Chances are that you may be wondering whether your website can possibly fetch you a million dollars, and even if you’re not, wouldn’t it would be nice just to know what a million dollar website looks like? What would potential buyers of a million dollar website be looking for? Articles like this and this show you that there is the potential to exit for over a million dollars.
Actually, it is much easier to identify one than most people may realize. For example, you would simply need to put yourself in the shoes of a potential investor looking to pay top dollar to acquire a site to figure out and grasp most of the factors they are bound to be looking for. Who would want to pay a million dollars for something with doubtful prospects of giving them a good return on their investment? Here are some of the key features that make a site worth millions stand out:
Profits are Extremely Important
This is the simplest way to swiftly value any kind of business and not just e-commerce sites. Investors will typically be looking to pay 2 or 3 times what the site makes in net profits in a year. That means $500,000 to $333,000 annually if you want to sell your website for a million dollars. Other factors closely linked to profitability such as, growth, future prospects, and stability will also be considered since nobody wants to buy a business that is churning out profits now but has the possibility of coming down like a house of cards shortly after their check has cleared. Let’s take this ecommerce business for example that sells a range of beard oils and has hit over $100k per month in sales. Now there are going to have a million dollar valuation because they would be doing at least $300,000 in profit per year.
For instance, if the startup cost for a similar business is low, and someone else does exactly what you did in a short amount of time, then anybody can start and quickly replicate the business you are trying to sell. Then you can be sure that most investors will take quick note of this, which will dramatically reduce the value of your site, even if you are currently raking in good profits. In many instances it can even cause most potential buyers to lose all interest in it.
What Kind Of Workload Will the Buyer Be Expecting?
No matter what anyone says, an investor would happily part with a lot of money to get their hands on a site that runs almost on auto pilot, with very little or no daily workload and chores required on their part. That is the ideal situation. This lets them focus on other aspects of their revenue without needing to worry if the site is making money or not.
The bottom line is that the less work they have to put into their acquisition to keep the revenue flowing in, the more attractive a preposition it will be to them.
Is the Site a Google Slave?
It happens all the time. A highly successful site that relies heavily on organic traffic gets wiped off the internet by a simple algorithm adjustment by the search engine giant.
A much better situation would be for a site to have multiple sources of traffic including paid search, social media, and permission based email marketing, among others. This would mean that they would not be affected as much by the Google updates. Naturally, such a site would be much more stable and therefore much more attractive to any investor.
What Are the Growth Trends?
The reason why savvy investors buy businesses is because they see growth prospects in them. The same applies to an online business. It means opportunities can be exploited and ultimately a quicker return on their hefty investment. Ideally a really unique business and a niche with excellent future prospects will always have investors falling over themselves to clinch a deal with you.
That means that you will be in a position to ask and get a much higher price than what would ordinarily have been paid. This is so important that a site that falls short on the other factors can easily attract a million dollars just because of its great growth potential.
Age Of Your Business
A site that is 5 or more years or older will always appear to be much more stable than one that is only a year or two old. Something that has stood the test of time will understandably be a much more attractive preposition to potential investors every time.
Is your Business Easy to Copy?
Anybody can start a drop-ship e-commerce website. All they need to do after establishing the viability of your niche, is to do a little keyword research and with a minimal ad budget, may become a serious competitor. In sharp contrast a warehouse based business model, more so one where the products have been designed and developed, and a brand established, is much more difficult to replicate. Investors know this and will always check it out before reaching for their decision on whether or not to buy your business.Other advantages a difficult-to-copy business will usually have for a potential buyer include higher profit margins, and scalability.
There are some instances where a site can be valued at a million dollars and yet lack some of the attributes mentioned. Alternately the site could be strong on one particular key factor the buyer may be looking for. It all depends on the industry and circumstances in play. It would therefore make lots of sense to analyze your particular industry and business and gauge what would be the most attractive hot buttons for prospective buyers and then focus on them as much as possible. If you think you have a site that is worth 1 million dollars or you want some advice on how to get there, try out this free valuation service that will let you know what your business is currently worth.
Jock Purtle is the CEO of digitalexits.com a full service website brokerage. They help online business owners find a buyer when they want to exit their company. He personally exited his online business in 2013 and is on track to facilitate over 20 deals in 2014 ranging from $100,000 to $4,000,000.