Knowing which website to buy can be confusing, especially when you consider all of your options. While you don’t want to miss out on a great one, you also don’t want to regret your purchase. To help you build a strong portfolio and avoid potentially expensive or embarrassing mistakes here are ten reasons why you shouldn’t buy some websites.
If the business requires more time than it’s worth.
Even though the initial cost of a website might seem reasonable, it is still important to take a few minutes and figure out what the “return on investment” (ROI) will be. This will help you calculate how much time it will take before you see a financial return.
One easy formula is to divide the total net income of the website by the average number of hours it takes to maintain it. This will give you a good idea if the amount of the return will be worth your valuable time.
The website is so niche targeted any potential growth is stunted.
If the website for sale earns its profits mainly through an affiliate that concentrates on one particular item, it will probably be difficult to grow the business and maximize earnings. An example of this is if a website is only discussing kitchen knives you will be stuck in that particular niche. The potential for growth isn’t available, and this will also have a last effecting on profits.
That will definitely suck..
On the other hand if the website is dealing with kitchen products there is plenty of room for growth that will in turn increase profits.
Simply put, we love talking about a website’s brand since at the end of the day you want to be proud of what you own. After spending the time searching for and purchasing a website, don’t you want to be proud to show it off to friends and family?
If someone asks about the current project you’re working on do you want to show them “Cheap Really Small Niche Website ” or proudly bring up “Authority Site” on your smart phone?
At Creative Innovation our portfolio is filled with websites we are so proud of, each one inspires and motivates us to work harder. It is important to remember to never purchase a website that you won’t be proud to show off, regardless of who is selling it or the asking price.
Acquire what you’re proud of.
This one tip can save you time, money and a lot of embarrassment.
To put the importance of brand into perspective, eventually you will probably want to sell the website. This also means that you will be selling the brand and if it is one that you are proud of this will generally equate into a larger profit when it is sold.
Unbalanced organic traffic.
This can be slightly confusing, since at first glance it can seem like a positive sign. If 80 percent of a website’s growth is due to two keywords you will want to take a step back and carefully consider a few things. The first is whether the site is in a competitive niche or the only one discussing that product. You also need to figure out how much time and effort you will have to put in to maintain the site’s high ranking, along with whether it is even possible for you to duplicate the previous owner’s hard work.
It is not uncommon for websites these days to use content that has gone viral, and then share it on social media sites with a lot of native advertising added in. The actual content on the site is not original and it does not add any value, instead it is simply a way to increase ad revenue. Sites like these can show short term profits, but chances are it is not something that you would be proud to show off in your portfolio.
I’m sure you’ve seen these sites so you know what I’m talking about.
Instead try finding new content. If you write, sell, promote or refer something that is new and valuable it can still be shared across social media sites, and you will have the satisfaction of adding something new. Goggle will also love your site since it is unique, which generally translates into higher rankings, increased traffic and greater profits.
As we briefly discussed earlier if the website’s previous owner implemented a SEO technique that you are not comfortable with, especially if it limits growth, you will want to take a minute and listen to your gut instinct. If you feel like purchasing a website is a bad idea, chances are your gut is right and you should simply walk away. Your parents probably warned you to stay away from bad neighborhoods, and this is especially true when you are dealing with SEO.
Getting paid in a timely manner is important, and some e-businesses (ex. Amazon, FBA) are notorious for having issues with cash flow. The speed in which you get paid can have a serious impact on the business, especially if it is growing. Imagine orders have gone from 10 a day to 50 but you can’t afford new inventory because you haven’t received payment from Amazon, and there is only enough money in your business account to support the current growth.
If the website primarily depends on money from a slower paying e-business, you could lose potential long term customers and see your growth rate sputter to a halt.
If you are able to find the cash flow necessary to keep up the website’s growth, there is still the question of when you will get paid. In some cases it can take up to 5-6 months, which can leave you stressed and short on cash if there aren’t any other sources of income with a fast turnaround associated with the site.
This is something that you want to carefully consider when you are thinking about buying a website. Recently we came across a career aptitude website that really looked great. It was extremely profitable, had a strong brand, high traffic and a strong SEO profile that we were very comfortable with. Everything looked wonderful until we learned that the owner had a PHD in psychology and was also able to consult with friends and colleagues to provide the right answers and information for visitors’ questions on the website.
This was a great reminder for us that it is important to find out what type of communications flow between the website to your potential customers.
TIP: Review the email traffic and live chat transcripts so you are aware of what conversations are flowing.
If you are not able to duplicate the previous owners efforts growth and profits will suffer. In this case since we don’t have a doctorate in psychology nor are we willing to study or try to wing it, our best option was to pass on this particular website.
As previously mentioned we love to talk about branding, but sometimes it can be a little too much. Some websites have the owner’s name literally plastered everywhere. It pops up on the site’s blog pages, on all email communications, at the top of the website, and all over the “about us” page. In some instances the owner’s picture is even next to the menu, which can be a little startling. The main problem with a website being so “owner dependent” is that when you run the risk of losing the established following with a noticeable name change.
TIP: One effective and easy way to get around this problem is to use a pen name.
Keep the original owner’s first name in the email campaigns, but use your chosen brand name with “staff” or “team” added in to give the impression that nothing about the site has changed. This way loyal traffic won’t be driven away due to new and potentially frightening changes, and you can put your own mark on the website.
Even if the team running the website only consists of you and your dog, it is still important to sign a non-compete if you are going to run this type of business.
Even though this reason to not buy a website is fairly obvious, please don’t skip down to the bottom of this article. It is extremely easy to get lost in emotion when you are considering buying a certain website that you lose all common sense, it has unfortunately happened to me. All of a sudden the prospect of changing the brand and logo, implementing new keywords and social strategy, along with bring in more traffic doesn’t sound so daunting simply because the website tugs at a few emotional strings. This is when it is really important to ask the right questions about the approach he is currently using.
After learning my lesson the hard way, I now perform due diligence before I start thinking about potential opportunities. Once I know the facts, I can perform a growth analysis and get a good, unemotional idea of what the website is really worth.
If you remember these 10 reasons to not buy a website, you are well on your way to building a profitable portfolio you will be proud to show off. The most important things to remember is to keep your emotions under control, and always perform due diligence. When you have plenty of information on a potential website you have less of a risk of wasting your time and money, and a greater chance of seeing a profit.