The valuation of a website or an ecommerce business is important in determining the sale value of the business or website. However, many people, especially those without technical knowledge on how websites or ecommerce businesses work have no idea how these assets are valued. We take a look at how to value a website or internet business how to sell my niche website or blog with a website broker.
Why do you need a broker?
A broker has a deep understanding of how this kind of transactions occurs. Understanding the process enhances better utilisation of time by concentrating on the core business. The experience gained through brokerage of different deals enhances their negotiation skills and therefore, they are likely to get you a better deal than you would get. Brokers have developed a network of clients and other stakeholders in this market which may be fundamental in getting you the best deal for your website or niche blog.
How to value your online business or website
The first method uses discounted cash flows to calculate the current value of the business, website or blog. This method involves forecasting the future cash flows from the business or website and then discounting them using the weighted average cost of capital to attain the current value. This method can be affected by the unpredictability of future market trends hence the cash flows expected to be generated in future, the variations in monthly business income as well as the changes in the business model.
Online businesses can also be valued through the multiples method where the current discretionary cash flows of the business are multiplied by a certain number. The multiple used needs to be appropriate for the business in question for the figure arrived at to make sense. This method is preferred by many people given its simplicity and ease of understanding.
The other method uses the level of traffic to determine the value of the blog, website or online business. This is usually used when the online business, blog or the website has a substantial amount of traffic per unit of time but has not been monetised yet. To you this method, you will require the key phrases that drive traffic to the site, the number of visitors brought in by each word and the cost per click of the site. In most cases, the sites are valued using different methods and the values compared in order to attain a certain level of accuracy.
Selling a niche website, blog or online business
Such sites will only make sense to individuals in the niche market and therefore, to sell it at a good price, you need to market the site to the appropriate audience. For example, a site that discusses high end motorbikes can be advertised to those who manufacture their parts, those whose job or hobby is to review motorbikes or people who sell them. Working with a specialised broker ensures that you have access to such markets.
The broker will also assist you in valuing your site or business appropriately such that you get the best value for your hard work building and maintaining the site or business. Niche blogs and sites are known for fetching a higher return on investment and therefore should be sold at a higher price than normal sites. When setting your price, you should allow room for negotiation and therefore, you should mark up the value of the site accordingly. However, the price should not be extravagant as this could chase away potential buyers.