Hunting for websites to buy can be tough. Not because there are so many, but because there are so many out there that are not particularly the best investments.
It’s true there are a lot of websites on the market that don’t particularly attract me. Not because of their niche, but mainly because I can see that these business raise a handful red flags for me.
Which is why I want to share with you 5 things that I look for when hunting for websites to buy. Websites that don’t raise red flags for me at first glance. These 5 things drastically help me to cull out all the dud listings available and focus only on websites that have a higher potential of being a far better investment. A massive time saver when filtering through websites after website.
- The Price Of the BusinessFirst things first, I search by price and there is no denying that If I am hunting for a website to buy. I know my goals and one of those is how much I am looking to spend.This is why I keep that figure (buying price) in my head and look for websites that are within or around that specific price range. An obvious tip you should use for you when starting out. Simply because sometimes it is easy to get distracted by looking at more expensive listings that are essentially out of our price range, which only wastes our time.
- The Age Of The BusinessDepending on the business model, I generally like to check on how old the business is. Reason being that aged businesses are often (and not always), more established and solid investments. The reason it is better to invest in an older business is you can track the businesses financials and it’s records back further than those website business who have been existent for only one year.The further back you can track a businesses past, the easier it is to predict it’s future and that principle goes for younger businesses too. It is hard to know how well a business will perform in the next 2-5 years when it has only been in business for a year or less.
- The Model Of The Business
When hunting for websites to buy, I tend to look at the business models I know more about and have had more experience with. Which is why I like to keep and eye out for 2-3 different types of business models preferably.
In saying that though if a website pops up on my radar that ticks many of the other boxes (for me) and is a completely different business model, I am not going to turn it down. Although in general it’s always a safer investment to stick to what you know for obvious reasons.Because you have had experience with them before and you can apply that knowledge far more easily in something you know rather than applying mixed skills into something where they might not work so well.
- The Niche That The Business Is InWe all know there are thousands of niches out there and we shouldn’t be too niche discriminatory, however I like to stick to niches that are interesting to me. Meaning that if I am hunting for websites to buy and I have to choose between 2 reasonably similar businesses, I am going to go for the business which I am more interested in.I too skim over businesses that may tick a few of my boxes when scanning through different websites for sale. Simply because the niche they are in has zero interest to me and I wouldn’t want to spend my time investing in something that doesn’t excite me at all. So I don’t choose to read further into them as I would rather spend my time on something I value more.5. The Multiple Of The Business
The multiple of the business incase you are not yet aware is the amount of months or years net income which the business has been valued on. For example a business that has an asking price of $100k and netting $2,083 per month will have a multiple of 48 months or 2 years.
There are some website investors out there that will only buy a website if it has a low multiple where most multiples these days are around 35-60 month mark with a 35 month multiple being really good.
The only thing about looking at the multiple is generally, when the multiple is higher, the business will be more established and vice versa. Though this being the case, I still like to look at this when hunting for a websites to buy because I can gauge how much the business is worth at a glance before really looking into it further.
Where a business with a really low multiple I can see that the business is going cheap for a reason and the same goes for a website with a higher multiple, it is expensive because at a glance it is a good business. My advice and you can take this with a grain of salt, is to only use this tip to make a quick judgment for what the business might be worth. There is too no saying that you can’t negotiate a better multiple when it comes time to put down an offer, which is where the real money is saved when investing in websites.
So I urge you, when hunting for websites to buy, these 5 things that I look for may not be something you are concerned about and that is fine. Although by knowing what you are after in a business and keeping a keen eye on those few things (that a business must have) when hunting for a website to buy yourself, will certainly save you time from sifting through many websites that are most probably not worthy of your time.