Exit Plan

11 Steps to Selling Your Website for Profit

So you have a website or an online business and you’re considering selling it for a lump sum of cash that you can then invest in your newest venture, or perhaps use it as a retirement fund or to finance that round-the-world trip that you’ve been dreaming of?

It may seem fairly easy and simple, but in reality, there are a number of pitfalls that the majority of first time sellers don’t know to avoid, resulting in:

–       Deals falling through at the last minute

–       Getting paid much less than your business is actually worth

–       Not being able to find a buyer at all

I have compiled an overview of the most common mistakes made across the industry, accompanied by some tips for preparing yourself and your business for the exit phase, ensuring a smooth transaction and most importantly – making sure that you will get paid a fair price for your property.

1. Start preparing for the exit as early as possible

The majority of issues that lead to difficulties in getting a website sold or to a lower-than-expected price are caused by not being sufficiently prepared.

Because of this, it is incredibly important to start planning the exit as early as possible – preferably at least 6 months in advance – allowing you sufficient time for the necessary preparations.

Proper preparation can net you twice the amount that you would get for your site otherwise, so don’t take this lightly.

2. Distance your business from your persona

Regardless of whether your website will be bought by a seasoned investor or by someone looking to take it over and run it as their main business, having it heavily connected with yourself is always an issue.

If your website or its content revolves mainly around you as a person then now is the time to change it. Remove any mugshots that are hard-coded in to the site’s design. Start your YouTube videos with “Hi, I’m John Smith from ABCD.com”, rather than with “Hi! I’m John Smith”, and create a separate email address for your website-related communications, to avoid business emails being mixed with personal ones.

3. Make sure the site’s revenue is documented to the finest detail

A major area where online businesses tend to fail in due diligence is not having enough documentation available to prove and verify the revenue that the business has been generating – and revenue is by far the most important factor when it comes to determining your site’s value, with unproven revenue being disregarded.

If there’s even the slightest chance that you will eventually sell your website then make sure that everything is documented. Not only will it help you immensely in the process of selling your site, but it will likely provide you with valuable insights about your site’s finances, as well.

4. Have proper Analytics tracking in place

Similarly to being able to prove your site’s finances, you need to be able to prove its traffic levels and behaviour. At this day and age, the vast majority of investors require Google Analytics to be installed on each property that they’re looking to purchase.

This is both because Google Analytics is the most popular analytics suite available, as well as because it is widely regarded as one that can’t be easily manipulated.

Make sure to install Google Analytics on your site early on, as it can’t track your traffic retroactively, meaning it will already be too late to start thinking about it a few months before selling.

5. Don’t mix business- and personal accounts (or the accounts of different businesses)

For easy verifiability, it’s extremely important to have your website’s revenue run into a dedicated account – be it a bank account, a PayPal account, or an affiliate account. This will help you immensely later on, as having multiple revenue streams pool together into one account often makes it prohibitively difficult to pinpoint what part of revenue was generated by which site/activity.

In addition to revenue accounts, it is important to keep expense accounts separate. This includes advertising platforms, such as Google AdWords.

6. Document all your business relations

If you’re in a business where strategic relationships are an important aspect then make sure to properly document all of them, and whenever possible – have contracts in place.

Even though you personally may trust your strategic partners and be happy to work with them based on verbal agreements, the potential buyers of your website won’t, turning the lack of proper agreements into an issue that can lower your chances of selling your site, or negatively affect its value.

7. Use a stand-alone web hosting account

Always try to use a separate web hosting account for each of your sites that you plan to offload at a later date. The added cost is usually negligible, but being able to hand your website over together with the hosting account will likely save many days of hassle and hard work that transferring the site over to the buyer would otherwise require.

8. Keep business communication separate from personal

It’s always a good idea to have a separate mailbox for each business that you own and operate. In many instances, buyers will demand access to any historical email correspondence with clients, suppliers and partners, and having this email correspondence mixed with your personal emails (or those of another business venture) typically results in many days or even weeks of headache.

9. Get your expectations straight and take broker’s valuations with a pinch of salt

When preparing your site for sale, it is important to understand what it’s true value is.

Valuations are a tricky subject and there aren’t many widely acknowledged rules, but your best bet is to take a look at other similar listings to see what they’re selling for.

You can get an overview of other listings on brokers’ sites, as well as public marketplaces like Flippa and BizBuySell, but always keep in mind that asking prices don’t necessarily correspond to eventual selling prices, with the difference often being anywhere from 10% (reputable brokers) to over 50% (brokers who tend to over-value their listings).

Bear in mind that while many website brokers are more than happy to provide you with a free valuation, these valuations also need to be taken sceptically, as brokers often tend to either over-value your property to get you to sign with them (and will then low-ball you once you have signed exclusivity) or under-value in the interest of a quick deal.

A reputable broker will, however, do neither and is probably your best source for a valuation.

10. Shop around for a good broker

As I pointed out a little while ago ago in my article entitled How to Tell a Legitimate Broker From a Scam Artist, there are a number of charlatans operating in the industry.

Because of this, you need to be extremely careful when choosing which broker to go with, and not be tricked into signing a long-term exclusivity with a broker promising you an unrealistically high price or a low commission percentage.

11. Don’t neglect your business while in the process of selling it

Probably the biggest mistake that a seller can make is listing their website for sale, and simultaneously forgetting to take continuous care of it! It may sound like a no-brainer, but in my 5 years in the industry I have encountered this numerous times.

As investors are valuing your business based on its current and historical performance (not only its historical performance), it is crucially important to keep taking good care of the business while it’s listed for sale – as even the smallest decrease in revenues will nearly always result in a much lower price.

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