I would have much preferred to call this post something clichéd and ‘link baity’ like ‘Website Flipping is Dead’ but that’s not really true and it’s probably been done on a million blogs already. Whether you’re new to the game or you’ve been doing this for a while, you’ve probably noticed that finding good sites at below x times monthly profit just isn’t happening a lot lately. Here’s why, and what you can do to guarantee that you still trade profitably.
It’s been an awesome ‘month off’ this August, but I feel I should apologise for pulling a Houdini and not posting for so long. I use month ‘off’ lightly because I did work a little, but in between travelling, trying everything from half kilo steaks in Argentina to failed attempts at surfing on the South Coast (further enhancing the myth that Jamaican people can’t swim). This is probably the first time in many years of running a business that I’ve been away for so long without a single worry about either company (online and offline) and is mostly down to a combination of good systems, a great team of passionate employees (offline), skilled outsourcers (online) and the art of letting small bad things happen and accepting that you can’t control or fix everything.
August has been a predictably slow month for the industry; there were a few interesting sales
and some interesting brokered listings
but ultimately it’s holiday season in any industry.
Taking time out gave me a semi Eureka moment, especially as for the first time I was just observing rather than doing stuff (sneakily from my ipad in order not to break the ‘no working whilst on vacation rule’ I made with my partner. She’s allowed to check Facebook or gossip blogs but I’m banned from emails and Twitter … go figure!).
About three years ago the industry for buying and selling sites (as opposed to whole businesses which had a website) started to bloom, thanks mostly to Sitepoint (young Flippa). The early day model was quite different to what it is now, as the majority of sites being sold were Adsense or Affiliate sites which frequently went for 4 – 8x monthly gross / net (often the same give or take hosting once the content had been created). Website flipping was then an undercapitalised opportunity as you could often find stable sites with 6 months + earning history for less than a half years profit on somewhere like Digital Point (before the good to crap ratio fell through the ground). With few simple changes and a listing on Sitepoint you could double your money in a couple days. Better still, you could create something from scratch and sell it for $400, several times in one week.
These we’re the good old days, but here’s the problem
THIS DOESNT WORK ANYMORE
I’m not saying that you can’t find the odd hidden gem on DP or that you can’t sell a new site on Flippa, but your chances of doing either and making enough profit to make it worthwhile are now incredibly slim.
Enter Version 2.0
Things changed a couple years ago and the trend was now looking for undervalued bargains on Flippa or by scanning the SERPS for neglected sites, and reselling those sites by auction or to someone else in the industry. Does this still work? Sure, but nowhere near as good as it did around two years ago simply because there are more people doing the same thing crossed with sellers having more awareness and education as to what their sites are worth.
Finding undervalued sites isn’t impossible (using great software helps) but the odds are getting smaller and smaller – anyone who has recently tried looking for that illusive bargain will probably agree.
And now version 3.0
Where things have and will shift to isn’t about some new technique or method, but more about where I believe all the ebooks and member sites will eventually shift their focus to, and what people will ultimately end up doing en mass. The new strategy is looking for good businesses and buying them at value, executing a mixed bag of tested strategies to boost its ‘value’ and desire to investors then reselling above value for a profit.
Don’t get me wrong, if you can find a good business with solid traffic and earnings history, a good product or content and a solid member list below value then great – snap it up, but it seems people have become so short sighted in only paying less than x times monthly net that they’re missing out on good early stage businesses that sell for a little more but offer a greater long term benefit.
So This is Where It’s At
Knowing where things are, or where things are going next won’t guarantee you success but it will certainly help, especially as this industry isn’t about black and white but various shades of grey. You can still find an Adsense site and flip it for double your money, or alternatively win an auction for a good business at 4x monthly net but if this is about choosing the path with the greatest chance of success, neither of these will do it and it’s the same reason why you’re pro actively making your own income rather than relying on winning the lottery.
Over the next few months I’ll be putting a heavy focus on what works in terms of consistently improving ‘investor value’ (the things people will always pay more for) and breaking it down into practical actionable steps, with examples of successful sales where people have put it work and reaped the benefits. In the meantime, don’t be afraid to pay (slightly) over the odds if you spot an incredible business and know that having it will benefit your portfolio long term.
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