When investing in websites there is no doubt that you want to know absolutely everything about the business. However there are always some dirty little secrets website owners don’t like to be so upfront about.
This can be worrying when you are looking to lay some of your hard earned cash down for a website investment. Which is why I want to share with you 6 dirty little secrets website owners like to keep under the rug. These are a few little secrets that I have learnt from my years of investigating websites and talking to sellers which will certainly benefit you when investing in websites yourself.
1. How Much Time Does It Really Take?
When looking at a website you would like to buy, trying to understand how much work or time it really takes to run the business can be quite difficult to gauge. The worst part about this is that the website owners know exactly how many hours they spend on the business per week.
I do admit that some website sellers are great and very honest, although there is no way for us to really know. This is why they can tell us that it only takes 5 hours per week for example to run the business.
Fact is though we won’t find this out until we take over the website should we choose to go ahead and invest in it. Though instead of just sitting, hoping waiting and wishing, there is something I like to do to at least get a rough estimate on how long it would really take me to run the business.
What I like to do is make sure I know every little task that needs to be done to run the website, for example, emailing, marketing and ect. I then guestimate how long each task would take me by being as realistic as possible. There is no doubt that when you first take over the website you will not be as fast and efficient completing the tasks as the previous owner, although after a month or more you will start to understand everything and become more efficient.
2. Buying Fans, Likes and Links
Some website owners like to make their website appear like more of an authority in it’s niche than it really is. They can do this by buying fake likes and fans on social media channels like Facebook, Instagram, Twitter and ect.
The fact is that buying fake likes and fans is no good for your website at all. It actually makes things worse and you can see why from this great post on how buying likes can affect a website.
They can also buy links which link into the site since this can help to boost the websites SEO and make the website look like it has much more links linking in to it. But it’s not just about having links coming into the website from other pages that provides good SEO, its more about having links from websites and pages that are already ranked quite high in SEO themselves.
A question I always like to ask the seller is if they have brought any likes, fans or links for the website? Because not telling you everything isn’t lying and by not telling you some of these things can make the website investment look more valuable increasing it’s asking price. So be careful and remember to always ask them if they have brought links, likes, followers and ect.
I haven’t had any bad experiences with this although I know people who have and it can be a rude awakening taking over a business not knowing there are extra costs involved. When you are performing your financial due diligence check it really helps to cross reference the profit and loss statements with the businesses bank account statements to see if the website owner is paying for a subscription, different fees or anything for the website which they have not included or “forgot” to include in the profit and loss statement.
You could always ask them the simple question too, “do your profit an loss statements have every single little expense towards the business on them or are there some other bills and subscriptions you may have forgot to include?”. By asking this it will make them think and if they do lie to you about not having some expenses that are in fact missing. You may just have a case against them if you do end up buying the business and have kept that evidence either in your email or recorded over Skype.
4. Refund/Cancellation Rate
One of the most common dirty little secrets website sellers won’t tell you is the refund rate or the cancellation rate from it’s customers. Which essentially means they don’t want to tell you how many people either cancelled their product or service or asked for a refund.
Your job is to find out what the cancellation and refund rate is because it will help you to understand just how quality the service or product is that the website is selling.
This little tip is an important one to remember and a question you should ask the seller earlier on before you conduct a real thorough due diligence on the website. The reason to ask earlier rather than later is that by doing so you will get a better grasp on whether it is even worth conducting due diligence on the business or not, especially if the cancelation or refund rate is quite high.
5. How Fierce Is the Competition?
One of the reasons and dirty little secrets website owners may not choose to discuss is how strong the businesses competition is. If a website has strong competition this could very well be the reason the website owner is really selling.
Because of this I urge you to ask questions and find out who the competition is for the specific website you are looking at investing in and how strong their business and brand is too.
By doing the proper research into the competition you can uncover some great insights on how valuable the website business is against it’s competition.
6. What Didn’t Work & Why?
Obviously the website owner is not going to tell you what is failing in the business. They want to only sell you the businesses and provide you with all the positive information. Fact is though that all websites just like every human being has problems.
Your job is to put the hard word on the owner, ask them to be openly honest and tell you who the competition is and what they are doing differently that is working for them so you can make the same changes for the future of the business if you decide to invest.
You also want to ask the website owner what needs changing in the business for it to perform better. This way you will not only learn some great ways to build the business if you do choose to invest. However you can also find out if some of those changes that should be made are to fix or cover up bigger problems that the business may have and if those are problems you are willing to adopt or take on and change as a new owner.
I truly hope you found this post and these dirty little secrets that website owner hide quite insightful. Though I would like you to please remember these 6 secrets are just some things that a website owner may not tell you about.
This does not give you the authority to go accusing website sellers for not telling you everything about the business, that is your job as the investor to uncover everything. And since this is the case, this post is merely to help you keep your investment dollars safe and be conscious about each website investment you do make.