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Site Flipping Experts - How do you sell a 'service' based website?

by Minisite Frog
4 replies
Hey people,

First off, we're not selling minisitefrog at this stage. We've been asked by a close associate who is considering selling her 'service providing' website.

So let's say that you own a website which brings in $X,XXX per month.

However, the catch is that there's labour (writing, designing, seo, whatever) involved to bring in that amount per month.

So in other words, it's not automated like most websites for sale.

I can think of two kinds of buyers in this scenario.

The 1st buyer. She's capable of operating the business as she has the necessary skills to provide the services the business offers... so she therefore takes on the responsibility of providing the services herself.

The 2nd buyer. He is a businessman/investor who thinks he is capable of organizing people and systems to run the business for him.

So here's the issue.

Let's say the business/website brings in $10,000 a month, and pays $1,000 in expenses per month. Obviously the 'net profit' would be $9,000 right?

BUT, there is time and labour involved to bring in that $9,000/month. How do you account for the time and labour involved to bring this in?

Is there any demand for a website/business like this on Flippa?
#– #based #ervice #experts #flipping #sell #site #website
  • Profile picture of the author ozduc
    Originally Posted by Minisite Frog View Post


    So here's the issue.

    Let's say the business/website brings in $10,000 a month, and pays $1,000 in expenses per month. Obviously the 'net profit' would be $9,000 right?

    BUT, there is time and labour involved to bring in that $9,000/month. How do you account for the time and labour involved to bring this in?

    Is there any demand for a website/business like this on Flippa?
    Well if the owner is doing the labor work then it is not $9,000 a month in net profit.
    You would have to factor in the hourly wage of what it would cost for someone to do all this work just like you would in any business. You have to account for staffing costs. If it costs $20 an hour to hire someone to do the work then you would have to subtract $3,200 from the monthly income.
    The other issue is, does the person buying the business have the skills to run it. She has obviously built up "good will" (which is also worth something).
    As far as the demand goes, I am sure there is always a demand for businesses that are already making money.
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  • Profile picture of the author AllanWard
    Look at the net profit after all your costs, like Ozduc explains. You could then base a price on a multiple of net profit or EBIT. Remember, there is never one definite value of any business. The owner will think it's worth one price, and the purchaser will think it's worth another.
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  • Profile picture of the author Kezz
    I'd be leaning towards selling this as a business rather than a website, and hence going through a business broker rather than a website marketplace.

    Ideally, if you could find a business broker that deals in the local area of the current owner you'd be able to organize face to face meetings, conduct proper negotiations and get the maximum price.

    People looking to buy businesses rather than websites will be more open to the idea of taking over a service based operation.
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  • Profile picture of the author paulie888
    I'd focus on the net operating profit of the business when presenting it as a business opportunity; after all, I'd imagine that the majority of ongoing work is outsourced (and not personally done by the current owners), and also that the prospective business owner would be interested in it as a relatively passive investment opportunity.
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