Help with site flipping... $50k+ sale

5 replies
Hey guys,

I need some help on flipping a site. I've flipped a few sites but that was quite a few years ago and I didn't do it as a business model... it was just to grab some quick dough to pay for unexpected bills.

About a month ago, I decided I wanted to try website flipping for real. I set a goal to create a website that pulls in $10k/month for 3 months... then flip it for $50k+. I only say $50k+ because I've been told that you can get 5-10x your monthly revenue for your site.

Anyways, I'm 3 weeks into my site launch and we've cleared over $14,000 in revenue from sales. If I keep this up for the next 70 days, what are some steps I need to take to make sure I can sell this for $50k+?

The website sells services for internet marketers including social media needs, list building packages, web design and digital product creation. Packages range from $500-$5000. I outsource 100% of the work and have been interviewing a project manager this week to manage the incoming projects and outsourcing for me. I profit about 45% of that monthly revenue without the project manager.

Question... is the 5-10x estimate based off gross revenue or net profit? I would assume net profit with consistency... but feel free to clarify. Also, is 3 months of my goal revenue enough time?

I would be selling quite a bit more then just a website. The upcoming project manager would go with the business. I've informed each candidate that I plan on selling this within 3 months.

I have a large social media campaign for the business which would be included.... fan page, twitter following, linkedIn, Google+. The FB ads that work would be included.

I've been building a list which is at about 1780 subscribers. This includes squeeze, freebie, OTO product, and 4 weeks of autoresponder emails.

I also have 2 webinars early on in the autoresponder that promote the more expensive packages. This is where most the sales come from. I would include these webinar presentations in the flip as well and I could easily record them so they can be automated for the buyer.

I would love to get insights from someone who has experience selling sites at this level. Is there anything I could add? Is Flippa the place to sell something like this? And, I'm sure there will be more lol.

Thanks,
Travis
#$50k #flipping #sale #site
  • Profile picture of the author John Romaine
    Travis, I've sold sites ranging from $1,500 up to $25,000.

    I would strongly suggest keeping records of everything, and using a solid contract that clearly outlines everything when you do decide to sell.

    You may want to take a look at Website Purchase Agreement

    Ill also PM you one of my flippa listings. It's quite comprehensive, I'm sure you'll find it useful as a "template" for when you do list it.

    I think the only thing that *may* hurt you with this sale is that you wont have that "historical" element, given that the site will only be 12 weeks old.

    Something to consider...
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    • Profile picture of the author petelta
      Originally Posted by John Romaine View Post

      Travis, I've sold sites ranging from $1,500 up to $25,000.

      I would strongly suggest keeping records of everything, and using a solid contract that clearly outlines everything when you do decide to sell.

      You may want to take a look at Website Purchase Agreement

      Ill also PM you one of my flippa listings. It's quite comprehensive, I'm sure you'll find it useful as a "template" for when you do list it.

      I think the only thing that *may* hurt you with this sale is that you wont have that "historical" element, given that the site will only be 12 weeks old.

      Something to consider...
      Awesome, thanks man. I figured only going 3 months might not be long enough. How much do you think that could hurt me? Are we looking at having to sell for $25k or $2k because of it lol...

      I could go 6 months with the site, but the crowd isn't really my focus for 2013. The plan was to sell it for a good chunk as quick as possible, write a WSO on it, and bank a solid paycheck from the entire project by March.

      I will check out your PM now. thanks again man.
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    • Profile picture of the author alksense
      Hey Travis,

      I've sold multiple sites with six figure price tags.

      Here is my advice:

      - like John said, keep EXCEPTIONAL records of everything. Every dollar that comes in and goes out of your business should be accounted for if you're planning on getting that $50k. Real investors want to see real proof of income.

      - I know you said it was your goal to build your site and flip it within 3 months but I HIGHLY recommend holding onto it for 12 - 18 months if you can do so.

      If your site has only been around for a few months you are going to get a very low multiple of your NET profit (maybe 3 - 6x your monthly net).

      on the other hand...

      If you can hold this business for 12 - 18 months while it keeps growing/stays steady then you will be able to sell it for 18x month earnings.

      Here's the math:

      Right now your site is on pace to do about $18,500 gross this month. You said that you a 45% profit margin so that's $8,400.

      If you maintain that for 3 months then sell on flippa at a 3-6 month multiple you will get between $25,200 and $50,400 (I know that's a huge window but it all comes down to who is buying on flippa at the time of your sale and if two people start a bidding war for your business)

      Now lets say you maintain that $8400 net profit for the next year (assuming you don't grow at all). You can go to a broker and they will sell your website for $151,000. You pay them their 10% and walk away with $136k.

      There's a potential extra value of $110,000 of cash in your pocket if you can afford to hold this business for 12 months.

      The way to get the most value out of your site is to use a website broker (and not one that sells sites on flippa for you). I sell through brokers who have huge lists of buyers that look for certain types of investments. I pay a 10% commission on each sale but it's well worth it because they can get you the type of money that can't be found on flippa.

      Whatever you decide, Good Luck!
      - Anton
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      • Profile picture of the author petelta
        Originally Posted by alksense View Post

        Hey Travis,

        I've sold multiple sites with six figure price tags.

        Here is my advice:

        - like John said, keep EXCEPTIONAL records of everything. Every dollar that comes in and goes out of your business should be accounted for if you're planning on getting that $50k. Real investors want to see real proof of income.

        - I know you said it was your goal to build your site and flip it within 3 months but I HIGHLY recommend holding onto it for 12 - 18 months if you can do so.

        If your site has only been around for a few months you are going to get a very low multiple of your NET profit (maybe 3 - 6x your monthly net).

        on the other hand...

        If you can hold this business for 12 - 18 months while it keeps growing/stays steady then you will be able to sell it for 18x month earnings.

        Here's the math:

        Right now your site is on pace to do about $18,500 gross this month. You said that you a 45% profit margin so that's $8,400.

        If you maintain that for 3 months then sell on flippa at a 3-6 month multiple you will get between $25,200 and $50,400 (I know that's a huge window but it all comes down to who is buying on flippa at the time of your sale and if two people start a bidding war for your business)

        Now lets say you maintain that $8400 net profit for the next year (assuming you don't grow at all). You can go to a broker and they will sell your website for $151,000. You pay them their 10% and walk away with $136k.

        There's a potential extra value of $110,000 of cash in your pocket if you can afford to hold this business for 12 months.

        The way to get the most value out of your site is to use a website broker (and not one that sells sites on flippa for you). I sell through brokers who have huge lists of buyers that look for certain types of investments. I pay a 10% commission on each sale but it's well worth it because they can get you the type of money that can't be found on flippa.

        Whatever you decide, Good Luck!
        - Anton
        Nice thanks a lot Anton. Great info.

        I figured selling this through Flippa might not be my best option since it's somewhat more then just a website with organic traffic. I like the broker idea tremendously lol

        I guess I'm going to have to hold out for 6-12 months then.
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  • Profile picture of the author John Romaine
    You've only got to check out listings on Flippa to know what buyers ask.

    They'll want to see earnings, in particular (historical data). There's so many people "slapping sites together" simply to flip them, that the short lifespan of your site might be a deterrent.

    I'm by no means an expert on site flipping, but you've only got to consider it from the buyers perspective. They'll be wanting to ensure they're not buying a dud.

    If the site is making decent income, could you possibly outsource the upkeep and sustain it a little longer?

    (Don't forget, everyone is different - you may not have any issues selling after 12 weeks, I just thought it might be worthwhile mentioning)
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