How to buy an existing website – part 2

Welcome to the second part of my guide on how to buy an existing website. If you haven’t done it yet, please red the first part of the how to buy a website tutorial.

Ok let’s recap: you already have a shortlist of web sites that meet your budget and you have gathered enough information on them (traffic stats, revenue stats, technical prerequisites etc’). Now it’s the time to pick the web site you’ll going to buy.

1. Check PR is valid: If the web site that you are buying has a PR, make sure that the PR is valid. A good tool to check that is DigpageRank. By no means buy a web site with a fake PR.
2. Validate stats: Carefully check the traffic and revenue stats. Check if the traffic is consistent. Search Engine generated traffic and direct traffic are best. Social bookmarking generated traffic is inconsistent and doesn’t convert well. Bot generated traffic is really irrelevant. If the web site owner claim tha the site has revenue, check the revenue sources. Make sure that all revenue schemes are applicable to your plans.
3. Understand why the web site is sold: If you are satisfied with the revenue and traffic stats, you can ask the owner why he is selling. This is key in order to make sure that you are not being scammed.
4. Review the seller’s iTrader: Webmaster forums feature the iTrader, which is a ranking system for webmasters trading goods in the forum. The iTrader is important as it allows you to know what fellow webmasters that had business with the potential seller think about his way of conducting business. I recommend that you make sure that the seller’s iTrader is impeccable (with no negative feedback). If negative feedback is found in the iTrader history, try to understand what went wrong.
5. Negotiate the right price: After executing the mini due diligence (steps outlined above) now is time for you to negotiate the price. My rule of thumb is to bid a sum which is equivalent to 6-8 times last month revenue. So for example if last month the web site made $50, my bid will be $300-$400. This is just a rule of thumb, and not a common business practice.

Once negotiation ends, it’s time for transferring the domain and content to your possession. This will be covered in the next installment of the how to buy a site from someone tutorial.