How to buy a website - Everything you need to know!
When you think about buying an established website you should know which factors are the most important before purchasing it and how to analyse them. During this article we will provide you the best tips to know when it is time to buy an established website.
When you face to buy an online business usually you ask yourself some questions such as:
- “Is it safe?”
- “Can I trust the seller?”
- “Is the information trustworthy?”
- “Is the business profitable?”
During this article, we will show you the best tips to buy a website and we will clarify all your doubts and make sure you will make the right choice.
Currently, there are many marketplaces and brokers where you can buy or sell digital properties. At Trustiu’s marketplace you can find the best websites for sale, profitable and trustworthy assets.
Here is a list of the most important factors to keep in mind when you want to buy a website.
Knowing the broker’s role
The broker is very important to act as intermediary of a business and its role must ensure that everything is done safely. You should know how the website comes up to the marketplace and how it is evaluated. Knowing if the seller is trustworthy is just possible if the broker has an established process to guarantee the safety of a deal.
At Trustiu, before any seller puts his website for sale, he must go through a strict process to validate the data and confirm that the asset is able to be sold:
- Meet the seller - The first step is knowing who is the seller and why he intends to sell.
- Seller identity - Every person who wants to use our marketplace must prove its identity.
- Check the earnings and costs - We only sell profitable projects. This is a crucial point to follow the process.
- Income proof - The seller must prove the veracity of the incomes and costs of his online project.
- Analyse the traffic - The traffic is very important to understand where the visitors come from and validate if the seller is running for paid advertising or there are external factors that justify the traffic of the website.
Return on Investment
One of the main concerns when someone buys a website is the ROI. Once you invest, how long does it take until you see a return on the investment? Actually depends but there is a way to figure out how many months it takes until you return the investment according to the current performance of the website. This is called the sales multiple. The sales multiple represents the number of months that it takes to achieve the amount that was invested, based in the net profit average.
Check the following example:
The net profit is the beginning to calculate the sales multiple. It is possible to reach the average dividing the net profit by the number of months (in this case 12 months).
The next step is knowing the price of the property to achieve the multiple.
In this example, the sales multiple would be 24, that means the number of months until return the investment if the websites keep approximately the same metrics. If you improve the metrics of the website, of course the multiple will be lower.
Usually, the sales multiple between 12 and 24 is good but it also depends on the business model that we are talking about.
Below, you may find some examples of the best listings with the lower multiple:
- Sportswear E-Commerce for sale - Sales Multiple: 8
- Pet Accessories E-Commerce - Sales Multiple: 14
- Electric Scooters E-Commerce in Spanish for sale - Sales Multiple: 16
- E-commerce of Personalized T-shirts for sale - Sales Multiple: 14
Analyse the performance
The website performance is one of the most important tips when you consider to buy a website. You should be focused if the business is regular, if it is reported revenue peaks and why it is happening.
You also should have access to Google Analytics reports to fully understand the traffic and the performance of the website. Google Analytics can explain a lot of facts that are happening and which factors influence the business.
You must access the reports about the last 30 days, last 12 months and since the website is running, to make sure that the good performance is not something sporadic and evaluate the growing.
At the online market, a business is never 100% stable and is normal when there is some oscillation regarding the visits and incomes.
Below, is an example of a very well profitable website with that variations: