It can be a scary thing when you first want to start investing in websites, especially if you know nothing about the online world. From how websites work, how they make money, what you need to do and know to run them. Along with building them up should you wish, and ways to protect yourself as an online business owner along your journey of owning websites.
I am not particularly making it sound appetizing am I? However I can assure you it’s benefits really are. Which is why I started investing in websites in the first place, to better my lifestyle in many ways, but that is a whole new story I have already covered on How Buying Internet Businesses Changed My Life.
Though, the lifestyle is great there still is work that you need to put in before you start investing in websites.
The first step you want to do is to really knuckle down and start learning how different websites work and are making money. Which can be from a number of different methods, like advertising websites ,which make money by placing ads on each of their pages. Or membership websites that sell access to digital products or information for a monthly fee, just like what Audible and Eonetwork
They could be affiliate marketing websites that sell other peoples products for an affiliate commission. Or even drop shipping websites (my all time favorite), that sell other peoples products at retail and buy them for wholesale whilst the supplier does the dirty work and send the products out to the website owners customers.
As you can see there are so many different ways that websites can make money online, especially since I had only rattled off a few examples above for you. Although once you get a handle on maybe 2-3 of these types of businesses and how they make money. You can start to look at what you need to be able to do to run the business.
For example, understanding what the owner’s daily, weekly and monthly tasks are and teach yourself everything you need to know to be able to do these task yourself.
This is a great preparation technique to do before you start investing in websites. As it could be disastrous coming on board as the business owner of a website and not actually knowing what to do and how things need to be done in order to run the businesses efficiently. Let alone if you want to grow the business and have it perform even better than when you first invested in it. Sure the website seller will teach you some things about how to work the business side of things if you choose to invest. Although not having any background knowledge is a rookie mistake not to be made.
Next on the learning list it to understand how to really break the business down and conduct some heavy due diligence to see if it is actually worth investing in any of these businesses. The goal with conducting due diligence is to really pick holes in the business. To see what the owner of the website is not actually telling you about the business.
You want to work out if the business is a valuable investment by crunching the numbers from the income to expenses and calculating your own net income (not the sellers net income they are giving you) to get its value.
Due diligence does not stop there though, as a matter of fact the due diligence is the most important a rigorous step you need to do. The step that you will get better at with time since you need to understand so much, like calculating the financials, looking into what marketing has been done, the SEO ranking of the website, the amount of traffic being sent to the website, from where and what the pros and cons are about the website.
Once you have conducted a arduous amount of due diligence, you should be able to correctly value the business and make an educated decision whether the business is a worth while investment.
As you can see it’s not nearly a walk in the park when you want to start investing in websites. However it is a valuable education you can use to invest in something life changing.
Whilst it’s just three steps you need to learn, the more work you put into these steps, the more you will learn and the more successful you will be when investing in websites. Those three steps again are;
- Work out how website businesses make money
- Understanding how to run, own and manage website businesses
- Conducting due diligence and valuing the businesses
Furthermore it really helps to continue to get better at the second two steps, where they too will also start to come naturally to you the more websites you look at investing in.
Just like any big investment that can change your life for the better, it will require some serious time and dedication to finding the perfect online business. Although with all that time an effort put in, if it can help you to quit your job, have more time freedom and live a far better lifestyle, it is all certainly worth it.