As the world becomes more and more digital, many people are looking online for ways to make money.
There are lots of opportunities out there, but this image of a golden promised land of 10k per month profits has also created a lot of misconceptions about how people make money online, leading to a lot of disappointment and frustration from those who don’t really understand how it works.
The reality is that there are a few proven ways to make money online that you should be pursuing if you want to enjoy the freedom and flexibility this line of work provides.
Of course, there’s room for innovation, but don’t stray too far from what works and you’ll be putting yourself in a good position for success.
One method of making money online that some people don’t consider, though, is website flipping. Much like when people flip houses, this is the process of buying websites, working on them to make them more profitable and valuable, and then selling them for a profit.
If done correctly, this practice can actually be incredibly lucrative.
Here are some tips to help you get an idea as to how this works and whether or not it’s an investment strategy you might want to pursue.
1. Know what makes a website valuable
The first thing we should clear up is that when we refer to websites, what we are really talking about are online businesses, or at least they should be run as such.
Anyone can set up a website, but this doesn’t inherently give it value. Only when they apply a business perspective to the site and take steps to help it bring in revenue does it become valuable and something worth an investment.
Knowing this, you’ll want to take some time to learn what makes an online business valuable.
Generally speaking, a site is worth two and a half times its yearly revenue, but there are a lot more factors that help determine its worth, such as growth prospects, risk, efficiency and records keeping.
Nevertheless, this number gives you a good jumping off point for when you are looking for websites to buy and then when you eventually put the ones you own up for sale. However, this information is particularly valuable when you are looking to buy sites. If the site you are looking at isn’t making any money, know that it’s probably not worth much.
Don’t fall into the trap of spending money on domain names. These are a dime a dozen and aren’t really all that valuable unless they are attached to a reputable business. Get a hold of the site’s financials and take a look at where things are going, keeping in mind this 2.5x rule.
If you think you can grow it enough to produce enough of a return, then you are looking at a pretty good investment and should consider entering negotiations. However, if it looks like things are headed in the opposite direction, think twice. You may be jumping onto a sinking ship.
2. Look for scalable, turnkey operations
The way to be successful buying and selling websites is to try and keep your expenses and investments low. If you have to pour lots of money into making a site profitable, then you are going to eat into your margins for when you do eventually sell.
Look for sites that are driving traffic but maybe in a limited way. Or, look for sites that are driving a lot of traffic but aren’t converting these into sales.
Another thing to look for are sites with a strong back-link profile. This is the number and type of links pointing to the site from other places on the web, and it’s a huge determiner of search engine rankings. Sites with strong back-link profiles tend to do well with Google, opening them up to a whole new source of traffic that can drive growth.
You’ll also want to keep an eye out for sites that already have a team in place. It takes quite a bit of people power to get a site running at full capacity. You’ll want to make sure you already have a team that knows how things work so that you can make use of their skills to drive growth.
Also, since you’re the investor, you don’t want to be spending hundreds of hours working on the site. It’s better to give direction and delegate than to be working on the day-to-day operation.
3. Get some help with the buying and selling
No matter your level of experience buying and selling websites, you’re going to want to get some help when it comes time to actually carrying out these transactions.
For example, when you go to sell your site, you could list it on auctions sites such as Flippa.
However, the problem with sites such as this one is that they operate like an auction. People are out looking for the best price, and that often means they are hoping to spend less than the site is actually worth. Even if you are a diligent and patient negotiator, you may find it hard to locate a serious buyer on this platform.
It could, though, be a good place for you to find sites that you would like to buy, but make sure you do your due diligence to make sure the figures being advertised by site owners are true and accurate.
But the better option is to make use of a website broker.
These people, or organizations, operate much like a real estate brokers. They take in businesses, conduct a valuation and then use their marketing and networking skills to get the business in front of someone who has genuine interest in taking over a functional business.
Making money buying and selling websites is not only possible, but with the right strategy and approach, it’s actually a great way to either supplant your income, boost your investment profile or make your living.
There are obviously some pitfalls you need to try and avoid. There will be some growing pains as you learn the process and find out what works and what doesn’t. But if you follow the steps outlined here, you’ll be well on your way to a profitable life of buying and selling websites.
About the author: Jock is an entrepreneur who has built his career buying and selling websites. He started doing it out as a way to make money on the side, but has now turned it into his full-time job. He also works to help other people do the same thing. His work can be found in Forbes, CNBC, Entrepreneur and Business Insider. Originally from Australia, he now resides full-time in the U.S.