Day 29 - Selling Your Site


Staff member
BuSo Pro
Digital Strategist
Sep 3, 2014

Here we are, closing in on the end of the course. This is Day 29, the day of reckoning... the day of the liquidation event.

You've been grinding and growing your web asset for some time now. That could be six months or six years. You're getting steady traffic, you've optimized your monetization and funnels for maximum revenue, and you're bank account just got a new comma.

There comes a time when your operation has gone about as far as you're able to take it. You'll either need to step up your efforts and scale, maintain it as it is and collect the semi-passive income, or sell that sucker for a huge multiple.

What to Consider Before Liquidating

The questions you need to be asking yourself at this point is:
  • Do I want to redirect funds to scale this harder?
  • Is the ROI there at a larger scale?
  • Is my traffic stable and non-reliant on iffy sources?
  • Could I cash out and redeploy the money into something bigger?
The first question is whether you even want to push this further. You might be plum sick of it by now. It might not have been a labor of love and you'll be more than happy to close this loop.

You may also determine that you've hit the peak before your return on your investment begins to diminish fairly quickly. You've basically tapped out the industry. Holding at this point isn't a bad idea if and only if your path to victory was paved in stability. Otherwise, holding is a risk that you can get paid to offload on someone else.

The biggest risk to you are algorithms, whether that's Google's Page Rank and associated filters, Facebook's Edge Rank, etc. You might be winning (and hanging on) by a thread, and that thread can be disconnected at any time. It's happened to most of us more than once. You can survive it, determine the next best move, regrow and become that much stronger. But there's that ROI question again.

And finally, can you liquidate and redeploy? Let's say you don't see this project growing beyond the $5,000 a month mark you're at, and it's eating up all of your time. Let's say that you find a buyer willing to pay a 30 month multiple on your profits to buy it out from under you. You can walk away with $150,000 (minus taxes, escrow fees, broker fees, etc.) and pivot that into your next project that has a monthly cap around $500,000 instead, for the same amount of effort you're putting in on the current project.

The Selling Process: Where & How

To determine if you should sell or not, you need to weigh the risks and rewards against each other, which is what the questions above help you do. But if you've never been through this process, you may not understand the rewards. Let's look at the typical process first.

There are essentially three paths to selling off your site:
  1. Auction
  2. Broker
  3. Outreach
In all three cases, your first move will be writing some copy to present to the potential buyers. We'll talk about the best ways to get that done later in this day.

For an auction, know up front that you will pay a static listing fee, whether you complete the sale or not, and you'll pay a percentage of the total rake to the auction house. The basics are that you will decide on a length for your auction. Too short and you don't reach enough eyeballs. Too long and you lose urgency, greed, and fear of missing out. Seven days is typically good, pending you make it end on a day people are doing business and not at the park with their kids or plastered watching football.

Most auctions feature a proxy bidding process, which means I could bid on your site for $10,000, but if the current highest bid is only $2,000, it will incrementally bid for me to $2,500. The auction house will continue to incrementally bid for me up to $10,000 and then stop and notify me that I've reached the limit and should revisit the auction if I want to win. Those without proxy bidding love to scam people by not announcing that they aren't offering proxy bids. I don't recommend using them at all as a buyer or a seller.

In most auctions, you'll have options for a Reserve and a BIN. A reserve is a value that you enter that says, "This is the lowest I'm willing to sell for and if the bids don't reach this, I don't have to sell." Some ballsy guys will put a $1 bid in order to get more and more of these incremental proxy bids, which lands their sites on the "Most Active" lists, which fetches them more eyeballs and hype. Don't do this if you don't know what you're doing.

A BIN is a Buy-It-Now price. My recommendation here is to do the opposite of the reserve and post a price that's very optimistic for you. That's the tax someone pays for wanting to secure your property immediately without risking losing it. They can pay that price and shut down the auction immediately. The danger is you might miss out on a bidding war that goes above this BIN price, however... a bird in the hand is worth two in the bush, especially if the bird is bigger than you expected.

When you sell your profitable website, you are essentially trading that monthly income for a one-time pay off (typically) anywhere between 10x - 50x monthly earnings but it can be a lot more than that. That's a wide net to cast in terms of valuations, and that's because there are a lot of variables at play. In a moment, we'll discuss some of the things that you can do to make sure you're on the higher end of that estimate.

Be ready for a thousand and one people trying to get you to tell what your reserve is, pretend to be interested and ask for analytics access so they can copy your site for themselves, try to get you to lower your BIN, etc. Weed out the dummies and don't do anything you don't want. Staying calm is your best friend during this stressful and exciting process.

With a broker or brokerage, what you're doing is paying them a fee to go out and find you a buyer. This might range from 10% to 20%, on top of escrow fees, taxes, etc. I prefer this method with a trusted and skillful brokerage for several reasons.
  • They prompt you for every bit of information you may not have considered that helps the sale.
  • They'll put together copy and/or a prospectus to send to potential buyers.
  • They shield of you from manipulative buyers, mediate conversation, and negotiate for you.
Basically, you're paying a brokerage to reach out to their current and past clientele list to shop your site around. Someone will likely want it. If they don't, they'll go out and grow their contact list and find you a buyer. But don't bring them some bullshit. Your site needs to look good, be good, be stable, be earning. They won't tarnish their reputation by trying to sell for you.

Unlike an auction where you can toss up anything and hope for the best, a broker is going to have some expectations. They will analyze everything to make sure this isn't a trickster site built on 301 spam, to make sure you aren't lying about traffic sources, to make sure your content is original, etc. They want to know every source of revenue, map out how long it has existed, how stable it is, which networks you're dealing with, and more. Every bit of this will play into the valuation you receive.

This is you doing everything for yourself and finding your own buyer through direct contact. The best approach is to contact the big boys in your niche first, and second to find agencies or companies that collect cash flow to sell off to their own clients. Third best move is to find media empires building out their portfolio.

This approach can be well worth your money if you're experienced enough to pull it off and if your site is earning in the big leagues. Take a 15% broker fee and apply it to a $30,000 flip and against a $3,000,000 flip. Sure, I'd pay $4,500 on a thirty grand flip to not have to bother with anything. But I'd be hard pressed to just hand a brokerage $450,000 for flipping through their rolodex for 30 minutes.

The Transfer Process

No matter which method you use above, you'll be engaged in the transfer process. There are many ways to get this done but you'll be limited by the willingness and technical proficiency of your buyer.

For instance, you could, in addition to transferring the domain:
  • Hand over the server entirely
  • Export and import your database by hand or plugin into their server for them
  • Let the server company copy and paste cPanel or WHM
  • Give the buyer access to your server and let them do the work
Regardless, you're not going to escape this part, and this is when tensions get high. And this is why...

We Always Use Escrow!!!
If you're selling some piece of crap for $300 on Flippa, go ahead and use Paypal if that money doesn't mean anything. But any time the stakes are high, use Escrow. It will protect you and is legally binding.

Whether a broker initiates a 3-party Escrow for you or you engage the buyer in a 2-party Escrow, the process is the same.

1) The buyer will fund the account and Escrow will say "Okay, seller, the money's here and is legit. Go ahead and take the next step."

2) The next step is you'll show good faith and calm buyer nerves by transferring the domain to them. You won't do anything else until the buyer notifies Escrow that they have received the domain and all is well.

3) You'll supply the buyer with everything else: The site files, the site database, social media accounts, contacts for your monetization network, etc. At this point, you tell Escrow "they have it all, start the timer." The buyer will have some pre-negotiated time period (48 hours, 72 hours, 1 week) to check up on everything and make sure it's all there.

4) The buyer has three options during this time period. They can say that things are not as they should be and cancel the sale (someone might try to steal your domain this way. Don't worry, the past and new registrar will get it back for you). They can say that their due diligence checks out and release the funds. Or they can do a disappearing act and try to be slick. In the last case, when that timer runs out, Escrow is going to give you the money. This is why we use Escrow every time. Protect yourself.

The Reward - Valuation

I've been telling you how to determine you should sell, how to sell, how to protect yourself, but not what you'll get out of it.

The entire point of flipping your site is this:

You're selling your future cash flow at a current valuation for a large lump-sum.
This may be to get funding for a new project, it may be to sell your risk to someone who can tolerate it, or it may be because you're in a financial bind. But the point is, however your site is doing right now, you're getting paid as if it performs the same way for the next XX months. The buyer is hoping he can make it grow and make his money back sooner and turn it into big profits.

You can sell at any time, really. But the serious and knowledgable buyers have expectations and an understanding of how to value your site, so you might as well stick to the industry standards. Your valuation will be in the form of a multiple of months of profit.

First, the bare minimum is that you need three months of income. Lots of buyers will give you a valuation based on the last rolling three months of profit, averaged out. But if you only have three months, expect the lowest valuation, as low as 16x.

Even if your site is earning well, if it's built on tricks the serious buyers will know and won't give you a high valuation or run up your auctions. And then the dreamers who might have bid will wonder why it's not getting bid on. I've seen sites that are putting down mid-six-figures a month sell for only 10x.

If your site is proven to not be based on tricks and your revenue stream has been active and consistent for six months or more, you can expect to sell for around 24x. That's two full years of cash flow.

To receive a higher valuation, up to 30x and even 36x, your site needs to basically be a real business. No tricks, no traffic based off of SEO cheats that'll tank, no arbitrage, etc. Not only this, but it also must be a big earner. Yeah, you might flip a $300 a month earner at 36x on an auction when two guys go into a bidding war, but not with a broker or outreach. And the difference between an extra 12x at $300 and 12x at $300,000 is a whopper. When the stakes get higher, you are going to be scrutinized deeper than you ever have been. The fine tooth combs will get busted out with magnifying glasses and you'll go through FBI level interrogations before you see a dime. Thankfully, your site is legit and all you need to do is tell the truth... right?

So now you have a reasonable expectation of what you might receive... if you sell. Let's go back to that conversation. Maybe you're still on the fence after asking yourself the key questions. We can weigh the pro's and con's to help make things more clear.

The Pros & Cons of Flipping

You can list the positives and negatives and assign weights to them and add up the numbers if you're having a real hard time deciding. If it's that hard to decide, we can assume there's another reason for this turmoil that we'll deal with next. First let's look at the ups and downs of selling.

Advantages to Holding:
  • You continue to earn money each month, while holding onto your asset.
  • A longer history of earnings will help you sell for a higher multiple down the road.
  • Potential untapped growth can be realized.
  • If part of a larger portfolio, it can help normalize your earnings year-round.
  • Big site sales often come with those non-compete agreements attached. You might not just be giving up a site, you could be giving up the ability to compete in your entire niche, at least according to the agreement you'll have signed. This could last a year or two.
Advantages to Selling:
  • You recieve a lump sum payment that reflects many months of earnings that you can invest in a better project
  • You're trading continued risk for a one-time reward.
  • You're closing loops that cost you time, energy, and focus. Saying no to this project by selling it is saying yes to others while giving yourself the bankroll to make big things happen.
The truth of the matter is there's rarely a reason not to sell, unless you can't ramp up the next project with some funding from your nest egg in under the multiple period and your living expenses are too high.

It should rarely ever be a question of "should I sell" but only "when do I sell." If you're struggling with the question of selling at all, ever, then pay close attention to this next section.

Inner Turmoil

Depending on who you are, if it's your first rodeo or not, and how attached you get to your projects, you may experience quite a bit of conflicting feelings. You know cashing out for two or three year's worth of income is probably the wisest thing since anything could happen in that time.

There are two main traps when it comes to attachment to your projects:
  • Hoping for increasing passive cash flow
  • Thinking it can be something it can't, all in the name of Power
You really love your baby. It's like raising a pure-bred puppy from two weeks old until he's 5 years old. Yeah, you knew the whole point was to teach him to be the fastest racing dog on the planet so you could sell him for $500,000. But then he looked at you with those eyes and licked you a couple times, so you let him lay on the couch. Next thing you knew, he was sleeping on the foot of your bed while you gently brushed his hair. Then you started giving him nicknames and taking him to the park.

"Oh... I'll sell him next year. I just want to enjoy some more time with him. I'll race him myself!" Except these dogs are really prone to breaking their legs or getting sick and being worthless. You know you should offload that risk to someone who can afford it and knows how to deal with it.

Here's the reality. There is no passive income. That's an illusion and clever marketing ploy used on unsuspecting newbies, and many of us carry that dream into "adulthood." Everything comes with a risk, and it's going to go bye-bye eventually. Algorithms change, culture changes, technology changes, devices change, etc.

You also get a sense of power and security from being the CEO of your brand. But it's only a sense. The truth is that you are exposed. That power can be taken at any moment and you can be left with zero security. It's virtual power. It's like buying Bitcoin at $10 and watching it soar to $300. It's unrealized power. It means nothing until you offload it. "But what if..." That's how you lose.

You win by liquidating. You turn virtual power into manifested physical strength. It's like beating a video game and clicking New Game+. Sure, you're starting over, except your inventory is full of $300,000 and your character is already level 19 with 50 attribute points to distribute. That's the nerdy explanation.

A rocket launching off of sand won't even make it a mile off of the ground. A rocket with the best tech and funding that launches off a reinforced steel launch pad is going to leave the atmosphere and eventually the solar system. That's what you get by starting a new project with your current experience level and a ton of funding.

So hopefully you're beginning to realize that there's rarely a time as an individual or small group of co-workers when it's worth holding.

Places to Sell

There are countless places to list and sell your websites. There are auction houses, private brokers, and marketplaces that operate somewhere in the middle. You can even sell your site on eBay (not recommended). Here are a few that we trust:

FEInternational: Is a website brokerage that will assign a broker to help you with every step of your sale, and they focus on higher-priced websites.

Empire Flippers: Runs a vetted marketplace for websites of all sizes and monetization methods.

Flippa/Dealflow: Flippa is the public auction wing of the business, and Dealflow are the private brokers.

For smaller sales, Flippa is a great way to unload something quickly and to get it in front of as many people as possible. If you want to auction your website instead of working with a broker, you'll reach more potential buyers which can increase the likelihood of a bidding war, but the downside is that you'll have all sorts of copycats popping up and you need to be very careful not to create a honeypot. This can turn-off some more serious buyers who prefer the brokerage route.

If it's your first time going at it, using a broker could definitely prove worthwhile just for the peace of mind of having somebody to hold your hand through the process.

There are plenty of other places to buy and sell sites that haven't been mentioned here, and they've all got their pros and cons. You don't have to go with the first one you find but make sure you do some of your own due diligence to make sure you're dealing with a solid outfit.

Don't jump the gun though. There are things you can do before you list your site or hit up a broker that can help you obtain a higher valuation.

Increasing Value Prior to Sale

Here are some rapid-fire tips that can help you get the most out of your sale, and to make the process as smooth as possible.
  • Have the longest proof of income that you can tolerate. 3 months will get you near the minimal flip value. 6 months might be mid-range. 12 months and you're golden. Of course this is variable, but a longer history will build a lot more confidence in buyers. Revenue stability is a plus.
  • Hold the peak as long as you can, which is to say that you want to keep your earnings stable. Ups and downs can make buyers nervous, like the top months were just flukey, that that level isn't sustainable, or that you were being tricksy. Sometimes you'll just have a great month and that's obviously not the end of the world, but expect people to ask what's up and to not necessarily incorporate that as strongly into their valuation if it's not reliable.
  • Look at your design and fix everything and anything that's 'off'. If something's messed up with your CSS you haven't dealt with it, deal with it. It's like spring cleaning before guests arrive. Put your best face forward. Of course, you should be doing this anyways, but knowing your site is about to be under heavy scrutiny should be a good motivator as well.
  • Go to all of your satellite properties that will transfer with the sale and clean them up. Even if you haven't logged into your Google+ profile since the day you started your site, just hop on quickly and make sure you've got the current logo and brand colors up there, it helps to paint the overall branding picture and people pay premium prices for brands.
  • Have all of your important information ready to go in one place. As you go through and update your old social profiles and satellite properties and tidy things up, you'll want to keep a document with all of your hosting info, log-ins for social, and so forth. You'll need to hand this over to the new owner anyways, so getting it done as you go can save some effort down the road.
  • Let potential buyers know that you've created an in-depth document to aid with the transition, including how to handle all of the regular tasks, on-going maintenance, info on training staff to work with the site, plans for future content, a guide to adding their own affiliate links / banner codes / which networks they'll need to sign up for. This makes it obvious that you're dedicated to a smooth transaction and for them to hit the ground running.

  • Go in and do what you can to make the monetization transition as easy as possible. Create shortcodes and switch all display ads, pay per call phone numbers, CPA forms, etc. over to a shortcode. That way, the buyer can change the data in one place and be done, minimizing down time. Think up any way you can lessen the buyer's burden and do it.
  • Keep an itemized spreadsheet detailing all of your revenue and expenses month-to-month. Everyone who is interested in your site is going to want to know how much it earns and how much it costs to operate on a month-to-month basis. If your site is over a year old, include at least the past year.
Doing these things can not only pump up your valuation, but they can ease nerves, fetching you more and higher bids from the confidence you've instilled.

Different Types of Website Buyers

There are various characters you'll encounter as you go through this process.

Often buyers are just regular folk who see an opportunity to buy their way into a shortcut and cash flow. Maybe they are already players in the game who are doing well in the niche and looking to expand their reach, or they see ways to improve your site that you have overlooked. Here are some other types of buyers you may encounter:

Wantrepreneurs: They may have found success working for the man, saved up some cash, and they want to buy their way into the lifestyle that you've built. They'll be inexperienced, armed with second-hand knowledge, and kind of a pain in the ass. Their money is still green, but you'll want some tylenol on hand.

Entrepreneurs: Just like you, they know what's up. They just have the funds to expand through acquisition. They generally aren't problematic unless you just catch the wrong one. Everything typically goes smooth here as long as you're transparent.

Investment Portfolios: They want static websites that will keep running and earning without them having to be too hands-on. Having a good team in place and showing that you require minimal personal effort is a huge plus to these guys. But they likely have their own teams in place so it's not a big deal. They aren't looking to buy themselves a job, they just want that sweet cash flow.

Media Empires: They have huge teams and processes that they can apply to your site right away. They own a lot of other sites already, and can leverage their existing properties and teams to grow their new ones. Sometimes they'll run their own ad-networks, so they're always on the lookout for more inventory. They don't all operate the exact same way, but they're all massive and they own countless influential sites doing huge numbers. Just a small sample of some of the big players out there:

Defy Media: Break, The Escapist, Damn You Autocorrect, Smosh, Screen Junkies...
Gawker Media: Lifehacker, Deadspin, Kotaku, Jezebel, Gizmodo...
Spin Media: SPIN, Death and Taxes, Vibe, Stereogum...
Vox Media: SB Nation, The Verge, Polygon...​

Identify who it is you're dealing with once you close a deal so you can figure out how to speak with them on their level. It'll make the transition much easier, and you can build a solid connection.

Life After Liquidation

Once you're paid, don't go buying new high-end computers or new cars just yet. Way too many people have hit it big in this game, only to end up in the red a year or two later for various reasons. Things can change over night, so don't just blow all your money even if it's coming in easily. You're going to have to pay taxes on the money you earned from your sale, so set those aside before you buy a Lamborghini and end up having to sell it at a big loss the next year to appease the taxman. If you don't know anything about personal finance, take some time to study - it'll pay for it itself over and over.

Consider whether or not you just sold all of your cashflow or how much you'll have left. You will need:
  • To put back the proper amount for taxes
  • Fluff up your emergency fund even more
  • Keep enough for living expenses
  • Buy yourself a toy or two
  • Fund your next project. Do NOT start from ground zero again.
Like Kevin O'Leary says, your dollars are soldiers. Deploy them so they bring back hostages. When you get past your first decent sale, you're in like Flynn as long as you're not stupid about it. Remember from my talk about outsourcing and automation. Money buys you time and effort. Use it to scale those two things. This is your shot to never worry about money ever again, if you can be mature about finances.

Think of yourself as a start-up. The entire purpose is to grow quick and liquidate and repeat. Over and over, unless you plan on becoming a Media Empire yourself, which is legit. Grow carefully so you can have stability if that's the case. Otherwise, cash out, redeploy, and fill up your Scrooge McDuck swimming pool.

That's it, my friends. Tomorrow, @The Engineer is going to explain how to continue your education beyond this Digital Strategy Crash Course. This is knowledge, and knowledge is unrealized power until you act on it. Keep getting knowledge and keep taking action! We'll point you in the right direction so the knowledge you're getting is knowledge worth having...


BuSo Pro
Sep 15, 2014
Fund your next project. Do NOT start from ground zero again.
Can anyone say more about this part?

I've sold some sites here and there for $200, $500, etc. Nothing worth talking about. But when you sell a site for $100,000... what impact did it have on your next project? I'm imagining buying a branded, pre-powered domain, outsourcing a lot of content, and buying some editorial links and things of that nature. Did it really let you hit the ground running, and did it decrease your ramp up time significantly?

I'm hoping to sell a project soon. It'll be in the five-figure range. I need guidance on how to ramp up the cash flow again real fast.

Thanks for this post. The Increasing Value part is itself of serious value. It also set me at ease a bit about what to expect and how to control it before it hits me in the face.