If you want to be the proud owner of a profitable website, the fastest way of doing so is always going to be to invest in a site that is already generating income. Doing so allows you to skip those pesky first few months when very little profit is being made. Unfortunately however, skipping those first few months comes a price. Namely, a significant financial outlay.
It also adds a certain amount of risk to the equation. After all, start a new website from scratch and the most you can lose is your time. Invest a few thousand dollars into an already established website on the other hand and failure comes at a much bigger price. It’s therefore important that you know what you are doing.
Should you be considering investing in a website, you need to understand two things. First off, not everyone can be trusted. Most internet entrepreneurs are lovely fellows but there are also those that would like nothing more than to rob you. The second thing that you need to understand is how to correctly value a site. Here are six important factors to consider.
Of course, if you’re purchasing a site with a view towards making money, its current income is going to be the first thing that you look at. Don’t do so blindly however, there’s more to the equation than how much money the site made last month. You should consider its performance over the previous twelve months and whether those figures are on their way up or down.
Be wary of spikes in profit as they are rarely indicative of future profits. And take special notice of where the income is coming from. Ideally, you will want to purchase a site that has multiple revenue streams. When you purchase a site that is only generating income in one way, you are placing a lot of your eggs in that one basket.
Age and History
I personally don’t purchase sites that are less than twelve months old. This is because I like to know that what I am purchasing is actually an established business. New sites tend to be pretty unstable. They also tend to be accompanied by pretty fragile SERPs. And don’t make the mistake of assuming that a site built on a five year old domain has been in operation for five years. Do your research, the Wayback Machine is your friend.
A surprisingly common mistake made by those new to investing in websites is failing to understand that very few sites generate genuine passive income. A site that makes two thousand dollars a month might sound appealing but what if fifty man hours are required each week for it to make that much?
Such a site would offer you nothing other than the chance to make minimum wage. Is that really something you want to invest in? Always determine just how much time, effort and money goes into running a site before you even consider purchasing it.
The long term profitability of any site is always going to have a lot to do with the strength of its competition. Never purchase a site without first establishing who its primary competitors are. How does your potential purchase compare to its competitors? Inferior sites rarely stay profitable for very long. Investing in such a site is like jumping onto a sinking ship.
Can it be Replicated?
An important question to ask yourself before purchasing any website is how easily it could be replicated. This is essential for two reasons.
- The first reason is that if it can be replicated easily, why are you investing in it? Why not just start a new site and compete with it?
- And the second reason is that you are not the only person thinking this. When an easily replicable site is advertised for sale and the owner demonstrates its profitability, copy cats site usually spring up and fast.
This is one of the reasons I prefer purchasing older sites. Sites that have only been around for two or three months are usually very easy to replicate.
Potential for Growth
Finally, the kicker when considering investing in any website is whether or not you believe you can improve it. Though it’s possible to make money by buying a website and simply collecting the revenue each month, the real money is always going to be made by those who purchase sites and then improve them. When you purchase a site and increase its profitability, you are increasing its value. Therefore, you not only get a nice bit of income each month, you also get a serious lump sum when you go on to sell it.
Tom Koh is an internet marketer and works for a leading online money makers firm. He is passionate about SEO and shares his eagerness via articles on online marketing, web investments and efficient use of keywords.