July 12th, 2012, 4:23 AM
I'm sick and tired of sellers educating me
As the title says. It's starting to really bug me now.
In the last couple of months or so I had to read through lengthy "lessons" (in forums/PMs/emails) from sellers as to why EMD is very valuable (even with half a dozen hyphens), why their new SEO contract is going to get their sites back to the "normal" level of traffic within a few months, why their own time running the business shouldn't be accounted for, why SE traffic is not risky, why Paypal is safe for the transaction etc etc.
I'm finding it increasingly difficult to sit through these lessons. I sometimes point out that I've written the book on valuations or that I've already been in millions of dollars worth of transactions already so save me the sermon. I don't like to pull that line, but even that fails to work and I still have to sit through the arguments some of them pretty pathetic and ignorant. I'd like to just tell these sellers to shove it but there aren't that many opportunities around in the market and it's hasty to dump those you've already spent time identifying and researching.
How do you guys cope with it?
July 12th, 2012, 5:10 AM
Clinton - you have to be thick-skinned...
One thing which has been a very interesting lesson for me (though it confirmed suspicions) in spending time on here and studying the online market is that:
a high % of people in this sector are not businessmen (or women!) and are not running businesses...
As some will know I come from a background of working in business (small to multi-national) / consulting / setting up my own / being involved in investment / running small businesses / etc. - i.e. the traditional 'offline' route...
The online route though seems to be a forumlaic approach of:
- idea (good - always needed!)
- website - generally find and install
- SEO / get visitors
- sell the 'business'
there is no asset to the business / no business model / no strategic aim / no understanding of risks to the business / no plans ref. cash flow / no plans for growth (other than more traffic!) / no plans for consolidation or stability / no understanding of balance sheets / no real understanding of how a business runs - yet they want silly money for it all they have is a template / an idea / a domain name / some traffic...
Even where there is cash coming into the business there seems to be a lack of understanding of what it means / etc. - cashflow is not always understood / profits (Gross / Net) are not always understood - esp. when it comes to cost of time! / valuation is def. not understood (or deliberately misunderstood...) There seems to be no recognition of the fact that money from an investor is expected to work - it is a tool whose job is to bring back more... therefore while a $495 website might be an impulse purchase for an amateur - selling a website for $5k+ is into business territory - there are standard ways of valuing businesses - and then an investor expects it discounted... the less people after it the mroe the discount that is expected...
So ultimately - while it is worth reading through to spot the occasional gem - think of it rather like checking through your spam / junk folders in case something important gets in there - you soon learn to spot the rubbish and filter it out very rapidly...
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bwelford (July 13th, 2012)
July 12th, 2012, 5:28 AM
The most common and annoying "lesson" from sellers is about how their site is going to get back to previous traffic levels if you "just do some seo" and get some links to fix the pandas/penguins. No, it's not! In fact it's much more likely to get worse.
How do I cope with it? Usually just ignore it or point out why I think they are wrong based on my experience, then make a counter offer.
July 12th, 2012, 5:54 AM
Ignore the chatter and make an offer based on your opinion rather than theirs. As you know, most sellers who give you an elaborate story about how great their site is usually overvalue their sites. Call their bluff and make deals on your terms.
I reject a ton of brokerage leads from sellers who have overly optimistic expectations, and it's quite common for them to come back in a few months after failing to sell their site.
I think my experiences must be slightly different to yours, as if anything, sellers seem to be slightly better educated than before. If they are forum regulars (or Flippa regulars) they tend to all think the "12x" multiple is standard so if you quote any higher than that they are delighted.
I guess if you're approaching people cold who are trying to sell sites they might be delusional, I'd blame that on people like Zuckerberg who paid $1bn for Instagram based on "potential"...
July 12th, 2012, 8:45 AM
- Rep Power
We just ignore them. I realized it's not worth it anymore to argue with them. We make an offer, if they don't like it, we move on. I used to try and make a point or whatever but my time is too valuable. We have the metrics, we see what we can do to make it more $$$ once we buy it, and that's our offer. Seller/Seller's Broker (as happened recently with a QLB listing) doesn't understand the idea that I don't buy jobs and that I factor in a reasonable salary for an employee and that is the real, true net positive cashflow? No problem - one of a few things will happen:
1. someone is buying himself a job - can't compete there.
2. someone has economies of scale or relationships in that vertical that trump mine and buys it at asking- can't compete there
3. buyer drops out of deal and I'll buy it.
4. no one buys it and either the seller forgets about it and it dies a sad death or they come back and are more reasonable to offers..
The Following 2 Users Say Thank You to ari For This Useful Post:
Clinton (July 12th, 2012), crabfoot (July 12th, 2012)
July 12th, 2012, 9:41 AM
- Rep Power
I agree with these guys, I would make YOUR offer and let them decide. I made a good offer on one and the guy went on and on why it should be double that. I walked. A year later it still hadn't sold. I made an offer for half of my original offer (because it sat neglected for a year and showed less value) and he accepted it.
I have also had to deal with "lessons" as a seller. I don't care why someone thinks my site isn't worth much. They can either make an offer close to what I want or go buy something else. Please don't try to justify your lowball offer!