Income Generation Series: Website Acquisitions

Overview

Websites are acquired from active marketplaces, known for selling web assets. Acquisitions are made based upon a preexisting buying criteria. There is a great deal is risk associated with buying websites, so a risk mitigation strategy is devised to limit the potential for loss. Once a website is acquired, it is transfered to existing servers and analyzed for potential opportunities. An optimization plan is developed; which aims to upgrade design, identify unrealized potential, and find new advertising channels.

Active marketplaces are continually scanned for opportunities.  Many marketplaces operate on a auction format, much like eBay.  Thus the ability to react quickly to seize opportunities is essential.  To qualify for purchase, each potential opportunity will be judged against pre-existing criteria.

The buying criteria will help establish a methodology to objectively evaluate each opportunity.  The criteria will evaluate the category the websites fall into to make sure the acquisition is in line with corporate objectives.  It will also take into consideration the following factors; time commitment, overhead, technical expertise to operate, niche, growth opportunities, traffic trends, and valuation formula.  A quick technical analysis will also be preformed to check the following factors; incoming links, PageRanks, Alexa ranking, and reputation analysis.  The technical analysis portion of the buying criteria will be brief, in anticipation for the fully technical analysis during escrow.

A risk mitigation strategy will be used to minimize the potential for loss.  All acquisitions will be purchased through an escrow procedure, and any opportunity not offering escrow will be disqualified.  During the escrow period, a full technical analysis of the site will be preformed, looking the following factors; transferability of accounts, standing of existing contacts, legitimacy of traffic, traffic trends, incoming links, history of website, and reputation of brand.  While this requires additional work, the goal is to minimize the potential of buying a fraudulent website.  The technical analysis will be documented into a clearly defined, repeatable process.

Once a website is acquired, a full optimization plan will be developed.  This plan will prioritize growth opportunities, and set a time line for execution.  This plan then be broken into tasks, which could be outsourced to virtual assistants.  The optimization plan will look that the following opportunities for growth; new advertising channels, integration of e-mail campaigns, ad placement optimization, different revenue models, social media optimization, SEO, and content creation.  This plan will be specific to each acquisition.

Analysis

  • BDE6FFAC-68AE-4279-A7CA9E8C40136FBCTime:  The time requirement is generally high, although it would taper off over time.  At the time of initial acquisition, there is a lot of work associated with evaluating, purchasing, transferring, and optimizing the site.  Much of this will be outsourced to virtual assistants via a management program.  After the site is optimized, a regular maintenance schedule will be developed and the time requirement will become considerably less.
  • Capital:  The capital requirements for website acquisitions are very high.  The objective is to purchase websites at 10-12x monthly revenue.  The average acquisition would be around $5,000 – $15,000.
  • Scaling:  The acquisition of websites based upon a disciplined buying criteria will allow for scaling, by avoiding websites that need a high degree of work after the optimization process is complete.
  • Outsourcing: Most of the activities in this process can be outsourced.
  • ROI:  Based upon acquiring websites on a valuation of 10-12x monthly revenue, annual ROI should be 100%+

Recommendation

Website acquisitions has a high potential ROI, can be outsourced, and is scalable.  As long as capital can be generated and risk can be minimized, this strategy is a solid business opportunity.  This strategy will be deployed form the onset of my business strategy to develop consistent incoming cash flow.

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