Starting an online business from scratch takes time. Websites have to earn visibility in search engines before you can realistically monetise your enterprise. If you don’t have time to create income streams, the alternative option is to purchase an existing website.
Buying an existing business requires due diligence. You need to evaluate the digital footprint and understand what operating costs are involved in relation to the potential income of the website. This article will help organise the questions you need to answer in order to weigh up the advantages and disadvantages of buying an existing website.
- Access to web analytics
Before you even consider tabling an offer for a website, you need to know how the site is currently performing in search engines. Ask the owner to see the web analytics. This data will give you valuable information in respect of traffic volumes, sources and which search terms customers use to find the website.
Web analytics will also provide information about the historical growth of the website. As a general rule of thumb, older websites should perform better in search engines. If the website only has less than a year of historical data, or the owner refuses to give you access to web analytics, it’s probably best to walk away. You can run some preliminary performance tests yourself such as a speed test and mobile-friendly test, but make sure you quiz the current owner.
Next to outright traffic, one of the most important aspects of any website is the number of backlinks the site has and where they have come from. Don’t rely on the response of the seller. Check them out yourself.
In the past, it was common practice for web owners to use link farms or buy backlinks from low-quality third party sources in order to improve search engine rankings. However, these type of backlinks were penalised and many websites were blacklisted. Use a website checker to verify the health of a website and invest in an SEO audit that will enable you to verify the quality of backlinks.
- Income streams
There are several income streams an online business can utilise to maximise profits. Selling products/service is the principle option, but some content-based websites earn revenue through alternative sources such as Adsense, affiliate programs like Amazon or hosting guest posts or sponsored posts or content sections.
It’s not only important to understand how a website is making money. You also want to be assured that the methods the current owners are using will not impede your chances of growing your online business.
For example, websites that are saddled with third party advertising through Adsense and sponsored content can negatively affect traffic because visitors don’t want to be disrupted with ads. Although you can change this, it is advantageous to be aware of any damage that may have already been caused.
- Conversion rate
As a follow on from the previous point, you should be asking the seller what the current conversion rate is on the site. With this data to hand, you can calculate the value of the website and factor it into your offering price.
In your evaluation, consider the consistency of the conversion rate. Some businesses make money seasonally and if you are presented with short-term earnings from off the back of a peak period, the numbers are misleading.
- Unique content
The rank of a website is only as good as its content. In order to consistently rank well, webmasters need to be publishing unique and high-quality content on a regular basis. Ask the current owners how they have been publishing content.
What you need to know is whether the content is unique or whether there is a chance it could have been spun. Also check product pages for duplicate content. Ask the current owners if they have an in-house content writer, whether they hired a freelancer or whether they have been using a machine to spin content. If it is the latter, you should consider rewriting the content.
- Ongoing costs
Most websites require plugins, tools and themes in order to make them functional. Whilst many of these add-ons are installed as a one-time payment, there may be some tools which are licensed and carry an annual or monthly subscription charge.
For example, if you are purchasing an eCommerce website, the chances are the seller has installed an eCommerce shopping cart software. If package includes a Software as a Service (SaaS) application, there is probably a monthly subscription fee to pay. If it is web-based, the platform will be supported by a web host which also comes at a cost.
Knowing which plugins are subscription based is not only important from a financial point of view. Plugins and tools affect the functionality of your website and if the subscription expires, you could lose a critical part of your website, such as a payment gateway or SSL security.
- Traffic sources
Traffic can arrive at a website from various sources. Ideally, when you buy an existing website, the bulk of your traffic will be organically accrued from search engines. However, you also want to be assured that traffic is coming from other sources such as social media, third party websites and directly from other marketing materials.
- Effective advertising
Digital marketing is awash with opportunity and finding the best advertising solution is often trial and error. One of the benefits of buying a ready-made online business is to tap into the knowledge of the existing owners. This is a good opportunity to pick their brains about online marketing tactics that have been successful and which have been unsuccessful.
- Existing customers
Another benefit of buying a ready-made website is to profit from existing customers. Ask the seller if they have an email list of registered users. This is not only important for marketing purposes, but can be utilised to introduce yourself as the new owner and look to make a positive start with your customer loyalty program.
- Customer satisfaction
The data you gather about the website you purchase can reveal a lot about the volume of traffic and the behaviour of the existing customer base. But one thing data does hide is how satisfied customers are with the current level of service.
How customers feel about the current business will have an impact on your early profits. If the current owners have a bad reputation, you have to decide whether you can remedy the problem and if so, how you will go about it.
Buying an existing website is an effective strategy to start up an online business. Given the amount of time it takes to rank a website in search engines, produce content and build backlinks, a website that already has some online visibility can mean you start earning from your new venture sooner than you would if you started a business and built a website from the ground up.
However, it is imperative to audit the website before you purchase otherwise you could pay a lot of money for a lot of inherited problems.
How we can help
Here at The Content Works, we specialise in website audits. If you’re looking to buy a website, talk to us first. We can carry out due diligence on your behalf and help you establish the true value of a website. Call us on 0207 305 5599.