So you want to take the leap and exit your online business… gulp. Like everyone, you probably secretly hope that as soon your site hits the market you’ll be flooded with amazing offers beyond your wildest financial dreams. But in reality, you know that’s not how things work. And honestly, doubt is setting in.
What if no one wants to buy my business? How do I know what is a fair price? How do I make sure that I don’t get scammed? What do I need to consider? Where do I even start?
Selling an online business can be overwhelming. Especially if it is your first time. But following the right steps and protocol with care will help ensure a smooth sale, an easy handover and the best possible price.
Over the years we have sold hundreds of businesses at Domain Magnate. We have seen every newbie mistake, difficult buyer and tough negotiation under the sun. We’ve learned A LOT of valuable lessons… often the hard way, so we know how tricky this process can be. Selling online businesses is now second nature to us. So we wanted to share our expertise by creating this accessible, in-depth guide essential for anyone about to embark on selling a website.
The Overview – Selling a Website
To give you an idea of everything we are going to cover, here’s a rundown of the process.
Nb. As our expertise is in content sites, this guide is especially focused on sites that get most of their traffic organically through Google and that monetize through methods like affiliate, Adsense, digital products etc. However, the guide is still relevant for any type of site!
No matter how well your site is doing, or how much it is earning, can you prove it? You need to make sure you have all the necessary documents and data to show buyers what they are getting into.
Why is gathering proof for sale important?
So what data do you need to gather to show potential buyers?
Any buyer looking to purchase an online business wants to trust they are making a good investment. The number one thing they will be looking for is proof that the site actually performs and earns like you say it does. A buyer will want to see at least 6 months of strong financial data, ideally 12 months.
Financial data usually consists of:
The clearer and more transparent you can be about earnings and expenses, the better. Any earnings or costs related to the business should be tracked in a separate account from any personal accounts so they can clearly see expected profits. Buyers don’t want to wade through any irrelevant information, so make it as easy for them as possible by showing only relevant information that is easy to digest. If your accounts are a total mess, get them organized now.
As well as money, having clear data on traffic and performance is also key when selling your site. You should be able to show your potential buyer several months data on things like:
Use a tool such as Google Analytics to keep track of your traffic and prove that it is genuine and high quality. You may also show Google Search Console Reports to demonstrate the potential of your organic traffic, as well as traffic reports from any paid advertising such as Facebook or Google.
Ideally, you will have six to twelve months of solid data and analytics to put your buyer at ease. This will help them see past any anomalies in traffic such as seasonal trends, campaigns etc. It is a good idea to use videos and screenshots for proof.
In terms of proving your traffic, the more diversified and detailed the better. For example, don’t simply say “37% of traffic comes from referrals.” Break that down further by telling your potential buyer the 3-5 most significant referrers in that 37%, and why they are so.
A sale can be a long process – so make sure you get all the aspects of your business in order and create a plan for all the phases of your sale. This is vital to make sure the sale runs smoothly and you have any unexpected surprises. A sales plan can help you manage each stage of selling and leave both you and the buyer clearer on the whole business.
Now is the time to fix any obvious issues and improve your site to make it more attractive to buyers.
Why should you spend time and effort making your site more sellable?
If your site has any obvious issues such as broken links, usability problems, laggy code, or security issues, it’s time to fix them now.
Does your site use poor-quality web hosting? Using a poor-quality, cheap or shared web hosting service can cause a number of usability issues such as site pages taking a long time to load. If so, you may look into migrating to a higher-performing hosting service before the sale.
How quickly does your site load and run? A speedy loading time (ideally 3 seconds or under) is vital so that users don’t get bored or frustrated using the website. This will in turn lead to more clicks, conversions and revenue. Some things that might help increase load speeds are:
Are there any bugs or errors in the web code that worsen the site’s usability? Could the code be simplified to make it easier for someone else to edit it in future? If so, might be worth spending some time streamlining the code of your website pre-sale.
Does the website design need an update? It should be clean, modern and user-frinedly. Make sure the site is also well-adapted to work on mobile to cater to mobile users.
A site that relies heavily on one main traffic source can put off potential buyers.
For example an affiliate site that gets all its traffic through Google, may be at risk of taking a big revenue hit if Google suddenly updates its algorithm (which is likely to happen).
Therefore it is a good idea to diversify your traffic sources, for example by building an email list (which is a valuable and evergreen traffic source) and creating an email marketing strategy. It will make your site seem like a safer bet to potential buyers as well as boost traffic and sales.
What are some different traffic sources you may consider exploring?
In terms of traffic, one of the most valuable traffic sources is organic traffic through search engines like Google. This is because it is a long-term and cost-effective strategy. Whatever your business model, it is recommended to spend some time building up your organic traffic as this will be appealing to buyers.
Multiple revenue streams are more desirable than one. Again, if you only have one revenue stream, you may consider diversifying before you sell your site. It will feel like a safer investment to buyers and they will be willing to pay a higher price.
For example, if your affiliate site above earns 100% of its revenue through the Amazon Associates affiliate program by promoting links to products in your content, you might try working with some other affiliate programs, and perhaps begin showing your visitors relevant display ads too through Adsense. That way if Amazon were to cut their commissions (just like they did in 2019), then you minimize your losses with revenue coming from other places.
Possible revenue sources to consider:
The easier it is to take over and run a business, the more appealing it will be to a buyer. A good way to facilitate this is by creating SOPs aka Standard Operating Procedures.
SOPs are basically documents that detail the step-by-step processes and systems for running your business. You may already have these for different parts of your business, but if not, it is a good idea to make some.
You may create SOPs on things like:
It will put them at ease that they will run the business without your help. It will also reduce the need for you to stay involved long after the deal is closed.
Buyers are likely to check out your backlink profile. A solid backlink profile will mean that there are links on other sites that point to yours. These should ideally be from reputable sites and sources.
If you have allowed your backlink profile to go by the wayside, spending some time building it up can certainly make your website more sellable. On the other side, if you haven’t cleaned up these links in a while, there may be old, low-quality or broken links that are actually damaging your backlink profile.
There are tools such as Disavow that can help you identify old, low-quality links so they can be removed.
3 Decide where to sell your site
When it comes to where to sell your site you have a few different options.
You are probably familiar with online marketplaces such as eBay and Amazon. Well, these exist for websites too. You can create a listing with the details of your website. Buyers can then browse these listings and make an offer if they see something they like.
Pros of marketplaces are that they are very budget-friendly, they are easy to use and they have some vetting processes in place and they use an Escrow system to process money transfers safely. The cons are that you don’t get help or assistance in doing due diligence, it lacks security measures, and it is best for deals of a smaller value.
What are some examples of marketplaces?
Perhaps the safest bet is to sell your site through an online business broker. While a broker will usually charge a fee and percentage of the sale, they will help you with the whole process including:
Business brokers have experience in buying and selling so you can trust them to help you avoid any silly mistakes. They will be able to identify any red flags in potential buyers, leverage your site to get the best price and help you negotiate your deal.
If you are looking for a clean and quick exit, a good option is to sell your site directly to a website investor fund, like Domain Magnate. Website investor funds are often on the lookout to buy websites to add into their portfolio. You won’t need to deal with multiple buyers and as experts in buying sites, they can also play the role of broker, saving you money.
Although they may offer a slightly lower price than the going market rate, after broker fees and expenses, you are likely to end up walking away with a better deal. Companies like this also have capital upfront. This means they can move fast and you will get all your money straight away.
This will only work if you already have an extensive network in the industry, so it is not the best move for everyone. However, if you do, you may consider finding someone to buy your site directly. Selling to someone you are already acquainted with means it will be easier to build trust, negotiate the sale and hand over the business. You also don’t need to waste time doing due diligence on many different potential buyers.
Knowing what your site is worth is a key step in the sales process so you know what to charge.
Why is it important to value your site?
You can start to make a rough estimation by following the loose rule that on average most sites sell at between 2 to 3 times their yearly profit. It is also a good idea to head to marketplaces, browse sites or send emails to find out what comparable businesses have sold for in the last 12-18 months. If you can’t get an exact number, at least try to find out a range. It will be a good starting point to build on.
The earnings multiple formula is the most common way to value a website and it will help you get a general idea of what your website is worth. It looks like this.
Average yearly net profits x Multiple = Value of site
Most businesses define their yearly profits using Seller Discretionary Earnings (SDE). This refers to profits after all overheads or ‘add-backs’ have been deducted, like salaries, content costs or any expenses that don’t directly impact the profits of your site. It is the most common way of looking at earnings as it gives an honest picture of pure profit expected each year.
For a more complex business, people may use the more formal valuation method of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). This is mainly for bigger businesses that are bringing in 5 million+ yearly.
To determine the earnings multiple you will need to consider many other factors such as:
Sales (is there consistency or an upward trend?)
Traffic and revenue streams
Profits (both gross and net)
Growth trends (How quickly is your industry growing? How does your business compare? How evergreen is your niche?)
Business position (Where are you relative to the competition?)
Long-term value of the site (Is this a business that will still be relevant in 5, 10, 15 years?)
Scalability (Can the site produce even more income simply by making adjustments to scale up?)
Systems-in-place (Can a new owner simply and easily take over? Is there an “owner’s manual”?)
Opportunities (Perhaps the most exciting item for a buyer – how can he/she take what you’ve done and go to the next level, thereby not only recovering the investment but making it worthwhile?)
A website broker will help you land on an accurate price for your business. They have the skills and expertise to analyze your business and come up with a fair price.
You may also choose to use a reliable valuation calculator online. While these are not 100% accurate, they consider a variety of different factors to estimate a price such as revenue model, earnings, traffic, email subscribers, social media followers, sales/downloads etc. We recommend trying:
Finding and choosing a buyer can be a lengthy process and may involve talking to various people before settling on the right one.
If you are selling your site through a marketplace once you have listed your site, buyers will come to you.
If you are working with a broker one of their services is that will help identify and introduce you to potential buyers. They will even have many initial conversations with buyers on your behalf and only identify reliable prospects.
If you are going solo, why not start by reaching out to your network and contacts? You can do this individually if you have particular people in mind, or you could advertise your sale on your website or Facebook page. You could even cold pitch possible players in the industry who you think may have an interest in or would benefit from your site.
Once you start meeting potential buyers you will need to identify the reliable ones from the time-wasters or just plain scammers. First you should know what to look for and then set up a vetting process. If you are working with a broker, they will help you with this process.
A ‘good’ buyer will:
Be aware that some buyers might just be wasting your time. The kinds of people who you should look out for and avoid are:
What can you do to vet buyers?
A quick note that while you are vetting your buyers, they will also be vetting you. As a seller, it is important that a buyer trusts you. They will likely be checking your online profiles such as Twitter or LinkedIn. If you don’t have one, this could send out red flags.
Check your online presence and make sure that you are findable. Even better if you can add information that shows a strong track record or reputation. Be ready to put yourself out there.
This part may involve some lengthy negotiations. It is a good idea to decide on the minimum and maximum price you will be willing to accept to make sure you don’t leave your negotiations unhappy.
As well as price, there are many other factors you can leverage in negotiations. These may involve:
People buy domains for a wide variety of reasons, usually for purposes of either reselling, investing or developing, and domains that have a clear development plan on how to produce revenue are much easier to sell. It’s always recommended to do some research on a domain before selling it and emphasize the main points in the post. People would pay more for a domain if you also provide an idea on how to monetize it better.
Here is your moment to convince your buyer of the long-term value of the site and make them trust that they will make back the money they are spending and turn a profit. If you are a born negotiator, you may be able to do this on your own. Otherwise, working with a broker can really help you negotiate a higher price.
When it comes to transferring over the actual website and receiving the cash, you need to make sure you do this securely. You don’t want to transfer the deeds of your website to someone only to have them ghost you without paying.
Ideally the transaction will be done through a secure third-party escrow service. At Domain Magnate, for example, we will always use Escrow.com. Here, they hold the money until the assets have been transferred to the new owner and then release the funds.
While this can vary dramatically from sale to sale, between one and three months is a reasonable estimate for selling a website. If you have work to do on your site before then, this may take longer. But once it is ready to go, the actual sales process can be completed in this time frame.
The ‘right’ time to sell will depend on your own personal circumstances. You will likely know it is the right time to sell if:
However, once you know you want to sell, from a business point of view, here are some tips on the best time to sell:
So it is time to take the first steps towards selling your website. There are a lot of things to think about and the process can be time-consuming, but the details are important when it comes to letting your business grow with a new owner and getting the price you deserve. While you can definitely do this process on your own, we always recommend getting some professional help. Working with a broker or industry expert will help you avoid mistakes, get a higher price and reduce stress through the whole process.