Picture this. John has spent time and money building up his online business. He has worked on the marketing, he has built up traffic, the site is generating revenue. Life is good. So why on earth would he sell it?
Actually, there are a number of reasons that people decide to sell their established websites. These could range from the owner simply being tired out and losing interest in the business, to them seeing a decline in their revenue. In John’s case, maybe he just wants to take the cash and move to Barbados (it happens!).
Whatever the reason, it is good to get an idea of why someone is selling. For buyers, it can reveal useful information about the business they’re buying. It could even help them negotiate on the price. If a buyer knows John is looking for a quick sale, they might be able to ask for a discount.
Why it’s good to understand a seller’s motivation for selling their online business
If you are looking to buy an online business, you obviously want to make a good investment. You might look at a website for sale: the niche looks solid, the numbers check out, the price is good. So you ask yourself, why would the seller get rid of this business that is making him money? Am I being swindled?
Well, it’s always good to ask that question to make sure you know what you are getting into. But often there are plenty of legitimate reasons why people sell their businesses.
Knowing a seller’s motives can help you plan for the future of the business. If the revenue is declining, do you have a plan on how to turn it around? Perhaps you, unlike the seller, have the skills to clean up the coding on a messy site. Or make the most out of Facebook advertising. What is an issue for the seller, may not be one for the buyer.
Being aware of any issues with the business also puts you in a stronger position as a buyer. Don’t be afraid to ask for discounts to land yourself a better price.
Whatever your predicament, in this article we will walk you through seven of the most common reasons why people choose to sell their established websites.
Seven common reasons people give for selling their online business
1. I’m tired
Yes, as simple as that. Losing passion and burning out is one of the most common reasons people give for deciding to sell their business. Sometimes people reach a point where the amount of work they have been putting into a business is just not worth the return on investment. Perhaps they want to sell up and reinvest in something that requires fewer daily hours, or something in a niche they are more interested in.
If you have an interest in a specific niche, or a skill set that the seller is lacking, you may find a good deal from this type of seller. A seller looking to focus on more profitable endeavours may sell an inexpensive business perfect for a newbie, who is looking for a site to tinker with. Just make sure the site has potential for growth before buying.
Check out this infographic by onlinemarketingtogo.com to think about some of the ways you might be able to grow and improve an online business.
2. The revenue of my business is declining
When faced with a downturn in revenue, some business owners will do what they can to turn it around. Others just want to get out while they can. It can be demoralising and frustrating. Some business owners don’t have the time or money to fix whatever is going wrong with the site. By selling at least they can walk away with something to reinvest.
Many people understandably don’t want to invest in a business with decreasing revenue. But if you can see exactly where the business is going wrong, and have a particular skill which you’re confident could turn it around, you might be able to ask for a considerable discount.
3. Personal reasons
Sometimes selling a business has nothing to do with the business itself, but personal life changes for the seller. Anything from wanting a cash injection to invest in real estate or an offline venture, to moving abroad. Some sellers might be looking to retire. Selling up will give them some cash with which to do so. Perhaps they have lost money on a side project and simply need quick cash to pay off their debts.
A seller with a big lifestyle change coming up may have a deadline by when they need the cash. You may be able to use this to your advantage to negotiate a good price. Especially if they have left things to the last minute.
4. I’m a website flipper
Just like with property developers or offline business investors, many people have made fruitful businesses out of buying and ‘flipping’ websites for profit. Successful flippers will identify sites they have the skills to improve, invest some time and money into them, and sell them on.
Although there is no reason to doubt a flipper’s motivation, make sure the seller isn’t trying to shift a dud investment. Flippers are often looking for a quick and easy sale. Their ideal buyer is someone who can take over straight away without too much hand holding. If you might be interested in becoming a repeat customer, you might be able to get some good discounts in return for loyal custom and quick turnover for the seller.
As website flippers are usually very experienced at selling businesses, they should provide you with all transparent data for the site. Be wary if they don’t. Also, before you buy make sure there is still potential for some growth and improvement.
5. Something is changing in my industry
A website owner might see a change coming within the industry they work, and sell up before it will affect their business. Is there new legislation coming in that restricts the product the site sells? Or are there upcoming import taxes being introduced on the materials the business works with? Maybe the niche is a fad and traffic will suddenly slow three months down the line. These sorts of things may not be reflected in the traffic statistics or earnings so can be hard to spot.
Make sure you thoroughly research the industry for any online business you are thinking of buying. You don’t want to get caught out by changes down the line that will lose you money. Seller’s may not want to disclose such information so it is best to investigate yourself.
6. I’m moving on to bigger and better things
New opportunities are another common reason people decide to sell their online businesses. Perhaps someone has acquired several small sites over the years. Now they want to focus on those larger, profitable investments that really make the big bucks. They may be looking to build up their biggest and best businesses. Or put money into longer term investments.
This type of seller may be looking to sell off their smaller, less profitable businesses, but these could still be of value to some buyers. If you are just starting out, want a site to play with, or are looking for a small side project, a low value site could be perfect to test the waters.
If the seller owned multiple sites, there might be some sites the owner hasn’t had much time to work on. These may have good potential. However, if the seller owns many sites in one particular niche, you may want to check what other sites they are hanging on to. Do they have businesses that dominate the industry and would be your direct competition?
7. I am a scammer
Some people are just looking to hustle for some quick cash. They may be selling sites that they have only owned for a few months. These types of sellers may forge traffic figures or dodgy earnings.
It’s best to avoid purchasing sites from scam sellers. Make sure you perform your own due diligence on a seller to make sure he isn’t one. Red flags include earnings that look too good to be true for the sale price, and sellers who refuse to share their real personal details with you. Buying through a broker minimises the risk of getting a dodgy dealer.
Read about the different ways to find online businesses for sale here in our guide.
So, we can see there are a number of reasons someone might sell their online business, even if it is profitable and making money. The good news is, it is perfectly possible to find a ‘good’ website for sale. The bad news is, we can’t trust every seller to be upfront and honest. The key here is so do your research and perform your own due diligence on every possible purchase. That way you won’t end up with something you didn’t bargain for.