How to Sell an Online Business for Big Profit
Hi everyone, welcome back to another episode of What’s Your GamePlan. Today, I’m going to teach you how to calculate the value of an online business. I know you've been waiting on this information, so you might want to take notes and listen up! This information is like GOLD! Since 2010, the online business industry has grown 15%, year over year and right now there are over 7,000,000 businesses online doing $100,000 per year or more. Given this information, I thought it would be helpful to create this quick guide on how to make your online business worth more. So, when you need to, you can sell it and cash out... with the BIG BUCKS! If you want to learn how to increase the value of your online business, stay tuned!
Building and then selling an online business is a BIG decision. Like many online business owners, you may have done a lotttt of work to get things setup and even developing a community. This has taken you a lot of time and I'm sure you want to get your money's worth when ....you need to sell. Here are the things you need to consider in order to get the best offer on your business.
Type of Website
The type of website you create has a lot to do with its marketability. Nowadays, most people like to own businesses that have a hands off approach. Let's go over the 4 main kinds of websites you can own and break down what they are. Number one is a content website. These are usually blogs, directories, review sites and forums. These types of websites are not usually hands off and require YEARS of building it up, in order to generate substantial income. The second kind of business is an eCommerce website. This would include dropship stores, stores that sell digital products, stores that are using self fulfillment which also known as holding physical inventory or Amazon FBA stores ( which use Amazon as a fulfillment partner.
These kinds of businesses are not EXACTLY hands off, but if you can get to a point where you have automation in the business, many business owners are spending less than 20 hours a week and making tens of thousands of dollars each month... The third type is a Service website. This would include any and all websites who sell digital services or physical services. Here's a few examples. If you owned a website that sold graphic design services. People would pay for these services on your website and receive their designs online. If you own a website that sells physical services, an example would be if you owned a cleaning company, and people paid for your services through the website, but then you actually dispatched physical people to go clean the homes. You're selling a physical service, but online.
The last type of website is a Marketplace. Marketplaces have become very popular nowadays because people who own these kinds of businesses have unlimited ways to make income. Keep in mind, setting it up and growing it does take TIME!! Marketplaces usually charge vendors a fee to sell and keep their listings live on the website AND also charge a transaction fee on top of all the products that are sold. You've probably heard of Ebay, Etsy, Alibaba, and Envato. Those are all VERY successful marketplaces online.
The next thing you want to pay attention to is what industry your online business is in. Some industries have a MUCH higher demand and just appeal to more buyers. The top selling websites are all uniquely positioned in these industries.
When a buyer is looking to make an offer on a website, they want to know how your website actually makes money. What kind of business model do you follow and what website monetization methods are you using? The most popular monetization methods are: Affiliate Sales, Subscriptions, Memberships, Selling Advertising Slots on the Website, Using Adsense, Selling Physical or Digital Products and Selling Services. If you own a website and can combine or layer on these different methods, you're going to put yourself in the best position to sell.
Revenue & Profit
This is one of the most important parts of building and selling an online business. Buyers want to know how much money does your business make each year? What is your net profit each month? and year over year has your revenue declined, increased or was it stable. They also want to get an understanding of your profit margins. Most stores that sell digital products have really high profit margins. Services would be second highest and physical products would be last. If you can create an online business that focuses on selling high margin, in demand items, you'll be able to sell your website for a lot more money.
Expenses are just as important to your buyer as the revenue. Because expenses will eat up all the money they're going to make, if your expenses are too high. Online businesses expenses usually include advertising fees, employee salaries, design fees, website hosting services, email marketing services and more. If you want to sell your online business for a high price, keep your expenses as low as possible.
Page Views & Site Age
Building up your page views has a lot to do with your site's age. Most new websites don't generate lots of views, which means they don't have a lot of authority online. Authority within SEO is how search engines decide you the kind of the castle. Your website is going to be placed in the top spot on google and deemed worthy of sending traffic to. A website like eBay has millions of page views each month, but how did they get there? Well they've been doing business online since 1995. They've worked on their website and EARNED their Authority. The more views and visits your website receives, the higher the asking price you can have.
How you generate the website views and the traffic also matters. Most buyers are looking for websites that they don't have to spend a lot of money to advertise. They would like websites that generate most of their traffic organically and have a lot of brand awareness. SEO is not the only way to generate traffic, as a business owner you can get people to come to your website through email campaigns, social media, online ads, flyers, business cards, sponsoring events, banners, the list goes on. What they care about the MOST is that you know how to get traffic and you have PLENTY of it coming to the website.
The last thing the buyers want to know is what else comes with the website that could be valuable in the future? How many social media pages do you own? Do you own an email list of subscribers or customers? How many people are on that list? Do you have vendor lists? Do you have employees or contractors? Are you willing to sign over your trademarks, your patents, your website files, the brand's logos, access to the software licenses and physical inventory? All of these things bring additional value to the business and allow you to ask for a higher price when selling to a buyer.
I hope this video blog helped you understand how to calculate the value of an online business. If I can help you in any way, please let me know and if you have a minute, leave me a comment on this post, each comment helps boost the video up in the search results. I'm giving away my marketing strategy book series for free, if you want it, just go to my website, enter in your email address and I'll send it to you right away. If you know someone who needs to see this today, tag a friend, hit like and please give it a share...and until next time guys, take care!
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About Adella Pasos
This Entrepreneur and Marketing Expert has shared her passion for growing brands from the ground up. She’s worked with Startups, Small Businesses, Fortune 500 Corporations and Entertainment Talent to help them recognize the value of marketing, and give her clients the ability to access their niche market via online, social media, mobile, merchandising, and events.
She hosts the What's Your Game Plan TV show features: Free Expert Advice, and Growth strategies for Business Owners Across the Globe. Access thousands of FREE Tips, Trends & Tools to Move Your Business Forward!