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Thread: Selling a site with losses

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    Selling a site with losses

    So I am considering selling my site that has revenue, but is not profitable. Has a few hundred thousand visits a month and a few hundred dollars in ad revenue/month. Most of the revenue is eaten by writing and hosting costs. This was done at a loss for a few months but I am not sure that is necessary. I know of a very similar site that makes several thousand dollars a month (~$15,000), at the same approximate costs. I think the main difference is the quality of writing. I think this site could be much more successful for a good writer with knowledge of the subject matter: English football.

    So I am thinking to put this site up on Flippa where I bought it. I would like to remove the previous listing but not sure that's possible. The pitch will be around its potential. I think I will leave profits with no claims. Anyway once I go live, I'll post here and look for feedback. I'm looking to at least recoup my original costs.

    Do folks think it matters if one posts for 30 days as opposed to 7 days?
    For sites without profits, what should I play up as value other than the assets: plugins, site itself, domain name?

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    Administrator Clinton is a Premium Member
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    If you can't remove the previous listing then expect prospective buyers to find it and ask questions about why you're selling so soon after buying. It would appear to them that you didn't have much success with this site. That's what you'll have to expect and address.

    For sites without profits, some other assets that would interest a buyer: extensive quality content, a good community, intellectual property rights (software, for example), traffic and to some extent PR and backlinks. Unless it's a premium domain I wouldn't talk the value of the domain up.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    monty (23 July 2012)

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    If you are selling a business to someone they will want to make money from it...
    if you are currently running at a loss - you are selling a liability not a business
    potential is irrelevant - there is as much potential for the purchaser in a brand new site which is cost neutral to them
    it is difficult to sell the content as an asset as it is not making you any money
    you have over a million visitors a year and are making no money...

    good luck

    sometimes you might strike lucky
    other times it might be better to just pull the plug

    Alasdair

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    Chabrenas (25 July 2012), monty (23 July 2012), Nidec (24 July 2012)

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    As Clinton and Alasdair said, if there are some valid intangible assets then its worth having a try and see if you can get your money back but, as with any repeat sale, a potential buyer will naturally be wary of catching a falling knife. One way to get around that is to provide solid stats and so on in your listing.

    The fact that you don't have the subject matter knowledge/interest in it doesn't mean to say that some footie fan won't see that as a plus for themselves in a purchase, so one piece of advice would be to be upfront about that in your listing along with the comparative incomes for other sites on similar topics with similar traffic. Honesty is an under-rated feature on auction listings, and someone else may just fancy having a go at it themselves.

    Regarding your question on 30 days versus 7 days, I always prefer 7 days. Its long enough to do DD, but short enough not to lose interest - plus I always wait near the end to bid anyway.

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    elster (23 July 2012)

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    Thanks folks. I would be banking that someone sees that this is a legitimate site with good traffic, not a scam (that helped sell me) and could be profitable with the right content (there are countless folks already blogging on this topic matter without an audience or any revenue). Getting to lucrative levels may be pipe dream though. I plan to be honest in my dealings. I don't need to make a big profit, but to get this off my hands with a bit of money in my pocket would be great.

    What about offering seller finance or a JV with an interested buyer? Would that violate Flippa ToS? I know its hard to do for lower priced sites since escrow for anything more specialized than an escrowed domain name, is relatively pricey. Some way to have someone buy into an opportunity to make income on the site?

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    Administrator Clinton is a Premium Member
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    You could always list it here and offer seller financing/JV. Why worry about Flippa's rules?
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    Can I do both? Or try and list there for a period, then pull it and list on Flippa?

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    Administrator Clinton is a Premium Member
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    Once you list it here it would be up to you to post in the thread that you are no longer selling it in the thread. (We're trying to involve admins and mods as little as possible to help/manage these listing.)
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    Top Contributor grynge is a Premium Member
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    Some people are going to hate my comments here but I have purchased sites in the past with no thought whatsoever towards that site making profit, IF the site can supply me with something that I need for another site to make money then I would look at a purchase. If the traffic you have is legit and you have some kind of userbase there is a value in that. What that value is, on the other hand is a seperate question all together. Sometimes you have to go outside the box, why put it on an auction? Work out companies that would love that niche with that amount of traffic and put them into a war against each other. It will take more work than an auction, but the rewards can be far superior. I wrote about how I did that in this thread hope it helps you somehow.

    Quote Originally Posted by akirk View Post
    If you are selling a business to someone they will want to make money from it...
    if you are currently running at a loss - you are selling a liability not a business
    potential is irrelevant - there is as much potential for the purchaser in a brand new site which is cost neutral to them
    Alasdair
    Businesses purchase money losing businesses all the time, BUT with a specific target in mind, access to hardware, access to a government, access to a workforce, access to a contract, access to a patent .... the list goes on. Google purchased youtube and it wasn't making any money?
    And they thought me broken, that my tongue was coated lead, but I just couldn't make my words make sense to them, if you only listen with your ears ... I can't get in
    Non ducor, duco

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    Quote Originally Posted by grynge View Post
    Businesses purchase money losing businesses all the time, BUT with a specific target in mind, access to hardware, access to a government, access to a workforce, access to a contract, access to a patent .... the list goes on. Google purchased youtube and it wasn't making any money?
    Absolutely. I had a client who bought an established but unprofitable e-commerce website for a substantial mid-six-figure price. He was already in the same business and had the infrastructure and inventory he needed. The domain name and thousands of quality incoming links from relevant websites, along with the traffic from those links and the SERP based on those links, were worth the price he had to pay. It's been a couple of years and the purchase has worked out just the way he planned.

    Over the years, I have also represented a number of clients who have bought companies out of bankruptcy proceedings and have successfully turned them around.

    But as grynge says, when a business buys a money-losing business (or pays a substantial multiple of cash flow for a moderately profitable business), they are buying SOMETHING, even if it is intangible.

    The problem is that many sellers want to sell POTENTIAL, not what they actually have. It's one thing to have a site that has both content and traffic but little or no revenue. Someone in the same niche can probably figure out what the traffic SHOULD bring. It's quite another thing to have some content and the potential to bring in user traffic. Sure, the content and design may be worth a little money even with no revenue, but getting the traffic is the key. Again, as grynge said, there may be a patent, a database or a contract that cannot be readily duplicated or replaced that can add value, but if the seller is selling only the potential to turn around a losing business without something to add value, they are trying to sell something to the buyer that the buyer must create himself. Only a very silly buyer would fall for that.

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