Why do People Sell Profitable Websites?

One of our colleagues over at SitePoint recently asked “Why would anyone sell a profitable website, wouldn’t you just hang on to it and keep collecting the funds?” Admittedly, I asked myself the same question when I first started at Flippa, and indeed, many buyers are suspicious as to why someone would sell a profitable website.

There are a range of genuine reasons why people sell profitable websites. In fact, the best time to sell a website is when it’s profitable. Buyers love to see a history of profit and will reward a seller accordingly. Of course, there may also be some less genuine reasons for selling, but for the purposes of this post we’ll focus on the positives!

The reason for selling usually boils down to one of the following:

1. I’m broke and I need the money

Sometimes in life, stuff happens, and people need money to get them out of a sticky situation. We operate in a global marketplace and reasons for needing money can be many and varied. It can be as simple as putting food on the table to paying for your kid’s dental work. Not everyone likes to admit they’re going through tough times, but sometimes, people just need the money.

2. I’m raising funds for a new project

Starting a new project often requires start-up funds. Programmers, designers, servers, it all costs money. And when you get the itch to start a new project, you’ve got to do it now, before anyone else comes up with the idea and steals your thunder. Raising funds in the short term by selling a profitable website is usually a more appealing prospect than waiting, going into debt or calling in angel investors.

3. I’ve fallen out of love

Some owners just lose interest. In the beginning they spend hours building an online business; adding content and backlinks, all the while encouraging and nurturing the site.  Then one day they turn around and realize it’s been weeks since they even looked at the site, even though it’s ticking over a tidy little profit each month. Instead of letting the site die a slow lonely death, they decide to sell.

We see a lot of this on Flippa and it’s a great reason to sell a website.  If you don’t continue to maintain a site, eventually profits will decline and the site won’t be worth anywhere near as much.

4. I just don’t have the time

Often there are other priorities in life besides making money online… yes, I know, it’s a difficult concept to grasp, but it does happen. A friend of mine recently inquired about how she could sell her website. As a work from home mum, she’d managed to build up a successful online business from home while raising two kids, but she’d just fallen pregnant with her third. Realizing there was no way she could put in the time required to run her online business, look after a new born and two young children, she decided it was time to sell.

There were regular customers to think of too. If she’d decided to shut up shop, she’d put a lot of people out. Why not make some money out of the sale, keep customers happy and hand the business over to someone who has the time. Everybody’s happy!

5. It’s what we do

Serial entrepreneurs often start with the end in sight (or site 😉 ). They build up online businesses with the express purpose of selling them. Truth be known, they’d prefer to be bought out by Google, but in the event that Larry and Sergey don’t come to the party, other buy-out opportunities need to be sought. Some people just love building businesses, not running them, so this is a great opportunity for buyers who love running businesses, not building them.

6. I’ve taken it as far as I can

Many individuals don’t have the full set of complementary skills to take their website to the next level. If you’re a solo website owner, and for whatever reason unwilling to outsource, you need a wide range of skills (not to mention time) to run a successful online business. SEO, copywriting, design, programming, marketing … it’s difficult to do it all.

Realizing they’ve taken a website as far as it can go, some owners decide to hand their baby over to someone who’s better equipped to take it to the next level.

Why are you selling?

Have an interesting reason to add to the list? Tell us why you’re selling your website on Flippa in the comments below.

How to Sell Websites Without Finding Clients

Web designers, how do you sell websites when you can’t find clients? You might be the best website developer in the world but if you can’t find customers and you’re not great at sales, how are you going to make money selling websites? Glad you asked!

It can be challenging to find new business, particularly during tough economic periods. Even harder is when you’re starting out as a freelancer and you don’t have clients to refer you business, or for that matter, a marketing budget.

As a web designer you also invariably go through stages when you’re just downright sick of clients. Sound familiar? You come up with beautiful design comps for clients then they tear them to shreds, insisting on beveled nav buttons and a Flash splash page – so late nineties! How on earth are you going to develop a brilliant folio to help attract more sales when all your beautiful work keeps being spoiled by clients with no taste?

There is a way you can build websites and make money selling them without clients. You may not be able to sell them at a premium as you would to normal clients with custom requirements, but on the upside you won’t have to endure the time consuming back and forth with the client; discussing the color pallet, explaining browser compatible fonts, finding a stock photo that encapsulates the client’s brand… I digress.

So, as a web designer, how do you go about building and selling a website on Flippa, or any other website marketplace for that matter? Here are the basic steps involved:

1. Find a niche

A niche is a small targeted section of a particular market. There are thousands of sites and products out there that will help you find a niche, but a great place to start is the 30 Day Challenge. 30DC is a free online course that breaks down niche finding into a science. Also, you can find out what’s popular with buyers on Flippa.com by checking out tags buyers are watching.  When you’re a bit further along, use Google’s Keyword tool to discover how many related searches the niche receives.

A word of advice: pick something you’re knowledgeable about and enjoy. For example, if you like surfing, your niche might be about “how to wax a surfboard”. Choosing a topic you enjoy will make it feel less like work and help when developing content for the site.

2. Register a Domain

You’ve found a niche, now you need to buy a domain for the website to live under. A domain will cost you around US$10 from GoDaddy or NameCheap. Dot com names tend to sell better than other domain types so try to find a dot com relevant to your niche. Using your core search term in the domain name will also help.

For example: waxingasurfboard.com (by the way, that domain name IS available at the time of writing this post – I’ll give a free Flippa listing and success fees to whoever buys the domain and sells it as a developed website on Flippa.)

3. Get Some Hosting

If you’re a seasoned web professional, you’ll know that a website has to live somewhere. You may already have a hosting reseller account, but if not head over to one of the many hosting providers and find an affordable but quality hosting provider. You can host a single domain from around $5 per month or, if you’re going to make a meal of it, buy a hosting reseller account for around $25 /month and you’ll be able to host unlimited domains. I’ve used Hostgator (aff) for a couple of years and can recommend them.

4. Choose a Popular CMS

Not everyone knows how to to markup perfect standards compliant HTML like you. Building your site on a popular publishing platform will make your website more attractive to buyers as it makes editing and adding content much easier. Open source is definitely the flavor of the month with WordPress being one of the more popular platforms used for Flippa listings. You could also use Joomla or Drupal if they’re your weapon of choice.

5. Build It

This is the easy part for a gun website builder!  But it’s hard for many others, so this is where you add value.  You may have a spiffing design you’re dying to show the world, or you may just be happy to modify one of the many themes available for the platforms listed above. Design it, slice and dice, then implement – you know the drill.

6. Add Content

OK, this is the part that the client usually looks after, or the copywriter  –  the stage of the project that always takes the longestand keeps you from being paid. This is where it helps to love the niche you’re in, or find someone who does to write content for you. If you decide to go down the latter path, you can expect to pay about $8 – $10 per article for a 400-500 word article on Elance. As with all things, you get what you pay for. When writing your Elance brief, ask for samples.

7. Publish It

People want to be able to see what they’re buying, so once you’ve finished with the design, development and content loading stick the site up on your hosting account.

8. Install Google Analytics

Potential buyers will want to see some evidence of traffic – Google Analytics is pretty much ubiquitous for traffic stats on Flippa.

9. Build Backlinks

If you’re familiar with Search Engine Optimisation (SEO) then you’ll know what I’m talking about here. You want your website to be indexed by Google, at the least, and ideally, over time, it will appear on the first page of search results for your niche related search terms. No mean feet, but again, this will make it more valuable to buyers.

10. Let It Mature

Like fine wine, websites get better with age. Yes, this may be a generalization, but it’s undeniable that all else being equal, the more miles the site has under its belt the better. Some of the things buyers look for when buying websites are as follows:

11. List Your Website For Sale

Ready to sell your website? Here are some tips on selling your website at Flippa.

Watch Your Time and Expenses

You track your time and expenses when build website for clients don’t you… DON’T YOU? Well, of course you should do the same when you build websites to sell on Flippa. Work out the minimum you want to get paid per hour and try to achieve that. Quality start-up website packages generally sell on Flippa for $200 to $500 dollars, so do your sums. For example:

  • Domain Name: $10
  • Hosting (Say 6 months worth): $30
  • Outsourced Content writing: $100
  • Flippa Listing Fee (min.): $19
  • Total Expenses: $159
  • Your Time ?

Experienced sellers can setup a site in as little as 4 hours, though admittedly these are usually based on pre-designed themes. So,  if your site sells for $200, that’s $10 an hour. You’re not going be holidaying on a tropical island on those returns, but if your site sells for $400 you might consider giving your next annoying client the flick! Focus on providing quality; targeted sites with backlinks, some traffic, PageRank and even a little revenue and you’ll be able to generate some handy income on the side.

Why Build When You Can Buy an Established Website?

The following guest post was contributed by Ryan Moran from eTycoon, a website dedicated to teaching people about buying, building, and developing virtual real estate. For more info on eTycoon, register for a training webinar.

If one man’s junk can be another man’s treasure, then one person’s dormant, neglected website can be another person’s goldmine when there is untapped profit. Like a house that already has a foundation, it is much easier to grow an established website than to start from scratch. In fact, it seems almost foolish to develop a website from scratch when someone else has already done most of the hard work. If you’re like most marketers who would rather be growing a site than designing or writing content, then here are a few reasons why you should start buying up other people’s websites:

1. Someone else has done most of the hard work.
When you buy a website, you can skip designing and coding the website, choosing the target audience, or creating the initial content. Instead of being bogged down with tasks that don’t put money in your pocket, taking over an existing business frees you up to start marketing the existing site.

2. You don’t have to be the expert.
The easiest solution to competing in markets in which you are not an expert is to buy the hard work of someone who is. Instead of attempting to create a product, a website, or content to a foreign niche, it is far more advantageous to buy a website created by someone familiar with the audience.

3. Most neglected sites have existing traffic.
Whether it comes from search engine rankings, links from authority sites, social media, or old article marketing campaigns, most established sites have consistent traffic. However, the traffic is rarely monetized near its potential. As a marketer, you can monetize the traffic that already exists, rather than resort to generating traffic from scratch.

4. Many sites come with customer lists.
If a previous webmaster was smart enough to build lists of prospects and customers from his or her marketing efforts, then your job is much easier once you take over. Oftentimes, a few promotions to the existing list will pay for the cost of the website itself.

5. Most importantly, if you purchase wisely, then the website has existing revenue and profit.
While there is no instant success in business, buying an already profitable business is about as close as it gets. However, few webmasters are capable of maximizing the profits of their websites, and there is often ample opportunity to expand revenue and profit once a site is purchased.

Building an online business from scratch is like attempting to push a car; the greatest amount of energy is required at the beginning in order to get things moving. When you buy a website from a previous owner, it’s like pushing a vehicle that is already moving and has momentum.

Instead of focusing on time-consuming tasks that either eat up productivity or don’t put money in your pocket, like website design, niche selection, and even some forms of initial traffic generation, you have the ability to skip much of the up front work that is required in building a profitable website. When you buy someone else’s website, you are freed from the burden of getting the campaign started. With the ball already rolling, your energy can be spent marketing the site, tweaking areas of weakness, and scaling the work that has already been done.

If you build a campaign from scratch, you are shooting in the dark. Significant time and resources can be spent building a site, choosing its direction, and developing its content, but there is no guarantee of profit. If someone else has done the work, however, you enjoy the benefit of existing data, a proven track record, and the confidence in knowing that your efforts contribute to building on an established foundation.

Detective Work with the Wayback Machine

A great tool to add to your website due diligence arsenal, the Wayback Machine is a digital archive of web pages across time. A website time line if you will, the Wayback Machine gives you the ability to see how a website has changed over time and lets you cross reference the website established date claimed by the seller.

For example, you come across a website listing on Flippa that claims to be established 2 or 3 years ago. Running the domain through the Wayback Machine will let you view, and do some limited browsing of, the site when it first appeared.  Step back in time and see what sort of content was on the site over time.

The following Wayback Machine results for Flippa.com indicate that the domain existed in a previous life back in 2002. It also gives an indication of the activity on the domain:

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When using this due-diligence tool keep in mind that Wayback Machine snapshots only become available 6 to 18 months after they are archived.

So if you’re buying a website that claims to be established, check out the history with the Wayback Machine.

How to Value a Website that Doesn’t Report Revenue

Valuing a website before deciding to make a purchase is one of the most important steps in your due diligence. Valuing a website that lists little or no revenue in the Flippa sales page is challenging, to say the least.

In a previous post I described how I went about valuing a young website before making a purchase. This post will hopefully help you value more established websites that haven’t recorded any significant revenue.

This post was prompted by one of our users who recently Tweeted us and enquired:

“How much clout does Google’s PR carry when selling a site? Eg:What if a site is well indexed, with a PR 5 but not many overall sales?”

PageRank, or PR, is usually a good indicator that the site is well indexed by Google and has been around longer than a couple of months. Good PageRank suggests that the site has a respectable volume of original content and a substantial number of back links (people linking to the site from other websites).

PageRank vs Traffic

What PageRank doesn’t tell you is the amount of traffic the site is receiving. When push comes to shove, it’s traffic that counts; you can’t monetize PageRank, but you can monetize traffic. I’ll add an important caveat to that last statement; you can monetize the right kind of traffic. And by traffic I mean the number of different people who visit a website.

With any website auction or sale listing on Flippa, the seller has the ability to submit and display website traffic statistics from Google Analytics or other traffic stats packages. We highly recommend you see some proof of traffic and study where the traffic has come from.  This applies for any potential purchase, but especially if you’ll be making a significant investment.

Not All Traffic Was Created Equal

The first question you need to ask yourself is, what is the right kind of traffic to value? Traffic generated by organic search engine results tends to be the most reliable and consistent. This is a bit of a blanket statement and there are exceptions to every rule, but read on for an explanation.

Looking at a site’s stats, there’s usually 3 to 4 main types of traffic mediums you’ll be able to identify via Google Analytics:

Organic: Organic traffic comes from people searching by a keyword phrase in a search engine, finding a listing in the search results, then clicking on that listing. It’s an indication that search engines think a website’s content is relevant to a user’s search. Generally speaking, the more organic traffic, the more keywords a website is ranking for.

Referral: Traffic that’s arrived via another website may not always be reliable long term. Say, for example, the website owner has been active in a particular website forum, leaving links back to the website for sale.  What if the forum disappears or the user gets banned?  No more traffic!

(None): This really just means that Google Analytics can’t figure out where the traffic came from. In reality it may indicate that visitors are typing the domain directly into a browser address bar. This can be a good thing; it may suggest that the site has an established brand name, Twitter for example, and people just know to type twitter.com into the address bar. But it may suggest that traffic has been generated by less scrupulous methods, such as spam email.

CPC: cost per click or paid traffic means exactly that – the owner has paid to generate the traffic. You’d have to ask yourself the question: why is the owner paying for traffic?  Especially if, as in this case, the site isn’t making any money.

Putting a Price on Traffic

Ok, so you’re satisfied that the traffic is kosher and the majority of visits are being generated by organic search engine results. How do you value that traffic? One way to value traffic is to figure out how much it would cost you to buy it.

For example, a site for sale might rank #1 in Google for “takeaway pizza”, if you were to use AdWords (Google’s Pay Per Click advertising engine) to pay for a #1 position in the sponsored listing, you’d be paying around $2.75 per click. 10,000 clicks is going to cost you $27,500 – that’s a lot of pizza.

This is complicated, but fortunately there’s a tool that will help you estimate the value of a website’s traffic. SEMrush.com is a keyword research tool that lets you discover the keywords a domain name is ranking for then estimates the value of that traffic based on what it would cost you to buy that traffic. Read that back slowly and make sure it makes sense.

SEMrush provides you with an estimate of the monthly traffic value (see SE Traffic price below) of a website:

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The other great thing about SEMrush is that it gives you an indication of a site’s top ranking keywords which you can then compare to the statistics a seller provides on Flippa:

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So How Much Should I Pay for the Website?

Well… it depends. I won’t go into the complicated mathematics of different monetization methods and revenue generation models right now. You need to decide how much the traffic is worth to you. You need to figure out what percentage of visitors are going to convert to product sales, clicks on ads, sales leads, or membership subscriptions once they come to the site. Then you’ll know what to pay.

At the end of the day using the SEMrush tool is just one of the many methods of valuing a website, but it’s a handy one to include when doing your due diligence.