After making the tough decision to sell your website, it is optimal to prepare the business for the sale, so you can maximize the selling price. While we always advise our clients to have their financials ready for due diligence and update the aesthetics of their sites if necessary, in this article we are mainly dealing with the business model of a website. From a buyer’s perspective, the most important aspect of a website value is the cash flow that it produces, not the number of Facebook likes, Twitter followers, email subscribers, or traffic.
While each of these is important and should contribute to the profitability of a website, it is ultimately the cash flow that valuations are largely derived from. Perhaps you are not optimizing your email list or social media following and there is an opportunity for a new owner to do so which may make the website a bit more attractive, but the majority of buyers feel that they should not pay you a valuation for the improvements that they make to the business. Also, most website brokers will advise you to make your internet business as easily relocatable and operational as possible.
For instance, a client recently called our firm and asked for advice as to which of the three segments of her online business she should focus on building while preparing for a sale in the near future. Aside from obviously analyzing the profitability and growth potentials of each, we advised her to focus on growing the segments that would be easy to operate under new ownership rather than the one that requires the knowledge and hands-on work of the owner. It is more attractive to a buyer to operate a website which he can outsource many of the aspects of it and not be bogged down dealing with every operational component of the business.