Two schools of thought.
#1 - Sell when you are offered what the site is worth to YOU. Reasoning: If it's a good deal that makes sense do it and don't think twice.
#2 - Never sell your income unless it's to buy an increase in income. Reasoning: unless you have a plan in place that will pay you more over the long run, including covering the period of time in which you don't earn, it makes no sense to sell.
My advice is the same as any stock investor would give you. Know your risk level tolerance and stick to it. Unless you predict a drastic reduction in earnings in the near future, or have a killer new business plan ready to go, it makes financial sense to keep earning on a monthly basis.
At 65 sell and go enjoy life, you've earned it. At 20 ride it out, you can still afford to rebuild if all is lost and the upside is greater when you own sites than when you don't.
Thanks for the great advice.
#1 is very tough to decide. The site I'm considering selling I've had for almost 12 years. You become attached. I think it is worth about twice what the market thinks it is worth... =)
Your #2 point is what is making my decision so difficult. The offers I have on the table are decent offers (5-6 times annual profit), but with the markets and investment options not so reliable, I won't be earning at the same level with my money invested. I do have some other sites that bring in some decent money. I could re-focus my energy on and maybe improve their earnings in a few years time. But even then, if it takes me 2 years to get back to decent earnings, that is 2 years I've burned through some cash, and I probably still would not be at the same level of earnings I am now.
My gut agrees with you on holding onto my site. It has been a steady earner for years.
But it is hard to turn down that big chunk of change being dangled like a carrot in front of you... Decisions... decisions... =)
These things come around from time to time. Sit on any offer for 30 days... makes them nervous and willing to up the offer... meanwhile income continues. You'll know when that "magic" number appears.
That's when you sell.
I've had two serious companies contact me repeatedly about buying my biggest site. Although the lure of quick cash is nice, I know that I can continue to manage the site for another 5-10 years (or longer) easily. I've already been doing it for over 10.
Yes, I'm attached to the site, what can I say. About the only thing that would make me sell is to have a crazy offer like 15x annual profit, or some personal need like needing time to take care of sick family members.
I've learned it's incredibly hard to build a site from scratch and get 500K+ uniques/month (organic), so you don't sell for less than it's worth to YOU even if that's way more than what the market would pay.
Another tip, the flip side of the comment above: Take a good long look at where your traffic comes from. If it's Google, how much do you trust Google to continue sending that traffic? As you can see being #1 for any keyword now often means being as low as or even below the fold. Your site is only worth as much as the traffic your keywords command if free search is your primary source of traffic.
Since you mentioned 5-6 times current annual profit that equates to 5-6 years pay in the bank now. I wouldn't trust Google to continue sending the same level of traffic that far into the future and I'm quite certain you could rebuild in that timeframe, unless you sign a no-compete contract that prevents you from doing so of course.
If you don't change your spending habits you have more than enough time to rebuild imo. At 5-6 years profits I'd take the money UNLESS I think this site is likely to expand exponentially or allow me to leverage another idea that will.
|I wouldn't trust Google to continue sending the same level of traffic that far into the future. |
I could just as easily argue traffic will double. It's a guess - feeling lucky max?
I was approached by a company last year and their offer was 12 months net. The site doubled that profit this year. They came back again this year. I told them I was expecting another 50% increase in 2011.
I think the question is really a personal one. Are you ready to sell the business? Start over? Retire?
Find out what the tax implications would be if you sold for a lump sum versus keeping the site and earning income over time.
Be sure you're making your sell-vs-hold comparisons on the basis of after-tax dollars, not just the gross amounts.
Something else to consider is how your other sites might be affected if you sell a strong site. If you've been doing much cross-linking between your sites, your other sites might see a dip in their traffic and earnings once the new owners start taking out your cross-links and putting in their own.
If you've been doing a lot of cross-linking, it might be wise to assume that your other sites will sag for a while, rather than just staying level.
Whoa! Guys, Gals! Maybe I'm not reading this right... we're talking about selling a site named example.com, right? Not the CONTENT which currently exists on example.com?
Who in their right mind would ever sell the CONTENT? Never sell the content, that's your IP (Intellectual Property) unless they offer some REALLY, REALLY, SERIOUS CASH.
Just a heads up when negotiating. Some of these critters think get the domain, get the contents, too. Avoid that by crossing t's and dotting i's...
I have had many offers on different sites over the years and have never taken any. In hindsight, had I taken any of the offers I would have lost money on all of them. I've never been offered more than the 12 - 18 months earnings, yet my older sites have been up for 5 - 10 years and are still going strong.
|What do you do with the money? That plays a big part in the decision process. Do you re-invest in another business or another site? Do you buy some real estate? Do you become a landlord? Do you become an investor? |
You have to do what works for you, but personally I'm into passive income, like making or buying sites that don't need a lot of upkeep and investing the income into other things that don't need a lot of TLC, like even more sites or domains (if I can find good deals) or CDs, TIPS, etc.
I know people make money in real estate, but property takes time to buy, maintain, etc. and it simply doesn't interest me.
|Something else to consider is how your other sites might be affected if you sell a strong site. If you've been doing much cross-linking between your sites, your other sites might see a dip in their traffic and earnings once the new owners start taking out your cross-links and putting in their own. |
That is a good point Buckworks. A strong site has ramifications beyond just that site's income.
|About the only thing that would make me sell is to have a crazy offer like 15x annual profit, or some personal need like needing time to take care of sick family members. |
I agree and still feel that way. But I also realize that potential buyers have a numbers game to play when they make offers. It puts us in a bind if we want to sell. If the offers were even at 10x annual profit, I would be a lot more trigger happy. The personal side of the decision does play a minor factor. I am a little burned out so to speak. Though I always have the option to put the site on auto-pilot and move on to something else. It comes down to weighing the risks of the unknown future, versus the rewards of the present and the unknown future. ;-)
|I've learned it's incredibly hard to build a site from scratch and get 500K+ uniques/month (organic), so you don't sell for less than it's worth to YOU even if that's way more than what the market would pay. |
Totally agree. My remaining sites I would be keeping pull in maybe 50,000 visitors/month and brings in around $900/month right now. I have a lot of ideas to expand and grow them, just hadn't really had the time over the past few years. So it would be a good starting point for me to "start over" so to speak.
|I wouldn't trust Google to continue sending the same level of traffic that far into the future and I'm quite certain you could rebuild in that timeframe, unless you sign a no-compete contract that prevents you from doing so of course. |
I've never taken free traffic for granted. I know it can change from day to day and it could disappear one of these days. That is one of the biggest risks in this business. I think I've done well building a solid brand over the years that does pull in decent direct traffic, but we are still dependent on search engines for about 45% of our traffic.
There would be some non-compete clauses included, but not overly confining. I can't, of course, re-build and launch the same type of site for a few years. I made it clear that my existing sites would be exempt from such clauses as well.
|If you don't change your spending habits you have more than enough time to rebuild |
I agree, though I think it is a much more difficult landscape to do so now a days than it was 12 years ago. And would I even want to do it all over again? I am not so sure. It would probably take a lot more work the second time around in this new world to get to where I am right now. That is the part I struggle with. I am at a good place now. Why change it? I guess the temptation of greater financial stability for my family creeps into your mind. There is a lot of things I could do with the money to provide peace of mind to my family. Particularly if I get back on my feet within a year or two and start paying the bills from a new business or my existing sites. I told my family if I sold I would give myself a one year salary in the bank to live off with a goal of not needing to add to that account by the end of the year (implying I would find a way to replace that income).
If I could do that I would be left still with a nice chunk of change in the bank and back on my feet. The unknown being whether I could pull that off. I think I could, but you never know in this business.
I try to compare it to holding on to the business and how much money I could have in the bank after 2 years if I saved the extra cash, etc. It is a difficult comparison to make since the value of the site can either climb or go down, etc. You just don't know and no one can predict 2 years down the road how any business will be doing...
|Find out what the tax implications would be if you sold for a lump sum versus keeping the site and earning income over time. |
Great advice. This is a big issue I've been researching for a while now. It appears my biggest expense for selling will be capital gains taxes here in the states. Right now they are at 15%. Plus escrow fees and any lawyer fees. From what I've read and been told (I talked to the IRS), everyone seems to agree that the sale of my site would fall into the capital gains tax structure. If for some reason it fell into personal income, I would get hammered by more taxes and the deal would not be worth it. So I am definitely trying to nail down all the details of the transaction with an attorney to make sure I'm covered. A mistake can be very costly.
|If you've been doing a lot of cross-linking, it might be wise to assume that your other sites will sag for a while, rather than just staying level. |
Fortunately there is no cross linking. All the sites are independent from each other.
|we're talking about selling a site named example.com, right? Not the CONTENT which currently exists on example.com? |
The content would be part of the sale. The content is what drives the current levels of traffic. Without the content, the site is a shell of emptiness, some scripts and a domain name with links. That is not worth nearly as much (unfortunately... =)
I really appreciate everyone's input on this. You have all been a great help. It is a hard decision to make when you don't have many friends or family to bounce it off of (since they don't quite understand the nature of my business). But everyone here does understand, so thank you for your advice. It is much appreciated.
Sell a site when you can earn more from the proceeds than you can earn more from the site over the next three years. That's it, unless you are wedded to your site and emotion is winning over logic.
Talk of selling a site for 10x or 15x earnings comes from those who will never sell their site. Come on guys and gals, be realistic and take a risk. Calculate how you can use the capital and be brave. "faint heart never won the day" and waiting for offers of 10x earnings indicates the faintest of hearts.
Has the spirit of enterprise totally deserted WWW?
I recently sold my site at well below 10X earnings and concentrated on another site. Wow! how glad I am that I sold that site! Seven months later I am now at 75% earnings of the sold site. I have pulled off some of the sales capital to live on but I am looking at a huge pile of cash in my bank account free of charge in around six months when I will have replaced income like for like.
I'm in it for the money and the fun. But I need the money to pay the bills and selling my site has worked an absolute treat for me.
|In hindsight, had I taken any of the offers I would have lost money on all of them |
Agree. The problem with selling a site/business is that the offers are almost always lowball. It's a way of making a quick buck and does not usually involve a desire to put any work into running things.
Therefore, it's a no unless there are other factors such as retirement, lack of time to run it effectively or financial problems to consider.
I decided to go for it. Looking forward to some new challenges and some new business adventures. :-)
And you shall receive those :-)
I have a couple of sites you might be interested in, rich guy! (j/k)
Have you thought about buying other people's projects now that you can afford to do so? If you can spot good value these are tough times and you may also find a willing seller.
Rich guy is a stretch. ;-)
I will probably take a few months off. Then back to the grind.
I am planning on working on a few of my side sites for a few months.
I may look to acquire a smaller site or two. But for now I have to close the deal. I could change my mind. It will probably be another month before the deal is done. ;-)
Good luck, maximillianos. I hope everything works out great for you.
Thanks! From what I've read it can be 50/50 that deals fall apart. We will see how it goes.
Trust your gut feelings Maximillianos, trust them 100%. There are predators out there but the majority of people are honest. My buyer was totally honest. They are out there. Absolutely the best of luck and post back after the deal is done. Please post back.
They seem honest. If you never hear from me again, tell the authorities to check my email logs. ;-)
It just so happens we are having record revenue months during this time. Makes the decision to sell that much harder, but it also gives you some leverage when selling.
Everything I have read says the best time to sell is when things are on their way up. You have the most negotiating power to get the price you want.
You have probably done this already, but do a search on your buyers email, other domains, BBB, whatever you know about them. I did that I found out someone interested in one of my sites was a pretty shady character, thanks for forum info and stuff I found on him on the BBB. It creeped me out that someone like that had targeted one of my sites.
That is great advice Jane. I have done some research. It is a very large company buying my site. They have been very professional.
I'll be sure to update everyone with my experience once it is all done.
I'm getting cold feet. Anyone else have a subscription to Inc magazine? There is an interesting article in this months issue about selling your business. They profile a number of folks who have sold, or plan on doing so, or refuse to do so. Talks about life after selling and the challenges. Kind of spooked me!
Now I'm back on the fence. As my lawyer says, it is never too late to say no.
My main website has been a labour of love and I've put a shed load of my time into it over the years. When I started, I was a totally clueless webmaster... but that site has been the tool I used to learn the trade.... So, I'm very attached to it. Further, I've made some very dear friends through the forum part of the site.
However, 10x annual profit would build the house I promised my wife and daughter. I'd sell in a heartbeat if I was offered that sum... and then rebuild my income by developing some other projects I've had in mind...
That said, starting over from scratch scares the hell out of me... looking at those analytics.... zero visits... scary.
Indeed interesting, I just sold one of my websites for 15 times monthly income. It was not a big one, like yours is probably, but decent..
Hope you will update this thread soon :)
Oh, man. I just walked away from month-long negotiations where I asked 10x and was offered 5x. If they would have given me what I wanted, I'd have investment income and the money to move cross-country and a house overlooking the Pacific Ocean.
I sure hope I made the right decision by walking away. Now I need something to motivate me to get back to work. It's going to take a while for me to recover from the negotiations. I hope I made the right decision.
|That said, starting over from scratch scares the hell out of me... looking at those analytics.... zero visits... scary. |
I hear you on this one. I credit my wife to renewing my confidence in selling by advising me that I could always buy a new site to grow. She says with my abilities and background I could take a smaller site and make something of it in a few years. The idea got me excited. And helped me realize that I didn't have to necessarily start over, I could buy myself a site that is a few years into the game.
|It's going to take a while for me to recover from the negotiations. I hope I made the right decision |
I'm in the same boat! I just told my wife if this latest offer doesn't close, I'm walking away from this whole selling situation for a few months. It is just too much stress and distraction.
LATEST UPDATE: Might be closing the sale by the end of the year. I will post more details soon if all goes well. Can't talk about much until then!
Stress and distraction! How true, anyone who sells their their site can expect that in shedloads. Very very big shedloads.
My asking price would be so high the prospective buyer would laugh at me.
Unless the web changes dramatically in some wierd direction, I have a steady, fairly comfortable income for years to come, not months. Low maintenance. I renew domains and keep up with hosting fees. I add content here and there. Occasionally I even take on a client.
2 hours max in the morning and the rest of my day is free.
How would I put a price tag on that?
thats cause you're factoring in your emotional attachment to it ;)
|My asking price would be so high the prospective buyer would laugh at me. |
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