April 23, 2009
The market for blogs has exploded. Many companies do not want to invest the time in developing a blog in their respective niche, which has given rise to a whole new cottage industry, blog flipping.
Blog flipping is done in a few different ways. Some flippers buy an existing blog that has potential, but is not currently producing. They take that blog and build the traffic and sales up to a level productive enough to reap a profit from their investment, and then sell it.
Or, more common in today’s blog flipping market, is to research a specific niche, develop a domain / blog, and then sell it.
But what does “developed” really mean? It depends on the flipper. So buyers really need to do their homework (read due diligence) before investing in an “established” blog or website. Because “established” is in the eyes of the beholder, and means many different things depending upon who you consult.
In my opinion, established means that the site, or blog, is profitable. Now profitable can be defined very differently for different companies. It doesn’t mean that the site has to be making money, though it does help justify the investment when purchasing the blog. It can mean to a prospective company only that the site has traffic that company believes it can convert into sales. Not everyone can convert website traffic in the same way. So there are companies out there looking to buy blogs that have a certain, specific reader demographic that fits their market. However, these types of sales are few and far between. Companies that are buying blogs normally want to see one thing.
Not just income, because a blog’s gross monthly income and it’s actual profit margin can be two very different things as well. We’ve all seen the advertisements screaming that you can make ten thousand dollars a month blogging, or with Adsense, or whatever. But the part usually left out is the investment it takes to get that income. Sometimes the cost is far greater than the income, making the blog or website a LOSER.
So what steps should you take to sell your blog if you are a would be website flipper? Here are a few factors your blog or website should have in order to get top dollar:
1. Real Web Property
Your blog needs to be a real web property. What I mean by this is that it needs to be a real domain, on hosting you are paying for. Free hosted blogs are not a viable investment for most companies and corporations. There are exceptions to every rule and I’m sure that there have been a few sales of extremely popular Blogspot blogs, but unless you have a million visitors a month, you’re probably not going to sell a free hosted blog anytime soon. Buy a domain, pay for some hosting, build something that has value.
2. Professional Appearance
Your blog or website needs to have a professional appearance. Custom design is always better, but at the very least, it needs to have a template or layout that fits that blog’s readership or market. If you have poor graphics, even if your blog has monster traffic, you’ll sell it for much less than you could have if you had professional web design. It’s sort of like house flipping or selling a used car. If you can afford it, a fresh coat of paint usually brings the resell value up substantially.
3. Developed Traffic Sources
Potential buyers want to see traffic. Not just any traffic will do for most serious investors. They want to see solid, search engine traffic and a solid bookmarked reader base. StumbleUpon and other social bookmarking websites are awesome traffic sources, no doubt. But when it comes to someone buying your blog, they want to see more than just a few traffic spikes from a front page listing on Digg. They want to see that the traffic is going to keep coming for months and years to come. Without a lot of work if they can get it.
4. Documented Traffic Statistics
It is going to take more than just the summary of “hits” screen capture from your webalizer stats to make the sale. You are going to need at least three months history of actual traffic statistics. Unique visitors, tracking cookie info if you have it, Google Analytics, etc. Numbers, numbers, numbers. Corporations want numbers in order to convince their board of directors that your blog would be a sound investment. Private investors are no different for the most part and they want to know exactly what they are buying when it comes down the actual traffic your blog has.
5. Profit and Loss
Lots of income statistics. If you are looking to sell your blog or website for real money (read more than a few bucks nabbed on EBAY) then you are going to need to show your buyer some stats about money. P&L statements (Profit and Loss) for as far back as you can go will help your buyer make his or her decision. It is one thing to tell a potential buyer what the gross income per month is, it’s a completely different thing to show them exactly what the net income is and how it is obtained each month. Keep good records of your website expenditures and what the income received from those investments are. Include every cost. Website hosting, design, redesign, employee or outsourcing costs, whatever. Include everything and show them the real bottom line.
6. Set a Fair Price
I know you love your site, I love all of mine too. So it’s easy to attach an emotional value to your blog and inflate the price. It’s also really easy to confuse a blog’s actual value with your vision of it’s potential value. What you think the site will make someday and what it’s making now are two very different things. Sorry, but what you think it will make someday has zero value to a would be investor. They only want to know what the net profit is, right now. Yes, you can take some long term income growth statistics and make profit projections, but unless you have these statistics going back a year or more, most buyers are going to dismiss them entirely.
Set a real price. In the bricks and mortar world most companies sell for 2 to 3 years of the total net income. Online, this number is usually cut down to one year. So if your website is netting $300 per month, the actual value of your blog is probably somewhere around $3600. Once again, it’s easy to add an emotional price tag for all the hard work you’ve done to get that blog making $300 clams a month, but your sweat equity doesn’t mean much to a buyer.
Neither do website values created with online calculators. These sites are traffic magnets and are built totally to obtain webmaster traffic. If you search long enough and hard enough, you’ll find a website value calculator that comes up with a number you like. It still means nothing to a buyer. It’s not what your site is really worth and should have no bearing whatsoever on your sale price.
7. Where to Sell your Website
Where and how you sell your website is super important. The profit you make will be directly related. Try to stay away from auction type formats if at all possible. If your site has some real value, use a website broker. A broker will help you determine the real value of your blog or website and then help you find a qualified and interested buyer. You would call a real estate agent (read professional) if you were selling your house, right? So why would you rely on your “for sale by owner” plan when it comes to your web property? Call a professional.
Sadly, one of the main reasons most flippers don’t call in a pro is because deep down they don’t really want to know what the site is worth. They want to live in their imaginary world where their holdings are worth millions. They can put a site up for sale on Sitepoint or Ebay for whatever price they want. Creating the illusion that they are worth substantially more than they really are.
8. Pie in the Sky Promises (magic beans)
Stay away from “Pie in the Sky” promises to potential buyers. When it comes to buying a website or blog, 99% of the buyers out there are from Missouri (the “Show Me” state) and only want to see the cold hard facts. Offering to take them to some new level of income at a later date is only going to make you look unprofessional and like an amateur.
There are sales contracts that require you to assist the new buyer for a set period of time. But these are normally for sites that are currently making money and allow time for you to teach the new owner just how that income is made. These clauses in sales contracts are not designed for you to hatch your half baked plans or for time to realize “what you think” the site’s potential might be someday.
9. Accessible Communication
You need to be extremely accessible to both your broker and potential buyers. They are going to have questions. So you need to have a cell phone number and an office number where they can reach you. You need to check your email often and respond quickly. Slow response can be a red flag signaling uncertainty, and that’s something an investor just does not want to see when they are thinking about laying some cash on you. Be available to talk to them.
10. Know the Details
Communication is only effective if you have answers. If you have to stumble and stutter with your answers, it’s going to have impact on the sale. You need to have done your homework and you need to know the answers to the questions in advance.
There you have the basics for flipping your blog or website. Of course there are many more points that can increase the actual dollar amount realized when you sell your blog, this only covers some of them.
But if you follow these guidelines and are realistic with yourself and your buyer, you can sell your website for a profit. So take the time to prepare your web property for a real sale. Writing a good sales pitch is fine, but it’s not going to be sufficient for most investors. You’re going to need to have these bases covered.
Good luck. I hope you sell your blog for what it’s worth.
Chuck Crawford is an established expert in web design, traffic development and website financial analysis. He has been helping people design and develop their internet business since 1995. Visit http://www.business blogs.us/blog/