I cringed as soon as I looked at it.
The figures were almost laughable but I was quite worried because he actually wanted to buy this particular website. And when I say the figures were almost laughable, the website was earning $15,000 per month but selling for $4,500.
Do the math.
Clearly something was not right and I had to break the news to the guy. In saying that though I saved him from wasting his money on this website which was clearly a scam!
For example, the rough law or should I say, the way to value a business traditionally is 3 times the annual net profit. Where as website businesses can be around the same ballpark although I like to work out deals to get valuable businesses at a cheaper price. However, that is another lesson for another time.
Back to my point, as you can see IF this website business was really earning $15,000 per month and it was a legitimately valuable business, it would be worth anywhere between $450,000 and $600,000 at least!
To get these figures I simply timed $15,000 by 12 months and that again by 3 years, which is $540,000. Although depending on the website business and how good you are at making deals/offers will depend on what you may pay for the business.
But that quick 101 on how to very roughly value as business is not what I wanted to cover today. What I want to talk to you about is getting scammed by website sellers and how to prevent that.
The only way you can prevent getting scammed is in educating yourself!
I will repeat this and a lot of you who know me know I like to repeat what I say, not because I have a stutter or am slightly retarded (who knows maybe I am). I do this because repetition is key for learning, remembering and understanding.
Sooo…. The ONLY way you can prevent yourself from getting SCAMMED is by educating yourself.
And that goes for anything you buy, be it a wakeboard or a website. Learning what makes it valuable will allow you to understand why the wakeboard is worth what it is worth or why the website is selling for X amount.
This isn’t just for valuing a website either. You should be educating yourself and surrounding yourself with as much knowledge as possible about online business. How different businesses work, why they work, what type of marketing is being used, how to understand the financials of the website business all the way down to making an offer. Which in my opinion is super important.
So for those of you who are looking at getting started investing in websites you do need to be wary of scams. I speak to people regularly who want to buy a website and they generally have something they are already looking at, but in all honesty they don’t really know what they are looking at (yet).
They just want me to tell them to buy the business or not really, and sure I can do this for people but only because I have the education to see why the business is a worthy investment or not.
How do you go out and get an education in buying websites for passive income though if you don’t want to be calling me up every time you find a website you like?
You have two options;
- Teach Yourself
- Hire A Mentor Who Has Paved The Path Of Success Before you
Teaching yourself is more than possible and this is how I started. I got onto different websites, read blog posts about website investing and what it entailed. How to break down the website, how to value it and every little thing.
Well I though I learnt just about everything. That was until I decided to really step up my game where I explored mentoring. I had started seeing that the most successful people in life all had mentors. Which initially didn’t really click until one day the light bulb in my head finally flicked on and I soon understood that I could supersede my success by following the path of someone who has done it before instead of carving my own.
On top of hiring a mentor who has paved the path of success before me, learning from them would allow me to achieve my goals much quicker than slogging it out through trial and repeating this for each investment I made. Not the wisest or smartest strategy, so it was time to change.
At the time hiring a mentor was the last thing I wanted to spend my money on although that investment has been far better than any website investment I have made. They do say that the best investment you can make is the one you make in yourself and that quote couldn’t be truer.
I don’t know about you, but if I am to spend upwards of $10,000+ on anything I am going to want to understand the value of what I am buying.
It’s your choice how you choose to educate yourself, though I must say education is absolutely vital to prevent yourself from being scammed.