5 Things to Look for When Buying a Revenue-Producing Website
Websites are like any asset – they can be sold and purchased. And like physical assets, they can increase or decrease in value, depending on a number of different factors.
If you’re interested in buying a website as a business opportunity, there are a handful of things you need to know – particularly about the vetting process.
5 Factors You Need to Evaluate
Most people don’t realize that revenue-producing websites are bought and sold all the time. Just like brick-and-mortar businesses have ownership transferred, so do e-commerce brands. And while there are dozens of interconnected components that have to be analyzed before purchase, here are a few of the most important factors you’ll want to evaluate right away.
- Sales Method
The very first thing to consider is the sales method. How is the website being sold and what platform is it being sold on? The sales method will often tell you a lot about just how serious the seller is.
For example, it’s not uncommon to see websites occasionally sold on a site like Craigslist. Nothing against Craigslist, but it’s not the most secure or reliable platform. When buying and selling revenue-producing websites, you should be careful to only invest in websites when you find them on a reputable marketplace. Some of the most trustworthy ones include the Shopify Exchange, Empire Flippers, and Freemarket. Platforms like these have strict requirements and vetting processes that protect both parties involved in the transaction.
- History of the Site
The next thing you need to do is dig around and uncover the history of the website. If the website has only been operating for six months, then there’s a risk that it’s a “flash in the pan.” If, on the other hand, it’s been around for six years and has a consistent track record of success, then there’s a good chance that you’ve identified a sustainable business.
- Revenue Streams
The owner claims the website cash flows “X” dollars per month, but where is that money coming from? There are a variety of ways that a website can make money and you need to find out exactly what the revenue streams are so that you know whether they can be seamlessly continued after an exchange of ownership.
Examples of various types of revenue streams include PPC ads, affiliate income, banner ads, product sales, and paid content submissions. The more clarity you can get on this front, the better off you’ll be.
- Traffic Quality
In addition to revenue, traffic numbers are commonly touted in the sales process. However, if you’re going to look at traffic as a point of value, you need to dig around and gather information on the quality of the traffic.
Where is the traffic coming from? How long do users stay? At what rate do visitors convert? These are all important questions to consider.
- Seller’s Motivation
Finally, don’t forget to take the seller’s motivation into account. Why is the website being sold and what is the seller planning on doing next? It’s rare that someone walks away from a perfect website, so their motivation can tell you something about what’s actually happening.
Don’t Make a Rash Decision
It’s easy to let emotions get the best of you. You see a website that fits in your niche, identify a couple of key data points that justify the investment in your mind, and pull the trigger. While it could end up being a profitable investment, chances are you missed something important.
You have to avoid making a hasty decision when it comes to buying a website as an investment. The factors highlighted in this article are just a starting point. Don’t leave any digital stones unturned.