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.

My plan this year is to do away with clients totally by the end of the year. Be 100% self reliant income wise.

How am I going to achieve this? The same way anyone else can. By investing my time and energies into my own business ventures, building web based applications based on subscription models and by investing my excess revenue into offline businesses.

I have a whole bunch of targets I need to meet financially, but with the right planning and by putting the right steps in place I should be able to get there.

The same goes for anyone, and anything. Work out what you want to do with your X (X being your website, business, blog, life, whatever). And then sit down and research ways to achieve this.

For example if your goal is to make money from your blog, you really need to work out how that’s going to happen, why would people read your blog, what hooks are in place to get people to register to your mailing list or subscribe to your RSS feed, what value are you delivering to the end reader that they can’t get somewhere else?

In my opinion for a blog it really comes down to content and hooks, if your content delivers value people will read and search engines will index, if your hooks are of value people will take the bait and refer other people to it as well.

If the goal is to build traffic to the site to sell ads or something, then work on small targets, 100 a day, 200 a day, 500 a day, 1,000 a day etc. But don’t just set random targets without ways to achieve them, for every target put in place a set of actions that will make that target achievable.

It’s easy to say I want 5k visits a day and you’ll get that from writing good content. Well you might but you probably won’t, it’s better to say I’ll get 500 a day from writing good content, and search optimising my site, networking with others in my industry, buying ads on related sites and building some link bait.

And then go from there; work on sustaining that traffic and then growing on it to reach that 5k, it’s the same old story on the internet, once the traffic is there the ad revenue will follow.

For me in my position I’m working on building web applications that generate revenue, I’ll be building them with my team of developers in between client projects, and once they are ready for the public we’ll start small with some basic marketing, and no fees for usage, grow the user base, and start working on ways to monetise once the application has a healthy number of active users.

Until there’s a good amount of users on the system, just like high traffic numbers to a site, there’s no point of trying to monetise, you’ll make shit all and you’ll only drive people away.

I think of this site over at SitePoint as a good investment.

It’s a celebrity gossip forum, good base of members, lots of posts, been around for a long time, and has stable consistent traffic.

Makes $2k a month, the BIN is $45k, a little high for the revenue, BUT, it has potential.

Just like a rundown house that you could buy, renovate and then sell for a profit, this site could really do with a massive makeover, it’s a bit of a mess but it’s popular.

You could really make this forum a centrepiece for a larger community, mesh in a blog, celeb photos and videos, and some social aspects and it would go crazy.

Just needs some love and development.

I’m even considering buying it! It’s the kind of thing that if you know how to renovate, you can really make this site go well, you don’t have to be a marketing professional, or even know heaps about celebrity gossip, you just need to know how to renovate.

Look around at what else is popular, find some active posters from the forum and talk to them, ask what they would want to see, and see if they want to be involved in blogging or something, and go from there.

It’s pulling 350k unique a month, the hard work is done here, the traffic is there, all you need now is some development and hard work.

I have no good reasons why you would want to do that, but apparently the people who are trying to offload their site to someone for a 6 month lease think it’s a good idea.

The lease is up for bids over at SitePoint, and the site in question is called Frooler.com

Frooler.com is a social networking site with no niche; it’s just another generic random social site that’s never going to go anywhere. It’s a very average site, with traffic that would be very hard to monetise (Mostly from Asia), and its Alexa rank is 500,000.

The person who’s offering this lease is boasting 6m monthly page views, and as you can tell with the Alexa rank, it’s defiantly all foreign traffic, mostly western countries run the Alexa traffic tracking, also Compete which does traffic analysis like Alexa is measuring next to no traffic.

So aside from the fact that the site is pointless, paying them to ‘lease’ the site for 6 months for their asking price of $2,000 is absurd (from a business / let’s make a return on investment point of view).

To even start to make your money back you’d have to lay down even more cash for marketing, and if you do make it back then after 6 months you’re out with nothing, nothing to sell, nothing to push the traffic to that you’ve spent all your money and time on, you’re left in the gutter with nothing.

However the person who owns the site has done real well, they’ve made a cool $2k from you, and meanwhile they’ve spent their 6 months working up a bank of cash from other projects, they would have just taken ownership back of their site that you’ve built up for them with fresh new traffic and even more revenue from before.

If you’re going to spend 6 months doing something, it’s defiantly better spent building your own site and promoting it. I have no doubt in my mind you could build a site comparable to theirs within a week, and with your $2k lease cash and some time, build an equal amount of traffic and members, if not better.

At the end of it all, at least you own it, you can sell it, develop it some more, or whatever. I think if the lease was more like a building lease, like 3+3, 3 years plus 3 more optional, and you can re-negotiate terms and prices after that, it could be possible, maybe not for this site, but for others, still, would have to be a really good site and good deal.

Everyone should diversify their investments. You don’t need a million dollars to invest to diversify; investing can start with as little as $40! Heh

Seriously, though, you can invest in a new opportunity for nothing, just your own time. All you need is an idea and some motivation.

If you do have some spare cash, even a little, it does help. If you do you should start talking to people, discuss some ideas on a joint venture for something, look at what you can bring to the table and come up with something where both parties can benefit. Brainstorm something together, you could even try to take your idea to a micro venture fund.

Before you know it your investing in something new and you’re ‘portfolio’ of investments has expanded and you’re more diverse than before.

I like to diversify offline just as much as I do online; my latest venture is in sushi, of all things. Unlike the internet where everything is local, and to compete with another site you need to be different, or offer something very special, offline businesses don’t have to do that, offline businesses can offer location over difference.

If you’re in an area like me, a small city, and there’s no sushi train or place to buy sushi, then there’s an opportunity there to start something, it doesn’t have to be the best sushi in the world, or the cheapest, or the greatest looking, it does help to have a good product and of course we’ll try to do that, but the location is what’s going to make it work.

Especially with a restaurant, we’ll be opening in an area with other restaurants where there is high foot traffic. Just like the internet where traffic is king, with offline businesses such as restaurants, foot traffic is king, foot traffic for restaurants is like organic search engine traffic, it’s a life blood, if you’re in an area where people naturally search for food on a daily basis, you’re going to get some hits, hopefully some bookmarks, referrals and with any luck some return visits! Try and keep that bounce rate low…

I’m no restaurant king with years of experience, but I’m no idiot either, I’ve seen restaurants with fantastic tasting food that are in really bad locations, they bleed to death slowly over years and rarely survive or make decent profits, if that same restaurant was in a street with other restaurants the traffic and word of mouth would have made it successful in no time.

Anyway, back on topic, my diversification is simple; I’m taking revenue from my other businesses and using that revenue to support a new venture in a whole different market segment.

If for some reason my development studio failed to convert projects and our staff costs started bleeding us to death, my personal backup is in a whole different industry, if we started to die because of a global market slowdown in the internet segment, which has happened before, then I’m ok, I have a restaurant, people always need to eat!

I think it’s a vital part to anyone’s financial success to diversify their personal investments, it doesn’t have to be much, and it doesn’t have to be big, start small, start small multiple times, and nurture the venture, bring in some partners so your time required to work on the venture or invest into it remains low.

In the past I’ve started ventures with upwards of 6 different partners all bringing something different to the table, we had a common interest, to diversify and supplement our income, and by dividing up the work load and investment we were able to give the business what it needed to work.

Partner up, brainstorm, plan and get it going on!

Have an idea for a web application? Want to invest in a real online venture? Something custom built to actually take on players in the market?

To build something substantial realistically costs thousands every month in development fees.

Let’s break down a professional development team, such as ours.

To develop a business application to the high standards that we have to for our clients, we have the following staff in house:

A Systems Architect, Project Manager, Programmers, Designers and an accounts person to manage the billing.

Of course they all aren’t fulltime on 1 project.

I’ll break down the % of time spent on an average 4 month project by each team member.

1 Systems Architect: 20%
1 Project Manager: 20%
1 Programmer: 100%
1 Designer: 50%
1 Account person: 10%

Our apps are all web based apps, hosted either internally or externally (intranet / internet), so there’s a high level of input from a designer who handles the interface design and xhtml etc.

This should be typical for any midsized development house. Let’s take US rates for staff and break down what a project would cost, and also look at the % per project.

Systems Architect: $100k – 20% = $20k a year, about $7k in wages for 1, 4 month project
Project Manager: $80K – 20% = $16k a year, about $5k in wages for 1, 4 month project
Programmer: $60k – 100% = $100k a year, about $20k in wages for 1, 4 month project
Designer: $50k – 50% = $25k a year, about $8k in wages for 1, 4 month project
Accounts: $45k – 10% = $4.5k a year, about $1.5k in wages for 1, 4 month project

So in total, in wages alone, for 1, 4 month project the cost for a company to develop an application is at least $40,000!

Plus, if this company is a contracted company, than they need to add profit and cover other costs, looking about $100k plus.

If you were to shop the project around and found a lone ranger, a 1 man show that can do it all, to cover his own wages for 4 months is still around $20k, and you would realistically expect less development done in that time since their time will be spent on other things, management, architecture, design, client updates, billing etc. I’d expect 3 days of a 6 day week of actual programming.

So how can I possibly justify my topic of a whole development team for $40 a week? Where is this crazy and bullshit deal?

Well there isn’t one. Not yet. Not that I know of anyway.

I can however divulge that I’m considering it…

I’m a systems architect and project manager for our current projects. We also have another project manager on staff, a designer, some ruby on rails programmers and some other general staff for accounts, and support.

There’s a bunch of projects that I want to build and I’m willing to open my team of developers to outsiders in exchange for their expertise, industry contacts and their own network of resources.

On top of that a requirement would be to share the development costs.

I can afford to reduce development costs to as low at $40 per week, on the proviso that there are 10 people investing in the application development.

So my thinking is that I’d invest in at least 3 shares minimum, and put the other 7 shares up for anyone to buy into at that $40 per week.

Why?

Well, I can afford to develop my own projects, and we do. But that’s what we do, we develop applications, we don’t necessarily have all the greatest industry contacts, networks of websites with thousands of users every day or things like that.

We can build businesses but we don’t have the time to market them, I’ve done marketing before professionally and I understand the resource requirement and time that’s really needed to make a web business work, and that’s not time well spent for a team like ours.

So I’m willing to open my team up to outsiders to own a portion of a business and in exchange for our super low development costs / super cheap investment, I’d only be accepting people who can offer what we don’t have, that marketing and promotion side of things.

Honestly the money for development isn’t an issue, but it covers my team costs and re-assures me that the people involved are dedicated to the cause; they have a financially invested interest in what’s going on, I would want to be partnering with people who have the resources and traffic to promote whatever it is we build successfully.

At the end of the day it’s about making the development successful, I wouldn’t be profiting from the development, so it’s in my best interest to partner with worthwhile people so me, just like you can profit from the business itself.

As for what we would be building, well I’m undecided. I have a lot of ideas, but who says it has to be one of my ideas? If someone comes along and has a good idea and is keen for what I’m proposing, then we might run with that and see if we can round up some other people to invest in it.

Anyway, just been a thought of mine, thought I’d blog about it.

Client work pays the bills and more, but I’m not into doing client work forever, we’re building our own apps and I’m defiantly interested in expanding that scope.

I’d be interested to hear some feedback on what people think about it all.

Need some start-up cash, but nothing huge, just a few thousand?

Well Y Combinator might be your answer.

They are offering $5k per partner in your business for just a 6% share.

So if you have 3 partners in your new business, your investment they would offer you is $15k.

Not bad?

If you and your friend have a good idea that you’re working on you should think about submitting it, the application is easy, no business plans required, just submit their online application form.