Last week I posted about a business forum that I quite liked (not as a user, but as an investor)

It needs some work, but it’s fine. Only issue was that he bought the site like 9 months ago for WAY too much ($11k+) and is now trying to sell it again for even more, a starting bid of $12k and a reserve of $35k! I said in my post that I only valued the site right now at around $5k.

And I still stand by that, and I think other people agree, cause the general consensus was that $12k was too much, forget the $35k! So yeah, the auction ended with no winners, the guy either needs to keep it and monetize it like I said in my post, or he needs to come to grips with the reality that he overpaid, bigtime, and if he’s keen to get rid of the site it’ll be at a loss to him.

But yeah, overall I like it and I’d defiantly by it for $5k, maybe a little more. Oh, I think he got sold on the ‘domain is premium’ bit, he thinks’ it’s worth heaps, and it may be worth something, but it’s a .net to start with, so… yeah it’ll maybe weight the price a little higher, but still not near his $35k BIN…

I might open a dialoge with him and see if we can’t negotiate a fair price.

Now that I’m back in acquisition mode, I’ll probably be blogging about lots of dot coms that are for sale! Since most of my free time will be devoted to finding some that I like and would be interested in buying…

As far as a sustainable site goes, things that I’m not interested in are proxies, image hosts, free hosts, clickbank affiliate sites, PTC sites, and directories. Sure they all can make money, some do quite well, but when buying one not building it from scratch, you really need to be careful about where the traffic is coming from, how sustainable is it, and will it be switched or turned off after the purchase, the traffic could easily be fed from their other sties they are running.

The other thing is, proxies, free hosts and what not often get banned from ad networks, so revenue options can be limited – as can be growth.

There’s a forum for sale over at SitePoint, it’s actually a good forum, the url is: http://www.businessforum.net/

It’s making $0, it’s pulling over 500 uniques a day, 250,000 page views a month.

But his starting bid is $12k, and his BIN is $35k.

The reality here is that it’s over priced; it only has 7,000 members, 5,000 threads and 24,000 posts. It’s a bit, but not a lot for a 2 year old forum, so it’s been kicking along and slowly growing, but it’s not shit hot and taking off or anything. He’s put a lot of work into it, but it needs a lot more to get it really going, regardless, it is a nice foundation to start from, so it’s defiantly worthy of purchasing… but not at $12k-$35k

I think the main problem here is that he bought the site 7 months ago for $11,600… back then it has 4,000 members, 14,000 posts.

He overpaid 7 months ago for it. And he’s trying to sell it for more now, because in his eyes from the price he bought it for it’s now worth more.

The reality is that he overpaid, back then it was worth $3-4K, and now its worth about $5-6k tops.

There’s no revenue, there’s only 500 uniques a day and only 7,000 members. To really get this forum kicking and making any kind of money, it needs 20 hours a week put into it and more marketing cash invested into it, in 2-3 months you could if you’re lucky kick it up to 1,000 uniques a day, but even then from ads alone you would be hoping to bring in $500 to $700 a month. You won’t do it from adsense, you would be doing most of that revenue from private ad sales.

So after expenses, and all your time, you’re not making much. To keep it going you would be easily spending $200 a month on marketing, let’s say you profit $500 a month (after that 3 months of heavy marketing and time spent), and then you’re looking at a site worth $5k (10x revenue) probably more because there’s revenue and growth and a long history.

Still, not worth $12k minimum, if I was him, I’d spend $1k+ on promotions a month and start putting ads on the forum, sell ads for 3 months, get some revenue in and then sell, at least then you’re showing the potential buyer of the site that the investment is going to be worth it.

OK, before I start this rant, I warn you that I see something that I think is bad, I can be a real asshole, mostly because I think whatever it is I’m ranting about needs a serious reality check and while everyone around is saying good things and being supportive, I feel there needs to be someone dishing out the reality of the situation, and I’m prepared to be that person. Not out of hate, but to really give whoever a reality check in the hope that they see the error of their ways, and either change profession, or step up their game a whole heap (go back to school).

Today’s ‘why the fuck would anyone buy this’ rant, is about http://www.bidcheap2u.com/

It’s for sale over at sitepoint, http://marketplace.sitepoint.com/auctions/36780 with a BIN of $6,000… and starting bid of $2,500…

It pulls 500 page views a month – 60 uniques – which is about right for search engine bot traffic, not people… Mostly what’s being sold is the code, he custom wrote it, and honestly so what?

There’s heaps of ebay – auction style scripts around that do all that his would do – and probably more, and not to mention, since he’s the only developer and he’s selling the site with code as a once off thing, if there’s bugs, errors, issues, and anything else, then you can’t get support, you don’t have updates, you will have to hire a developer to decipher his code, and then work out the issue.

This site is a liability, not an investment.

He should be selling the code to other developers with resell rights, or an exclusive sale, not a site on sitepoint. Or he should be selling a hosted solution and a singular marketplace, a single auction site with your own code is just pointless, it’s like buying a Russian custom built one of a kind car which you will need to manually comply to drive in your own country, and then find a Russian mechanic who can fix it when there’s issues.

Actually, I might start valuing things for sale on sitepoint and wherever else I see them, because as a designer, developer, investor, business owner, and whatever else I am / have been, I think I have a good grasp on the value of a site for sale. I’ve built them, sold them, bought them, invested in them and disowned them.

I don’t know about you, but Yahoo buying out a Web Analytics company called IndexTools, and also testing Google ads on 3% of the Yahoo network search results is a sign of desperation from Yahoo – trying to stop a takeover that I think should happen.

Microsoft acquiring Yahoo in my opinion is a good move for Microsoft, and maybe even a good move for the internet in general, I’m still a little divided on that 2^nd point.

It’s great for Microsoft because Yahoo has a following of developers and general public, both of which Microsoft needs to set up its internet campaign overall – in followers, developers, advertising and more.

Not only that, Yahoo has a whole heap of other services that could be easily folded into the Microsoft family of services, such as their poor music delivery service, mail, developer network, geocities etc etc.

As for Yahoo, well I never thought they had the long term fire power to enter a war with Microsoft and Google, sure they have big numbers, and have for a long time, but Google came along pretty quick and stole a large share of that, and Microsoft is really pushing themselves into the arena.

Yahoo IS innovating, but people aren’t hearing it as loud as when Google innovates, I think Microsoft would do Yahoo some good, Microsoft knows how to make noise, even if it’s not always good. Yahoo has a lot of services that have been launched pretty poorly and developed poorly too, they seem to give up on them at times as well, I think this is where the Microsoft side of things can really help, Microsoft seem to stick with things and push enough resources and money into something until it either works well, or is completely dead.

Personally I think overall it’ll be a good move to join the two, the public might even benefit here somehow, not sure just how yet – besides some nicer apps around, it might mean there’s a gap in the market for another search provider, who knows.

CSSMania is for sale over at SitePoint, if you’re unfamiliar with the site, it’s a CSS gallery with a blog basically.

The Bin is set at $500,000, but the site’s only making $10k a month.

Sure the site is popular, and it’s got great traffic, but that buy price is 50 months revenue…

The site costs money to run, servers, marketing, and staff. Even if you ran it yourself, it’s a fulltime job, your own wages would easily be $5k a month + server and marketing, we’ll assume $2k a month.

After those simple expenses, you’re only bringing in a $3k ROI every month, that’s 166 months before you get your $500k back, over 13 years.

Not only would you have to expand the revenue from the site somehow, but you’d have to really take on a lot of risk, anything more than 5 years to pay off your investment in a dot com is a huge risk, the industry changes daily and 5 years is a long time, let alone 13.

CSS sites only became popular a few years ago, what’s to say there won’t be something new in 2 years that’ll kill that market? I’m sure it’ll still bring in revenue, but the $10k+ a month you were expecting? Maybe not.

Not to mention that the market is saturated with other CSS sites that are all pushing in on the traffic that you have to the site, and if you don’t update the blog correctly you could start turning away traffic. The visitors are expecting a certain standard of blog posts and sites in the gallery, if you don’t have an eye for it you could end up hurting the site more than anything.

Realistically, $200k is what I think it should BIN for, I’d never pay more than 2 years revenue for a site, typically I try for no more than 2 years profit, I think most sites are fair priced at 1 – 1.5 years profit.

The internet changes so fast, your site could be hot this year, cold the next.

It’s basically the same as the old layout and design, a few things moved around, new fonts and CSS.

Overall I think it’s a step back in areas, not the biggest fan of the new styles, but I guess I’ll deal with it.

The new style still hasn’t delivered any moderation of the listings; I’m still an advocate of Sitepoint implementing some kind of moderation to weed out the bad or fraudulent auctions.

Like what the hell is this?

AsbestosLawyersBailMeOut.com

Not only is the site a horrid design and built purely for what I would call spam purposes, others would call it a made for AdSense site.

The site is really a proxy site, with lawyer content around it so the AdSense ads are high paying ads.

So the site violates the AdSense TOC.

My advice, don’t buy this, or anything from the seller, simply trying to make a quick $ by selling sites that will be terminated soon enough.

I mean really… There’s no great business value to paying $10 million for a domain name.

Regardless of the name, spending $10m on a domain name is pointless.

The name is not going to make them their money back in the next 5 years, not through natural traffic, brand awareness or anything. I don’t care what you say, there’s much worse names out there that are worth heaps more, but will never sell for that much.

You can have the greatest domain in the world and it won’t matter the slightest, what matters is what the product is, what the server is, the content and the substance that you deliver to people, their $10m is better spent on hiring local staff to develop content and systems to make their site worthwhile.

Business dot com sold for $7.5 million, they have built a good business based ppc search engine over the last few years, but have you seen fund.com? Have you seen the site? Its crap, pointless crap content, I’d never go to fund.com.

That $10m could have been spent on building a kick-ass business application with cash spare to market it.

I’m sure they have big plans on doing something with the site and producing profits, but I still can’t justify why they needed to spend 10m on the domain name.

Craigslist has more traffic than they do, and that was a $10 domain.

I can understand even though business.com was bought for $7.5m and then sold again later for $345m; the name itself wasn’t the cost of the sale. The whole business model with its operating revenue, assets and what not set the price of the sale.

That’s a different story.

This is a question that doesn’t get asked – or thought about enough when it comes to buying websites and webapps.

There are lots of them for sale every day – sites and apps that are under 6 months old, minimal amount of money spent on advertising, but since the site is making upwards of $500 a month, the sale price is at least $5k or more.

I’ve rarely seen a site or app for sale for under $5k that’s – in my opinion; a ‘good investment’.

There’s no reason why you can’t take your $5k, build something similar, or better, and have change left over to do marketing, at least that way you’re taking away the risk that the seller is lying and you going to throw your cash away.

And not to mention you can have it built the way you want. That’s how I prefer things, mostly because I like things done my way, and I like things built a certain way.

The last 5 sites I’ve bought we’ve totally re-done from scratch because the code that was powering the site was average at best, and the design wasn’t all that fantastic.

Honestly, there’s not much you can’t have built that sells for under that $5k mark for around $3k or less. Shop around; look at places like odesk and elance for developers and designers.

The general rule of thumb going around is that the price to buy a site is 10x the monthly revenue or profit.

But that creates an issue I don’t think people are looking at when buying a site.

What’s your time worth? And how much do you have to spare?

If the site your buying makes $500 a month, and you need to invest 40 hours a month into the site to keep it updated and the traffic going to it so you can continue to make that return, then your hourly ‘wage’ or return on investment your making from the site every month is only $12.50.

Why are you buying this site? To make $12.50 an hour?

Not forgetting on top of that $12.50 an hour ‘wage’ your drawing from it, you would want to put back in your bank the $5k you dropped to buy the site, even if you put away half of the $500 every month, back into your bank, it would take you 2 years to get your $5k back, and you would have also effectively cut your hourly wage to $6 an hour.

Unless the site is of great value to your ‘network’ of sites – so something you can leverage, or if it only takes 4-5 hours a month to maintain then you should really run the numbers, all of them.

Never count out your own time when it comes to business, always pay yourself a wage, and put the rest into the bank for future investments into other businesses, or marketing etc.