer reviews. Try to make contact with a couple of their clients directly and find out what they have to say about their experience of service reliability and technical assistance. Compare pricing plans and remember that if a provider’s prices and the promises seem too good to be true – then they almost certainly are!

Influencer Series: Matt Raad eBusiness Institute – How to start out on Flippa

Influencer Series: Matt Raad eBusiness Institute – How to start out on Flippa

This week, Flippa CEO Blake Hutchison sat down with Matt Raad as part of our Influencer Series to discuss buying online businesses.

 

Matt is the CEO and Co Founder of eBusiness Institute and with wife Liz, they have been recognised as Australian experts in buying online businesses. Their courses help students to look for businesses that they can buy and build and their platform of choice is Flippa.

In this video interview (see below) he reveals some key insights. In referring to their live events Matt remarked about the ease of using Flippa. “When we run a live event, we love getting onto Flippa and we do it unscripted. We are pretty much guaranteed to find a good deal” (2m:34s).

What are your favourite types of businesses?

“We like sites that sell advertising and the next level (up from here) would be affiliate sites, so sites where we promote a product and then (earn money) get a commission if someone buys it.” (3m.40s). Matt also discusses Ad Sense websites and the success he’s had with those. “It’s where we started and we have made a lot of money. What we are seeing now is that where those Ad Sense sites are in good niches, there is a lot of opportunity.” (3m:15s).

Should you be interested in the subject matter?

“It’s nice to start out in your passion but the reality is you don’t need to once you know how the system works” (5m.00s).

When it comes to website audiences Matt mentions that he loves finding sites that he can drive traffic towards. “On Flippa if we can find someone that’s owned a website for years and they were really passionate about it (but couldn’t figure out how to make money out of it) and they have a bit of an audience following, that’s gold. That is what we want” (4m:28s).

Blake and Matt spoke a little about Amazon and the various business models.

Matt remarks that he’s less familiar with ecommerce but that doesn’t detract from his ability to make money from Amazon. He likes affiliate businesses. Matt gives the example of a dog products reviews website. He notes that an Amazon affiliate revenue stream, in this example, is where reviews of a particular product might convert to an interested customer. In this case, interested customers click off and buy. Where they do buy, the website owner is paid a commission. “A reviewer might do a review of a dog bed and (on that basis) say to customers, ‘BTW if you are interested in this dog bed here is where you can buy it on Amazon’” (9m.38s).” If the customer then clicks this link it is tracked and Matt is paid a commission on the sale of between 4-8%.

For more information around how Matt buys websites on Flippa and monetizes them, watch the full interview below.

Matt Raad is the CEO and Co Founder of EBusiness Institute Australia, a digital training organisation and is passionate about helping others to buy online businesses. Check Matt’s website to learn more or you can connect directly with him via Linkedin.

Buyer Due Diligence Checklist

Buyer Due Diligence Checklist

Buyer Due Diligence Checklist

Whether you’re a first-time website buyer or an experienced web entrepreneur, it is always important to perform proper due diligence before placing a bid.

For those unfamiliar with due diligence, it is the process of verifying that an asset is as it is claimed to be. In the case of due diligence on websites, it’s making sure that revenue and traffic claims are accurate and ensuring the online business isn’t fraudulent in any way.

With the help of our marketplace integrity team, we have pinpointed some of the top questions to ask and areas to focus on when looking at an asset for purchase. Below is the complete buyer’s due diligence guide and checklist.

Business Model

One of the first things you should check is to make sure you understand the business model and how it operates. For example, is it an eCommerce site or does it provide a service? Does it carry any inventory or not?

If you’re unsure about the business model, make sure the owner clarifies:

  • The hourly time commitment, broken down by task
  • Any technical expertise required to operate the business (ex: knowledge of WordPress, Amazon Affiliates, etc.)
  • Monetization Methods

WhoIs History

You can verify the owner by checking the site through a WhoIs lookup.

Personally, we recommend whois.domaintools.com. From there, search for the domain and scroll down to whois history. Click through some whois records to see if the owner has changed recently.

For example, here is Flippa.com’s WhoIs history.

If the domain is under privacy, you can also check the hosting history and see if there have been any IP address, hosting provider and domain registrar changes. This will not tell you with 100% certainty that the owner has changed, but if all three have changed (around the same time, +/- 3 days), it is likely.

Plagiarism Check

Checking for plagiarism isn’t just something college professors do. Verify that the site has original content will help confirm that the website is built using whitehat SEO tactics.

Our personal favorite tool to use is copyscape.com.

This will show if there are other copies of the site out there. If you spot very similar sites, it may mean that the site is either using someone else’s design, the theme is very popular, or the seller has other competing sites.

In case of blogs, it is recommended to check a random sample of 5-10 articles, to verify they are original and not stolen from elsewhere.

Establishment Claim

To verify if the business has been established for as long as the seller has claimed, go to: archive.org and search for the domain. Always check for more than one screenshot, something from the beginning, middle and end.

Note: If the business is very young (less than 6 months), archive.org might not have that domain archived yet.

One thing to look out for is big gaps in archived pages as this may indicate that the site was down during that time. Below as an example is Flippa.com:

You’ll notice that from 2005 to 2008 there’s almost nothing archived. In this case, you would need to take a look at the last and first screenshot from that gap. In many case this will show that the domain was parked, meaning that most likely it had not been used for the entire time.

In this particular case, it was parked and redirected to seeq.com.

Sometimes archive.org may show something like this:

In this case, click on the link to the robots.txt file. Sometimes the seller has blocked archive.org by mistake and sometimes it is intentional, if they want to hide the true age of the site for example. But in either case, you would need to be cautious.

If you see that robots.txt has disallowed all spiders apart from Google and Bing, it’s not a red flag. But if you see that they have disallowed archive.org specifically, this would raise a red flag.

Non-Compete

A non-compete form prevents a seller from competing with the site you just bought from them for a pre-determined amount of time (typically 2-3 years).

If the seller says that they can’t sign it, find out why and if this can be negotiated. For example, in some cases, they don’t want to sign a very broad non-compete, which is understandable, but if it is very specific, most sellers are willing to sign it.

Another example would be that they have another similar site, in which case, ask if they would be willing to include it in the sale for the right price.

Trademarks

Check if there is a trademark for the business name or domain name. If there is a trademark in a similar niche, ask the seller if they own the trademark and will include it with the sale or if they have the right to use that trademark.

Also check that the domain isn’t infringing on any trademarks, for example, iphone7.com or theandroid.com. Note though that trademarks in names are fine if the site is in no way infringing, i.e iphoneyou.com is fine if it is a blog about phone calls, called “I phone you” but not fine if it is an eCommerce site selling iPhones (unless the have permission from Apple to use the name).

For more on trademarks:

US trademarks: https://www.uspto.gov/trademarks-application-process/search-trademark-database

Australian trademarks: http://pericles.ipaustralia.gov.au/atmoss/falcon.application_start

European trademarks: https://www.tmdn.org/tmview/welcome

Refund/Chargeback Rate

For certain business models, such as eCommerce, it is important to check the refund and chargeback rate of the business. It should never exceed 2%. Anything over and the payment processor may terminate their account. Often this happens without prior warning, but usually a month of high refund rates is not an issue, only if it is a trend.

If the current owner hasn’t already disclosed the refund/chargeback rate, follow up with them to get an idea about the business.

Top-Level Domain Transfer

Check that the domain can be transferred to anyone. Some top level domains have specific registration requirements. Examples:

  • .com.au – buyer needs to have Australian presence, either reside in Australia or have a business registered there.
  • .com.mt – buyer needs to have presence in Malta
  • .ca – buyer needs to have presence in Canada

You can check the requirements by Googling the top level domain. The Wikipedia page for a particular TLD will have the requirements. For example: https://en.wikipedia.org/wiki/.au

TTM Financial Trends

This one will likely be one of the first things you check, but in case you haven’t already, check that the trailing twelve months’ revenue trend seems reasonable. Both the net profit and gross revenue. If you see a sharp spike or large decrease, ask the current owner what caused it.

Monetization

Make sure to identify exactly how the site is monetized, and if this monetization method has been changed in the last six months.

Revenue Account Transferability

Make sure that the revenue account can be transferred or that opening a new account is straightforward and easy. Easiest is just to Google for it and look at the terms for that particular payment processor. At the time of writing, PayPal and Stripe for example can’t be transferred, but it is fairly straightforward to open up a new account.

In case of subscriptions, unless the seller is selling the entire business, not just the asset, in most cases the subscriptions can’t be transferred over to a new owner. In this case all the current subscribers would be prompted to re-subscribe, but you would be sure to lose at least a portion of them, thus losing a portion of the revenue.

The only sure way to keep the current revenue levels with a subscription business, would be for the new owner to assume ownership of the entire business, therefore be able to keep the current revenue accounts.

Note: In some cases many payment processors allow transfer of subscriptions, but this is on a case by case basis and is rather the exception than the rule.

Google AdSense ToS Compliance

When a business is monetized with AdSense, it is very important to make sure it complies with AdSense terms. AdSense terms can change fairly regularly, so for the most up-to-date terms, visit their help page: https://support.google.com/adsense/answer/48182

One big change that Google did just recently, was to remove max ads per page limit. But instead they now just say: “Advertising and other paid promotional material added to your pages should not exceed your content. “

It’s important that the site complies because even if they have been running for years just fine with AdSense and breaking the terms, it may get a manual review at any point and get banned from AdSense. Usually manual reviews are done within 6 months to a year since implementation.

GA Tracking

While Flippa does show Google Analytics stats from the listing itself, we highly recommend getting the full picture by asking for Google Analytics “read-only” access.

Traffic Sources

With this check you’ll need to go through all the top traffic sources and see if they make sense and are sustainable.

For example, if organic search shows as one of the top traffic sources, click on it to see the traffic graph for that and make sure there aren’t any drastic changes that may indicate a Google penalty, algorithm change or that the traffic is faked.

But if you see a traffic source that you can’t verify, (e.x. the source shows up “ads / 22media”), ask the current owner about this.

Analytic Trends

This is basically the same check as for revenue but instead of the revenue graph you look at the traffic graph for TTM and see if there are any odd spikes and if the revenue is declining or increasing.

Typically, high revenue months will also coincide with high traffic months. This is particularly relevant for content sites that make money via advertisements.

Paid Traffic

Now that you have access, click through all the traffic sources and see if you spot any that may be bought traffic or from ads. If the seller has not disclosed any expenses for Google AdWords but you spot cpc traffic from Google, ask for explanations.

Also be on the lookout for odd referrals. If you spot anything suspicious that you wouldn’t expect to be sending traffic to that site, check out the URL and if it still doesn’t make any sense, it is most likely paid traffic.

Example: The seller is selling a blog in the pet grooming niche but you spot that 30% of traffic is coming from getfreebitcoinsinstant.org and it’s a random low quality site, with no links to the site, it is almost certainly paid bot traffic.

Traffic/Revenue Countries

If the business is selling subscriptions or products, ask the seller where his customers are from and see if it matches the top traffic countries, if not, try to understand why/ ask the seller and see if makes sense.

Visitor Engagement

Make sure visitor engagement seems natural and sustainable. If engagement is very low, i.e bounce rate is around 99% and returning visits are less than 5% and time on site is only a few seconds, it is highly likely that the traffic is faked. But if the engagement is a bit higher but still on the high side, it means that visitors for some reason do not want to stick around on the site.

And on the flipside, if engagement seems too good to be true, i.e bounce rate is only 10%, it may mean there is a tracking issue. Or in very very rare cases people find the site so appealing that most tend to click through to another page.

Owner Responsibilities

Make sure to get a clear understanding of the owner’s responsibilities, including the time to perform the tasks and the technical experience necessary.

As always, if you have any questions, make sure to ask for clarification from the current owner.

Live Revenue Verification

After you’ve done a majority of the heavy lifting, one final thing to do would be to prove that their financials are as claimed.

While screenshots can make for excellent revenue proof, one way to quickly verify all the data is to ask the owner about live revenue verification.

Live revenue verification would involve doing a screenshare through a service like Skype, where the current owner would navigate around the account financials and proving that these claims are accurate. Typically this is verified by looking at the Shopify Analytics, WordPress plugins, or just going through the businesses PayPal account.

What Next?

If everything checks out and you have no further questions, it’s time to place your bid! The whole process may be exhausting, but it’s necessary to ensure the authenticity of your asset.

If you ever uncover anything suspicious, please use the report feature, which can be found on every listing.


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