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It is a joyous time when you are ready to sell your website. While you will be fraught with questions and unknown variables when ultimately you decide to sell your website it can be like winning a jackpot and a big change to your life. You might have been building your web business for years, consistently working on it day after day and night after night. When it finally sells you get a (hopefully) big cash injection and move on to new projects feeling renewed and excited about your future prospects. But before this can happen you have to make the sale, which in and of itself is a tricky task.
I sold a website back in 2004 and at the time it was a pretty big deal for me. I had built the site for a hobby in 1998. It went through 3 different domain name and site name changes, at least 4 major design changes and I put in thousands of hours working on it over 7 years, but damn it was fun most of the time. Eventually it became time to move on and pass my baby on to new hands that would keep it growing and moving forward.
The funny thing was I didn’t really think about selling my site because it was making money so consistently. It had become so routine that it was just part of my life. One day it dawned on me – Why can’t I sell it? It produces revenue so has a value – let’s give it a go! I really wanted to move on to other projects and just the idea of not having to look after the site was a huge relief – I knew selling it was the right thing to do. But how on earth do you sell a website?
I’m going to recount the processes I went through to sell my site. By no means should you consider what I did as hard and fast rules but they should give you some guidelines. Remember that there are many ways you can go about the process and you should explore all your options before deciding to sell.
Your site is worth as much as someone is willing to give you for it. Simple answer really. I know, that doesn’t help when you go out advertising a site for sale and everyone is asking how much you want for it and you don’t know what to say. You don’t want to undercut yourself especially after years of hard work, but then again, you are selling a website – virtual property – it just seems a little bit strange doesn’t it. That’s what my friends told me after I sold my site.
Friend: “You sold a website?!?”
Friend: “But a website isn’t anything, how did you get money for it?”
Me: “Well I took the average revenue the site was earning minus the costs of running the site and then multiplied by 2.5”
Friend: “Ahh, okay, well, umm, that’s great (walks off muttering about geeks…)”
As with traditional business, website business or even just a hobby site that brings in money, it’s hard to determine a selling price. What you need to consider are what you will be happy to walk away with and what the numbers tell you. Other variables that will come in to play are the industry your site operates in (competition too), how much labour and technical skill is required to manage the site, the costs (hosting, marketing, staff, etc), whether the business is growing and how fast, the future potential and whether the industry is a buyers or sellers market (supply vs demand). And that’s just part of it.
Some people will tell you a business should be sold for ten times it’s gross profit, or 5 times average revenue or 2 times last years total revenue. EBizBrokers state that generally an e-business website is worth three to six times earnings before interest and tax, so if your website profits are $100,000 you have an asset worth $300,000.
When I first decided to sell the figure of 2-3 times yearly revenue went through my head as a fair valuation given if the new owners kept things at least constant they would recoup the buy price in 2-3 years. I would be happy, very happy, to get that sort of price for my hobby site.
your site is worth how much someone is willing to give you…
In my case my website operated in an industry and had a target market that would be hard to extract much more revenue beyond what I already was getting from advertising. Yes it certainly was possible, but it would take a new income stream to make significant gains. My website operated in a small niche that would not present me with a lot of buyers – but you won’t really know demand until you try and sell of course.
I had a special personal consideration to think of as well, I didn’t want my site to go to just anybody, it had to go to someone that would look after it and keep the dream alive. I didn’t want some overseas buyer to absorb the site into their business and lose the great community that I had. The new owners had to share the passion I had when I first started and hopefully take the site to new heights. (In the end though I would have taken anything if I exhausted all options to find good owners – I wanted to walk away with something for my hard work even if it meant the site would die a slow death under new management. Yes this might sound heartless but I’m being honest and I didn’t really believe I would be forced to sell to a potentially bad owner.)
The more information you can provide to potential buyers the better. Raw statistics are especially important to most buyers and if they don’t ask you for certain numbers then they don’t know what they are doing and are probably not really interested. You should prepare at least these figures:
Most web servers come with a statistics package. Ask your web host if you don’t know. The most common are Awstats (demo) and Webalizer (demo) which often are preinstalled on many hosting packages. Become familiar with these packages so you can accurately assess your site traffic.
Once you have decided a rough figure you would be happy with you can head out and find buyers and see how much demand there is. With my 2-3 times revenue figure firmly planted in my mind as a goal to work for I went off to find a buyer.
Searching Your Industry
My initial thoughts were to find a local buyer in my home country (my site was focused on the Australian marketplace). I figured the best place to start would be the retail outlets that sold products that my market was using. I emailed all the stores I could find contact details for, some of which I had already established relationships with because they advertised on my site. I also emailed some of the largest overseas online stores and websites that I thought I should at least notify that I was looking for a buyer to get some interest going.
When you first head out to find buyers you should look to contact individuals that will understand the value of your site because they will be the easiest to sell too (they won’t need to be “taught” about your marketplace). They will also be the most excited about the prospect because most likely they already sell to the same target market and you will be bringing them a lot of potential new customers.
Searching Outside Your Industry
Once you search locally with no success you might want to try and search simply for a buyer looking for a website. This could be a web entrepreneur that sees the potential in your site or simply someone interested in running a website and would prefer to buy one rather then build from scratch. Obviously with this method you are going to have to do more explaining if the potential buyer doesn’t understand your industry and even worse if they don’t understand website hosting at all you will have a lot of technical training to do if they buy it. You will also need a really good sales pitch and the numbers (financial details) will count for a lot more since that might be the only part of your web business the buyer will understand.
There are a handful of online places you can try and sell your site. EBay’s Business/Websites for sale section is a popular choice but remember eBay is an auction so the negotiation and haggling is all automated. Your auction listing page will have to be very good to get a good price and you will be very much at the whimsy of eBay’s traffic which might not be ideal for what you are selling.
A better option in my mind is try a few forums like the SitePoint SiteSell area where you can list your site for sale and get some exposure. The best thing about this is you can go in and search the archives to see what other sites have sold for in the past. By comparing the details of previous sales you can get a feel for what your site might sell for. Try hunting around in other forums such as SearchEngineForums – buy my website and businesses for sale/brokerage sites such as BusinessBroker, BuySellWebsite, WebmastersMarketplace.com and eBizBrokers) to drum up some interest in your sale and conduct research.
Eventually you should find someone interested in your site and the negotiation will begin. As with any negotiation the mindset and “state of urgency” of the buyer and seller play key roles in determining who has the upper hand. If the buyer is not desperate or the seller is then the power can rest in the buyers hands and she can dictate the terms and price. Of course it can be the other way around with the buyer very eager and the seller not so desperate, or any combination. Each case is different but as a seller remember to stick to your guns and don’t sell unless you are happy with the terms. No regrets.
In my case I had my set price in mind but I was also new to selling websites so to be honest I was a little star struck to think about the numbers I could get from my site. In the end I presented my price, we negotiated terms and eventually I was discounted down $1,500 off what I presented, which I was quite happy with. We agree on details such as where the site would be hosted, how long I would make myself available to train the new owners and the transfer of ownership record changes. It took about three months for the new owners to get the hang of things and for about a year after the sale I would jump in and help now and then with technical matters.
When finalising the details of the sale I suggest you keep in mind these points:
You’re all smiles, your pockets are laden with cash and the world is a wonderful place. Now don’t screw it up and blow all your money on partying too hard, stupid investments or get rich schemes. You’ve learnt what it takes to build a web business and sell it. No doubt you would like to do it again and you have more business ideas to test. Remember how hard it was first time round with no capital available? You had to bootstrap your business, provide your own funding or beg family/friends/the bank for funds. Now you have capital which you can use and invest wisely. Sure celebrate a little, have some fun and enjoy the moment, but remember you didn’t get to where you are by wasting money and you’re not about to start wasting it now.