You decided to buy a website on Flippa, and now you are wondering what the first thing you should do is. First of all, congratulations on making the right decision. Buying revenue-generating websites is one of the smartest financial and business decisions I have ever made.
Although I still don’t have the six-figure flip that everybody likes to brag about, I had some success. The six-figure flip eludes me mostly because I haven’t decided to sell my crown jewels. If you have a winning horse, why sell? Once you learn the ropes, there’s a discussion worth mentioning, to sell or not to sell. But that’s for another blog post.
Why read what I have to say?
If you want to talk about questions, that’s a great question to ask before reading an article. Why should you pay attention to what I say? Looking at my second interview with Flippa back in 2021, I can tell you that since 2021 my beard is not the only thing I have grown. Returns on the websites I bought are steady after 5 years of investing. I made all my money back in March 2022, and I still own and operate around 15 websites making around $1000 per month.
Why such poor results? I spend most of my time working on my company WhoAPI and webmaster.ninja, and the websites that I just mentioned were purchased for passive income, which they generate for me. On top of that, they were and still are a great learning experience. I really wanted to be involved in this growing industry, even with the limited funds I had at the time I started. I was looking for where to park any cash savings that I had. I began with $1000, that’s how much I had to play with. I was clueless about crypto and didn’t like the risk. Then I realized I have web hosting, domain name, WordPress, and other skills that make a good foundation for a website investor and operator.
Now I live on a beautiful island in the Adriatic, with amazing beaches within walking distance. Quaint cafes, amazing fish restaurants, and spectacular beach bars are also included and part of everyday life. Speaking of life, it’s very short. And if you couldn’t tell, I am a big fan of Tim Ferriss’ 4-Hour Workweek. Looking at where I started almost 20 years ago, a financially poor high-school dropout living in a small town in the Balkans, I can tell you with absolute certainty that I was not heading in the direction of where I ended up today.
One question for you
Before we start with the list of questions, I have one question for you. Would you like to make $1000 per month passively? Because that’s what I was able to achieve, working from home and buying an apartment on an island. Or better yet, would you like the opportunity to grow the websites you purchased and sell them for six figures? Because that’s how much I think one of my websites could sell for.
If the answer is yes, then these are the questions you need to ask the sellers. Some of these questions you need to ask yourself, and some you need to ask the seller.
1. What is my situation, and what set of questions do I need to ask?
As you can see from my introduction, I was in a very particular situation. It’s probably quite different to the situation you are in. Maybe you have $1,000 to buy a website, and maybe you have $1,000,000. The questions you will ask are diametrically different and won’t even make sense in different situations. For example, if you buy your first website for $1,000, you can’t ask the owner to sign a non-compete agreement. It doesn’t make any sense!
When Blake Hutchinson, the CEO of Flippa, interviewed me in 2020, he asked me what my number one tip for new buyers would be. This is exactly what I told him, understand the scenario you are in and what it is that you are looking for. Very briefly, these are the different factors that can impact your situation:
- Size of the deal. Small website (up to $2,000), medium website (up to $100k), big website (over $100k)
- Your experience in buying websites. (First five acquisitions, every acquisition after that)
- Your experience in managing websites (No technical, design, sales, or copywriting skills, some skills, seriously skilled)
- Type of the website. Content, eCommerce, SaaS, starter site, no monetization, dropshipping.
- Your sweat equity (Part-time like a side gig, full-time like a new career, flipping)
2. Is this too good to be true?
The golden rule of buying anything holds with buying websites as well: if it seems too good to be true, it probably is. Air Jordans for $40? Used 10-year-old Audi with 40,000 miles on it for $5,000? A website making $1,000 per month on sale for $12,000?
No matter how much due diligence you put into it, if something sounds like the deal of the century, and you think that you are the lucky one who found it… Then you will make the same mistake I did and waste $2,000 on your first deal. The problem with websites, unlike cars or fake sneakers, is the only thing you are left with is a worthless domain name you have to renew for $8.57 annually.
3. What does the website’s history look like?
Bookmark Web Archive (Wayback Machine), and check what the website looked like a year ago, 5 years ago, and 10 years ago. Doesn’t have that much history? Why not? Is there a different domain name where the website originally started? Which domain, why was it done that way, and what does the history look like on those domains? Are there any people mentioned on the about us page, are these the same people selling you the website? On some deals, I spend more time on Web Archive than I do on Flippa.com, and you should too.
4. Is the domain name worth anything?
What’s the first thing you see when you look at a website? What’s the first thing you say when you want to tell someone about the website you purchased? That’s right, a domain name. Since my main business WhoAPI deals a lot with domain names, I found the cheapest place to buy a domain name (despite the name, it’s not Namecheap). Having said that, I have also paid thousands of dollars for a domain name. Speaking of, don’t you just hate it when someone writes on their website .com domain for $8.50, puts an affiliate link, and then you find out that the domain name renews for $13.98 or higher?
5. What impact does the seller have on the business / website?
When you are buying a website, you essentially have to make plans to take over. Taking over from someone else generally means that you or your team can resume where the old owner left. In a best-case scenario, you can improve upon what’s already built. With that in mind, it’s a great idea to learn if the seller was an SEO wizard, a social media mogul, a fantastic engineer, an outstanding designer, a slick salesman, or a shrewd business person. What is their overall online reputation? In other words, will you fit into those shoes, or will they be too big?
6. What is the real reason they are selling this website?
Flippa is always making an effort to vet both the websites and the sellers listed on their platform. That said, just like everything else in the world, you will have reputable sellers asking for a premium price and a newcomer offering their websites. In my experience, price alone is not a guarantee that the website or the seller is reputable or the reason someone is selling. So you have to find another way and try to understand the real reason someone is selling a website.
7. What level of expertise is required?
Similar to question number 5. Speaking of experts, do you have what it takes to take the website to the next level? If the seller states he never worked on the site’s SEO, could it be that executing good SEO is really hard? Or just that the seller doesn’t have those skills? Don’t let this put you off your first purchase, but understand what you are getting yourself into. In 99% of my website acquisitions, I didn’t buy a website that’s built on Django. Do you want to guess which framework is under the website’s hood that brings me the best returns? I’ll give you a hint, it’s not WordPress.
8. Was the website ever sold in the past?
Not only can you find out if the website was ever sold, but you can also check if the domain name was bought on the aftermarket. Well, at least if the sale was reported. Our third question was all about history, this question expands on it. You should check the website’s sale history, including any website or domain name sales in the past.
9. How old is the website?
A particularly important part of the historical check of the due diligence is age. How old is the website, how old is the domain name, and how old is the traffic? Flippa has partnered with SEMRush for a good reason. Open a free SEMRush account, and check what the traffic looks like over two years or more. You can check the history of any website, so do it before you bid on a website.
10. Are there any potential legal issues?
Here are some questions you need to ask yourself about legality. Is the website infringing on any name marks or trademarks? Is content that’s published rightfully owned or scraped from Web Archive and then plastered on an expired domain name? Why ask these questions yourself and not the seller? Maybe the seller is ignorant of the registered trademarks, and maybe they think it’s not a big deal.
If you need help with comprehensive due diligence, Flippa’s team offers that service. It’s worth looking into that if you want that advantage on your side, especially if you are a first-time buyer.
11. How does the website make money?
You want to be clear and understand how the website makes money. Or monetization, as the seasoned website investors like to say. Furthermore, will you be able to continue making money in the same way, diversify the revenue and even increase it? You can also look into customer acquisition channels, customer acquisition costs, and conversion rates. Is the website getting traffic from search engines or social media channels? Are you proficient in those skillsets? Are you good at conversion rate optimization? Can you make considerable improvements in any of these areas?
12. What does the website look like (UX, UI)?
When you open the website, do you like what you see, or does the website need a major redesign? Are you a great designer, or know someone who can help you? Can you update the design with your skillset? Is the website’s usability great, does it make you want to read another article? Do you see thought-provoking content? Is bad design an opportunity or a challenge for you?
13. What does the website look like from a technical perspective?
There’s so much you can do to check the website from a technical perspective. You can check the website’s speed with Google’s PageSpeed Insights. You can check on-page SEO, link structure, and dead outgoing links. Speaking of backlinks, this might be a great time to mention checking the backlink structure. Do you see any suspicious websites sending a lot of backlinks to the website you want to purchase? Will those backlinks remain or miraculously disappear after the sale? Again, is this something you can fix?
14. Who are your competitors?
If you buy a website for anything close to six figures, you definitely want to check your competitors. The last thing you want is your seller starting a new business with your money and then competing with you. During the due diligence process, you want to check who is competing with you on traffic, who is selling similar products, and who is the 800-pound gorilla in this space.
15. What’s your exit strategy?
There are so many questions I can write, and you can see that up until now, I haven’t asked just 15 questions; it’s way more. I’ve decided to end my 15 questions with the exit strategy. That’s how you will end your website acquisition. Even if you don’t have an exit strategy, you actually do. It’s death – or end if I am not allowed to be so stoic. End of technology (Flash), end of a trend (PBNs), or end of something else. On the other hand, you may plan to sell to one of your competitors, a strategic buyer, or return to the source and sell the website on Flippa, where you bought it.
Ask yourself, will I sell this website or own and operate it for as long as possible?
What now? The title promised 20 questions, and I delivered only 15. Now comes the best part! I’ve decided to ask other experts and sharp website investors with more deals under their belt than I have. Together these investors have dealt with acquisitions of over a million dollars. What questions do they ask?
Filip Cakic wants to know why the seller decided to sell the website. GeeK.hr is one of the biggest tech portals in Croatia, with over 1.500.000 pageviews per month. Filip owns and operates more than 20 websites.
16. What is the reason for selling?
One of the first things I want to find out is the reason for selling. If there is no good reason, there must be a catch somewhere.
Filip Cakic CEO/Owner @ GeeK.Hr
The next website investor wants to get his hands on Google Analytics access as soon as possible. Mushfiq is a prolific investor who buys, grows, and sells online businesses, specifically content websites. He has done 200+ website flips to date, and several have resulted in 6-figure exits. He is experienced in all aspects of digital marketing and acquisitions.
17. Can I get added to Google Analytics?
Can I get added to Google Analytics? As a buyer, I want to verify Google Analytics data on my own, not through screenshots.
Mushfiq Sarker CEO @ thewebsiteflip.com
Stacy Caprio agrees with Mushfiq, she always asks for Google Analytics access so she can dive into the site’s history. Stacy Caprio is a website investor and the Founder of Her.CEO. You can follow her journey and case studies on her email newsletter.
18. How long has the seller owned the site and how did it come into their possession?
I like to ask the seller how long they have owned the site and how it came into their possession. It is always interesting and helpful to know if they bought the site or made it from scratch to get a better idea of the site’s history. Knowing as much background about the site as possible is helpful when determining if the site is a fit for my portfolio.
Stacy Caprio Founder @ Her.CEO
Another legend in this space, Michael Bereslavsky, also looks at the history, discerning high-quality projects by learning if the website was built out of love and enthusiasm. Furthermore;
19. What are the website’s most recent revenue and traffic data?
I always ask to see the website’s most recent revenue and traffic data to get a better idea of current trends.
Michael Bereslavsky, CEO of DomainMagnate.com
Marko Grbic purchased $100k+ worth of websites just on Flippa, and he has an interesting take.
20. Who your role models are? And who do you like to learn from?
I often like to ask who your role models are? And who do you like to learn from? I like to ask such questions because I want to understand what sort of a person the seller is, their level of integrity, who they learn from, and similar. The technical aspects are easily verifiable. High-quality sellers make the chance of something ugly jumping out of the closet lower.
Marko Grbic Founder & CEO at beardoholic.com
At the beginning of this article, I mentioned how we should ask different questions in different scenarios. So I’ve decided to expand on the 20 questions with 2 bonus questions.
At SaaS.Group they have specialized in acquiring SaaS websites (and companies). Their Chief Acquisition Officer, Dirk Sahlmer, has this question in mind.
“One of the first questions I ask the seller is what transaction structure he or she would prefer. Since we offer a high degree of flexibility, it is important for me to come up with an offer that the seller feels comfortable with.”
I’ve also reached out to mergers and acquisitions expert Joe Bardenheier. I met Mr. Bardenhier a few years ago while he was working for Endurance International Group (now Newfold Digital). He worked there for over 17 years while completing 80+ deals worth more than $1.75 Billion. Here’s what he likes to ask:
- What value can I add in revenue generation and/or cost reductions to this asset that might bring down my effective purchase multiple over the next 12-24 months?
- Does this asset fit my overall strategy and core competency, am I going to have time to manage it well?
- If the price is on the lower end of the scale, is it “too good to be true”?
If you are having second thoughts about your first purchase after reading this article, that’s normal. You want to be a little scared going into your first purchase, but remember that this has the potential to turn into excitement if you are well prepared. Hopefully, this article did just that. Feel free to use these questions as a checklist when you are evaluating a website. Good luck with your purchase!