Are you making these mistakes when buying websites?
If you are buying websites regularly or are a first time buyer, there are some common mistakes you should be aware of that can cost you hundreds and even thousands of dollars if not avoided.
The first mistake many people make when buying websites is they get caught up in the emotion of the sale. They fall in love with the website before the purchase. During the website due diligence phase of reviewing the site, they may find something that causes a red flag, but they look past it because they love the site so much.
Once the transaction is complete and they start working with the site, they find the red flag was even worse than they thought and the site’s value is half what they paid for it.
Set Rules When Buying Websites
To avoid the emotion of the sale, be sure to set rules for anytime you are buying websites. Rules such as the price you are willing to pay, the multiple you are willing to go up to and that the site passes each due diligence check you have set prior to reviewing the site.
The second mistake most investors make when buying websites is not performing enough, or proper due diligence. Some sellers push the buyers to hurry the sale along in order for the buyer to not be able to do enough due diligence. That should be one of the first red flags for not going through with a sale.
Buying Websites Due Diligence Defined
Due diligence is the automated and manual checks on a website that if passed will lower the risk of the site not performing at the expected levels. Expected levels can be the amount of traffic the site gets, where the traffic is coming from or the amount of revenue the site generates.
A few due diligence checks that are critical are to look at a minimum of 12 months analytics for the site. If the site is less than 12 months old, get all months the site has been around. If at all possible, get as many months or years as possible for analytics.
The analytics data to look at includes: what country traffic is coming from, the consistency of traffic over time, what referring sources are sending traffic, is the traffic paid, organic or referral, does any one source have a large share of the traffic and what is the bounce rate of the traffic the site is getting. All analytics data is important and should be reviewed.
The key is to have a standard or benchmark for what you are willing to accept. Will you buy a website that has 70% of the traffic coming from a foreign country? Will you buy a website with 35% of the traffic coming from one referring source? By setting standards you minimize your risk and give yourself a number to work from. If you find your sites are still not performing to the expected levels, increase or decrease your benchmarks.
Webinar: 5 Mistakes to Avoid When Buying and Selling Websites
For more mistakes when buying a website or selling a website that you should avoid, register for our live webinar to be held Wednesday March 20th, at 12:30pm Pacific.
You can register here.