There are many reasons why building an online business is an ideal way to make money, and one of the most convincing reasons is the fact that an online business is an asset that can be sold when you’re ready to move on.
Of course, we’re all familiar with some major businesses that have been sold for millions or billions of dollars (like when Google paid $1.65 billion for YouTube way back in 2006), but it’s not only big businesses that are sold. Small online businesses like blogs, niche websites, and e-commerce sites are also in high demand, even if these sales don’t generate national headlines.
I’ve been working online full-time since 2008, and while I’ve never purchased an online business, I have sold several. In fact, the very first blog I ever started wound up selling for $500,000. In total, I’ve sold just over $1.5 million in online businesses (about $1.3 million in blogs and about $200,000 for an Amazon-based business).
If you’re interested, you can read more specifics here:
- How I Turned a Photography Hobby Into $1,138,610
- This Amateur Photographer Made Over $1 Million from His Hobby (Forbes.com)
And you can learn more about my approach to building profitable blogs in Blog Launch Breakthrough.
Back in 2008, when I left my full-time job as an auditor to pursue my own online business, my employer paid my final paycheck, and that was the end of my compensation for that job. But in 2013, when I was ready to move on from my first blog, I got paid a few years’ worth of income by the buyer of the site. The work that I had been doing the previous years allowed me to build an asset that had value to buyers.
Because I’ve sold several online businesses over the years, I get a lot of questions from people who have an interest in selling a business of their own. It can be a pretty foreign topic if you’ve never been through it. This article will cover the process that you can use to sell your own online business, and hopefully it will serve as a guide that you can follow.
Throughout this article, I’ll use the words “website” (or “site”) and “business” interchangeably. The information covered here will be applicable regardless of whether you are looking to sell a blog, niche website, eCommerce website, or some other type of online business.
01. Prepare in Advance (So You Can Maximize the Value)
The first step in selling a website or blog is extremely important, but most people overlook it. If you want to maximize the value of your site and get as much money for it as you can, you need to prepare in advance.
Most people decide that they want to sell their site and they move on to the next part of the process. Of course, there are a lot of different reasons why you might want to sell a site and you may be in a situation where you need to sell it quickly, but if that is not the case, you should plan ahead.
Ideally, I believe that most bloggers and website owners should start preparing about 6-12 months before they want to attempt to sell their site. If you give yourself some time, there are a few things that you can do in order to increase the value of the business.
02. Eliminate Any Tasks and Expenses That Aren’t Producing Results
The biggest factor that’s going to determine what most buyers are willing to pay for your site will be the amount of profit that you’re earning.
For example, a buyer may look at the total profit you’ve earned over the past twelve months and multiply that number by three in order to determine the value of your site.
That means that there are two ways to increase the value of your site: 1) increase revenue, or 2) decrease expenses.
You’ll want to take a look at all of the expenses that you’re incurring with your site and see if there are some unnecessary expenses that you could eliminate (or even reduce). If you’re spending money on something that is not producing tangible results, consider cutting it.
One of the first things that many potential buyers will ask you is, “how much time do you spend working on the website?” This is a really important question because most buyers are investors and they will be hiring other people to do the work for them. You may not view your time as an expense that reduces the profit of your business, but a potential buyer could see it that way.
For example, if you spend 20 hours per week on the website, the buyer may calculate how much it would cost them to hire someone else for those 20 hours of work, and include that as an expense to reduce the profit they expect to make after buying your business.
With that in mind, you should take a look at every task you do with your business and make sure that each one has a purpose and is producing results. In most cases, there are some things you could eliminate that would save you a lot of time. Maybe you spend 5 hours per week on social media and you could cut back to 1 hour per week with essentially no impact on your traffic or profit. Any time that you can eliminate could help you to present a more attractive business to potential buyers.
With one of my sites, I was able to cut back from 40+ hours per week to just 20 hours per week, which made it much easier to sell. All I had to do was streamline my operation and eliminate a few things that took a lot of time but didn’t generate significant results.
03. Maximize Existing Revenue Streams
How does your website make money right now? Are you truly maximizing what you could be making with those methods? There are probably some things that you could do fairly easily to increase revenue for the things that are already working for you.
For example, if you publish sponsored content, maybe you could proactively approach more potential sponsors in an attempt to increase revenue. Or maybe you could create some package offers that allow you to increase the value of sponsored content on your site.
If you’re monetizing your site with affiliate programs, take a look at the affiliate programs that produce the most income for you. Are there ways that you could start promoting those programs more aggressively?
04. Consider New Revenue Streams
If there are any potential revenue streams that you haven’t been pursuing, now is the time to change that. Remember that your profit will heavily influence the value of your site, so any extra revenue that you generate has the potential to increase the value of the site exponentially.
05. De-Personalize the Site
There are some significant benefits related to personal branding and there are a lot of reasons why you might want to incorporate your personality into your website or blog. However, when it comes to selling a site, strong personal branding can be a turn off to some potential buyers.
If your site is heavily personally-branded, potential buyers may wonder what will happen to the site when you’re no longer involved. Are people only following the site because of you? If so, how will it impact traffic and revenue if you’re not involved?
When you reach a point where you’re starting to think about selling your site, I suggest that you consider changes that you might want to make in order to remove yourself from the branding a bit.
This advice really only applies for selling a site. I think personal branding is extremely effective for building a responsive following. But I do recommend taking some time to transition away from that before trying to sell.
06. Prepare for a Smooth Transaction
There are a number of things that you can do in advance to make the sale and transition a little smoother. First, it’s a good idea to have all of your financials in order ahead of time. Every buyer is going to want to see a breakdown of your income and expenses, so you should have this prepared when you’re ready to start talking to buyers.
Many buyers will also be interested in continuing to work with any freelancers that you have been using. Take some time to think about how this transition might work. Do you have freelancers that will be able to help a buyer carry on the regular operations of your site? If not, you might want to think about hiring some freelancers to take care of some of the day-to-day operations of the site. Most buyers like to see a team already in place because it makes the transition smoother for them.
Of course, you want to be aware of your expenses and be sure that you’re getting good value from any freelancers that you hire in this situation.
If you have the site on the same hosting account with some other sites that you own, you may want to go ahead and move the site to its own hosting account now. That way, you can tell potential buyers that no transfer is needed. They can simply log in to the hosting account, put it in their name, and update the billing info.
07. Get a Free Valuation from a Broker
Once you are ready to take the next step towards selling your site, it’s a good idea to get a free consultation and valuation from a broker. You certainly don’t have to use a broker to sell your site (we’ll look at your options in just a minute), but even if you wind up trying to sell the site on your own, it can be really helpful to know how much a broker thinks your site is worth.
Keep in mind that the broker wants to sell your business, so some of them tend to be a little aggressive in terms of how much they say your business is worth. Ask them how much they would list it for, and also ask them how much they think it would realistically sell for.
Knowing the value of your website can be one of the most difficult parts of the process. In reality, a website or online business is worth whatever someone is willing to pay for it. The value can vary drastically from one potential buyer to the next.
While there are a lot of factors involved, a general starting point for most online businesses is about 3 times the profit earned during the last 12 months. So if your site made $50,000 in profit during the past 12 months, it might be worth somewhere around $150,000.
Of course, there are a lot of things that can impact the value, but that should give you a general idea.
08. Decide How You Want to Sell Your Site
You have a few different options when it comes to selling your website or online business:
- Use a broker
- List it at a marketplace
- Sell it yourself
All three options have pros and cons. Listing it with a broker allows you to benefit from the broker’s network of buyers, but they’ll take a percentage of the sale.
Listing it on a marketplace will increase exposure for the sale, but you’ll pay either a flat fee or a percentage of the sale price. Flippa is the most popular marketplace.
If you sell it on your own, you don’t have to split the money with anyone else (except the tax man). But will you be able to find a buyer or get the best price without the help of a broker?
I’ve sold websites will all three of these methods. If you’ve never sold a site in the past, my first recommendation would be to use a broker. Most brokers will take 10-15% of the sale price as a commission, but they may be able to get a much higher price than you could get on your own, so you may wind up better off even after the commission. For example, a broker may be able to get you 3x the profit from the past 12 months, but on your own, you might only be able to get 2x.
One of the challenges with brokers is the fact that some of them specialize in businesses that will sell for 6 or 7 figures, or even more. Some brokers will sell smaller sites, but if the value of the site is less than around $25,000, it’s difficult to find a broker that will list the site.
I’ve worked with a few different brokers and had mixed results. If you’re interested in finding a broker and you want a recommendation, feel free to contact me through my blog (which is linked in my author bio below) and I will try to recommend a broker that might be a good fit for you.
If you have some experience selling websites and you have a strong network, doing it on your own may be a good option. My biggest sales were done on my own without a broker.
If you work with a broker, they will market and promote your business to potential buyers. The rest of the article is written for people who want to sell the site on their own, without a broker.
09. Identify the Ideal Type of Buyer
Before you start to market your business to potential buyers, take some time to think about who the ideal buyer would be. What type of business would benefit from owning your site? It may be the same types of business that would be willing to advertise on your site, because they obviously see value in reaching your audience.
You may wind up selling to someone that is completely different than what you identified as an ideal buyer, but in the early stages, thinking about the ideal buyer can help you to know who you should be reaching out to.
10. Reach Out to People in Your Network
If you’ve been building an online business for a while, no doubt you have connected with some other people in your industry. This could be bloggers, other business owners, people who work for companies that advertise in your industry, or any other professional contact.
Take some time to contact everyone from your network and let them know that you’re interested in selling your site and talking to potential buyers. Ask them if they know anyone who might be interested. You may even want to give them some details about who you think would be an ideal buyer, and maybe that will help them to think of someone they know.
Your network can be extremely valuable. Not only will you know a lot of people, but each person in your network also has their own network, and this potentially connects you to thousands of people.
I would recommend not giving out too many details (like your asking price) in your initial email, but if someone expresses an interest or has someone else in mind, you can take it from there.
11. Contact People/Companies That Own Multiple Sites in Your Industry
You may know of people or companies who own multiple websites in your niche. Chances are, they probably purchased at least one of the websites, so maybe they would be interested in purchasing yours as well.
If you know of any websites in your niche that have sold in the past, reach out to the current owner and see if they would be interested in buying your site.
12. Contact People/Companies Known to Invest in Online Businesses
Investing in online business has become increasingly common over the past few years, and there are a growing number of businesses that are actively involved with acquisitions. Reaching out to these companies will not take much time and it may lead to a sale.
Some examples include:
13. Consider Facebook Groups
If you want to sell your website without a broker, one option to reach a lot of potential buyers is to post something in a Facebook group. Here are a few groups that exist specifically for buying and selling online businesses:
Aside from these types of groups, you may also be able to find potential buyers in niche-specific Facebook. My wife and I had a business selling private label products on Amazon and we sold the business for six figures thanks to a simple post in The Amazing Seller Facebook group. That business had been listed with a broker for four months (unsuccessfully) and we found a buyer very quickly through the Facebook group.
Wrapping it up
Selling an online business can take time. Don’t expect to start the process and find a buyer right away. It might work out like that, but usually it doesn’t.
Smaller sales are more like to happen quickly. You might post something to Facebook or contact a company that buys a lot of sites and they’re ready to move right away.
Larger sales are likely to take longer. Anything six figures or larger will often take at least a few weeks for the buyer to perform due diligence, and they may need time to line up the funds. Plus, it may take several months to find a buyer.
Keep in mind that it only takes one buyer. The right person can come along at any time.
Related Reading: How to Start a Blog the Right Way – Step by Step Guide