The stock market and real estate industry have long been populated by day traders and “flippers”, those who buy and sell in a short period of time in order to make a quick profit.
In the real estate industry the life of a house flipper can be very appealing. Buy a renovator’s dream property at a discounted price, renovate and modernize it and then sell it at a few months later at a profit. This process can then be repeated over and over for a reasonably stable income. You might even get rich.
The life of a house flipper is often romanticized, with images of married couples buying old houses, spending a fun-filled six months working renovating and then making a cool $20-$50K profit on the sale and moving on to the next property. Do this three times a year and you have a recipe for a fairly nice lifestyle.
If you plan to renovate yourself then you better have the skills to do it or have the friends or family willing to help out. Alternatively you can hire professionals to perform the labor but you must factor in the cost into your expenses.
There are also many other variables that need to be carefully controlled such as financing fees, real estate agent costs, legal fees, government charges and all the other issues that come with buying and selling property.
Those with a keen eye for a bargain can do exceptionally well but it’s just as easy to lose money if you don’t do your research and plan. Watching the real estate market, tracking house prices and monitoring economic conditions are all important activities for a successful house flipper. Provided you do your homework and control your variables you stand a fair chance of succeeding.
Trading on the stock market is another area where the educated and diligent researchers can succeed. Knowing market trends, tracking company performance and economic indicators can all provide an extra edge and if you work on it full time you just may come out on top more often than not. Both the stock market and real estate industry have long been considered staple investment opportunities and even full time careers for those that choose to take on the challenge.
There is unique breed of entrepreneur that has taken the concept of flipping to another area; buying and selling businesses. A shrewd entrepreneur will locate an underperforming business, buy it, work their magic to improve performance and then sell it for a nice margin. It is by no means easy and certainly requires a lot of research and due diligence, but the rewards are there and no doubt it’s a heap of fun too (entrepreneur’s wet dream 🙂 ).
Buying and selling businesses is appealing but given the high costs of making the purchase it is quite difficult to start, especially as a young entrepreneur. If you go wrong you may end up loosing a lot of money (just as you can with the stock market and real estate), so you really want to be sure of your skills and ability before investing.
The Internet is very new and the whole online commerce industry is just establishing marketing practices that work. Quite frankly, and this may sound harsh, but most of the people running businesses online have very poor websites. A lot of people running popular sites are not taking advantage of their traffic by monetizing it (this could be by choice or ignorance). Making a profit may be as simple as implementing a smart AdSense campaign on a popular site after buying it from an owner wishing to move on to other things. Perhaps an e-commerce site could use some search engine marketing or some tweaking to an AdWords campaign might do the trick, or better still, monetize, optimize, affiliate and upsell for maximum gain – make use of all the marketing tricks at your disposal.
I’m sure if we did some statistical sampling of the web industry search engine optimization techniques would be understood by a minority of webmasters and implemented well by even fewer. Search engine optimization is becoming mainstream and no doubt as the web continues to mature more and more people will study, test and build better websites, but it’s definitely still early days.
What this says to me is “business opportunity“. For those with the know-how, the energy to implement and a little bit of funds to buy the sites there are big gains to be made. What makes it even more appealing, especially for young or new entrepreneurs, is the price – we are talking about a lot less funds then it would take to invest in shares, buy property or purchase a bricks and mortar “real world” business. Websites with potential go for as low as a few hundred dollars.
The Advantages of Buying A Website
The big advantage of buying a site is you don’t have to establish an audience and wait for the site to be indexed within search engines. Most webmasters, even those that don’t know their SEO from their XML, will understand the benefit of link exchanges. Even the most poorly managed sites should have some form of backlink network developed and return a result in the major search engines. It may not be a top ten search result but it will be a result ready for you to optimize and improve.
Taking over a mature site (at least 12 months old) will mean you avoid the Google sandbox, a significant perk of buying established web property. Of course it really depends at what stage you take over a website as to how much of a step-up you gain and will no doubt reflect how much the owner will expect to receive for it (traffic for cash in simpler terms, but there are other variables to consider when selling a website).
Top 7 Website Acquisition Strategies
Before undertaking a search for a website acquisition a smart web entrepreneur will stop and have a good think about what she wants the site to do and how it will fit within her overall web business strategy. Here is a list of the top 7 strategies to consider when buying a new website:
1. Buy a site that has targeted traffic for a product or service you already produce or sell. You can direct traffic from the new site to your products/services through advertising, email lists or sales pages. This is a great way to establish a customer base very quickly but you have to be confident that the traffic is quality, targeted traffic. Don’t fall into the trap of buying a high traffic site that consumes lots of bandwidth but doesn’t have the type of user you can leverage for revenue, otherwise you might be buying a liability, not an asset.
2. Buy a site to generate advertising revenue. In this instance you might not change the site other than by working to increase the amount of traffic and improve the performance of advertisements on the site. Sites with lots of good content but are poorly optimized are perfect for this strategy. Once you own the rights to the content you can then further leverage it by repacking and republishing the content in other ways perhaps information products, article marketing or as free give away enticements to join an email list.
3. Buy a site specifically to flip it quickly. This is perhaps the most risky venture (day-trading!) because you need to find sites that are clearly underperforming with the potential for a big upside result after you complete your renovation. Ideally you should locate e-commerce sites selling a product that has an established market that is only just starting to take off online AND the current owners are not good at search engine optimization or online marketing and are willing to sell. The theory is that you can quickly implement your changes, tweaking a few percentage point increases in multiple areas, resulting in a good double figure increase in sales in a short period of time. If you can complete your work just before the general marketplace catches up you can make a mint by selling the site at a premium before the Internet becomes saturated and your early mover advantage is eroded or the market slows. The web is one of the fastest industries in terms of competitive action due to the very low barriers to entry. To execute day-trading style website buying and selling requires an entrepreneur with their finger on the pulse of the web. They must be in tune with what’s new and willing to gamble on what’s going to be new tomorrow in order to have success.
4. Purchase a community driven site. A site with a massive forum filled with a nice target niche audience can be a gold mine to a entrepreneur. Often these sites were built by hobbyist fans, not aimed to profit in any way. Their website might have ballooned in growth to the point where the bandwidth is costing them a lot each month and since they are not skilled in website monetization they will be willing to sell the site at a bargain price. This can be a great strategy to make advertising revenue but be very careful with audience selection. Some forum communities are very difficult to make money from and may end up costing you more in ongoing hosting fees. Ideally choose a community demographic that has established high keyword prices in AdSense/high value to advertisers (electronic gadgets for example), has a good selection of affiliate products you could market or suits some products or services you already sell yourself.
5. Look for a site operating in a highly popular keyword niche or one you expect will become popular in the near future. Keywords drive search engine traffic and if you can pick the trends before they become trends you may own some valuable property. Consider if you could guess what tomorrow’s blog or podcast will be and buy the sites with established keyword rich content before they become mainstream topics and overpriced.
6. Remove the competition or merge with the competition. In this case you buy competing websites or negotiate a merger to combine with them to create one large enterprise. Depending on the industry you operate in this can be a very smart strategy to create market dominance. One of the best examples is website hosting. Often smaller hosts are bought up by larger hosting businesses with the result increased stability and professionalism.
7. Purchase a site strictly for the domain name. Obviously in this case you don’t care too much about what is already developed in terms of website content, you just want the street address (URL). Imagine a few years ago if you purchased
blog.com. In this case the address itself is of significant value regardless of the website, or if you are good at picking trends, you might see the future value in a domain name before the market realizes it.
There are many other options available for how to use a new website acquisition and of course what you do with a new website and what type of website you search for will depend on your skills, the industry you operate in and your cash to spend. Remember to take some time listing a few goals you want your new website to achieve and strategize exactly what you will do with the new website before you buy it.
Investing Time And Energy Into Your New Website
Make sure you have the time to manage your new investment in web property. Remember just the transfer process and daily maintenance of your site will take time and energy and if you don’t have it available now then maybe you should hold off making the purchase. It would be a shame if your good intentions to improve a website result in you instead killing it because you don’t have the time to maintain the status quo. Remember a new website comes with new responsibilities, for example support emails and phone, server maintenance, SPAM control and the usual day-to-day activities of a webmaster. Don’t get caught up in the excitement of the purchase making you blind to the reality of how much additional work will be added to your daily activities.
Where To Locate Websites For Sale
I could point you in the direction of a few good website trading sites (this article has some links – How To Sell A Website) but you will be very lucky if you find a bargain there. To find good sites you have to search deep into the web. Use the main search engines to find websites operating in an industry you feel confident buying into. Don’t look for the big sites, the sites on the first few pages of search results unless they show clear potential – perhaps in industries with low competition so “bad” sites show up in the first page of search results. Professional or popular keyword sites are usually too expensive, well managed (they wouldn’t appear in the first few pages of the search results if they weren’t) and the owner likely won’t be interested in making the sale or will be looking for six figures if they are.
You must look deep in the search results. Find the solo-webmasters that perhaps don’t take their site too seriously but have been diligent over the years adding content consistently, if not in large quantities. You need to find the good sites with potential, not great sites already optimized or poor sites going nowhere. The more research you do during the search phase the smarter buy you will make. No matter how much time you put into the search it’s going to be gamble when you do decide to buy. There are just too many variables to consider and control, but by being smart and patient you reduce the risk.
Buying The Website
Once you find a good site that meets your criteria start monitoring and researching it. Check backlinks, investigate it’s history (try the Wayback Machine) and if the site has a community (forums, chatrooms, comment system, helpdesk, etc) see what goes on there. Check the site design, the structure of the links, headings, titles and keyword density. Check the site statistics if they are available (look for those little webstat icons or try Alexa rankings).
Once you get a good feel for the site and you are interested in buying it’s time to contact the owner. You should be able to find an email address for the website owner somewhere on the site, if you can’t do a domain name lookup in the WhoIs database where you will find the email address for the person that registered the domain. Remember some websites will simply be hobbies for the owner which will make the purchasing process that much easier, while others will be fully fledged businesses making the transfer process just that little bit longer (think about business registration and incorporation detail transfers now consider you may not even be located in the same country!).
Start casually by introducing yourself to the owner, state you like the site and then slowly gauge how much interest the owner has in their web property. Eventually you are going to have to express your interest in making a purchase and you can spend as much time as you like communicating with the owner to negotiate a deal. Like with buying anything, the negotiation process can be laborious as you gather the information you need to calculate a price. This process can be swift and easy or slow and painful depending on your attitudes and the willingness of the owner to make the sale and release private information about their website. You will need to know details like website statistics, revenues, and costs, all information that the current owner may be hesitant to give out (see How Much Is Your Website Worth? for a discussion of important website metrics when determining the value of a site). Demonstrating your sincerity at this point will go a long way in helping you to divulge as much information as you can order to properly evaluate the website.
If you are lucky the owner of the site may simply be so excited that their website will make them some money that a few hundred dollars will seal the deal, others, the more savvy owners will realise the value of their asset and you might have more difficulty negotiating and will pay a higher price. Remember you are never under any obligation to buy so don’t force yourself to offer too much because there are plenty, literally millions, of other sites out there.
Don’t Forget The Little Details
When you finally agree on a price don’t forget to look after the little technical details as you manage the transfer of ownership. Here is a list of some important factors:
- Transfer of the domain name registration details, the business name, incorporation information, hosting ownership and any third party software or subscriptions to your name. Check that everything, absolutely everything, has your name on it by the time the deal is done.
- Get a contract made up outlining the deal and have all parties sign and date it. Also consider creating a clause stopping the previous owner starting up a competing site immediately after the sale.
- Download the email lists. Download the email lists. Download the email lists. There is nothing more important in a web business then the mailing lists so make sure you have these safely in hand with backups.
- Outline how much support, if any, will be provided by the ex-owner for a transition period. Having the owner available for questions for a few months after the sale can make the transfer less stressful.
Buying A Website Is A Very Effective Entry Strategy
Given the time it takes to get a new website off the ground because of issues like the Google Sandbox and the amount of work and effort it takes to create a site, produce content and build backlinks, the prospect of buying a ready established domain and website is very appealing. If you have a sound understanding of search engine optimization and the industry you work in online, you should have no problem finding under optimized websites, or perhaps fully fledged web e-commerce businesses to buy. By adding content, fixing title tags, linking structure and all the other good search engine marketing practices you can very quickly start reaping rewards. Sites with quality traffic but no monetization strategy are huge opportunities ready for you to step in, stick some advertisements up, use your AdSense optimization skills and boom, start profiting immediately.
Alternatively you might look for sites that augment your existing web enterprises and purchase the targeted traffic to effectively “buy customers”. No matter what your strategy, the web is ripe with opportunities for smart investors and you don’t have to have a wallet the size of Rupert Murdoch’s to start buying and profiting.