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The Intelligent Investor’s View of Acquiring Sites

Saturday, June 10, 2006
I have been on the move for acquiring sites the past few months. I have found that there are more junk sites for sale than any other. A lot of people list sites with “growth potential” which really means it’s the same as building your own website. There are a few things that I specifically look for and these are: long term sustained growth, decent cap rate, and easy value creation opportunity.

When I look for long term sustained growth I want to see more than just 10 days of growth on the site. The longer the period of time the site has been up and running the better. This allows me to trust the site will continue getting traffic. Also, I try to look out for things that may taper off very fast. One of the sites that I purchased ended up tapering quite quickly, to an acceptable rate, but nonetheless tapered.

A lot of times owners of sites just expect way too much from their sites. The market to buy sites is fairly financial, and if the owner of a site is trying to justify the price with costs it is fairly worthless. It seems that the payback period for an investment in an online business is about 10 months. Sometimes owners will have a site making $100 a month and want $3,000 for it citing potential growth.

The only form of potential growth that I am really interested in is the kind that I can apply with my monetization skills without much effort. Lets say the site is doing alright traffic wise but I see that they are placing their ads all wrong, or are just putting up affiliate links without proper pre-selling. This means I can create value in the site by using my expertise rather than so much time and effort. The idea here is that if you can buy a site with a payback period of 10 months, and then by something so simple as a change in the color scheme reduce it to 5-7 months, then the investment becomes that much more attractive.

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