Shall I sell?

[kmander]

Hello all,

I'm relatively new to the site buying world, but am pretty captivated by it's potential. I own a couple of small, but successful sites which I've bought as established. I'm thinking about selling a site (my breadwinner) and wanted to see what you folk made of it. Here is a brief background:

I stumbled across a site a couple of years ago. I saw that it was ranked well, that it could be improved greatly and featured little monetisation. I approached the owner directly and negotiated the price. I paid $11k and subsequently invested ~$4k on redevelopment (design, features) and outsourcing new content creation.

The site is evergreen and self-reliant. There is some UGC activity which provides fresh content. Traffic continues to grow slowly and will undoubtedly continue to do so over time. Most users originate from the US and other English speaking countries, but it has good reach elsewhere.

The content is geared towards children and parents. I just use AdSense at present (I previously dabbled with ringtones) and the site reliably clocks in ~$45/day in revenue. There are zero running costs (advertising etc.) - so the only cost is hosting and domain renewal. Therefore the site generates ~$15k in annual profit.

A couple of weeks ago a buyer approached me directly. We negotiated the price and agreed to $36.5k. I now need to decide whether to sign on the dotted paper and go through with the transaction.

My thoughts:

+ I get a bunch of cash with rewards my efforts and I can enjoy some of that for myself.
+ I can buy some more sites with unrealised potential and grow them more rapidly than I can do with this site.
+ I do prefer the tasks associated with buying a new site and redeveloping it.
- I loose my cash cow. My other key site doesn't generate nearly as much revenue, so I will lose my income stream.
- The site is still not 100% maximised in its potential. There is more I can do to maximise monetisation and increase traffic. Therefore, I'm selling at a multiple which doesn't reflect the sites true potential.
- I can use the site's income to buy more sites, just at a much slower pace.
- It's a perfect site in many ways; evergreen, self-reliant and trouble free.
- Buying new sites carries risk. At the moment I am pretty much risk-free.
- Maybe I was just lucky with this site and I won't be able to snatch up any other deals.

So, what should I do -shall I sell the site? Is the offer a good one?

Love to hear your thoughts. Let me know if you have any clarifying questions.

[benitez17]

Congratulations on your success over the last couple of years with that site. That sounds like a pretty good sales price for the site. You hinted at the answers to some of these above, but here are my questions.

What does "UGC activity" mean in your post?
How much do you depend on that revenue stream? (i.e. do you use it to buy food and pay your rent, pay for hobbies, or put it in the bank to reinvest)
How much work do you do on the site, and how much do you think it requires to maintain its current revenue?
Does the site require any specialized knowledge to run?
How confident are you that the buyer is legitimate?
Do you have an idea what you would do with the proceeds to duplicate your current revenue stream?
(Probably the most important of all) Do you want to sell the site?

If you take a look around Flippa, Digitalpoint, the sites for sale that Clinton posts here, and other places where you can find websites for sale, you can see that most of them don't sell for the multiple that you have negotiated. That probably means that your site has less risk and is higher quality than the average site for sale, but it also means that you can use that $36.5k to buy 2 sites that make the around the same amount of money as your current site if you do your research and find the right auction. Alternatively, you can use the cash as a down payment on an even larger business if you can find a motivated seller or a lender, or you could buy several sites that look like they have potential to you and work to build them up.

[DomainMagnate]

Hard to say without seeing the site, but generally it's a decent offer at over 2 years of revenue. Also depends on how long was the site performing at similar revenue levels and how much money and effort is involved in updating and creating new content.

[leadegroot]

Well, a couple of thoughts

The site is still not 100% maximised in its potential. There is more I can do to maximise monetisation and increase traffic. Therefore, I'm selling at a multiple which doesn't reflect the sites true potential.

Website sales are normally priced off current earnings, not pie in the sky. How many auctions say "this site has so much potential!!!!" ... and then don't sell - because the current value is not about the potential, but the current income.

Re 'should I sell?' - well, do you have a plan for the sale money that will earn you yet more, or would keeping the site and letting the money roll in be a better income stream?

Lastly - do you *want* to sell? Doesn't really sound like it

To my mind, I only sell sites when either I don't have time for it, or I have an idea for a bigger money generator that I need some capital to finance.

(First post, hi guys!)

[tke71709]

- I loose my cash cow. My other key site doesn't generate nearly as much revenue, so I will lose my income stream.
- I can use the site's income to buy more sites, just at a much slower pace.
- It's a perfect site in many ways; evergreen, self-reliant and trouble free.
- Buying new sites carries risk. At the moment I am pretty much risk-free.

The above quotes tells me that you should keep it, that's how I approach things.

I'd only sell if you came across another site/investment that you really loved and that you were getting a great deal on and needed the money to buy it. Otherwise slow and steady wins the race.

[kmander]

Thanks for sharing your thoughts benitez17. I agree that the price seems to be just above average in terms of multiples and this is a reflecting of risk. I prefer the notion of using the cash to buy several smaller sites to grow, just like I did with this site.

Here are the answers to your questions:

What does "UGC activity" mean in your post?

User-generated. Essentially the site contains a bunch of article-style pages and users can leave comments. Also, they're invited to contribute to the article itself or provide new articles. The site is the best in the niche - containing the most content and having the best design/feature set.

How much do you depend on that revenue stream? (i.e. do you use it to buy food and pay your rent, pay for hobbies, or put it in the bank to reinvest)

I have a full time occupation, so don't need the revenue as such.

How much work do you do on the site, and how much do you think it requires to maintain its current revenue?

I spend on average 2-hours a week. I have little double doubt that it can be maintained at this level of commitment. 5-10 hours a week would allow for efforts to make it grow.

Does the site require any specialized knowledge to run?

Some sound technical knowledge to update HTML etc, but most of the site is managed through a custom built CP. Everything on the site is custom built by a professional developer. The site content is a subject anyone can understand.

How confident are you that the buyer is legitimate?

I have some doubts given some lack of questions or DD on his part. But I think this can be ironed out.

Do you have an idea what you would do with the proceeds to duplicate your current revenue stream?

I have some ideas for projects to start from scratch and a list of possible acquisitions - but nothing concrete. I have confidence in something being attractive.

(Probably the most important of all) Do you want to sell the site?

That's a big one. I enjoy the site, but I'm not emotionally attached to its content or reputation really.

[kmander]

Hard to say without seeing the site, but generally it's a decent offer at over 2 years of revenue. Also depends on how long was the site performing at similar revenue levels and how much money and effort is involved in updating and creating new content.

I guess I could reveal the URL here without any downside??

Site has been stable in revenue for the last ~year. I'd say 5 hours a week would be a good ballpark on the required time to maintain and grow the site. No cash is needed unless you want to outsource some manual data entry tasks - which would be very low cost.

[kmander]

A good start to the forum leadegroot - thanks for your feedback

Website sales are normally priced off current earnings, not pie in the sky. How many auctions say "this site has so much potential!!!!" ... and then don't sell - because the current value is not about the potential, but the current income.

So true - you hear it all the time. Yet, there often some truth to it. I've shown that revenue is stable and that I've been able to increase it with some optimisation (ie. where the AdSense ads are placed and their appearance). I see clear opportunities to grow this further and I'm sure the buyer sees this too. So it's more like the cream on top, rather than saying that the price should be entirely on a pie on the sky notion of potential.

Re 'should I sell?' - well, do you have a plan for the sale money that will earn you yet more, or would keeping the site and letting the money roll in be a better income stream?

Mentioned above in another reply; no firm plans but I'm sure I could find something.

[kmander]

I'd only sell if you came across another site/investment that you really loved and that you were getting a great deal on and needed the money to buy it. Otherwise slow and steady wins the race.

This is a great point. Why don't I just wait until I've figured out what I would do with the money - then try and find a seller at that point?

[kmander]

Thanks everyone for the amazing feedback - really appreciated.

I'm not sure there is much harm in revealing the site in question and it will undoubtedly help you in sharing your thoughts. Plus, a bit of PI work could probably uncover it anyway.

So it's bussongs.com