Building profitable websites has never been easier.
One of the distinct advantages is that these websites can be created with just a bit of knowledge and very little start-up capital. In most cases, all that's needed is a domain name and hosting account, which can be purchased from any of the major providers for around $100 per year.
The lack of any major barriers-to-entry has made this an attractive model for those with little cash and plenty of time. With the right niche topic, a built-from-scratch website can go from nothing to earning $1,000, $2,000, or even $5,000 per month in as little as 12 to 18 months.
A lesser-known business model that's been gaining traction is the building and selling of these websites to portfolio investors. Usually priced at a multiple of the site's monthly earnings, a $1,000-per-month website could sell anywhere from $15K to $25K in upfront cash. Many website builders prefer to sell their sites and use that cash injection to build out teams to repeat the process many times over.
If this model interests you, here are ten tips to help you get started:
1. Niche selection (and keyword research) is key.
Don't bother targeting an industry. Instead, target a subset of that industry or a "niche." Smart Passive Income and Dumb Passive Income have a couple of resources you can use to find the right target niche.
2. WordPress makes building websites easy.
This content management system (CMS) has made it much easier for non-techies to get started, and there are thousands of different plug-and-play themes and layouts to choose from.
3. Start with simple monetization methods.
Selling physical products can be rewarding, but you also have to deal with manufacturing, storing the items, shipping, etc. Instead, look at programs like Google AdSense, which pays you per ad click, or the Amazon affiliate program, which will pay you a percentage of any purchases made.
4. Starter websites are okay, but profitable websites are better.
You can build out and sell unproven sites before they're even earning. The advantage is that you won't have to wait 12 to 18 months for the site to mature to the point that you're making money. The downside is that everyone can do this, and the prices are awfully low for these sites.
5. Build a site for users, not search engines.
While sites are generally priced at a multiple of net monthly earnings, buyers are willing to pay a premium for clean-looking, non-formulaic websites. Does the site look like it was made from a hobbyist in the niche? Great! Does it look like it was built with a template hundreds of other sites have been built on? Not so great.
6. Expect to fail...at first.
Everyone makes mistakes on their first couple of sites. Don't worry - this is a skill one can improve with practice.
7. Maximize your profits leading to the sale.
Cut down on any unnecessary expenses or spending. Since the price will be based on a multiple of net monthly profit, you want to maximize that profit for at least six months leading to the sale.
8. Plan a smooth transition for the new buyer.
Buyers don't want to purchase sites where all of the intellectual capital is inside the seller's head. If you can write clear standard operating procedures (SOPs) the buyer can follow post-purchase, your website will be much more attractive to buyers.
9. Look for a strategic buyer first.
A portfolio investor/buyer may only value the site through a multiple of profit, but a strategic investor may have much more to gain through your users, traffic, etc. If they're in a similar or competitive industry, they may be willing to buy your site for a premium.
10. Continue to run the site until the deal is completed.
Whether you're listing the site for sale on an auction platform or through a website broker, nothing will crush the sales price more than a neglected site. Continue to run the site as if you were keeping it through the deal being finished.
There's a small but rapidly growing industry of website sellers, buyers, and investors doing millions of dollars in transactions each month. The best way to get involved in this lucrative industry is just to get started!
Justin Cooke is a partner at the website brokerage EmpireFlippers.com and host of the Empire Flippers podcast.