Archives for July 2007

Selling a blog may seem a daunting task, but it doesn’t need to be so difficult or stressing. Perhaps what you need is the right system to assist you in selling your blog.

There are 3 basic steps to selling a blog:

1. Collecting Blog Stats – This is stuff that buyers will ask for AND information that will help you establish what your blog is worth.
2. Blog Valuation – Sellers often put too high a price on their blogs and this puts buyers off, but by knowing what to count you can quickly come up with a price range that will be acceptable to you and the buyer.
3. Finding Buyers – Your target audience (buyers) will depend on your niche and how popular your blog is. Knowing how to go about finding the right buyer can mean the difference between selling at the right price and coming away feeling shortchanged (or not selling at all).

So let’s get started.

1. Collecting Blog Stats

The first thing you must do is to collect some basic information about your blog – and at the very least dump it in a folder and prepare a .zip file that you can email to any prospective buyers (or site brokers).

So what information do you need?

• Monthly earnings (including breakdown of how much each revenue stream (AdSense, direct ad sales, Kontera, TLA, etc) earned) for the last 3 months minimum (6 months is better). At this point collecting screenshots as proof of earnings would be a good idea as well.
• Monthly traffic (unique visitors – in Google Analytics they call them absolute unique visitors) for the last 3 months, minimum (once again, 6 months recommended). Screenshots required here as well, although you could also provide access via your Google Analytics account.
• A brief summary of site audience and demographics – who are they, what do they do, how much do they regularly spend in this niche (and what for).
• A quick summary of your search engine rankings, especially for any keywords considered valuable in your niche.
• Site age (not just domain age).
• Key backlinks – if you’ve got multiple links from DMoz, a link from BBC, links from top blogs in your niche, other press coverage, etc – make a list.
• Site expenses (per month) – apart from domain, hosting and marketing costs, factor in the cost of your own time as well as of any bloggers that work for you / contribute.
• Feed subscription stats
• Anything extra that a site owner must know and could raise / decrease the price of a business (bad reputation in the niche, low earnings per click for the niche, new features that have been developed but not marketed, etc).

All this will take 15-30 minutes to put together.

2. How Much Is Your Blog Worth?

There is one universal rule in any transaction – the buyer thinks that he’s paying too much, and the seller comes out talking about ideas and potential and complains that the money offered is too less. Both sides are right, from their own perspectives.

So do you work out what a blog is worth? Note that if you’re going to run a public auction you will also need to decide a ‘BIN’ price (‘Buy It Now’ price) and starting bids.

How to value your blog? There are different ways of doing so, but a quick n dirty formula would be like this:

Blog Value = 2 x Estimated Yearly Revenue + Blog Premium – Running Costs

That’s a ridiculously low multiple – in the real, offline world businesses and stocks sell at a 10x multiple, not a 1x or 2x multiple. The reason behind such low multiples online is because sites usually have a lot of risk attached to them – they may be too dependent on the blogger’s personality, on one single revenue stream, on a fading gimmick, etc.

You can ramp up that multiple by developing the site’s brand (and not your personal brand), by developing multiple revenue streams, building a blog that doesn’t rely solely on search engines for traffic (and has a active community) and timing your sale so that the blog hasn’t peaked as yet in terms of its niche attraction.

What is ‘Blog Premium’? It’s a lump sum designed to cover the value of the domain, the content, the blog design / code and any extra value based on the community surrounding that blog.

Here’s a quick tip for setting a BIN and a starting bid: use different multiples for both of them. For example, I’d use a 4x multiple for the BIN price (a price I’d be comfortable selling the blog at) and a 2x multiple for a starting bid (low enough to get people started on the bidding).

In the end, remember that a) you’re probably asking for too much and b) you’ll be lowballed to the 7 hells. As my namesake says – you need a thick skin, so deal with it. Not every blog sells according to the expectations of the seller.

3. Find Buyers

How do you find buyers for your blog? If your blog is a leader in its niche, most times you can get away with doing a post on your blog and offering the basic info, and you’ll have a stream of emails from interested buyers.

It doesn’t happen like that most of the time, so you actually have to go out and do some legwork.

There are four routes to selling your blog:

1. Announce it publicly – on your blog, on sites like Performancing, on domain auction forums like SitePoint, etc.

If you do it publicly, brace yourself for public criticism of your blog from people who have no or little interest in buying your blog. They may be right (in which case you need to get back to work and fix things) or they could be merely misinformed – but criticism will definitely come. Even your readers could attack you (verbally) for selling out.

2. Approach blog networks – it helps if you already know someone, but IMO if you have a good idea and offer something that the network does not already have, you’ll definitely pique their interest.

   The problem that may arise here is that blog networks will probably want to ‘hire’ you as well – which may work for some people but for someone like me I’d rather have a clean break from my blog than sell out and then keep writing on it. If you already have guest contributors you can approach one of them to take over the blog.

3. Talk to people who you think might be interested – quite often you’ll find that even if they’re not interested they may know someone who would be interested. Depending on how your social networking skills are in your niche, you may have a lot of success using this method to find the right buyer for your blog.
4. Hire someone to sell your blog for you. To be honest, if you can bring in an expert who will find buyers and negotiate a good deal, why not go for it? Yes, you’ll have to give this person a cut of the deal, but as long as you factor that into the price, you’re good to go.

There’s no substitute for experience here, so my advice is to a) read up as much as you can about selling blogs and make sure you get advice the first time you sell out or b) hire an expert to manage the process for you. Option B works well because you can learn a lot from a broker, although your blog will need to be of a certain value to be worth a broker’s time.

At the end of the day, if you want to get the right price for your blog, you need to understand how blog buyers think (and if you’ve bought a blog or two, that experience is even better).

I’ll cover that in 3 Keys to Buying a Blog (goes up on on Monday), but for now I’d be interested in hearing what you think sellers do when planning to sell a blog. Anything I’ve missed?

I’d also be interested in hearing your personal blog selling experiences, as I’m sure several people here have bought and sold blogs.

As Ryan mentioned earlier, buying a blog can be a nerve-wracking process if you’re doing it for the first time and especially if you’re strapped for cash and are looking for a ‘good deal’.

The first blog I bought was over-priced and I knew it. I still went ahead though and bought the brand and for the ‘street cred’ I’d get in that niche. This purchase taught me three very valuable lessons about buying blogs:

• Make absolutely certain that you have time to run the new blog or find someone beforehand to run it. I didn’t do either, and as a result that blog was neglected.
• If the blog is not making money, do not spend your savings on it. You should have a definite plan of recouping your investment in a set period of time – don’t jump in with a vague notion of ‘slapping on AdSense and TLA to make some cash’.
• Make sure you have an exit strategy that will allow you to make a profit (after taking out the expenses (including value for time spent on the blog)). If you don’t, then you may have a dead blog or if it’s a big-money purchase, then you’re fucked.

To summarise, you need to focus on Time, Money and the Exits.

If you don’t have the time, don’t jump in.

If the site isn’t making money, don’t pay that much for it.

If you don’t have an exit strategy – good lord, what the hell are you going to do when you have to cash in?

Let’s look at each of these three in more detail.

1. Your Time Is More Valuable Than You Realize

It took me a long time to realise this (no pun intended), and since then I’ve been preaching this to anyone within listening range.

A lot of people think of starting new blogs with the intention of working on it ‘as soon as they have more time’. Similarly, you find bloggers buying blogs for the same purpose.

It’s not worth it. You’re much better off investing your time in one or two blogs in highly-profitable niches and building them up rather than buying 5 blogs and trying to blog on all 5.

I like Ryan’s and Raj’s style of buying blogs – you have a writer lined up beforehand or right around the time you buy the blog so that a) there’s no time lost in transition and b) you don’t need to worry about writing on ‘yet another blog’.

Writers / hired bloggers cost money though, which brings us to the next point.

2. No Money = No Purchase

Make your life easy – if the site’s current revenues are not enough to fund the cost of hiring a blogger, new hosting, new theme design (or whatever extra work you want done on the site), then don’t jump for it. If you can’t take the blog as it is and earn a profit from it, find another target.

Yes, you can always ‘work’ on the blog and raise it’s earnings. But that’s the future and its uncertain. In general though, you want to buy a profitable business – it’s easier to run if it’s bringing in a profit and there’s less stress for you.

Yes, there are exceptions to this rule. You might buy a brand (like I did, like AW did with Threadwatch, or like SPM did with Performancing), or the blog might be ridiculously under-monetized (e.g. a gadget blog with 20k daily uniques and no Chitika / AdSense / Auction Ads on it). Those are exceptions, hard to find and they stay on the market for a very short time.

Most blogs that you’ll see going up for sale fall into two categories – they either lack traffic to earn serious money OR they don’t have direct advertising yet. Both require time to bring in (although depending on your personal experience you may find one or both easy to manage).

And for the sake of your sanity, do not spend money on an asset such as a blog without an exit strategy.

3. What’s Your End Game?

Are you buying a blog to flip it (build and sell it off for a profit in the future), to build a business or to bring in a small but stable stream of income?

The 3 approaches require different amounts of time and financial investments, plus different evaluation techniques.

if you’re buying a blog to flip it or building a business, you’re operating with the intention that you have time and money to invest into growing that blog. In that case, #2 can be relaxed, a bit (but don’t take on a white elephant with the outrageous hope of selling it for a cool mil), however you need to very strict then about #1 (how much time you’re going to spend) and you have to have your targets clearly mapped out and written down. In fact, you should have a complete roadmap for both strategies before you make the purchase. And have a backup plan, just in case.

So if you’re buying to flip, have an alternative plan to build the business in case you’re stuck with it. If you’re buying to build, have a plan to cash out if the time and offer is right (or if you need the money / time).

If you’re buying a turnkey business that just brings in a regular income with minimal maintenance, make sure all your ducks are in line.

What’s Next

I realise that there are several topics discussed here that need to be talked about in more detail – I’ll be covering them in the coming weeks (with help from Ryan, Raj and David, as all 3 of them are more experienced in this area than me). Next up is a discussion on blog valuations, which should go up later this week.

For now, I’d like to hear your experiences on selling / buying blogs and if you have any tips to share, please do so.