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Mojo -> RE: Any Advice For Negotiating Selling a Web Business? (1/16/2006 13:04:23)
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I sell sites on an ongoing basis, but never to a competitor - I think that would drive the price upwards a little bit.
Any time you're looking to sell a site you run the risk of the entire process being a slight-of-hand technique by the supposed buyer to find out your company information.
Have they made any kind of tentative offer? There are exceptions, but the vast majority of sites have a final sales price based upon a multiple of monthly profit - typically 6 to 10 months for a newer site or 8 to 12 months for an established site. For the most part these sites will have their traffic coming from the organic (free) search engine results. Sites that depend on PPC traffic can often sell for less - unless they are selling a unique product. For every site that sells for 36 months profit there are 5000 sites that sell for 12 months (or less) profit.
Either way, it can be tricky.
quote:
I don't want to expose my SEO efforts or my marketing strategies as I work alone and I don't want to disclose any more information than is crucial to the negotiations. Any help that can be offered here would be helpful. Thanks very much.
Yep. Once you start giving up all your sites you're exposing yourself to many bad things. What if the company is just after some competitive analysis? What if the company isn't really involved and it's just a rogue employee fishing for infomation that he can use to build his own business or worse?
Paranoid? Maybe a little, but I have seen various flavors of most of those listed above. There is a cottage industry built up around copying sites that are for sale - what better way to learn if a specific category can be profitable than to have inside information?
I would try giving them as little information as possible until you get more information from them. You should make sure you're both on the same page before showing them the family jewels. Maybe your site is only making $1000 per month, but you would never dream of selling it for only $12k. It's best to find that out before disclosing all the nasty details about your business.
Something else to consider - Salary and Profit are not the same (hat tip to Threadwatch). Let's say your site brings in $5000 per month after expenses, but before you pay anyone. Someone has to do the work, right? Most self-employeed people would just take the $5000 and call it business profit. Except, it's NOT PROFIT. That $5000 was an expenditure. It was salery. The business had a net profit of ZERO. Most web businesses take someones time to operate and that time needs to be accounted at a fair market value.
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