How to Sell Your Web Business for More

So, you want to sell your website. Whether you’ve been dreaming of this moment from the day you picked your domain name, or built a personal hobby into an enterprise that you’re ready to release into the wild, parting with a web business can be a tricky thing. Precisely because it relies so much on the work you put into building it, a website isn’t easy to put a price on.

Ever since the dot-com bubble saw companies gobbling up venture capital just for having an “e-” in front of their name, investors and analysts have been wary of any business that lives online. That asn’t stopped web business from taking the world by storm, but it has led plenty of up-and-coming businesses to be undervalued, or sell only after they’ve reached their peak. Selling your business for as much as possible will take a combination of solid finances, strategic positioning, and good old-fashioned salesmanship.

Your Finances and Valuation

Getting a good deal for your website means convincing buyers that they’re getting a strong business with growth potential, and not the next online dud. If you’re even thinking of selling your business one day, you should run your site as if the sale were already happening. Keep a detailed paper trail of your revenues and expenses, and make sure you have a solid accounting package to show off your financial data.

Your website probably won’t have a lot of physical assets, so its value depends on those finances. Independent audits can help buyers with due diligence before they even start, bringing you that much closer to a sale. If you insist on making prospects work for information, they won’t. If you serve it up on a platter, they’ll have a lot more reason to stay interested.

The nature of an online business might temper your asking price a bit, but you should use the classic equation: Take your revenues, subtract your expenses, and then use a multiplier. A traditional business could ask for a price of ten times its gross profit, but a website will probably demand a bit less.

For some businesses, the right price is three to six times your earnings before taxes or interest, plus the value of your inventory. This will depend on the realities of your industry, however: The thin margins of an electronics business can mean an asking price closer to double your earnings.

Your Strategic Vision

In order to sell a prospect on your site’s potential, you should have a clear vision yourself. Know what makes your business work, it’s competitive advantages, and how much room there is for growth.

If you were to take your site through it’s next stage of evolution, what would you do? What do you see happening to your industry in the future?

The more successful you are at selling your buyer on a vision that demonstrates lasting value, the better the price you’ll get when you sell your business. Couple a strong vision with clear financials, and you’ll hook a lot of prospects.

Targeting the Right Buyers

Depending on the nature of your business, you may want to look for prospects in your own industry, such as clients, partners, consultants, suppliers or competitors. If your site has been doing well, these are the people most likely to realize it, without needing a basic introduction to the nuts and bolts of your market space.

On the other hand, if your business could be reasonably run by someone with little industry experience, you might find takers in a variety of places, where your site can fetch a premium from those excited about “living the dream.”  This second group of buyers will need a more detailed pitch explaining what your site can offer them, especially if they don’t have the technical background that managing a website requires.

Recently, marketing has revolved more and more around the idea of targeting prospect “personas.” By understanding who your best buyers really are, and building your entire pitch around the words they use, their needs and desires, you’re much more likely to connect, and create an emotional urgency. As discussed above, the personas you target will also determine how technical you need to be, and what kinds of venues you’ll use to find them.

Getting the Word Out

Think about how much you spend to market your business now. What percent of earnings does it represent? From how many channels do you draw leads? Is it a simple plan, or does your marketing entail a variety of tactics that work together? Selling your business itself should be no different.

Often, business owners unwittingly reduce their final sale price by failing to attract enough attention. They look at marketing their business for sale as if it’s reaching into their pockets and stealing profits, even though they fully understand the costs of marketing their products or services.

Business brokers, brokerage and auction websites, ad campaigns, offline networking, and even an entire site dedicated to selling your business can greatly improve your chances of finding that one hot prospect.

Start by announcing your intentions to your business and personal network. You might even offer a finder’s fee to anyone who brings a buyer that leads to a successful sale- it’s amazing just how motivating a relatively small monetary reward can be.

Once you’ve explored your network, investigate brokers who often work online and off. You’ll learn a lot, even if you don’t choose one.

Finally, if necessary, develop an online marketing plan. Find the right sites for the buyers you’re after, build a site to sell your business and run a test pay per click campaign to it to see what happens. PPC statistics can tell you a lot about how prospects view how you’re positioning your product or service, which in this case is your actual business.

Closing the Deal for Top Dollar

A website doesn’t need a lot of assets to maintain it, and a successful web business has already found a working model; all the buyer needs to do is follow it. What’s more, with an infusion of new resources, a web business is much easier to scale up than a physical one, opening the door to big profits through a proven method. If you can’t convey these ideas to your prospects, you aren’t ready to close the deal- not if you want a good price, anyway.

Similarly, if you’re trying to sell when the economics of it aren’t right, you’ll hurt your ability to find confident prospects who pay more. You can’t necessarily time the market, per se, but you can use time to your advantage, assuming you aren’t pressed to get out now.

Take a tip from real estate sellers and offer your buyer incentives that help put them in the driver’s seat, without lowering your price. For example, you might help to finance the purchase, assist with server migration, on-going operational or technical support. You might stay on as a consultant, or even write a reference manual. Any options you have to help the buyer mitigate risk and make a smooth transition will translate directly to your top line.

Just like any other sale, the result will come down to a negotiation between you and the buyer, and your state of mind will decide who comes out ahead. If your website has strong financials, and if you can sell a vision for what it can become, you’re on the right track. If you talk the buyer’s language and understand his needs, even better. If you can create buzz, demand and competition for your one opportunity, your buyers are the ones feeling urgency to act. And lastly, if you can ease the new owner’s transition, you can make anyone feel like they’re getting the best possible deal, while you walk away with the cash.

Mark Daoust is the owner of, one of the nations leading internet business brokers. Unlike many website brokers, QLB uses a hands on approach to assist buyers and sellers with navigating the complexities associated with buying or selling an online business.

Featured image Money by Flickr user AMagill, used under a Creative Commons license

Filed in: Business Success, Feature Articles, Selling a Business
Want to submit your own guest post? Visit our guest posting guidelines page.

You might like:

Why You May Need a Product Design Company Why You May Need a Product Design Company
Why Should VOIP Phone Services Matter to Small Business Owners?
Putting It All Together – Strategies for Link Building
How to Write The Perfect Headline

Leave a Reply

You must be Logged in to post comment.

© 2012 Geek Business. All rights reserved. XHTML / CSS Valid.