by Dominick A. Miserandino
We are routinely called to do “appraisals” of Websites/Domains. These are not so much to determine a value, but to give clients a different perspective on their due diligence. That is, we basically tell the buyer what they’re buying and what they should do with it.
We’ve listed 10 recent cases we’ve had, and of course, we hope the buyers avoid these situations.
1) Know what you’re buying!
All too often, we’ve found clients not really understanding the fundamentals of the business. We’ve had one client who bought a site for what he thought was a traditional banner advertising model, but in fact, the revenue came mostly from reviews.
2) Are the relationships dependent on one person?
We got called in after a buy when three months after the original owner left, the website revenues tanked. It turned out, most of their traffic was from the original owner’s personal pages, and not from the pages the client initially bought.
3) How much will it cost to fix their tech problems?
Just like in your house, people don’t often fix problems in the last year of ownership. Sometimes, webmasters don’t do the basic maintenance. Many updates/problems are hidden behind the scenes. Repair and maintenance can be non-existent or can cost in a range from a few 1,000 to 20,000.
4) Is the data tracking what you think or are being told that it’s tracking?
Generally, we find our clients fortunately use Google Analytics for data. That said, we wouldn’t recommend trusting anything outside of that for quantifying and qualifying your web traffic.
5) Where will you change and improve what you’re buying?
Simply speaking, where is the website lacking that your resources will help it grow and enhance? Know ahead of time where you want to spend your efforts.
6) Are the efforts repeatable without buying anything?
We had one client who wanted to buy a website that basically had 300-500 visits a month. Based on the cost, it was simply cheaper to get them buying traffic and recreating the site from scratch.
7) Is the product what you think it is?
For one client, unfortunately, we had to come in afterwards and clean up a mess of stolen content and other problems. They thought they were buying a publication, but in fact it was almost all plagiarized.
8) Is the traffic what you think it is?
We had one client for whom we found, after further analysis, that 87% of the traffic was completely faked. Know this ahead of time.
9) What is the plan going forward?
This is all too important. Do we have a sense of direction in where we’re taking this business?
10) If you don’t know… ask somebody who does — ask me.
Just like with any business, if you don’t know any piece of it, don’t leave it up in the air. Just ask the professionals to help you achieve your business goals.