How you should NOT sell your Website ?

Although there are various tools for determining a website’s worth online, they may not always provide reliable results. It is for this reason that you have to understand how to value your site. For instance, some of these websites use only revenue earned from Google AdSense. This may not be the best approach since numerous sites have various other sources of income streams apart from Google AdSense. The second reason is that the income from Google AdSense is actually very low, so it can’t be regarded as the standard of measuring ad revenue.

The other factor is the Alexa ranking. Even though it is widely used, it is mainly based on the amount of traffic to a given website. First and foremost, to be considered a user, one must have an Alexa toolbar installed. This reduces the count of countless visitors to a given site. Then there is also the high number of visitors to any given website does not necessarily relate to a high income. Income is largely based on the business model that any site operation. Here are the accurate ways to value your sites.

Website Earnings

The first consideration a buyer will probably look at is the earnings of a website. Logically the more a site has in earnings, the more potential buyers you will have. If your site has consistent earnings of say $100 per month the typical formula is to multiply the earnings times 5-12 times those earnings. So you could ask for probably about $500 – $800 and get it. Again assuming sales are consistent. Higher-end sites earning thousands per month can see a multiple of 12-48 times monthly earnings. For example, a website that is consistently earning $5,000 per month or $60,000 per year could be sold for $60,000 – $500,000.

Traffic On Your Site

A website that draws a high amount of traffic has a higher potential of business than one that doesn’t. The higher the traffic, the higher the market value. Having lots of traffic to your website is something that will definitely attract customers. Better than having high traffic to your site is having lots of “targeted traffic” to your site. Targeted traffic converts browsers to buyers. Lots of targeted traffic converted to buyers means that your website is getting AdSense clicks, affiliate sales, or making CPA commissions.

Back Links to Your Website

Backlinks are links that can be followed from another website to your website. It is used by the search engines to determine the importance of your site compared to other sites similar to yours. Backlinks are used as a kind of voting system. Links to your site cast a vote of authority for your website. The more links you have, the more power the SERPs will grant to you. You can build links by writing and submitting articles to article directories with your author resource box attached. Submitting your sites URL to open directories is another way to build up your links.

It is possible, however, to affect variables such as traffic stats, conversion rates, and income. Such factors may be deliberately manipulated or misrepresented by unscrupulous people to inflate the perceived value of their listings. If not actually manipulated, figures can still be massaged via statistical methods. Provided no attempt is made to manipulate such statistics, the above process provides an objective way of arriving at the value of a website.

When buying a business, you want to make sure that it a good investment. While traditional brick an mortar businesses can be lucrative, online businesses are a much safer investment, especially if you don’t have much experience running a company. There are a few reasons why an online business is a good investment.

#1 Reduced Overhead

If you purchase a traditional business, there are plenty of overhead costs that you need to worry about. You will need to pay for the cost of the space, the utility bills, and work stations for your employees. If your overhead is high, this will cut into your profits. If you aren’t bringing much money in early on, your business can fold before it even gets off the ground.

With an online business, the overhead costs are much lower. The overhead costs associated with an online business include website creation, web hosting, SEO, and other marketing channels. Fortunately, marketing tools, such as social media, are free. Overall, the overhead costs for an online business are much lower than that of a traditional business.

#2 Flexibility

When owning a traditional brick and mortar business, long hours are necessary if you are going to be successful. This means taking time away from your family and your life. For some people, this kind of commitment can be too much.

If you are running an online business, you can make it a success from anywhere. As long as you have an internet connection, you can run your business. This means that you can work from home, check in on the company while watching your child’s soccer game, and you can even run your business while you are on vacation. Having this level of flexibility makes it easy to run your business without needing to change your life too much.

#3 Adaptability

Online businesses are much more adaptable than offline companies. Marketing is essential for the success of any type of business. The difference is that with an online business, you can measure your revenue in real-time. If you see that something isn’t working, you can change your marketing strategy as you see fit. You can also use tools like Google Analytics to monitor changes in real-time.

Finally, you can target your demographic more effectively. With the rise of social media advertising for online businesses, you can easily define the audience you want to target and do so effectively.

Making changes with the marketing strategy for a brick and mortar business is not as simple. If you cannot adapt in a reasonable amount of time, things won’t turn around, and your business will go under.

#4 Less Risk

Buying an online business is much less risky than purchasing a brick and mortar business. If the company fails, you could be stuck in a lease for a year or more. If there is no business, you will be paying for an empty space until the lease is up. Also, online companies are much more liquid than a traditional business. If you choose to sell, your business isn’t tied to any location, which would allow you to sell to someone anywhere in the world. When selling a traditional business, your potential buyer pool is fewer, because your business is tied to its location. Overall, buying an online business is much less risky than buying a traditional brick and mortar business.

If you are considering buying a business that has already been established, you should consider purchasing an online business. Not only is an online business a good investment, but it is also a safe investment.

Buying an Internet Business – Advanced Due Diligence What Taxes Are Involved When Selling My Online Business

Before finalizing the sale of your website, you should definitely plan for the taxes you will need to pay once the sale is done. Here you will a basic overview to know what you need to pay attention to and save your time and money when selling your online asset.

Most website sellers are sole proprietors or part of S Corporations, which means that their taxation levels will be the same as their personal taxes. And selling a website could create an event that throws you to a higher tax bracket, so be aware of that. If you are married, this adds an extra layer of complexity.

And should you pay income tax or capital gains tax? In short, if you have owned the asset for more than one year, then you could be subject to paying capital gains, typically lower than income taxes.

In general, a business is not sold as a single asset – instead, it is comprised of tangible and intangible assets, and each of them is treated accordingly when it comes to taxes. A CPA or a tax accountant will help you with this. A pro will also help you in avoiding mixing up non-capital assets and facing issues with the IRS.

Some examples of non-capital assets are stock in trade, inventory, accounts receivable, real estate, copyright, among others.

The main advantage of identifying what are capital assets is to identify gains and losses for taxation purposes. A capital gain/loss is the difference between the total assets and the sum of the cost of acquisition and cost of improvements.

If you kept accurate records, your Schedule D will show all the benefits, and consequently reduce your tax bill.

The best way to achieve this between a seller and a buyer is with an asset allocation agreement. This document defines the assets held over one year and their values. It ensures the seller pays the correct tax and it helps the buyer establish a proper basis when they decide to resell the website in the future.

You should also mind non-physical items, called intangible assets. Some examples are goodwill, workforce in place, business records, patents, copyrights, designs, formulas, patterns, processes, know-how, licenses, trademarks, among others. Only some of them are subject to capital gains taxation. The IRS clearly defines all of them, so make sure to check with your tax accountant or CPA.

The selling party can also deduce the fees of all advisers involved in the deal accountant, broker, lawyer, and so on.

As of recent, buyers have been using more and more financing, hold-backs, and even earn-outs. As a seller, a full cash deal is probably what you had in mind originally when selling your website.

However, a scheduled payment formula could be an interesting solution to reducing your tax burden throughout a longer period, as they happen. Your future earnings could fall into a lower capital gains bracket. On the other hand, your non-capital asset taxation will be paid in the year you sell your website, regardless of when you receive the payment.

A good CPA or tax accountant can give you more in-depth advice about how to properly your website sale. All the time you invest into planning this event can greatly help you to reduce your tax burden.

Advertising Due Diligence: How to Evaluate an Advertising Business Can Backlinks Affect Your Business Valuation? How to Start Planning Your Exit Strategy

Performing due diligence on a website monetized with advertising is a process that has unique aspects to it.

The first aspect to pay attention to is the origin of the traffic. US visitors are higher value than certain other countries. Organic search, social, referral, email, direct or paid – the more diversity, the safer it is. Usually, up to 80% of traffic is organic traffic.

If the website has direct advertising agreements in place, you also need to understand if the current advertisers are interested in remaining. Also, it might be the case where some of them have yearly agreements in place, but the revenue for the remaining months will have already been pocketed by the current website owner.

You should also understand which keywords attract the most visitors, whether organic traffic is split among a wider variety of keywords and pages, and how consistent the keyword rankings are. Finally, it is important to understand the general trends of the niche you are getting into, and choose a niche with a growing audience and interest.

Another important part of due diligence is the backlink profile of the website you are buying. Ideally, the links pointing to the website should come from trusted websites, with plenty of visits and authority, and it is relevant to the niche in question. In this case, the backlink profile will be healthy and desirable.

As you move further away from this ideal scenario, the backlink profile becomes lower and lower quality. And even if you on-site content is the best in its niche, with relevant media to support it, poor quality links will certainly hurt your site. As Google refines their algorithms, you will be more likely to trigger a penalty – even if the dirty work was done in the past by the previous owner.

If, on the other hand, you find yourself on the other side of the equation and you are planning to sell your site in the future, you should take into consideration a series of measures at least one year prior to actually advertising your website sale. Sellers like to look at numbers and processes and having a complete picture for a full year can increase your chances of both reaching a higher price and a faster sale.

Regarding traffic, the very minimum you need to install and configure are Google Analytics to track your website pageviews, Google Search Console to deal with warnings or penalties, monitor your keyword rankings and your competitors movement, monitor your inbound links for the authority links you build plus prevent any negative SEO attacks.

As for the website finances, you need to treat it like a business if you plan on selling it. At the very least you should have a spreadsheet containing bank account statements, earnings reports, and all business expenses – both one-time and monthly overhead. Fluctuations in monthly earnings should be explained.

You should also document all website processes, so the new owner can easily replace the tasks and roles you play with someone else. You should know how long and how often you need to perform each task, so the new owner can factor those weekly work hours into the purchase decision. You should also have already a positive spin on why you want to sell your business.

Do all these actions and you will surely have a smoother transaction when selling your online asset.

The assistance offered by online business brokers is ideal whenever you seek to purchase any online business since it gives you the opportunity to get professional guidance throughout the journey. The process of acquiring online businesses can be complex and confusing and therefore necessitates the assistance of these skilled and experienced professionals. We explore the process of buying an online business working with an online business broker.

Identify your broker

You must identify the broker who is likely to deliver the best results to you. To do this, you can consider the skills and experience of the broker in purchasing businesses in your industry or sector, their reputation among clients and industry experts, their professional network, their charges as well as their work ethic. Some of this information could be available on their websites, professional sites and on different social media sites.

You should not rush the decision making process but rather wait until you have all the necessary information in order to make an informed choice. You can also request for proposals or bids from different professionals in the field in order to enhance your decision making process. When the process is competitive, the brokers will put their best foot forward giving you grounds to hire or disqualify them.

Discuss with them your needs

Once you have finalised the contracting process for the broker, you should discuss with them your needs, your expectations, the timeline you would like to work with and the resources you have at your disposal. This gives them an in depth understanding on their role as well as ensures that your needs are well understood. You should not move to the next stage until you are certain that you are on the same page with the broker.

Identification of businesses and narrowing down the options

There are two possible methodologies here. The first involves a hands on approach where you are involved in every stage of the process while the second involves empowering your broker to carry out the research, identify the best options available and then present these options to you for decision making. Irrespective of the approach chosen, the end result here is identification of the best online businesses that will meet your business needs sufficiently. Ultimately, you should settle on the businesses that you will approach and make an offer to. It is good to have at least three options such that you have some fall back plan should some deals fall off.

Making the offer

This should be done in a professional and structured way. The online business brokers have the knowledge and skills to do this well.  The offer letter or documents must be drafted by a legal practitioner to eliminate loopholes that could be used against you in future.

Negotiating the offer and signing the contract

In most cases, the online business will have a counter offer which calls for negotiation. The online business broker will take lead in negotiating the best possible deal for you.  However, you ought to inform him or her of your limits such that the deal does not stress you financially. After negotiations, the final offer is drafted and tabled before the online business owners for review. Then, the sale contract is signed, the funds are transferred and the transfer of ownership is affected.

Discharging the online business broker

After the business has been transferred to you and the hand over process is completed, you are then required to pay the online business broker their dues and bring the engagement to an end.