Do you want to earn the most you can from whatever website investment you purchase?
Of course, you do right, who doesn’t want to earn more money if they can. The best way to do this is to look for great opportunities before investing in websites. For example, you can do this by breaking down the business and seeing what opportunities it may have before investing in appealing websites.
You can also truly and honestly decrease your risk and increase your return on investment (ROI) before even entering the market by doing this as a part of your due diligence.
How this is done is by looking at 5 key opportunities that a website may or may not have to see if there are ways you can boost the business’s income when becoming the new owner.
One of these cool opportunities can also help you to minimize your risk too, which you will learn about when I get to that actual step in the post.
1. Cutting ExpensesFirst and foremost, before investing in websites, you should dig your teeth into the business’s profit and loss statements to understand its financials. See what they are making in revenue and what their costs are.
When doing this, I like to see what each individual cost is and why they have them, then I ask myself one simple question. How important are some of the expenses to the business, and how greatly would it affect the business if some of those expenses were eliminated?
It depends on the website, but sometimes you can find expenses that are irrelevant and don’t impact the business in a highly positive way at all. Just by cutting unnecessary expenses, you can immediately increase your ROI if you are to become the new owner of the business.
2. Monetization Strategies
There is no doubt that the business you are looking to invest in is making enough money for you to invest in it right. Although why should you allow that to be the limit?
Remember, open minds open doors. This is why I like to open my mind to other monetization strategies for each online business I am looking at purchasing. This doesn’t particularly mean adding affiliate links to a dropship website or changing the whole structure for how the website actually makes its money. The reason you wouldn’t want to do that is that it would only end up confusing the customers, and the more confused the customers are, the less likely they are going to buy right.
Instead, the monetization opportunities I like to look for before investing in websites are opportunities to grow sales in another way.
One easy example would be an eCommerce store that you are looking to buy is making money selling products from the website. But what you could also do is take all those product images and descriptions from the website and start listing them on eBay to sell.
Straight away, you have increased your audience dramatically from just your website audience to another whole new audience on eBay! This is a monetization strategy you could implement on many different websites once you become the new owner.
So, the takeaway here is to look for other platforms or ways to reach a bigger audience to either sell your product outside of the website or send them to your website to buy.
This could be cold calling people, advertising on other people’s websites, paying bloggers, and Instagrammers to post your content.
The list is endless, and you can find cool ways to increase your audience and sell just by doing a Google search and coming up with some ideas before investing in a website you like.
3. Saving Time Spent On Website
If you are anything like me, you don’t want to spend day in day out working. Which is why before investing in websites, I like to break down the business to see where time needs to be spent running the business and keeping it churning at its current earnings.
Once I understand what work needs to be done on a daily or weekly basis, I either like to find ways to get those tasks done quickly to save time. Or find out a way to either automate something or hire somebody qualified to do the work in which I could pay them less to do the work than what I would pay myself.
The whole idea here is to prevent yourself or me as the website investor having to spend much time working for the website, which is essentially working for your money, rather than having your money work for you.
By saving time spent working on the website and the daily tasks, this can allow you more time to think of or find other ways to either build the website business bigger and better. Maybe it could give you more time to hang out with your friends and family too or travel the world even…. just saying. Travel is fun!
4. Marketing Strategies
The cool thing about buying an online business is you can see what the business is and is not doing in terms of marketing before even investing in websites as many may not have a whole lot of opportunity to expand their marketing techniques.
What I like to do before website investing is first see where the website owner is spending time and money marketing the business and how effective their approach is. From there, I start to look at where the website’s audience is hanging out online, whether it be Facebook, Instagram, Twitter, Google, or many other places you could also find them.
If I can find an area that they have an audience but are not targeting them, then I know there is a big opportunity right there if I were to become the new owner of the website.
So, I urge you to look outside of just the business and into opportunities that may be there for the taking before even putting your money down for a website investment.
5. Negotiation (before making the deal)
There are certainly more than just 5 types of opportunities you can look for before investing in websites and finding the perfect investment opportunity. One of my favorites, though, is during the negotiation stage before you make the deal because this is where the REAL money is made.
I know you are probably thinking, “isn’t this where I hand over my money?”. The way I see it is, this is where you save most of your money right here during the negotiation.
For example, if you have done your research, and you know what the business is truly worth, and you have valued it to be less than the asking price. Chances are you can negotiate a better deal.
By paying less than the asking price and negotiating a great deal with the seller/broker, you ultimately not only minimize your risk since you are putting less money in the market. However, you are also increasing your ROI (return on investment) before even taking over the business.
How this works is the less you pay for the website, the higher your ROI will be as soon as the business is transferred into your name. In simple terms, you will achieve a 100% ROI a lot quicker with the less you pay for the business.
The negotiation presents a great opportunity, so never forget how important this stage of the deal is. Having good negotiation skills is essentially the most powerful way to get the most opportunity out of your investing.
More Tips on Investing in Websites for Profit
Now that you are aware of the 5 opportunities to watch for, here are a few more tips to keep in mind as you find the website you will purchase for profit.
Find Your Specialty
When you are focused on making some income from the website you are investing in, then you want to look for sites that have solid profit margins, as we have already discussed.
Find a website that has set up automation or can be set up for this without any additional costs. For passive income, we need to find a way to limit the time spent while also maximizing profit.
When you focus on the profit that comes from buying and selling websites, you need to look at favorable trends and then find the right avenue for growth. Where does your specialty lie?
If I were to specialize in search engine optimization and paid social media marketing, then those are the two avenues I would stay on when looking for a new income source.
Don’t Forget Transaction Fees
When investing in a website for either profit or a passive income, you don’t want to forget about the possible transaction fees. Sellers typically have to pay for the fees with the website.
So, if you are investing in a website for profit, then you will most likely be responsible for paying approximately 3 percent to 10 percent of the transaction value in fees alone.
When making a website investment, you are looking to buy a niche website to turn it into a profitable income source. After this, you can continue to build on it or sell it. However, since you also run the risk of losing money in this kind of investment strategy, you might also want to take a look at website flipping.
When website flipping, you find a site that hasn’t been living up to its potential and you flip it around. You fix it so that it can start making money, result in positive cash flow, and turn into a more profitable investment.
Remember the Risks
Finally, investing in a website also comes with its fair share of risks for the website investor. Weighing the risks against the rewards should be a step in the process. Things can easily change with traffic sources, for example.
An algorithm on Google can change without any notice, and this can ultimately drop your revenue significantly, even if it had once been a profitable website. It is not something you can control. All you can do is find the best solution for the problem and continue moving forward.
Always perform your due diligence before investing in a website for profit.