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Due Diligence Before Buying a Website

by GregNunan (follow)
Greg Nunan - Founder of www.WeDigital.com.au and www.homebusinesstoday.com.au
Website (9)      investment (1)     
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by Ana Maria Lopez via www.freeimages.com/


The web properties market is vast and still growing, but quite untapped, with a “free-for-all” vibe that the big players still haven’t gotten the chance to corner, bully, and monopolize. It’s all so exciting, but those of us who might be considering investing might be plagued with some misgivings about this relatively new world. Just like in the days of the gold rush, there’s huge potential to hit a gold mine and make a killing, or you could get cheated and end up buried in the mines or knee deep in murky rivers, desperately panning for the tiniest speck of gold.

So before you let yourself loose on Flippa or Empire Flippers and splurge on some websites or domains, you must condition your mind to be skeptical, question everything, and always err on the side of caution, because scams abound. It may seem a tad pessimistic to view everything with mistrust, but you’ve got to protect your interests.

via www.incomediary.com


Just like in any business venture, you’ve got to do your due diligence, do your own studying and fact-finding before making an investment. Luckily there are tools that you can use to make this part go easier, but you still have to put in the time.

WHY YOU SHOULD DO IT

The reason you’re considering going into this venture is that you want to make a profit. While there’s always risk involved in any business, doing your research allows you to make an educated guess about whether a site will be able to deliver you that profit. This is your basic guiding principle when you’re doing your due diligence.

THE 4 MAIN AREAS TO SCRUTINIZE

Listings for websites will generally include data on earnings, traffic and other details which would determine the selling price. You need to check if the data you’re given is correct.

1. Monetization and Earnings

If a site is already earning quite a bit, that’s great. There could be a good chance that it will continue earning when it becomes yours… but you need to verify that. Making some requests and ask some questions, such as how exactly the site converts traffic to revenue — is it through cost per click (CPC), product sales, advertising, or affiliate marketing? Invite the seller to a screen-sharing session with you as he or she views the site’s revenues, as sellers who aren’t on the up-and-up tend to be iffy about doing screen sharing.

2. Traffic

Earnings, no matter how the site is monetized, rely on website traffic. However you have to look into not just on the figure, but on what make up that figure. There are tools such as Google Analytics that can help you answer the following questions: What countries are those visitors coming from? Do they link from organic search results, social networks, or some other referrer? What browsers do they use? What pages do they visit? How long do they stay? Look out for red flags, details that don't make sense, such large numbers coming from the same IP address. Or large traffic for an English language site coming from non-English speaking countries.

3. Links

Traffic from organic searches is dependent on the site’s ranking for certain keywords. And one of the factors that influence a site’s ranking is its link profile. So make sure you delve into the nitty-gritty. Ask questions about where those links come from, whether they are paid links or not, and if those inbound links will stay up after you purchase the site. Stay away from sites with links from seemingly irrelevant sites, as well as those that are obviously from link farms. These dubious link sources may cause the site to be penalized heavily by search engines so as to drastically drop in search rankings.

4. Content

Another factor in website traffic is quality content. Excellent content combined with high traffic makes for a greater chance of it going viral. But, a caveat — that content must be original. Duplicate content is a sure way for a site to drop in authority and rankings. So make sure you actually visit the site and take a look around, navigate the sections and read some content. Copy a few blocks of text and paste them onto your Google search bar. If the search results show other sites with exactly the same text, then back away from any potential deals. You can also use Copyscape to verify unique content in the site.

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