How to build an online business you can sell
The huge growth in the number of valuable online businesses has led to a similar rise in the number of web-based businesses being offered for sale. In fact, more and more internet businesses are being established with the sole purpose of generating a profit when they’re sold a few years down the line.
Whether your business is real or virtual, many of the same principles apply – and there’s still a lot of donkey work involved before you can reap the rewards of your endeavours. Every business has to understand its target market, fulfil a customer demand and monetise its offering. Online businesses are more flexible because they’re often location-independent and do have the advantage of addressing a potentially global market – you just have to find the right niche!
Make a plan
Meticulous planning is the key to future success – and bear in mind from the start that your plans should stand up to investor scrutiny. Identify a market opportunity then research, plan and create a strategy – in short, all the things you’d do if you were starting any business. The key thing is to ensure you can generate a financial return; it sounds simple but it’s where many internet entrepreneurs stumble.
Follow the money
Think about how you plan to make an income – subscriptions, ecommerce, Adsense or affiliate marketing? If you’re struggling with the hows and whys of monetising your site, check out online businesses for sale, look at the companies that are attracting the highest valuations and dig into the detail on traffic and revenue sources to see what’s working for others. Sites that have a clear, sustainable income model will carry a higher valuation.
Choose your platform
Establishing your online business on an accessible, widely used platform like WordPress will make it easier for you to find a buyer further down the line. It may be tempting to have a custom site designed but you’ll limit your audience when you come to sell – there’s always a bigger market for a site built on a familiar platform. It goes without saying that if you’re not super-technical yourself, you need to collaborate with someone who can optimise your site to optimise traffic
And, talking of traffic – aim to bring steady, diverse traffic to your website through organic growth with solid content, paid, affiliate and social strategies. Over-reliance on traffic generation methods that are outside your control – SEO and Google – could impact your sale price as it introduces a level of volatility to the mix. Avoid using ‘black-hat’ SEO techniques, such as blog comment backlinks, to boost your traffic as it’s a strategy likely to land you with a harmful Google penalty down the line.
Keep your house in order
Just like any other business, you’ll need to maintain impeccable records that demonstrate the business is properly run. Take time to document operational processes – like logistics and fulfilment – and keep a separate record of each of your revenue streams. Your business will ultimately be valued based on an earnings multiple, so you’ve got a valuable incentive to make sure you log all your transactions carefully.