You’re in the trenches.
You’re building your business day by day, week by week, year by year, and after a while, you ask yourself an intimidating but straightforward question: what is my business actually worth?
What is the “end game” for your business? If you’re like most entrepreneurs I talk to, that end game consists of exiting your business by selling it to another entrepreneur or investor. Yet, the answer to this question often eludes us.
This post will answer that question for you. Now, if you’re running an SEO agency, a lot of this advice won’t exactly be a perfect fit for you since SEO agencies can be great cash-flow machines but often make terrible assets.
If you’re not currently building out sites of your own, this post might change your mind.
After all, while clients are great, assets are better.
There are thousands of hungry investors and buyers looking to acquire profitable digital assets, and they’re willing to pay a high price for them.
How high, you ask?
At Empire Flippers, we’ve sold profitable websites anywhere from $10k all the way to the 7‑figure range. This year, we sold an affiliate website for $1,818,182.80—with the majority paid in cash upfront—as our case study explains.
That would be a nice, big payday for anyone, but it would be especially rewarding for a solopreneur like the seller in the case study.
What would you do if you suddenly got that kind of lump sum? You could jumpstart your new projects, outsource and hire more contractors and services, scale your entire marketing machine, or take those profits offline, investing into more traditional investments such as real estate and stocks.
The options are pretty limitless.
Even if you have a small asset, selling that asset could be enough to get you playing at a whole new level.
So how are online businesses valued? What is a fair valuation?
Since this is such a common question, we identified a need in the market to create a tool that can help you out.
We have sold over 50 million dollars worth of online businesses and have been on the Inc. 5000 list as one of the fastest growing companies in the USA for three years in a row. I’m not saying this to brag but, instead, to show that when it comes to pricing, marketing, and selling an online business, we know A LOT on the subject.
That’s why we combed through our real sales data and created an automated valuation tool. Though this tool isn’t perfect, we are continually refining it. Still, this tool provides users with a good ballpark range as to the value of their online business.
We made our automated valuation tool free for anyone to check out. So, you can use this tool to get a firm grasp of what your website is worth.
Let’s break down how valuations work.
It’s quite a simple formula.
The basis for any valuation is to take your average 12 months of net profit and times it by a multiple.
It would look something like this:
The first part of this formula is easy. You should know what your average net profit is. If you don’t, there’s no time like the present to figure it out. However, figuring out the multiple is difficult for the average person who isn’t in the trenches buying and selling online businesses on a daily basis.
Typically, a multiple for a healthy, profitable business can be anywhere between 20 and 50x. Now, this is an example of a monthly multiplier, not an annual one.
Some brokers use an annual multiple, often called an Earnings Before Interests, Taxes, Depreciation, and Amortization (EBITDA), and those multiples usually range between 2 and 4x. At Empire Flippers, we use a monthly multiple for internet businesses because it allows us to be more granular, looking at the trends of the businesses overall.
If you have a distressed asset declining year after year, you have to make a choice. Sure, you can still sell that business, but if you do, you should expect a multiple of less than 20x. Some people are willing to buy sites like this, usually because they have the skill sets needed to fix the site up properly. On the opposite end of the spectrum, if your business is exploding, adding vast chunks of net profit every month, you can expect to get toward the higher end of that 20–50x range.
Now, there is A LOT you can do to manipulate this multiple in your favor.
In fact, a large part of this guide covers just that.
Yet, most people building out websites and digital assets don’t know the value of what they’ve built. Many of them don’t even know they can sell these websites! Moreover, even fewer know how to increase the value of their website.
Are you one of those people?
No worries if you are.
After reading this guide, you’ll know exactly how to increase that multiple, so you can have the best possible payday when you decide to exit that business. You’ll also learn a lot of what to expect when you do decide to sell your profitable site.
First, let’s talk about why SEO is an excellent traffic source when it comes to building these assets. This puts you in a great position, as reading the Ahrefs blog probably makes you an SEO expert.
Why organic traffic gives you the advantage in selling your digital asset
High-quality traffic is good, regardless of its source. I always urge people to diversify their traffic sources to gain several marketing mediums, thereby producing quality leads and sales for their businesses.
While Facebook ads can be awesome, SEO traffic is almost always better from a selling perspective.
When you’re selling an online business, you need to be able to approach the broadest possible buyer pool. Finding as many potential buyers as possible will help you get the highest priced offer and sell your business fast. Organic SEO traffic does all of this for you because all buyers love it—regardless of whether they’re a newbie or a veteran in building online businesses.
The reason why buyers love SEO is that unlike most other marketing channels, you don’t need to monitor the campaign actively. Once you rank in Google for your chosen keywords, there’s not much more for you to manage, aside from going after other keywords.
This stands in stark contrast with Facebook ads, which require you to monitor your campaigns daily to make sure none are broken. Plus, you need precision accuracy in calculating all the ad expenses to make sure you’re actually making a profit.
In this way, SEO traffic could be considered an asset in of itself. Unlike paid traffic where the ads could just stop and the business could die overnight, SEO traffic never stops coming to the site. Even with an algorithm update, it is rare for a site to lose 100% of its traffic overnight, and this problem can often be fixed.
If you contrast that with how your Facebook ad account could get banned and never reinstated, you can see the host of reasons why an investor might be more interested in a site that is fueled by SEO rather than paid media campaigns.
Even paid traffic experts prefer buying sites with strong SEO. To them, SEO traffic is just icing on the cake that works in tandem with their paid traffic skills.
You might wonder, though, how SEO traffic is actually valued.
Well, Ahrefs does a pretty good job answering this question using their Traffic Value metric.
I thought it might be fun to compare a few affiliate sites we sold on the Empire Flippers marketplace with the organic traffic values Ahrefs gives.
Keep in mind that when I say multiple, I’m not multiplying the Traffic Value metric. Instead, we’re multiplying the 12-month average monthly net profit the sites are earning to reach that number.
Here are five sites we’ve sold, each for over six figures:
Affiliate site #1
Ahrefs SEO Traffic Value: $39.7k
List Price: $185,109.54
Sold Price: $185,109.54
Avg Net Profit: $5,609
Time on the Market: 21 days
Sales Multiple: 33x
Affiliate site #2
Ahrefs SEO Traffic Value: $60.9k
List Price: $325,088.32
Sold Price: $290,000.00
Average Net Profit: $10,159
Time on the Market: 11 days
Sales Multiple: 28.54x
Affiliate site #3
Ahrefs SEO Traffic Value: $18.5k
List Price: $201,038.15
Sold Price: $201,038.15
Average Net Profit: $6,932
Time on the Market: 8 days
Sales Multiple: 29x
Affiliate site #4
Ahrefs SEO Traffic Value: $62.5k
List Price: $191,138.50
Sold Price: $191,138.50
Average Net Profit: $5,461
Time on the Market: 18 days
Sales Multiple: 35x
Affiliate site #5
Ahrefs SEO Traffic Value: $14.5k
List Price: $165,902.08
Sold Price: $138,749.00
Average Net Profit: $5,184
Time on the Market: 14 days
Sales Multiple: 26.76x
So how does the SEO traffic value hold up to the actual market price value for these sites?
If you take the average SEO traffic value of $39,220 and compare it to the average sale price of $201,207, you’ll see that there is a gigantic 413% gap between the two.
What’s going on here?
The Traffic Value metric in Ahrefs is based on the amount you’d spend if you were getting the same amount of traffic from all the ranking keywords using Google AdWords’ PPC platform. This metric will tell you the operating cost to get this amount of traffic, but it won’t give you a super-accurate picture of what the market would be willing to pay for your site.
There are two takeaways here:
- You guide the traffic flow. While you might not be paying AdWords for the traffic, you can still control where you send that traffic, which could cause a major disparity between the Traffic Value metric and your actual website value. For example, you might review a ton of different products on your site, but there might be one product in particular that has an amazing affiliate program attached to it. Although you’re getting traffic to different products, you’re really directing all of that traffic back to that amazing affiliate program by creating calls to action (CTAs) for your visitors to check out that product instead.
- You can build assets using SEO that would be difficult to create using paid advertising. Most site builders I talk to use SEO as their main traffic source. This is especially true for affiliates and people running content sites monetized through display ads. As you can see based on the PPC costs and sales price in the above examples, it would be relatively difficult to build a real, sellable asset using paid traffic for these kinds of monetizations. It’s not impossible, though: I’ve definitely met people who have built their affiliate and ad sites purely through PPC arbitrage, but they’re the exception, not the rule.
While it’s true that SEO is awesome from a selling perspective, there is one kind of SEO-driven business that can be painfully hard to sell. And you need to know about it because many of you are building this kind of business.
A word of warning about selling SEO agencies
You might recall from the introduction that SEO agencies are great at producing cash flow, but they make terrible assets. Almost no one wants to buy this kind of business, and if someone does buy it, they usually offer a pretty low multiple.
Why, you might ask?
Because agencies are too “hands-on” and are often personality driven.
It is almost impossible to sell an SEO agency unless it has a large number of clients (and no big-fish client that makes up over 50% of the revenue); sales and fulfillment teams in place; and good marketing funnels already set up, which drive lead generation.
Most buyers are looking to acquire an investment. They’re willing to roll up their sleeves and do the work needed to scale their new asset, but they don’t want to spend lots of money on something that is, in effect, a job.
If you want to get into the game of building and selling digital assets, there’s good news: as an SEO agency owner, you have a few options open to you.
Option #1. Use cash flow to build a fleet of content sites
Many of the skills you use for your clients will work for you in affiliate and display advertising, or even in ecommerce. Once your clients are ranked, you will likely have a very healthy profit margin coming in every month.
Funnel that profit into creating a team (or using your current agency team) to build out your sites.
I would say this is the most common path that agency owners take when they decide to build real assets. Client SEO is often a great way to get started, as you get paid to learn how to do the job; however, it can be difficult to scale into bigger profits, which is why so many agency owners decide to build their own websites.
Option #2. Use the ‘rank and rent’ method
The ‘rank and rent’ method involves ranking websites in local areas and then renting out a website to a relevant local business owner. For example, you might rank websites based on the keyword “roofer Houston” and then reach out to roofing companies in that area to rent your site for a set amount each month. Instead of a flat rate, you could also charge per lead, whichever you prefer.
When you build out these sites for your clients, you also get to build out assets for your agency. Since you own these website properties, you don’t have to worry as much if a client bails on you. All you have to do is call up the next business owner on your list to rent the site from you rather than working on a new client’s site from scratch.
When it comes to selling your agency, you now have an actual asset to sell to that potential buyer.
Remember that you’re likely to get a lower multiple, but it will be higher than it would have been if you had used a traditional agency model. You should also remember that if you have your clients on a recurring monthly payment, you can transfer over that recurring monthly payment to the buyer’s payment processor.
We’ve seen cases where a seller couldn’t sell their business—even though it made great money—merely because they wouldn’t transfer their PayPal account over to the new owner. In these cases, the buyers passed the business on because they would need to have every single customer sign back up using their PayPal accounts, which could potentially cause some major disruptions in the business.
Always make sure your payment processing method is transferable. Otherwise, you should be willing to transfer your actual payment processing account.
Option #3. The productized SEO agency
Productized services are another option for people wanting to sell an SEO agency. The productized services business model can be quite lucrative and attractive when it’s set up right.
In a nutshell, this model drastically limits the scope of your work for each client by getting rid of custom pricing. Instead, every portion of your SEO work is highly processed and shows exactly what the client will get.
In this model, you might sell packages of social signals, backlinks, content, and web design, each at a defined price point.
Essentially, what this does is allow you to build high-converting marketing funnels using paid traffic, content marketing, and, really, any marketing channel you want. Ideally, you should either have a fulfillment team (which you’ve built) or use white label services to provide the fulfillment as well.
For a buyer who understands marketing funnels, this kind of setup can be attractive.
Yet, even this model for an SEO agency is still going to be harder to sell than a traditional content site monetized through affiliate links, display ads, or ecommerce product sales..
Alright, we’ve covered why SEO is great, and we’ve discussed some pitfalls of the agency model.
Now it’s time to talk about how to manipulate the second part of the valuation formula.
Let’s examine how you can level up your multiple so that you can get the highest possible sales price when you sell your website.
How to move the needle for your multiple and earn maximum profits
You have more control over the multiple you receive than you might think. The key to increasing your multiple is to prepare your business for it before you ever decide to sell the site. If you have a good 12 months before selling your website, then you’re in a pretty good position to maximize your profits.
Most of the changes that can increase your website’s value are really common sense.
A good mental game to play for anticipating what has to be done is to re-enact the scenario you encountered when you started your current business.
You probably asked yourself a few questions, like these:
- Who is my target market?
- What is my audience like?
- What gives them pain or pleasure? What are their hobbies?
Most entrepreneurs ask these questions because we know that marketing something successfully all comes down to solving the audience’s pain or providing them with the pleasure they desire.
The same principle applies here, only instead of thinking about a vast audience, you think of one specific person that you need to persuade to buy your website.
Another game worth playing is asking this question: if you were the potential buyer looking at your business, would you buy that business in the 20–50x multiple range?
This is a relevant question to ask, considering you’re likely not all that different from the person looking to buy your business. You’re both entrepreneurs, you both believe in online business, and you likely have a lot in common when it comes to interests in that vein.
If the answer to this question is no, then you may have your work cut out for you.
The two biggest areas that affect your multiple come down to average net profit and the length of profitable history.
Let’s explore these two concepts real quick.
Average net profit
It goes without saying that the higher your average net profit, the higher your multiple is, with everything else being equal.
There are a few ways you can go about increasing your average net profit, but remember that it’s not always about getting more traffic—though that is certainly a great approach.
A few tips to quickly increase your average net profit are listed below:
- Content: Building out a highly trafficked site using SEO is often a content-heavy process. Creating content is often your biggest cost unless you’re writing everything yourself. The majority of sellers start ramping down content production as they get closer and closer to their sales date, which saves on expenses and increases your net profits.
- Addbacks: These are “nice to haves” but not “must haves.” Addbacks are expenses you attribute to the business but are not required to run the business. The simplest example here would be going to a conference. For most of us, going to a conference is not required to run our businesses, but we usually charge the cost of admission, the plane trip, and the hotel room to our business for tax reasons. You can add these expenses back into your net profit to help increase your overall valuation.
- Link Building: Similar to content, this is likely your second (or first) biggest expense in running your website. If you’re using a service to build links or have an entire outreach system you’ve built yourself, you may want to ramp this down before selling the business to increase your overall net profit. For most sites we’ve seen at Empire Flippers, the owners have been ranking their keywords for months without having to add another backlink to their website (with zero new pieces of content).
These are just three quick ways you can cut expenses and improve your net profit, and this is by no means an exhaustive list. After all, you know your business better than I do. Go through the machine you’ve built and see where the holes are, if any, that you can patch up to make your business stronger.
One thing I want to stress here is to avoid being “penny wise and pound foolish.”
In other words, don’t start doing the grunt work for your business just because you want to save on the expense of hiring a contractor to do it for you.
The last thing a buyer wants to see is that they’re buying a job.
If you’re running an ecommerce business and are packaging all the goods and shipping out the products yourself just to save the expense of a third-party fulfillment service, you’re being pound foolish.
Buyers don’t like to see this.
Sure, they could set it up themselves, but they’d rather buy a business that already has that system figured out. And if they do want to set it up themselves, they’re probably going to negotiate your sales price down to meet that requirement anyhow.
It is almost always better to put yourself in a position where you can work ON the business rather than IN the business.
Outsource the grunt work as much as you can. While it will increase expenses, it will vastly improve your business’s attractiveness as an asset.
Length of history
You can’t control how long your business has been around, but you can control how much data you have to show for the life of the company.
You should have Google Analytics or Clicky installed from day one.
These are the two most trusted analytic tools used by buyers, and they will expect you to have them. The more history you can show the buyer in terms of traffic and revenue, the more likely you are to attract a real buyer and get a better multiple.
Showing year-over-year growth will help increase your multiple, while a downward trend will, obviously, decrease it.
Ideally, you want graphs like the one I pulled from Ahrefs (below), which shows our traffic at Empire Flippers.
Your business is typically valued based on the last 12 months of average net profit. The higher you can make that average, the better. I am often asked about selling earlier than this, but I almost always recommend waiting for a full 12 months since you can take a potentially steep discount on your multiple if you sell it earlier.
I could even go a step further and recommend that you wait for 18–24 months before selling an online business. This way, you have a full calendar year of healthy profits, assuming your first few months’ profits were small, and the added length of time the business has been operating can help strengthen your multiple.
Other factors that will help you sell your website at a higher multiple
We’ve talked about the two main factors for improving your multiple, but let’s look at a few others that, when combined, can lead to a serious increase in your final sales price.
Even if you decide you don’t want to sell your online business, you should still pay attention to these factors. When you do, you will ultimately be building a better and more efficient business, and you’ll likely make more money in the long run, too.
Minimize critical points of failure
A critical point of failure is anything so valuable to your business that it has the potential to kill the business overnight if it fails.
For many SEO professionals, the dread of critical points of failure is linked to the fear we all have of a Google algorithm update slamming us down the SERPs page to the forgotten worlds of page 2 and beyond.
Now, you might say to yourself that you’re 100% white hat SEO, so a Google algorithm update won’t affect you. As we saw recently in the August update with all the turmoil rolling through the searches, plenty of white hat SEOs got their sites knocked down, right along with gray hat SEOs.
The truth is you have no real control over what ANY traffic source will do because you do not own that specific platform. We can manipulate and play with those platforms, of course, but we’re not the engineers coding them or making their business decisions for them.
Ask yourself the following question: “What would happen to my website traffic if I lost 100% of my Google rankings?”
If the answer is that you’d have zero traffic, then you’ve found a critical point of failure.
You can fix this issue with traffic by starting to build other traffic streams, such as the following:
- Social media;
These different traffic sources will help diversify your site and protect you in case one goes down. I would only recommend pursuing more traffic routes if you were looking to grow a real brand. For many sites, such as simple affiliate sites, it may not make sense to master another traffic strategy when you could build out more sites.
If you want to build a true content-publishing behemoth of a business, you’ll serve yourself better by expanding into different channels. Not only will doing so insulate you from one traffic source being taken away, but it will also show buyers that you’ve built a serious brand to contend with, which will increase the value of your business considerably.
High amounts of traffic
The more traffic you have coming to your website, the more likely potential buyers are to be interested in purchasing your business.
Now, when I say more traffic, I mean quality traffic. You want traffic that is converting, and you should have a healthy conversion rate in terms of sales versus visitors. There’s no generic number I can throw out there for what a good conversion rate is, since every niche is slightly different and so many factors are at play.
However, if a buyer sees an inordinate amount of high traffic with low sales, this will likely set off a red flag that something is wrong. Keep that in mind. There’s no need to inflate your traffic to get a better multiple, as ultimately, this is often a lower factor in helping your multiple.
For instance, in some niches, you only need a couple thousand visitors for your website in order to sell it for six figures.
One reason why a savvy buyer looks for high traffic is that they often know how they can improve a website dramatically if it has a good amount of traffic to play with. Often, a buyer will start implementing strategies that involve the following:
- Adding email options to start building a robust email newsletter;
- Identifying abandoned cart sequences for ecommerce stores to get customers back to the checkout;
- Changing various CTAs to drastically improve conversion rates
White hat vs. gray hat SEO
If you want to have the best possible multiple for your website, you should go the white hat route.
I did a study that analyzed the websites we sold on our marketplace to help educate buyers about what a private blog network is. After reviewing this study, buyers could purchase our content sites with as much knowledge possible before laying down their hard-earned cash.
Ultimately, my study didn’t show much difference in terms of which one was better for long-term rankings. Both the white hat and gray hat SEO sites that I analyzed had increases and decreases post-purchase. Each of those sites was chosen for the study because it had been sold six months prior, which was enough time for Google to adjust its algorithm.
So why do I recommend going white hat?
I say this because buyers are far more willing to pay a premium price for a website that is fueled by white hat SEO strategies than with gray hat strategies. On average, we see that pure white hat affiliate and ad display sites have a 10% higher valuation than gray hat sites.
For some people, that might not sound like a lot, but trust me, it can make a tens of thousands of dollars difference.
I do have to add a caveat here though, and it’s a very important one.
Although white hat SEO will give you the best bang for your buck in terms of the multiple you get, you may not want to go down this path if you’ve mastered gray hat SEO. The reason for this is that while you’ll earn less money for each site you sell with us, you will still have the ability to pump out more sites using your process and, ultimately, sell a larger quantity of sites.
And before my gray hat SEO friends claim victory over white hat SEO, let me also point out that white hat SEO has become far more user-friendly in the last few years. In going the white hat route, it has never been easier to win high-quality links, and contrary to popular opinion, you can absolutely systemize white hat SEO practices at scale.
It all comes down to where YOUR skill set lies.
If you’ve been in the online business world for a while, then it’s likely you’ve heard the phrase that “the money is in the list.”
Usually, this “list” is an email list we can use to capture (and then nurture) leads, marketing to and selling to them countless times. The majority of us see the wisdom in building out a newsletter. However, it’s similar to the advice that going to a gym is good for you.
We all know it. Few of us do it.
And to be honest, just like going to the gym, the results of building an email newsletter can be a real hit or miss if we don’t know what we’re doing. If you build an email list because you heard it adds value but then never monetize it, that email list has effectively added zero value to your business. It is more likely that the newsletter has taken profits away from you simply by having a CTA to an email opt-in instead of another product offering.
You need to prove that your email list is adding lifetime value to your business.
When you do that, an effective email list will be able to bump up your multiple to a higher valuation price.
You can do all kinds of things with a solid email list that will generate profits.
Here are a few ideas:
- Create automated sequences that upsell your traffic on more product offers;
- Routinely send emails with new deals, offers, and content that add value to the recipients’ lives;
- Create segmentation throughout your email funnel so that your subscribers are almost always in one of your automated sequences, where you can nurture them and sell them your products.
The bigger your monetized list is, the more it will increase your multiplier.
Social media following
A social media following is a great sign that you’ve built an actual brand. A good social following could be considered a “soft” email list. You have a captive audience, and you can sell to them over and over again if you’ve built a solid relationship with them.
The same rules apply here as those that apply to email lists.
If you’re not monetizing it or if you can’t show any direct correlation between the profits of the business and its social following, it is not going to contribute to your overall multiple.
For this to be an influential factor on your multiple, make sure to actually use it and grow it. Don’t fake your followers just for social signals. Most savvy buyers can easily tell if a social account has fake followers.
It’s not that hard for buyers to spot check your following and see that your followers are all located in a foreign country where click farms exist. It’s just not worth it to pay for fake followers since they’re not going add anything to your bottom line, and they’re certainly not going add anything to your valuation.
Offering multiple products for people to purchase
Ideally, you should have more than just one thing to sell to your audience. The more products you have to offer, the more opportunities there are for you to sell your audience on something.
Now, this doesn’t always play out with multiple products. Ahrefs does a good job exemplifying this product offering concept—even though they sell only one product. While Ahrefs itself is just one product, it has so many features that they can position it to an audience as many different products. They can get marketing benefits from having multiple opportunities to sell to their audience.
Likewise, you should have three or four solid product offerings on your website. This is especially true if you’re building out an ecommerce store. Affiliate and display ad sites can get away with fewer offerings here, but if you’re building these sites out, you should also be considering all the different ways you can make money with your audience, even after they buy their first item from you.
For ecommerce, having a lot of products or SKUs usually means that you are earning good money that is spread across these products. This reduces the risk of one product being the “big hit” or “flavor of the month,” where it is selling like crazy but then suddenly dries up, moving only a handful of units.
These kinds of products can hurt a business in a major way if the business has no other offer available when the craze dies down. An example from the not-too-distant past is an item people were going crazy for: fidget spinners.
If you had only sold that one product, you would likely no longer have a business when that trend died out. At the very least, the amount of revenue coming in would have been greatly reduced.
I can’t stress enough that buyers are looking for an investment, not a job.
They don’t want to spend hundreds of thousands of dollars on your website only to work in the business 40–50+ hours per week, grinding it out.
They want leverage.
Of course, there is nothing wrong with working 40–50+ hours per week on your business. We’re passionate, we’re driven, and we’re often trying to build something that is truly special. But that is not how an investor will look at your business.
They won’t mind working those kinds of hours either, as long as they’re working because they’re proactively scaling and growing the business aggressively.
You need to really track how many hours you’re spending every week on the particular site you’re looking to sell. If you are brutally honest with yourself about the hours you’re clocking, you’ll start to see right away that you can probably cut down a lot of those hours.
From what I’ve seen, these are the three major ways you can cut down your required hours:
- Systemize: Use automation, marketing and otherwise, to take the cost of labor out completely. Nowadays there is automation software for almost any business-related task you can think of—especially when it comes to doing redundant tasks continually.
- Build a team: When you build a team, you are constantly pushing yourself out of the business so that you can work on it instead. At first, it can be difficult to do this, but over time, your team will be producing far more work for you than you could’ve ever done by yourself, even working 80 hours per week.
- Create standard operating procedures (SOPs): You can supercharge your team by creating clear, concise, and outlined SOPs.
Some of these strategies can creep into your net profits by adding expenses.
However, that’s okay because you are ultimately making the business far more attractive and, thus, far easier (and more likely) to sell.
Dig a deeper moat around your business
Could your business be copied easily?
Could someone find out the URL of your website and have the exact same thing up in an afternoon? If so, it’s time to start building a deeper moat around your business.
What I mean by a “building a deeper moat” is ensuring that your business is unique. If a competitor saw what you were doing, they would find it difficult to copy your work or do it as well as you do. A dropshipping store or a thin affiliate site can be copied pretty quickly, which hurts their value as an asset.
But what about a dropshipping store or affiliate site with a real following and an engaged community? It is almost impossible for a competitor to swoop in quickly build something like this to compete with you. You’ve effectively built an audience that loves everything you do, including the products you sell.
How can you make your business unique?
It’s actually not as complicated as you might think.
Here are just a few methods of digging a deeper moat:
- Niche down and own the market. If you want to build a health website, for example, niche down even further. You might end up niching down to just one specific exercise, such as bicycling. You can own the market when you go narrow because it is far easier to become an authority on a narrow topic than on a broad topic, such as health.
- Create products you source. Instead of dropshipping, you could go for a more traditional ecommerce route where you source the product. This allows you to get potentially exclusive deals with suppliers and also increases your profit margins.
- Hire niche experts and content creators. This ties into the first point in that owning a narrow market involves creating less content, so you can afford to hire a top-notch expert to create that content for you. You could take this a step further by hiring niche experts to start a podcast for your brand, a YouTube channel, or an Instagram following to build even more engagement and community.
- Negotiate special terms with affiliate managers. Similar to sourcing products, if you have an affiliate manager, you can often work out a special deal with them as long as you’ve been providing them with quality traffic that converts. The negotiation can be as simple as an email asking them to give you a commission bump. You’d be surprised how effective this can be, and it can give you an extra edge in terms of a margin that your competitors simply don’t have.
At the end of the day, the harder it is for someone to copy what you’ve built, the more valuable your business is worth.
Why people sell websites in the first place
People sell for a lot of reasons.
And sometimes, for multiple reasons all at once.
The reasons can range from personal ones, such as getting enough money to adopt a child—something that actually happened with a seller of ours—to business reasons, such as requiring an influx of capital.
By and large, the biggest reason I’ve seen is that the seller wants to get a head start on creating a new business. This business might already be up and running by the time the seller lists their business with us, and now they want to use the proceeds from the sale of their other business to give themselves an advantage.
Many people sell so they have the capital, or “war chest,” to leverage themselves up into more lucrative and competitive markets. Others use this capital to simultaneously launch multiple projects that are in a similar vein to the business they just sold.
Still others take their digital profits out of the online game and put them in more traditional investments, such as real estate and stocks.
And more often than you think, a seller will use their newfound capital to buy other businesses!
It makes sense considering their assets are likely the most liquid they’ve ever been, which can help them buy an online business using an advantageous deal structure.
Last but certainly not least, sellers often sell their profitable websites because doing so mitigates risk. I mentioned earlier that you should minimize critical points of failure in your business, such as diversifying traffic. But not all of us want to learn how to do that, nor do we want to grow a really big brand.
Instead of rolling the dice on the future of search algorithms, sellers decide to collect 20–50 months of their net profits upfront.
That is a very profitable way to cut down on potential risks.
And with the six- or seven-figure war chest our sellers get, they have plenty of cash to play with on their next project, whether it’s online or offline.
When should you sell?
Knowing when to sell is more of an art than a science, as there is never a perfect time to do this.
One strategy you can follow is to ask yourself if you’re excited by the kind of money you’ll get from the successful sale of your business. You can use our valuation tool to come up with a ballpark range for the sale, or you can use the relatively conservative multiple of 22x.
Is that amount of money motivating?
Does it make you wonder about the possibilities for the future?
If enthusiasm is building up inside you at the prospect of selling, then you should dive deeper, asking more questions about selling your business.
Remember, you should always set a minimum threshold of what you’re willing to take for your business. That way, you won’t get negotiated down into taking a deal you’d rather not. Using this simple rule, you’ll be able to walk away feeling good that you made the deal.
Most of us online entrepreneurs are always working on multiple projects. It’s just who we are; we’re always spotting new markets, new challenges, and new opportunities to explore.
Right now, there is a hungry market of investors coming into the online business realm. They’re looking for businesses just like yours because they know they can get returns that other investment vehicles just can’t rival.
That means that as I’m writing this article, we’re in a seller’s market.
For you, this means that right now is a great time for you to sell and collect a big payday.
Ultimately though, the decision to sell your site will always come down to you.