Online businesses are becoming increasingly prevalent worldwide as the pandemic-related lockdowns force brick and mortar stores to stay closed another year in a row. In 2020, global e-retail sales crossed $4.2 trillion, and more than two billion people purchased services and goods online.
As an online business owner, you might have ventured into this avenue to make some extra cash or make it your primary source of income altogether. Regardless, have you ever thought about the worth of your online business? If not, you might be surprised to know that you can monetize content for websites and earn well.
An essential lead generation tool and the core of online businesses is inbound traffic, a great traffic source. This is because the quality of your SEO decides the ease with which your target audience can find your content, ultimately increasing the number of visitors to your website.
Even with a handful of articles live on your site, it is possible to generate thousands of monthly views if your site is properly optimized. Buyers are searching for such optimized business sites, and if you can manage to build one, it’s possible to sell it and make a handsome profit.
However, as profitable as selling your online business can be, many owners don’t even realize they have the opportunity to do so. If you have a good website, we can help you figure out how to sell it.
Read ahead to see how you can create your site’s valuation and the factors influencing its price.
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How Can You Value Your Online Business?
You can use the following valuation formula to determine your online business’s worth:
Annual Mean Monthly Net Profit * Multiple (20x – 50x)
For a more detailed look into a business’s performance, it is best to use a monthly mean net profit rather than an annual one. You can easily calculate the profit by adding up all the profits from the past twelve months and divide the value by twelve.
On the other hand, determining the multiple is more complex, and many factors contribute to it. Here are details for these factors:
1. Domain Age
Inbound traffic is essential for your business website, but it takes effort and time to build. The multiples in the valuation formula have a high probability of increasing with older domains for several reasons.
- The greater the domain age, the more resilient the website is against any updates in the search engine algorithm. Often businesses suffer negatively due to Google’s algorithm changes as their traffic and revenue reduce to half.
- It is also a common belief that sites with newer domains take from three to six months before their content begins to rank. As this rank increases in the search pages, so does the probability for your revenue to increase.
2. Pricing Periods
A Trailing Twelve-month period (TTM) is used to analyze the monthly profits and revenues to check how well a business is performing. The TTM period is an excellent standard, and companies should use it because:
- It considers seasonality and your niche for the traffic you get to your website at specific times of the year. If you use a short period, it might exaggerate your business’s performance as much worse or better than it is throughout the year.
- It gives more data that builds your credibility among your customers who are interested in your business. You can choose your prices over six months if you are making profits for the first time, and it’s the initial period you used to measure any revenue. However, suppose you don’t have to sell your website immediately. In that case, it is best to wait till your online business is in a good position, generating profits consistently before you put it up for sale, so you get a higher valuation.
3. Monetization And Revenue
Usually, content sites get monetization from sales commissions when they click on affiliate links or generate revenue from the number of times people click on your display ads.
Increasing and distributing how you monetize your site enhances the monthly revenue and reduces risk in terms of service breach and canceling of monetization channels.
When you create multiple income streams, you get the chance to explore how you scale your site. For instance, you will see more viewers clicking on affiliate links than ad banners.
Where site valuation is concerned, it’s a no-brainer that SEO is highly essential for it.
Inbound traffic is a great opportunity to form a hands-off business. When you consider SEO, you have to see how well-aligned your site’s optimization is for off-page and on-page SEO.
For on-page SEO, you have to see the diversification of page views throughout the highest performing pages, loading speeds, and the keywords for which the site ranks.
5. Domain Ranking
While this factor is difficult to alter, it is essential for the valuation of a site. You can enhance the domain ranking with off-page SEO characteristics like the number of backlinks of a site, whether any Google updates affect the site, and any PBNs used.
Whatever tools you use to calculate your domain ranking, you will gain insight into your site’s reputability relative to the search engines.
6. Traffic Diversity
Your business’s valuation significantly improves as your site’s traffic diversity increases. This is because it reduces the chances of lower performances if the algorithm changes affect the ranks of your site’s top pages.
Additionally, you can have several traffic channels to reduce the risk of relying on a single traffic source. Organic search is one of the most common ways to get visitors to your site, but you can also nurture other channels and influence the many traffic channels. These can include content partnership referrals and social media with more blog reach.
7. Content Quality
We all believe that SEO is everything in today’s time. However, quality content is still above everything else!
There are many characteristics that make up high-quality content. However, its timelessness, readability, and the value it provides to readers are among the top.
Well-written long articles generally fare better than shorter ones. Timeless content is useful because it needs lesser updates due to its relevancy for a long time.
Furthermore, fewer updates also facilitate the less time you have to invest in your business’s maintenance, making the site highly attractive for a wider buying pool that wishes to venture into the online business market but invest where the owner isn’t highly involved.
Of course, no search engine or broker will entertain plagiarized content, and they run Copyscape on the sites to look for possible copied content.
If you don’t have great writing skills or want to invest more time to grow your business somehow, you can hire a freelancer to give you original content.
How To Sell Your Online Business
With a better picture of your site’s valuation factors, let’s move on to see the ways that are best to sell your online business.
You can opt for any of the two primary options:
- Hire a brokers’ services
- Make a private sale
If this is your first time selling your content site, it is better to go for the broker option. Of course, it is not as straightforward as a few negotiations, contract signing, hands shaking, logins handover, and calling it a deal. Most brokers form a curated marketplace with systems they follow to protect the buyers and sellers.
You have to consider various factors when you sell your site. For an Empire Flippers service, a broker transforms your finances into a P&L (profit and loss) statement. Consider it the highlight reel for your business that allows qualified buyers to check your website’s financial performance. Once you list for sale, your business will be up for buyers to compete and acquire. On the other hand, it isn’t easy to generate a similar interest for your site through a private sale.
Usually, sellers give in to the first deal they get by getting influenced by other private sales happening around them, even if they don’t get their money’s worth from it.
Target Qualified Buyers
Usually, your broker shows your site to the correct buying pool with the appropriate skillset they can use to run it after you leave. More so than that, buyers have to give a fund’s proof or verify liquidity to prove the business is affordable to them.
On the other hand, private sales mainly attract those likely to waste time with their non-serious business inquiries and offers since they are only window shopping.
Even though brokers require a sales commission of 2% – 15%, it saves a lot of your precious time with the tools and platforms they give you to make the sales process more efficient. All you have to do is weigh your options and negotiate with buyers that offer the best deal, rather than worry about how you can sell your business.
Sell With SEO
Buyers usually look for built-up traffic channels and SEO-optimized content sites as strong assets. The inbound traffic’s nature makes online businesses very hands-off to run. Typically a buyer would want a smart investment to start making money the day they invest in it and have to put in less time for maintenance.
As discussed, effective domain ranking and SEO develop over time, and buyers prefer to save the money and time they would waste if they start their own. Buyers want a finished product and skip the buildup of a monetized content website or lead generation.
Your online business is worth more than you might think. It could be a great way for you to make large amounts of money, provided you optimize your website properly, increasing the chance of attracting potential buyers.
Consider your site’s value to sell it profitably and even if you don’t sell it now, continue building it so you can optimize it for the future and get a good price out of it when you do sell.