In this article, we provide a list of the 10 things you can do to optimize your website value. It’s critical to note that at the time of sale it’s far less about how you perceive your business and the opportunities; instead, it’s about how a potential buyer views your business today. You should prepare ahead of time for this scrutiny.
The list below is designed to be a practical and actionable guide. They will help you position the business for a successful sale and optimize your chances of getting the price you want.
Firstly, it should be noted that website valuations can be complex and take into consideration many factors.
These are the fundamentals.
In the digital real-estate space, it will often boil down to a simple calculation – seller discretionary earnings * an annual multiple.
The multiple is influenced by the business model, market conditions, earnings stability/trend, uniqueness, traffic, customer acquisition efficiency/sources and of course, historical website and online sales data.
Complex, isn’t it!?
But, what can you work on today? What can you do to ensure you optimize business value and limit the possibility of a deal falling over?
Before we get into the TOP 10, Liz Raad from eBusiness Institute sums it all up nicely. As an experienced buyer and seller, Liz states, optimising business value is about making your business as attractive to a buyer as possible – so instead of thinking about how much YOU value your business, think about how THEY see it based on return on investment (ROI) and security.
Liz goes on to say, that’s why when we advise owners on setting up their business for sale, we start by finding out who their ideal buyers are and what they would value most – then we can focus on improving or highlighting these areas.
Now for the TOP TEN:
1. Ensure You Have Clean Financials
This is well within your control. You should have a profit & loss statement, it should be up-to-date and a reliable indicator of ALL revenue and costs. Hire a bookkeeper to get everything in order and use a cloud accounting tool like Xero or Quickbooks for easy ongoing financial management. The expense is worth it. We see deals fall over where there are incomplete or inaccurate financials.
Codie Sanchez from Unconventional Acquisitions supports this and says – Create immaculate books! The more you can do to track expenses and revenue automatically, tie them perfectly to tax returns and explain any big sways one way or the other upfront, the more they (a buyer) can trust your financials and validate price.
2. Look After Reputation Management
If you have paying customers (less relevant for a content website) you should begin asking them for reviews. This is as simple as putting in place a reputation management system like TrustPilot. Start sending them invites and collecting verified reviews. 25 5-star reviews says a lot about your credibility and this is something buyers will try to measure. Or, if you need to repair relationships, start doing this now. We have seen plenty of sales fall over with the discovery of poor customer support or a disgruntled customer.
3. Review Your Cost Base
Renegotiate deals. Look for less expensive email marketing software, renegotiate your hosting bill, optimize shipping fees. Anything you can think of to reduce your cost base will help optimize your website value.
Goran Duskic from Webmaster.Ninja is a prolific buyer and he has some sage advice. He says, I track my activities, and incoming invoices (time, money) on a daily, weekly and monthly basis. When I see a pattern I don’t like I focus my attention on eliminating it. Spending too much money on a particular provider, brainstorm ideas how you can replace or eliminate it.
4. Boost Domain Authority
Neil Patel remarks Domain authority (DA) refers to the number of relevant backlinks—links to your website from other reputable sites—your site has. The relevance of those backlinks also contributes to your score.
You can boost this by conducting a site audit to ensure links are valid, negotiating direct link deals for critical keywords, improving site speed and building a relevant social presence.
5. Consider a Redesign That Will Optimize Your Website Value
Some sites present terribly. This is no different to styling your home when you put it up for sale. While the foundation might be solid, if it doesn’t look good up front, potential buyers will walk away.
Consider jumping on 99Designs, or similar, and giving the site a facelift…particularly if it hasn’t had an update in 3 or more years.
6. Make Your Website Mobile Friendly
Obvious right. Not for some. Do an audit and find out how much of your traffic is coming from mobile. If it’s over 25% you should ensure the site is mobile optimised. Try this tool: https://search.google.com/test/mobile-friendly
7. Add Diverse Sources of Traffic
Organic search traffic is great but you should look to de-risk your dependency here. Consider building a social following using quality content, sharing customer feedback or other, test some paid ads for hyper-targeted audiences and do content and referral deals with bloggers to build referral sources. The more sources of traffic that you can build, the better optimized your website valuation will be in the end.
Michael Bereslavsky from DomainMagnate.com says, “always reduce risk by diversifying your sources of traffic. Bringing more stability to the business increases value.”
8. Document Standard Operating Procedures & Processes (SOPs)
Documenting the standard practices of running your web business is critical for a smooth handoff. The new owner is going to want to know how you do the things that have made you successful. If you’re prepared to immediately hand these over, it makes you look much more professional and ups the value of your business.
If you write content – how do you decide what to write? Which types of articles work? Who edits these articles and how much does it cost? If you are a SaaS business, how are support tickets handled, what are the most common? How does bug maintenance work? If you are an eCommerce business – how does order fulfillment happen and what does the supply chain look like? You get the point. Document them!
Codie says, the more you document, the easier the transition. If you can wrap a bow on it you can charge a premium.
9. Build an Email List
An engaged customer base is a measurement of value. Adding 10,000 subscribers and pushing content, deals, offers or insights is a really good way to build credibility, a repeat customer base and word of mouth (emails are easy to forward). Not to mention, email addresses can be used in other avenues as well, such as creating targeted ads or lookalike audiences for Facebook ad campaigns. Increasing your email list with pop up sign up forms, capture at point of sale, or otherwise will help optimize your website for a higher value.
10. DON’T Execute On All Growth Strategies
What!? That’s right. You want to leave something for the new owner to bite into.
Hint at the opportunity, but leave it to them to realize that opportunity. This could be something as simple as optimizing your AdSense revenue and pointing to the long-term upside and value of an affiliate program plugin.
Shakil Prasla from SZ Ventures says, future buyers like me love to see growth strategies left on the table, where the seller didn’t have the skill set or time to implement. Most owners stress about chasing all avenues to grow market share. I will happily pay a premium for a business that has few strategies for me to implement vs a business that has exhausted most ways to grow a business.
And, Richard Patey from Investing.io also agrees. He says, to optimize business value I’d make sure that I leave optimizations on the table. Most buyers are looking for upside and if you max out everything you limit your buyer pool.
Summary – Optimize Your Website Value
Some optimizations will be more relevant than others dependent on the business that you run, but some combination of these 10 will most certainly help drive value for your business sale and help you finalize the sale when the offers start to come in.
Pick those that best suit your business and maximize your chances of sale.