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There are numerous ebooks and blogs on how to increase the price you get when you sell your site. Unfortunately, most of them are targeted at the low-end $100 sites. Top tips tend to be on
- What day to list your site on
- How long to list for
- How to "bump" your listing thread to get more people seeing it
- How starting the bidding at $1 will attract more people to your auction
etc.
The main advice in these guides all seem to be focused on how to get an extra couple of dollars in Flippa.
I'm going to look at the bigger picture.
Good entrepreneurs have what's called an Exit Plan. They work towards an acquisition by a major company or towards an IPO (public listing on a stock exchange). It need not be any different for your small business. One day you may want to move on. There may be an emergency requiring you to dispose of the site. Or the time may be right - when the business is at a peak or reached the highest level you can take it - to crystallise the value you've built.
To get the best price you need to plan for that now.
1. Be Realistic About Where You Are - Are you really profitable? If you deduct from your earnings a fair wage for your efforts, would there still be any profit left in the business? If the answer is no then you don't have a business, you have a job. That's so not what buyers with the bigger pockets are looking for. If you want to get the highest price for your site you want to develop it to the point where it makes no major time or skill demands on the owner. Hire in the talent and structure the running of the business so it's takes very little of your own time. If that's too costly and will end up with you making a loss then you need to re-examine your business plan.
Till you've achieved that you don't have an attractive business proposition - it's merely a job, albeit one with the flexibility of working from home and working to your own hours. You'll be limiting your choice of buyers to only those in similar situations (and skills) as yours, not the large corporations making acquisitions or wealthy individuals looking for an investment.
2. Don't Rely On "Potential" - Every seller claims "potential". Be different. Buyers see the word potential in your sales document and cringe. There no more stark admission of failure than to talk about potential - it's an excuse rather than a selling point.
The only time that potential influences the price is when the buyer spots it himself. Point it out and its value disappears.
3. Good Search Engine Rankings Are Bad - At the $500 end of the market, buyers get excited about what they see as "free traffic" and actually pay a bit more if you've got large volumes of traffic from Google.
At the "serious" end of the market, the larger a site's reliance on some fickle variable outside of the business's control, the more risky it's perceived to be, the less attractive it is to buyers and the less likely they are to shell out several hundreds of thousands of dollars.
Ensure you build assets that are not in some third party control. Buyers get nervous if any of the main business assets can be pulled out from under them by a third party. A good domain name, links from a wide range of third party sites, a large afiliate base etc., are good assets. Assess where you are at risk from third party actions. For example if you have a large newletter subscriber base you probably use some third party such as aweber. Protect yourself by making regular backups of your list just in case something goes wrong with your list manager company one day.
4. Age Matters - Buyers appreciate that it's easy to fake earnings for a short term, and many sellers do. In the hope that they'll get 10x their monthly earnings some sellers spend $200 in advertising for a month or two for every $100 they take in revenue. By not disclosing the advertising costs, they seem to be making a profit when they are actually running at a loss. But they can do it for only so long.
A business which has been showing consistent $x in profits for the last five years is unlikely to have been using such a profit pumping ruse.
But it's not just age of profit stream that's good. An aged domain (that has never expired), aged inward links and long history of traffic (keep those logs) are considered more reliable. The same applies to partnership deals you've got, licences, employee service etc.
5. Make a Business Plan - When you're dealing with professional business people (the type who tend to have the big budgets) they'll want to see your business plan. Having one if your head is just not enough. Many webmaster types are firmly of the opinion that they don't need a written business plan and they've done very well without it. Great, and well done to them. But if you've ever applied for a grant, a business loan, a partnership with a large corporate, you'll know just how much of importance they attach to this. If you don't have one you come across as unprofessional, unbusinesslike and they are immediately wary of proceeding further.
Do it for their sake even if you don't do it for yours!
And keep it updated. Archive older copies, you will be asked for those and they will be compared against the business's subsequent performance.
6. Get out! Extricate yourself from the site, remove your personal involvement, stories about your life, your opinions and photographs - everything. No links or connections with your social networking or bookmarking, no connection with your personal activities online.
Buyers don't want to know how fantastic or clever you are: remove pages about you, about how many Page One rankings you got, how many people signed up to your RSS feed and how many friends you have in Facebook. The more you are seen as core to the business the more the impact on price.
This is very difficult with some blogs as they are personality driven, but you have to do this if you want the highest price. You could start by getting some guest bloggers in, reducing your own posting and then gradually removing your "personality" from the site.
7. Always Keep The End Picture In Mind - Make contacts with likely buyers way before you want to sell. Give them free links (they'll know from their logs how much traffic you've sent them over the years - they'll be pre-sold). Get them to join your community, sign up to your newsletter / feed, or otherwise take a "stake" in your venture; let them belong. Cultivate them.
You'd be surprised how often a forum's moderators end up buying the forum...or merchants end up buying their affiliates' sites
8. Use Experts Rather Than Trying To Be An Expert In Everything: Rather than trying to do everything yourself, call in specialists where they will be of use. Use an accountant to do your figures - it looks more professional coming from them than from you. Use a business broker - a good one can add 50% to the price of your business. No matter how good you are as a business person or webmaster, a good broker has experience in selling businesses, a whole different skill. Get a lawyer to draft your legal agreements.
Your feedback / suggestion? Anything else you'd like to add to this? Anything you don't agree with?
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