Disclosure: This is a guest post from Investors Club, a leading brokerage for people looking to sell their websites.
If you’ve decided it’s time to sell up you’re going to want to make sure you’re getting a good ROI on all of your hard work. But, whether you’ve built the site from the ground up or you’re flipping your latest investment, it’s easy to get stuck with low-ball offers if you haven’t done your homework.
Before we jump into how to maximize your profits and get the right price for your site, let’s take a quick look at the possible motivations for selling and how to know when the time is right to cash out.
Why and How People Sell
When it comes to selling a business, in this case, a blog, every seller will have different motivations behind the decision. Broadly speaking though they’ll come under two categories: personal and professional.
Personal reasons can be anything from wanting the money to fund a house purchase, tuition fees, retirement, divorce, or medical expenses, to simply not having the time to dedicate to it anymore.
Professionally you might be looking to raise funds for a new acquisition, mitigate risk if you’re heavily exposed to one asset, or redirect your focus to other projects. This is a great way to raise money without traditional business financing.
Regardless of your motivations, the desired outcome is the same — make as much money from the sale as possible.
Deciding when to finally pull the trigger and list your business is a personal decision however, good indicators are if you’ve lost interest in the subject or you’re starting to receive unsolicited offers to buy.
While these offers are almost always a fraction of the true value of the site, they can indicate a demand for sites in your niche. And when you’re looking to sell you’ll find you’ve got two options: go private or use a broker.
Avoiding paying extra fees is one way to maximize your profits, and often the leading motivation behind selling privately. However, while avoiding broker fees might seem like an attractive option, selling privately can often be more trouble than it’s worth — especially as it usually leads to a lower sale price.
It’s up to you to find your buyer so if you don’t have a large network and aren’t good at (or have the time to dedicate to) outreach then you’re restricting your potential buyer pool. This puts you in a weaker position to negotiate because it’s harder to walk away from a deal when you know there’s not another one waiting.
The private buyers you do attract are usually out for a deal and want to use the fact that you’re not paying any commission fees to a broker to extract a lower price. If you’re prepared to take this risk then selling privately could be the option for you.
However, if it’s your first time selling then it’s recommended that you use a broker so you know what to expect from the process.
Selling via a broker takes the stress out of selling a website. They offer a done-for-you service, access to a vast pool of buyers, and handle all the marketing of your business so you can concentrate on the more important things (like figuring out how you’re going to spend your increased profits!).
As we mentioned before, the commission fees brokers charge can be off-putting. Although, these are typically offset by the higher sales prices you can command via a broker. At Investors Club we charge just 5% fees, making us the industry’s lowest. Our competitive rates mean more money in your pocket and with a total buyer pool of more than $300 million in investable liquidity you can have your choice of buyers.
Once you’ve decided to sell it’s important to understand how site valuations work. Having even a basic understanding of this will help put you in the best position to command a higher price and maximize your profits.
How Site Valuations Work
Even if you’ve chosen to sell privately it is still a good idea to have an independent party value your site. Personal bias can lead to overestimating your blog’s actual value leaving you with an unrealistic selling price and a buyer pool that’s a bit of a ghost town.
Selling via a broker means your valuations are taken care of, but understanding how it’s calculated is still extremely beneficial to you as a seller.
Sites are valued based on their EBITDA (earnings before interest, taxes, depreciation, and amortization) and the monthly multiple as determined by the broker, which we’ll go into more detail on in just a moment.
Pricing windows are typically taken at 3, 6, or 12 months, although a 12-month window is the best benchmark — particularly if the site experiences seasonal fluctuations in revenue/traffic.
The lower the pricing window, the less confident buyers will be so a 3-month window is extremely rare unless the business is very new. A 6-month window is really the minimum that should be considered as it reflects a more realistic view of the business and takes into account such factors as Google updates.
Average Monthly Net profit x monthly multiple = site valuation
Multiples For Affiliate Sites
Factors that will affect the valuation of blogs that promote affiliate offers are as follows:
- Revenue Diversity — The more revenue streams you have, the greater your ability to mitigate risk as you’re not solely reliant on one income stream. Most buyers are looking for low-risk opportunities so diversification is important.
- Site Age — Older sites are seen as more resilient. Age implies the site has been able to withstand Google updates without issue (the bane of any website owner’s existence).
- Traffic Diversity — Evenly distributed page traffic mitigates risk, meaning if one of your pages is unlucky enough to fall foul of Google’s dreaded deindexing then the whole site won’t be too badly affected. High organic source traffic indicates powerful SEO, while any traffic coming from social channels is a bonus. Traffic coming from predominantly paid ads is a warning sign for buyers because although it indicates you’re good at PPC, it suggests users aren’t able to find the site organically.
- Net Profit Trends — High margins are good, evidence they’re growing month-on-month is even better!
- Brand Reputation — Returning visitors are a sign of a strong brand, so if you’ve got repeat traffic and visitors are enjoying your content then that’s a good sign for your pending valuation.
- Assets Included — Do you have an active email list that’s used to increase net profit? If so is it included in the sale? The same applies to affiliate accounts, any social media accounts driving traffic and content both published and unpublished. Any assets that correlate to the site that generates income/traffic should be included in the sale for a better valuation.
Now that we’ve covered how valuations are calculated it’s on to the part you’ve all been waiting for…
How to Increase Your Valuation (and Maximise Profits)
In order to maximize profits, you’re going to need your site to command a high valuation. However, anyone can value their site at $100,000, the key is to be able to prove its worth.
We’ve already covered the factors that influence the multiple (ie. a key part of the valuation formula) so here are 6 actionable steps to improve your website’s saleability.
- CRO (Conversion Rate Optimization)
Whilst attracting new traffic to a site is important, equally as important is getting more out of the traffic you already have. A high conversion rate indicates your website is well-designed, formatted efficiently, and attractive to your target audience.
That’s why CRO can go a long way in making your website more appealing to buyers — particularly for blogs where your money is made through readers taking action.
Understanding your goals, whether that’s getting people to download an ebook, sign up for your newsletter, or follow your site is key to begin. After all, you can’t optimize your website towards a goal you don’t know.
Key areas to focus on include the homepage, money pages, and informational articles themselves. Whatever your goal, make it easy for your audience to take the desired action. Including features such as signup buttons, free resources, and CTAs throughout articles can really help. A/B (or split testing) is an effective way to determine which of your optimizations are achieving the best results.
- Display Ads
The more monetization methods your site has, the more attractive it is to potential buyers. Relying solely on one income — say Amazon Associates — leaves you vulnerable to policy updates that either disqualify you from the service or cut your commissions. If the worst were to happen then all you’d be left with is a high traffic site with no way of making money.
In other words, a site owner’s worst nightmare! Adding display ads help to diversify revenue streams and increase EBITDA. As we’ve already established, the greater your net profits, the more your site can command.
- Change and Test Affiliate Offers
Unless you’ve signed an exclusivity agreement with your affiliate partners, you’re not restricted to running offers from just one source. Keep an eye out for better deals, or negotiate your contracts with partners.
Test new offers and monitor the results; if they’re successful keep running them and if they’re a flop, cut them and try another one. Keep adding new offers as the site gets bigger and maximize your revenue stream.
- Invest in SEO
You can’t buy SEO (although you pay SEO companies to do it for you) so what we mean here is invest some time into your SEO strategy.
As a profitable blog, it’s highly likely you already have a working SEO strategy but dedicate some time to reviewing it regularly. Keep your keyword research up to date to ensure you’re always creating content that adds value and make sure your keywords are evenly distributed throughout your site.
SEO is crucial for maximizing profits, because whilst some buyers are looking for fixer-upper sites, most want something that’s ready to go and already achieving results. On-site SEO is focused on optimizing web pages for search engines AND users.
Good practices include optimizing content (ie. including keywords as mentioned above), adding internal and external links to relevant content, nailing down SEO-friendly URLs (read: not long and complicated!) and making sure your title and description tags are on point.
Off-site SEO is just as important as it helps establish domain authority, relevance, and trustworthiness for both users and search engines. Building backlinks is one of the most critical factors as search engines use them as indicators of content quality.
Increasing both the frequency and the quality of your backlinks can help increase your site valuation, as can other off-site SEO practices such as guest blogging and social media marketing.
- Optimize for Devices
It’s surprising how many websites out there still aren’t optimized for devices. Up to 70% of traffic comes from mobile devices and if your site isn’t optimized you’re losing out. Do yourself, your audience, and any potential buyers a favor and make sure the site looks great and functions just as well on a mobile device as it does on a computer.
- Diversify Your Sources of Traffic
If you’re receiving 98% of your traffic from organic search (or even really 60%+) congratulations you must be an SEO wizard, but more importantly, you’re putting yourself at risk.
Relying heavily on organic search results means that if you were to receive a Google penalty, there goes most of your traffic. Just like a diversified monetization method, having multiple sources of traffic makes your site safer and therefore more attractive to buyers.
What Do You Do With The Profits?
It’s a good idea to have a plan for any profits in place before you sell. With these tips, you could be about to come into a life-changing amount of money and if you don’t have a plan, your opportunity for further growth could be missed.
If you’re selling for any of the personal reasons we discussed earlier then it’s likely you already have the money earmarked for a big expense. If however, the sale is purely for professional reasons, then have you considered building a portfolio of websites and using your profits to buy one or two existing sites?
With the skills you’ve gained growing your first business, you could acquire pre-existing sites, grow them and flip them in a rinse-and-repeat style cycle. Each site you flip could mean more money in the bank, especially if you’re only paying 5% fees.
Bonus Tips For a Quick Sale
- Identify growth potential — Investors want something that can scale. Putting together a list of potential avenues for growth can make your site more attractive to buyers. High overheads aren’t desirable either and eat into profits, so if you can trim them down without affecting the quality of your site this can be a big help too.
- Don’t overvalue your business — Remove the emotional attachment to your business when it comes to the valuation stage. Put yourself in the shoes of a buyer and look at why they’d want to buy your business. Make your value clear but don’t overestimate it. Investors Club’s free valuation tool is a no-commitment way of discovering how much your website is worth today.
- Negotiate the right way — Getting to an endpoint that both you and your buyer are happy with is going to require a little give and take and it’s important to establish a good relationship. Before you enter discussions take some time to understand your buyer’s motivations:
- Why are they buying?
- What do they want to achieve?
- What is the pain they’re experiencing and how does your offer solve that?
- Do they have a specific lifestyle focus (ie. minimal management time)?
- What’s their risk level?
- What are their future goals? Do they want to scale the site aggressively in 6 months and flip it or are they looking for long-term steady gains?
Figure out your non-negotiables and identify the lowest price you’re prepared to go to (bearing in mind the point above). Know your data and be prepared to defend your figures. If you have external contracts such as freelancers etc, find out if they’ll continue with the new owner.
If you’re selling your site as a passive income opportunity requiring 4 hours of work a month but all the resources to achieve this don’t carry forward, you’re going to have one very unhappy buyer!
If you’re looking for a low-fee, hassle-free way of selling, then Investors Club offers a complete done-for-you service at the lowest price in the industry.
We offer in-depth due-diligence reports that prove your site’s value, mediate deals on your behalf to eliminate stress, and offer a guaranteed sale policy. It’s free to get started, so why not try our valuation tool and see how much your business is worth today?