When you are finally ready to sell your website you’ll probably realize it is a little more complicated than trying to put your car up for sale. While you can simply place an ad in the classifieds, the chances of you getting a legitimate offer are pretty slim.
Your website is a business that you’ve helped develop and grow, and it only makes sense that you want to be fully compensated for your time and hard work. Before you start advertising or take the first offer that comes along, it is important that you explore all of your options when you are selling your website.
Options for Selling your Website
You have all of your paperwork neatly organized and your website’s financial information where you can easily reach it, which means it is time to decide on an asking price and put your online business up for sale. There are several ways you can sell your website and it is important to remember that what worked great for someone else, may not be the best method for you. To help you make the right decision for your website and wallet, here are the benefits and disadvantages associated with the different options.
Using a Broker
One of the main advantages to using a broker to sell your website simply comes down to money.
Unlike other platforms that often deal with wholesale buyers, a broker can put you in touch with retail buyers who do not mind paying extra for a website that has proven it is profitable. A broker only has one goal and that is to sell your website for the highest price.
In order to understand what role a broker plays in selling your website, you first need to start thinking of your online business as a piece of real estate. Just like buying or selling a house you will enter into an exclusive agreement with your chosen broker that is normally valid for 90 to 120 days. Once the contract has been agreed to and sign, your broker will then prepare all of the pertinent information. This will include:
- Your website’s complete financial information
- Documentation on the website’s traffic
- Any information on debt, additional profits, and even employee payroll costs
Once this information has been complied your broker will then begin screening interested potential buyers. After you have picked an offer, the potential buyer will generally sign a letter of intent. Once they have made a formal offer, you will have the chance to either approve it or decline. If the offer was accepted then the funds and website will be transferred. Your website now has a new owner and you have been fairly compensated for your business.
Using a broker to handle the sale of your website can make the process simple and easy. Your broker will handle all of the paperwork and weed out any offers that are too low, and also take care of the legalities. This will also include setting a specific time limit that you will be available to offer the new owner any post training help. A broker can also help you get the best price for your website for a fee.
While there are several advantages to using a broker there are a few minor issues as well.
You do have to give the broker complete access to your business’s financial information, along with the relevant bank accounts. There is also a large fee involved with a broker, and while it is usually 10 to 15 percent of the sale this can be more than some website owners are comfortable with. The established buyer network of the broker you are dealing with also makes a big difference in determining the time it takes that broker to help you sell your website.
Venture Capitalist Firm
If you’re not sure what a venture capitalist firm is and how it can help sell your online business you are not alone. Many people simply think that a venture capitalist firm is only useful when you need extra funding to start your business, but it is also a good way for some entrepreneurs to sell their website for a comfortable profit. Please note that a venture capitalist firm is different from an investment firm. Keep reading 🙂
There are a few factors to take into consideration before you decide to sell your online business to a venture capitalist firm, and one of the most important is whether your website meets the necessary criteria. The type of online business is another factor that should be considered, along with how long the website has been open for business. These may seem like minor details but if you are considering selling to a venture capitalist firm each one could play a major role in the amount of money you are offered, along with whether they are even interested in purchasing your online business.
If you are interested in a venture capitalist firm then your first step should be to see if they would be willing to make an offer on the website.
If the firm is interested and you have all of the necessary paperwork ready for them to look over, you could be well on your way to closing a profitable deal. Venture capitalist firms generally have a large sum of money on hand that has been set aside for the sole purpose of buying established businesses which yours definitely qualifies for, but there are a few disadvantages associated with using a venture capitalist firm.
- Venture capitalist firms are not interested in purchasing websites in every niche.
- The online business must show a well documented history of steady profits.
- Generally resell the online business to another buyer, which can be upsetting for some people who like to “keep an eye” on the changes made to their website after the sale.
- Most VC firms have a thorough knowledge of their niche and business domain, enabling them to negotiate price quite aggressively.
While the main downside to a venture capitalist firm is whether your business is one that they would be interested in, there are several advantages associated with using this option to sell your website. Since there is not a “middle man” you can usually close the deal quickly and easily, and there is often not any waiting period associated with due diligence. This means you can have the agreed upon sum transferred to your bank, sometimes in as little as 48 hours, and have the extra cash you need to start your next project or enjoy a well deserved vacation.
Some online business owners have a lot of success selling their websites at an auction, while others would rather give it away than deal with the vast amount of time and paperwork required.
An auction can be frustrating but it can also be extremely rewarding if a sale is made.
Before you make up your mind and decide if an online auction is right for you there are a few benefits and disadvantages you should consider.
- You have complete control over the amount of the minimum bid.
- Only you can decide whether to accept or decline a bid.
- You can set a time limit on how long the website is up for sale.
- Instead of spending hours searching for prospective buyers, they will come to you at the auction.
- Potential buyers contact you through the auction so you only have to track one email.
While there are several benefits to using an online auction, there are also a few disadvantages that should be considered. It is important to remember that you have several options when you are selling your website, and you don’t have to settle for the first one.
- It is your responsibility to make sure that all of your information is in order, and that you can quickly support your financial claims when asked by a prospective buyer.
- You are responsible for answering any questions a buyer might have in a timely and professional manner.
- It is up to you to monitor the progress of any transaction, including transferring ownership and agreed upon money.
- There is a fee involved when you use an online auction, and it is generally 10 percent of the selling price.
- It is your responsibility to set the length of time you will be available to offer any post training guidance.
It should be mentioned that not every website owner feels that these are disadvantages, and some enjoy having the control and responsibility for their online business until the sale is finalized. While selling at an auction might not be the best method for everyone, some online entrepreneurs couldn’t imagine using any other option. If you have decided that this is the right way for you there are a few tips you should remember to make it easier to list and sell your online business.
Tips for using an auction
- Have all of your website’s financial information close by in case any potential buyers have additional questions.
- Write up a brief history about the website and yourself to help buyers learn a little bit about you and the business.
- Be ready and willing to put in a lot of time answering questions and weeding out certain types of buyers.
In general an auction is a safe and secure way to sell your website, but you have to be able to devote a lot of time and attention. For some website owners this is not a problem, but for others it can cause their business to suffer which could affect profits and your ability to sell it for the price it is worth.
Private Investment Firms
Some business owners might not be familiar with a private investment firm, but this option might be the right one for you and your website.
In some ways a private investment firm and venture capitalist firm are similar. Both types of investors purchase profitable online companies, but this is where the similarities end.
These two groups buy different types of companies and have access to different amounts of money, and even the equity percentages will vary between these firms. A private investment firm is purchasing the website to add to its portfolio, and will not put it back up for sale ( like a VC may sometimes do ). If you are not selling a large multi million dollar start up company, a private investment firm might be the right choice for you. If you are still slightly confused about how a private investment firm works, the platform used by Creative Innovation is an excellent example of how this option can help you quickly and easily sell your website.
Each private investment company works different, we’ll speak about how we work. We begin the process by having website owners fill out a brief form which will help determine if your business is something we would be interested in purchasing. If your business meets the criteria, we’ll continue the discussion further by asking you a set of questions to further valuate your website.
Once we have everything we need, it is time for you to relax and wait for 72 hours or less for an offer.
While you are relaxing we’ll carefully go over your financial information, and will also look at all business variables to give you a true offer. After verifying the information you have given, which will include checking on ownership, you will receive an offer from the private investment firm. If you accept the offer your website will then be added to the private investment’s firm growing portfolio.
We also help during the transition process which can make your life easier. There are some other advantages associated with a private investment firm that can include:
- You only have to answer questions from one buyer, not 100.
- The private investment firm will usually return with an answer on whether they are interested in purchasing your website within 72 hours of receiving all the required information. A transparent exchange of information with the private investment firm helps expedite this process.
- You do not have to collect and organize stacks of paperwork regarding the website’s financial information. Just the basic profit/loss and allow them to verify revenue and expenses.
- Generally speaking almost every aspect of the sale will be handled by the private investment firm, since they are the ones purchasing your website.
There are a few disadvantages associated with selling your website to a private investment firm, and the most important one is that you will only receive one offer.
Unlike auctions where there can be multiple buyers bidding for your website, a private investment firm is the only one that will be interested in purchasing your online business. While this does make this one of the easiest methods of selling your website, you can be limited in price since there will only be an offer from the private investment firm.
The final option when you are selling your website is a private buyer or company, and there are a few differences between these two. For some website owners this is the only option that they are comfortable with, and this often stems for the strong feelings they have for a business they created and helped grow.
Along with the comfortable feeling of knowing that your “baby” is in capable hands, it can occasionally be easier to reach a mutually beneficial agreement with a private buyer.
As an added advantage you also do not need to pay any fees or costs that are normally accrued when you use an auction, broker, or an investment firm. The same is also true for selling to a company, but there are usually a few more stipulations added to the contract.
One important tip to remember is that if you do not know anyone who would be interested or able to afford your web based business you might be better off using one of the other selling options. If you are lucky enough to have an interested buyer standing by, then you need to carefully consider the benefits and disadvantages of using this method to sell your business.
- You have the satisfaction and comfort of knowing that your website is being transferred to someone who will “love” it almost as much as you do.
- It is often easier to reach an agreement between two people, instead of going through a middle man.
- Since you do not have to pay any fees you get to keep a larger percentage of the sale.
- For people who are uncomfortable letting strangers look through their website’s financial records, it might be easier if it is only one person that might even be a friend.
- You are responsible for collecting all of the necessary paperwork, and making sure that it is organized and easy to reach.
- It can be difficult to draw up a contract if the private buyer is an acquaintance, and often when you sell to a company you need to hire a lawyer to understand the fine print.
- Selling your business can take longer, and it is up to you to ensure that everything is transferred properly.
- You often do not receive the true value of your website, since you do not have anyone brokering for you.
- If you do not set a time limit on how long you will be available to provide post training help, you could find yourself stuck “helping” the new owner longer than intended.
Another disadvantage that can often occur when you sell your website privately is that you must remember to include specific details in the contract or you could find yourself losing time and money.
One important aspect to cover is if you will be providing technical support after the sale is finalized, and for what length of time? If this is not included in the contract you can find yourself in a bitter fight over your valuable time. This can be especially true when you are dealing with a company.
The Best Option for You
There are several options that you can use when it is time to sell your website, and each one has its own advantages. If you are not in a certain niche or the proud owner of a profitable startup business you might not want to use a venture capitalist firm, but instead concentrate on your other options.
It should be noted that you are not always limited by using only one platform, and many website owners list the business on an auction even when they are talking to a prospective private buyer.
While this may not always be a good idea, especially if you end up with two hopeful buyers, it can mean more money in your pocket.
Going with a private buyer or company can also have its advantages and problems, and the main one is that it generally means more work for you even after the sale has gone through. While you don’t have to pay a fee, sometimes the sheer amount of work involved makes it worth spending a little more to let someone else handle the details for you. A private sale might also require you to hire a lawyer to make sure all of the details have been covered in the contract. This means money coming out of your pocket, before the sale is even finalized.
An auction is another option that some online business owners love, while others wouldn’t be caught listing their websites on this type of platform. There are good and bad points associated with auctions, and the best advice is to carefully research the auctionsite before listing your business. This can also give you an opportunity to see how the auction is listed in the Better Business Bureau, which can prevent you from making a potentially expensive mistake.
One of the best advantages associated with an auction is that the sheer number of potential buyers almost guarantees your chances of making a sale that everyone is happy with.
Brokers can take a lot of the hard work away from you, and have access to a long list of potential buyers. While you niche will help you find a few interested buyers, a broker already has some on speed dial. A broker will also keep an eye on the market and watch the sales of websites similar to yours which will help you determine a price, and remind you not get too discouraged if it takes a few days for it to sell.
Finally there is a private investment firm, which is starting to gain in popularity with some website owners. It is amazingly easy when you compare it to the other options, and you will appreciate the incredibly quick response time.
Unlike venture capitalist firms a private investment company is not limited by certain niches, and in some cases will do most of the work for you so you can concentrate on running your business.
Choose What’s Best for You
While all of these options have advantages, chances are there is only one that is right for you. Whichever option you choose to sell your website it is important to remember that you deserve to be compensated for the time and hard work you put into the online business, and the only deal that is fair is the one that ensures you are paid every cent your online business is truly worth.