11 Important Realities of Selling Your Blog [Guest Post]

Posted: 17 Feb 2014 06:00 AM PST

Note from Ali: I’m away this week at Email Summit in Las Vegas (oh, it’s a hard life being a blogger..!) so I’ve lined up several great guest authors to share their expertise with us. Please make them feel welcome … and I’ll be back next week!

This is a guest post from Marc Andre.

Over the past five years I’ve sold several different websites ranging from small 4-figure to mid 6-figure amounts, and I’ve learned a lot along the way.

When it comes to selling your first website or blog there are a number of things that may come as a surprise.

I made a lot of mistakes with my first sale because of ignorance, and if I'd known better, I could have made more money with the sale.

In this article I’d like to point out some of the realities of selling websites. If you're thinking of selling your website (or if you're just interested in the idea), hopefully this will help.

1. Valuation is Difficult

The most common question I get from people who are looking for advice is “how much is my site worth?” or “how much should I ask for my site?”

Trying to figure out the value of a site is not all that easy. In reality, a website is worth whatever someone is willing to pay for it, and everyone seems to have differing opinions about what they'd pay.

Many buyers will take the average monthly profit of a website and multiply it by a specific number of months. For example, a website that has $2,000 per month in profit will be worth $24,000 to a buyer who is willing to pay 12 times the monthly profit. You’ll often see anywhere from 10 – 24 times the monthly profit listed as a typical range, and with higher-profit sites you might see a range that extends up to 30 – 40 times the monthly profit. But it all depends on the situation, and more specifically the buyer.

If you’re unsure of the value you may want to talk to a broker that specializes in facilitating the sale of online businesses. For my largest sale I got a valuation from Digital Exits and that helped me to know how a broker viewed my site, even though I wound up selling it on my own.

Many brokers offer free valuations with no commitment to use their services to sell your site, so it doesn’t hurt to talk to one and see what they say about the value of your site. Aside from Digital Exits, you could try Quiet Light, FE International, and Latonas.

It's also important to really take some time and evaluate what the site is worth to you. Most sellers place a higher value on their own site than buyers will. This is partly because you have more emotional connection to the site and it’s only natural that your own project is valuable to you.

Think about the minimum amount that would make it worthwhile for you to sell. Set an asking price that is a little higher because buyers are almost certain to haggle, but know the minimum that you are willing to accept so you don’t wind up making a mistake.

2. Most Buyers are Looking for a Steal

People and companies buy websites to make a profit, so of course they are going to try to get the best deal possible. Many buyers will only be interested in purchasing websites that they think are undervalued.

These will include sites that are asking for a very low amount in comparison to their monthly profit, and it could also include sites that have been under monetized or could easily be more profitable with minor changes.

This is especially the case if you’re selling a site at a marketplace like Flippa. Most buyers at Flippa browse the site fairly frequently and they look for good deals. I usually recommend that sellers try to find a buyer on their own before resorting to Flippa, especially if you’re looking for a selling price of about $10,000 or higher.

Plenty of sites have sold at Flippa for more, but in many cases you’ll be better off finding a buyer on your own, or even using a broker.

3. “Potential” Usually Doesn’t Count for Much

Sellers like to talk about the potential of their website when trying to sell. I understand the temptation: I certainly tend to think about what “could be” when trying to determine a value for one of my sites.

But buyers typically are not willing to pay for potential. Profit, and to some extent traffic stats, will be the focus for buyers who are determining what to pay for a site.

Potential for growth is great and it’s definitely something that buyers want to see, but the amount that they are willing to pay is usually based on actual profit. Of course, there are exceptions, like Google buying YouTube for $1.65 billion before it was even profitable – but these are very rare.

4. Your Time Can Reduce Profits

When you’re calculating the profit for your website you are probably taking the revenue made by the site and subtracting the expenses that you’ve incurred to run the site.

However, most buyers will also consider the time that you spend on the site and factor that in as an expense. They are likely to hire someone, either an employee or a freelancer, to do the work that you have been doing, so this will reduce the profit that they’ll see from the site.

For example, if you spend 10 hours per week on a site (40 hours per month) and the buyer would have to pay someone $15 per hour to do the work that you currently do, that would amount to an additional monthly expense of $600 (40 hours times $15 per hour).

Depending on how much time you spend working on the site and how much the buyer anticipates it will cost to hire someone to replace you, this can have a significant impact on the monthly profit. If the buyer is basing the offer on a certain number of months of profit, reducing the profit will also reduce the price the buyer is willing to pay.

To be prepared for this you should keep accurate records about the amount of time that you’re spending on the site. You can also look to outsource some of the work to have an idea of what it will cost to replace yourself. If you can show buyers that it’s inexpensive to outsource the work for the site it might help you to get a better offer.

You can also try to reduce the amount of time you spend on the site by working more efficiently and cutting out unnecessary things that don’t generate revenue.

5. Finding a Buyer on Your Own is a Challenge

When it comes to selling a website you have basically three different options. You can:

Try to find a buyer and manage the sale on your own
Use a broker or investment banker to find a buyer and handle the details
List the site at a marketplace like Flippa

With a broker or investment banker you will be paying a commission out of the proceeds of the sale. With Flippa you’ll have a listing fee (currently $9) and a success fee of 5% (capped at $3,000) if the site sells. You may also have fees if you decide to use an escrow service like escrow.com to handle the sale.

Finding a buyer on your own can help you to avoid some fees, and you may be able to get a higher price than you would get at an auction site like Flippa. But finding a buyer, and a good price, on your own is usually not that easy.

Personally, I have experience selling at Flippa and on my own, but I have never used a broker. With my largest sale I was considering hiring a broker and that would have been my next move, but I wound up getting a decent offer through someone in my network.

For my first sale, I underestimated how long it would take to find a buyer on my own. I did wind up finding a buyer through a mutual contact, but I sold it for less than I would have liked because I wanted to sell it quickly.

If you’re looking to sell a site on your own I’d recommend that you plan ahead and allow plenty of time.

6. There's No Guarantee that Your Next Website Will Be a Success

If you have a profitable website that you want to sell so you can move on to another project, keep in mind that there is no guarantee that you’ll be able to duplicate your success.

You’ve certainly learned some valuable lessons through the process of building a successful site, and hopefully you can apply these to make your next site even more successful, but there are no guarantees.

I don’t say this to discourage anyone, but when you sell a profitable website, you swap monthly recurring income for a single lump sum. That loss of income is something that you need to seriously consider, especially if you have a family that depends on you for financial support.

Personally, I find this to be kind of a fun challenge, although that’s not to say that it isn’t stressful as well. After working on a site for a while you may jump at the chance to start something new. Just be prepared and understand the risks you face.

7. It Can Be an Invasive Process

Potential buyers are almost always going to want to get access to your analytics, or at least to see detailed reports, and also will want to see some sort of income verification.

If you've never sold a website before, it can seem a little awkward and even invasive to share this data with others.

If you’re considering listing your site publicly at Flippa this is definitely something you need to consider. Do you feel comfortable with your stats and income details being listed publicly? In some cases it may not be a problem, and in other cases it may be something that you want to avoid.

If you’re selling the site on your own you may be able to avoid giving this access too early in the process. For example, I would recommend only providing access to analytics or providing proof of income after tentatively agreeing on a price with the buyer. Some brokers will also have documents that must be signed by a potential buyer before getting access to this verification.

8. Contracts are Important

Any time you’re selling a website I strongly recommend using a contract. Flippa has a contract template that you can use if you are selling at their site, and you can also find some other templates with a Google search.

Depending on the details of your sale, you may want to hire an attorney to either draft a contract or review the contract that you are using. Attorneys obviously aren’t cheap, so templates will usually suffice for smaller sales.

For my largest sale, the buyer provided a contract and I hired an attorney to review it. This was a great deal because I only paid about $100 and the attorney made a number of changes to the contract and explained to me why they were important. I used Elance to find this attorney, but you can also find someone from your local area or use another similar website.

9. The Buyer May Want You to Sign a Non-Compete Clause

A non-compete clause or a covenant not to compete is often included in the contract for a website sale. The details will vary from one situation to the next, but in general you’ll be prevented from doing anything that will compete with the buyer for a specified period of time (often a year or a few years).

In most cases you’ll be prevented from starting another website in the same industry, but typically you’ll be allowed to start sites in other industries that don’t present any competition for the buyer.

If you already run other sites in the industry and you’re planning to keep them, I’d recommend that you talk to potential buyers up front so that they know this and any potential issues with non-competes can be worked out.

Regardless of what other sites you currently have, it’s not a bad idea to talk to potential buyers about your future plans and make sure that these doesn’t present any problems that could be impacted by a non-compete clause. You don’t want to come to an agreement on price with a buyer only to lose the sale because of unexpected terms in the contract.

10. Your Site is Likely to Change Significantly After the Sale

Many of us become pretty attached to the websites that we create and manage. It can be difficult to go through a sale because you’ll be turning over full control of your site to someone else. Most sites that are sold will experience significant changes following the sale.

These usually won’t happen right away, but come back 6 – 12 months after the sale and you’re likely to find that a lot has changed. The buyer may do things that you wouldn’t have done, or even things that you don’t agree with. If you’re especially attached to your site you need to consider how you’ll feel if this happens.

11. Many Sellers Experience Regret

It’s not uncommon for someone to regret selling their website. This is in part because of the emotional connection to the site that they built, and also because of the lost income or missed opportunities resulting from losing ownership of the site.

Make sure that you are not rushing into a decision, and be certain that you are comfortable with the price you are getting for your site. If you have a clear idea of the reasons why you are selling, you’re comfortable with the price, and you’re comfortable with the buyer, any regrets will usually be minor.

Would You Ever Consider Selling Your Website?

Some people would never sell the website that they built from the ground up, and others would love to do so. How do you feel about your own website? Feel free to leave a comment and let me know.

About the Author: Marc Andre is a full-time blogger and internet marketer with experience selling several different sites. At his new blog ProfitBlitz he is offering a free e-book: The Guide to Profitable Blogging, which covers everything he’s learned as a six-figure blogger.

Wanna learn how to make more money with your website? Check the Online Profits training program!

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